Making IGCs relevantHow we would create a Value For Money assessment and use it to

present policyholders with meaningful analysis.

Henry TapperDirector First ActuarialFounder Pension PlayPen

Antonia BalaamDC ConsultantFirst Actuarial

Our credentials

Antonia Balaam

Founded 2004200 employee pension consultancyFCA permissions through Institute and Faculty of ActuariesActive in DC governancePartners Novarca in the UK

Henry Tapper

Founded 2013Due diligence for SMEsUsed by non-experts (accountants +payroll)Mass market28% owned by First Actuarial

As one on value for money

Measuring Value for Money

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

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

What do we pay for an insurance policy?

What happens when you cheat?

Is the cost of Pensions Trust’s default 0.45% or 0.52% ?

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

A way to compare?

A simple intuitive way of doing it?

Do insurer’s need an Origo for Governance?

Talking about value for money

Engaging – Educating –Empowering Policyholders

Problems with delivery

Who should we write the annual statement for?

Winning hearts and minds?

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

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

Consistent reporting – but not like this

We deal in pictures….

What of the future?

2020

LEGAL & GENERAL GROUP PLC

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.

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LEGAL & GENERAL GROUP PLC

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

2222

LEGAL & GENERAL GROUP PLC

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.”

£15bnPlaces for people:£252m, acquiring 4,000 homes, building 7,000 houses, 50 year lease

Thames Valley Housing:£40m, 25 year facility enabling 500 affordable homes

Royal Liverpool University Hospital:£429m rebuild

English Cities Fundschemes in Liverpool, Plymouth, Canning Town, Salford and Wakefield: over 5.4m sq ft of mixed-use space, brownfield land

Transport and Logistics: £320m, maturities to 30 years

Aberdeen international business park:£127m investment, 335,000sq ft office space

CALA Homes:£210m investment (47% stake), further £200m for Banner Homes

Hyde Housing Group:£102m investment15 year facility

Sentinel Housing: private placement (registered social housing provider in Hampshire)

University of Southampton:£93m, 1,104 beds, 40 years income

Methodist Care Homes:£70m investment, 30 year lease

Media City, Salford Quays:£503m investment . 50% ownershipPRS Investment – 100s of new homes

£162m Leeds regeneration project: 200 acre mixed use site with potential for 7,000 homes

£400m Cardiff city centre redevelopment joint venture

£200m Bracknell regeneration partnership with Schroders

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LEGAL & GENERAL GROUP PLC

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.

For more informationFirst Actuarial have offices in Leeds, Manchester, Peterborough, Tonbridge and Basingstoke

First Actuarial – www.firstactuarial.co.ukPension PlayPen – www.pensionplaypen.com

Henry Tapper- www.henrytapper.com

Henry.h.tapper@firstactuarial.co.uk@henryhtapper 07785 377768

Antonia.balaam@firstactuarial.co.uk