Summary of extensive research into the new Independent
Governance Committees set up by defined-contribution pension
- Independent Governance Committees (IGCs) were established by
providers of workplace personal pension schemes in 2015 in order to
represent the interests of the consumer and to assess the extent to
which schemes deliver value for money - and to challenge the
provider as appropriate.
- At the end of 2016, the opportunity arose for eleven IGCs to
participate in a major market-wide study into customer perceptions
of value for money in workplace personal pensions. The research is
extensive (full-day workshops plus on-line survey to which over
15,000 people responded) and findings are applicable across a much
wider range of retail financial services.
- "Good return on my money" comes out strongly as the top
attribute. This is much more than simply good investment returns.
It is a form of words used by customers to express that, at the end
of the day, they have achieved a good outcome. In reality therefore
it implicitly reflects a combination of contribution level, fund
performance and level of charges.
- The level of charges in itself - the particular attribute was
described to customers as "charges in line with the market average"
- is relatively unimportant. Other research shows that consumers
are not generally capable of assessing levels of charges but this
finding stongly indicates that, in assessing value for money,
customers place much more importance on attributes that represent
the quality of the service than they do the cost.
- It might not have been expected that two of the top 4
attributes would relate to good governance and the financial
strength of the provider. This is a reflection of the widespread
distrust of pensions - not specifically workplace personal pensions
but pension issues more generally.
- Whilst a strong correlation is observed between the findings
from the workshops and the online survey in terms of many of the
key attributes, a clear finding emerges that customers place much
more emphasis on the value of support and engagement once they have
a much better understanding of the implications and consequences of
their decisions around pensions. Education therefore is highly
- The findings provide valuable insights for IGCs, for product
providers, and for policymakers. And perhaps now is the time to
reflect on what appears to have been a singular focus on cost - in
order to do right by the consumer this research illustrates that
consideration of charges in isolation is incomplete without fully
taking into account the quality dimension.
View the attached