Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.
Upcoming SlideShare
What to Upload to SlideShare
What to Upload to SlideShare
Loading in …3
×
1 of 34

Value for money workshop on September 5th

1

Share

Download to read offline

These sides were used in a discussion on value for money in WeWork in September 2019

Related Books

Free with a 30 day trial from Scribd

See all

Related Audiobooks

Free with a 30 day trial from Scribd

See all

Value for money workshop on September 5th

  1. 1. The value of our money September 2019 WeWork workshop
  2. 2. What we’ll be thinking about today • Understanding value for money from the consumer's view point • Understanding value for money from a scheme/plan's point of view • Can we engage consumers in a responsible way? • Where are we going on DC governance?
  3. 3. Value for money from the consumer’s point of view
  4. 4. Evolution of VFM inside pensions 2014 OFT report 2016 First round of IGC Chair Statements (FCA) 2017 NMG report for IGCs surprised that…. Perceptions of what value for money means focus around ‘good returns’: In the online survey this was the top rated attribute; the workshops revealed this is much broader than investment returns but is perceived by members as achieving a good outcome at retirement. 2018- introduction of VFM reporting in DC Trustee statements (DWP/tPR) 2019 FCA review – W&P Select call for an.. "agreed definition of what is meant by value for money in the pensions industry. Although individual schemes will need to vary their value for money goals, without agreed definitions it is not possible to make effective comparisons".
  5. 5. People need to understand their pensions Daily Mirror – August 20th 2019 Financial Times - June 2017
  6. 6. VFM for the consumer The amount out against the amount in
  7. 7. VFM now embedded into popular culture Talk sport 2019
  8. 8. Understanding VFM from the provider’s point of view
  9. 9. Pioneering work by NAO (2013)
  10. 10. Evolution of VFM inside pensions 2014 OFT report 2016 First round of IGC Chair Statements (FCA) 2017 NMG report for IGCs surprised that…. Perceptions of what value for money means focus around ‘good returns’: In the online survey this was the top rated attribute; the workshops revealed this is much broader than investment returns but is perceived by members as achieving a good outcome at retirement. 2018- introduction of VFM reporting in DC Trustee statements (DWP/tPR) 2019 FCA review – W&P Select call for an.. "agreed definition of what is meant by value for money in the pensions industry. Although individual schemes will need to vary their value for money goals, without agreed definitions it is not possible to make effective comparisons".
  11. 11. Regulators struggle for perspective Sandy Guest – to IFOA - 2014
  12. 12. And actuaries find “Opportunity in complexity” Sandy Guest – IFOA -2014
  13. 13. A typical qualitative assessment Aviva IGC chair statement 2019
  14. 14. Can we engage consumers in a responsible way?
  15. 15. Personalized Meaningful Accessible Value for money
  16. 16. Can simplicity be supported?
  17. 17. The data journey People using GDPR and DPA rights (to their data held in machine readable format) Access to contribution histories and pot value (NAV) creates an Internal rate of return AgeWage Morningstar index plots average fund price track since 1980 Investing contribution histories in Morningstar Index provides synthetic (benchmark) IRR Comparing actual v synthetic IRR (with allowances for charges) produces a VFM quant score
  18. 18. Benchmark • The Benchmark consists of Morningstar Category Averages • The Benchmark has weightings which represent the average over the period 1980 – 2019 of funds utilised for DC pension saving (including insurance products) • It is broadly 80% equity and 20% debt. • But the weightings within these broad classifications varies of time • From 80% UK Equity and 20% Gilt in 1980 to 51% UK equity, 29% world, 5% ILG and 15% UK debt in 2019. • These weights may be adjusted in the light of allocations observed in the member data supplied to us. • The Benchmark is meant to capture the opportunity set available and used by pension savers.
  19. 19. Risk and Strategies • The essence of good fund management is risk evaluation and management. • It is recognition that risk assessment entails the possibility that more things may happen than will. • Good fund management seeks to identify and avoid or mitigate those that will. • The use of an IRR captures those risks which did occur – it is a risk experienced rate of return. • This means that is it appropriate for the evaluation of strategies, including those which reflect explicit risk preferences, such as life styling.
  20. 20. Returns vary – VFM needn’t This chart shows the volatility of the benchmark IRR over rolling 20 year periods If a saver gets the benchmark return for his money – he will get a 50 score
  21. 21. Where are we going on DC governance?
  22. 22. What savers want from “governance” Trusted search (for independent expertise) Assurance on Value for money Clarity on saving and spending options (AgeWage Ipsos Mori research Q2 2019)
  23. 23. Trusted search for pension expertise • Finding the right IFA(s) • Reward • Performance reviews • Staff/member feedback We need a DELEGATED MODEL OF ONGOING OVERSIGHT -Ruston Smith .
  24. 24. Assurance on value for money Henrytapper.com
  25. 25. AgeWage would like to work with IGCs , trustees, GCs platforms and sponsors. We’d like to offer savers VFM scores Assurance on Value for money
  26. 26. Clarity on options at retirement
  27. 27. Help on retirement choices You want to wait and see You want drawdown but can manage it yourself You want a certain income that lasts as long as you do You want drawdown and want an IFA
  28. 28. How can fiduciaries help?
  29. 29. VFM for supermarket colleagues • Average supermarket employee • Assumes an 8% contribution on £0-14,000 over 20 years • Wage inflation assumed to be 2% AgeWage Score IRR Pot Value Total Investment 20 6% 34k 18.5k 50 8% 42k 18.5k 80 10% 53k 18.5k
  30. 30. Thanks for the chance to talk Any questions?

×