The document discusses creating a value for money assessment for pension policies that provides meaningful analysis to policyholders. It outlines key benefits expected from pension policies, such as funds to save into and policyholder support. It also discusses calculating value for money by comparing costs like fees to weighted benefits and services. The document raises concerns about potential conflicts of interest for some independent governance committees and a lack of consistent annual reporting across insurers. It envisions how pension savings could be invested in infrastructure and used to fund housing and regeneration projects in the future.

1. Making IGCs relevant
How we would create a Value For Money assessment and use it to
present policyholders with meaningful analysis.
Henry Tapper
Director First Actuarial
Founder Pension PlayPen
Antonia Balaam
DC Consultant
First Actuarial

2. Our credentials
Antonia Balaam
Founded 2004
200 employee pension consultancy
FCA permissions through Institute and
Faculty of Actuaries
Active in DC governance
Partners Novarca in the UK
Henry Tapper
Founded 2013
Due diligence for SMEs
Used by non-experts (accountants
+payroll)
Mass market
28% owned by First Actuarial
As one on value for money

3. Measuring Value for Money

4. What is Value for money?
The overall Value for Money offered by a Pension Policy can be assessed by
comparing the cost with the benefit to the policyholder.
Total benefits of
Policy
Total costs of
Policy
We’re on our own

5. What do we expect from a pension policy?
• Funds to save into (and clear direction)
• Policyholder support (helplines, online and paper-based)
• Options to spend pension savings (pension freedoms)
• Sustainability – capacity to deliver over time

6. What do we pay for an
insurance policy?

7. What happens when you cheat?
Is the cost of Pensions Trust’s default
0.45% or 0.52% ?

8. How do we calculate VFM for services?
Services
• What services
do members
receive?
How important
are the services
• Weightings of
importance
are applied to
each of the
benefit
categories and
to each of the
services within
that category
Fee comparison
• The charges
are compared
against the
benchmark –
0.5% pa
Services offered to policyholders Weightings of importance Fee score

9. A way to compare?

10. A simple intuitive way of doing it?
Do insurer’s need an Origo for Governance?

11. Talking about value for money

12. Engaging – Educating –
Empowering Policyholders

13. Problems with delivery

14. Who should we write the annual statement for?
Winning hearts and minds?

15. Conflicts
• IGC members owe their appointments and their remuneration to the
providers – is this independent?
• Company appointed members usually make 40% of IGC
• Several members appear on multiple IGCs
• Some IGCs are packed with former intermediaries
• GAAs offer little choice

16. How seriously are IGCs taking their duties?
Insurer Number of meetings so far Terms of Reference (downloadable
Aegon 3 NO
Aviva 2 YES
BlackRock 3 YES
Fidelity NOT KNOWN NO
Friends Life 5 NO
Legal & General NOT KNOWN NO On request
Phoenix 4 NO On request
Prudential 5 YES
Royal London 3 YES
Scottish Widows 8 NO On request
Standard Life 6 YES
Zurich “numerous” YES
Source Lexis Nexis Occupational Pensions October 2015

17. Consistent reporting – but not like this

18. We deal in pictures….

19. What of the future?

20. 2020
LEGAL&GENERALGROUPPLC
Retirement Balance Sheet: Last Time
Buyers, Lifetime Mortgages
• Chronic Shortage of UK housing
• A third of retirees want to move/rightsize
• Only 2% of housing is built for older people
• Tailored housing needed in the right places:
Family, Friends, Facilities
• Frees-up housing stock for families
• Part of the care cost solution
• For those who want to stay in the family
home, Lifetime Mortgages are a solution
• L&G entered this market in March and is
now seeing £10m of applications per week.

21. 2121
LEGAL&GENERALGROUPPLC
Pension Savings as “Slow Money” for
Infrastructure
Media City, Salford, and L&G Investment
• Individual Savings are the basis of
all institutional investment
• Recognised by Commissioner Hill’s
Capital Markets Union…
• …and by George Osborne’s LGPS
proposals
• Digital and Data can pinpoint
where a saver’s assets are
invested…
• ..for yield enhancement, local jobs
and growth

22. 2222
LEGAL&GENERALGROUPPLC
L&G: Long term direct investments
•We continue to drive risk-
adjusted returns upwards
through direct investments in
long dated real assets where
the banks have left behind
‘white space’. Investment in
housing and regeneration are
economically useful for us, for
the broader economy and
socially useful too.”
£15bn Placesforpeople:
£252m,acquiring4,000homes,
building7,000houses,50 year
lease
ThamesValleyHousing:
£40m,25yearfacilityenabling
500 affordablehomes
RoyalLiverpoolUniversityHospital:
£429mrebuild
EnglishCitiesFund
schemesinLiverpool,
Plymouth,CanningTown,
SalfordandWakefield:
over5.4msqftof mixed-use
space,brownfieldland
Transportand Logistics:£320m,
maturitiesto30 years
Aberdeen international business park:
£127m investment, 335,000sq ft office
space
CALAHomes:
£210minvestment(47%stake),further
£200mforBannerHomes
HydeHousingGroup:
£102minvestment
15yearfacility
Sentinel Housing:
private placement
(registered social
housing provider
in Hampshire)
Universityof Southampton:
£93m,1,104beds,40yearsincome
MethodistCareHomes:
£70minvestment,30yearlease
MediaCity,SalfordQuays:
£503minvestment.50% ownership
PRSInvestment–100s of newhomes
£162mLeeds regeneration
project:200acremixeduse
site withpotentialfor7,000
homes
£400mCardiffcitycentre
redevelopmentjointventure
£200mBracknell
regenerationpartnership
withSchroders

23. 2323
LEGAL&GENERALGROUPPLC
Pensions Auto-Enrolment: Basis for Beveridge 2.0?
• “Europe accounts for just over 7%
of the world’s population, produces
around 25% of global GDP and has
to finance c.50% of global social
spending... It’s obvious it will have
to work very hard to maintain its
prosperity and way of life”
• Angela Merkel, German Chancellor
*The Economist 1 June 2013. From the print edition
Polling shows 18-24 year-olds are
increasingly likely to see welfare as a
personal, not a State, responsibility.
Public-private risk-sharing offers a solution.

24. For more information
First Actuarial have offices in Leeds, Manchester,
Peterborough, Tonbridge and Basingstoke
First Actuarial – www.firstactuarial.co.uk
Pension PlayPen – www.pensionplaypen.com
Henry Tapper- www.henrytapper.com
Henry.h.tapper@firstactuarial.co.uk
@henryhtapper 07785 377768
Antonia.balaam@firstactuarial.co.uk