Prudential independent governance report 2019

17 April 2019

The fourth Prudential Independent Governance Committee (IGC) report considers the investment performance and transaction costs across £5.3 billion of funds under management in Prudential’s workplace pensions in 2018. The IGC, representing 215,000 members, also highlights the need to get more of them taking notice of their pension savings, with Chairman Lawrence Churchill reiterating it as a ‘central challenge for the whole pensions industry’.

IGC’s primarily review the value for money of defined contribution (DC) workplace pension schemes, independently of the product provider. This has been a requirement of the Financial Conduct Authority (FCA) since April 2015.

The focus on Prudential’s ‘default’ strategy highlighted that the £1.9 billion Prudential Dynamic Growth Fund IV had performed better than the IGC had expected, with annualised returns of 8.83% over a 3-year period after charges. The £287 million Prudential Dynamic Growth Fund II, which also forms part of the default strategy, also bettered expectations with annualised returns of 7.23% after charges over the same period. The IGC benchmark for growth is 3% above inflation per year after charges. These two funds have produced returns in excess of inflation of 6.56% and 4.96% respectively over 3 years. The IGC has worked with Prudential and employers to make all default strategies compatible with ‘Pension Freedoms’, introduced in the 2015 Budget, as promised when reporting last year.

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