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Pensions independent governance committees: perceptions of value

PFS Thinkpiece no.130

Publication date:

02 May 2017

Last updated:

22 September 2017


Policy and Public Affairs

Summary of extensive research into the new Independent Governance Committees set up by defined-contribution pension providers.

  • 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 influential.
  • 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.

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This document is believed to be accurate but is not intended as a basis of knowledge upon which advice can be given. Neither the author (personal or corporate), the CII group, local institute or Society, or any of the officers or employees of those organisations accept any responsibility for any loss occasioned to any person acting or refraining from action as a result of the data or opinions included in this material. Opinions expressed are those of the author or authors and not necessarily those of the CII group, local institutes, or Societies.


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