AAF 02/07 Assurance Report

Transcription

1 Contents and Introduction and Please navigate to the beginning of each section using these tabs AAF 02/07 Assurance Report Internal s for Master Trusts Report as at 5 September 2014 For people, not profit

2 and Please navigate to the beginning of each section using these tabs Contents 1. Introduction 2. of The People s Pension Scheme and Letter of Engagement For people, not profit

3 and 1. Introduction The People s Pension Trustee Limited is pleased to present its report detailing the control that are in place relating to The People s Pension Scheme ( The People s Pension or the Scheme ). The People s Pension is a Master Trust: a multi-employer workplace pension scheme founded by B&CE. It was launched in 2011 as a product specifically tailored to help employers deal with their statutory auto-enrolment duties. The Scheme is a flexible and portable workplace pension and is suitable for any organisation, of any size and in any sector. Its focus is on ease and simplicity of use, support for employers and engagement with employees and Scheme members. Building and Civil Engineering Holiday s Scheme Management Limited (the Founder ) established the Scheme on 28 June The Founder has two subsidiaries, B&CE Insurance Limited and B&CE Financial Services Limited (this group of companies, including the Founder, are collectively referred to through this document as B&CE ). Steve Delo, Chairman Representing PAN Governance LLP B&CE is a not-for-profit organisation with over 70 years experience of providing financial benefits to its members. Prior to the launch of The People s Pension, B&CE had successfully pioneered a form of auto-enrolment (since 2003) through its EasyBuild Stakeholder Pension Scheme. Employees at B&CE also shared their experience with the Government s Department for Work and Pensions during its development of auto-enrolment. B&CE currently manages assets of 2.2 billion, has 2.4 million members and provides financial benefits to over 800,000 active individuals on behalf of over 9,000 corporate accounts 1. Its not-for-profit status means that there are no shareholders so any surplus is used for the benefit of its members, through lower charges, enhanced terms or benefits and improved services. Andrew Cheeseman Representing PAN Governance LLP Employers using The People s Pension have enrolled over 1,000,000 members since October 2012, making The People s Pension the second largest Master Trust in the UK after NEST (National Employment Savings Trust), established by the Government to support auto-enrolment. The People s Pension is governed by The People s Pension Trustee Limited (the Trustee), a wholly-owned subsidiary of the Founder. The Trustee directors are entirely independent of B&CE. The Trustee directors are PAN Governance LLP and Alan Pickering. PAN Governance LLP acts as corporate Director and is represented by Steve Delo and Andrew Cheeseman. Alan Pickering CBE Independent non-executive director 1 (information correct as at 30 June 2014). 3

4 and Steve Delo is Chief Executive of PAN Governance LLP and a former President of the Pensions Management Institute. He has won individual professional awards, including Business Presenter of the Year, Pensions Personality of the Year and Independent Trustee of the Year (2010 and 2014). Andrew Cheeseman is founder and Chairman of the PAN Group and a prominent industry figure. He founded PAN in 1993, having previously held senior management and consulting roles in various major pensions businesses. PAN Group was named Independent Trustee of the Year at the 2013 UK Pensions Awards. Alan Pickering has over 40 years experience across a wide variety of pension industry areas. He has sat on the board of a number of important industry bodies, including serving as chair of the National Association of Pension Funds (NAPF). Strong governance is a key feature of The People s Pension. Employers and Scheme members can be reassured that The People s Pension is governed by a Trustee that is independent and has the requisite expertise to carry out this role. The Trustee has appointed B&CE Financial Services Limited as administrator of the Scheme. B&CE Financial Services Limited is authorised and regulated by the Financial Conduct Authority. The quality of The People s Pension has been recognised through a number of industry awards that B&CE has won, as provider of The People s Pension: Auto-enrolment Provider of the Year (UK Pensions Awards 2013); DC Provider of the Year (UK Pensions Awards 2014); Best DC Master Trust (Pension and Investment Provider Awards 2013); and Master Trust Provider of the Year (Pension and Investment Provider Awards 2014). Furthermore, The People s Pension holds the industry-leading Pension Quality Mark READY status, which requires best practice standards to be met on pension scheme governance, charges and communications. This report provides information and assurance on the design and description of the governance and administrative, in relation to the business operations of The People s Pension for providing pensions trustee services. The Trustee has adopted the framework provided by the Audit and Assurance Faculty of the Institute of Chartered Accountants in England and Wales, entitled Assurance Reporting On Master Trusts (Master Trust Supplement to ICAEW AAF 02/07), referred to as The Master Trust Supplement to AAF 02/07. This report is at a point in time, dated 5 September 2014 in accordance with the Master Trust Supplement to AAF 02/07. 4

5 and 2. of The People s Pension As of The People s Pension, we are responsible for the identification of control relating to governance and administration in the operation of the Master Trust and the design, implementation and operation of the control to provide reasonable assurance that the control are achieved. Those are derived from the Defined Contribution (DC) code of practice and DC regulatory guidance. In carrying out those responsibilities, we have regard not only to the interest of employers (who have entrusted their employees DC contributions to the Master Trust, or are considering doing so) and members of the Master Trust but also to the needs of the trust business and the general effectiveness and efficiency of the relevant operations. We have evaluated the effectiveness of The People s Pension s control having regard to ICAEW s Technical Release AAF 02/07 including its Master Trusts Supplement and the control set out therein. We set out in Section 5 of this report a description of the relevant control together with the related control which operated as at 5 September 2014 to confirm that: (a) the report describes fairly the control that relate to the control referred to above which were in place as at 5 September 2014; and (b) the control described were suitably designed such that there is reasonable assurance that the specified control would be achieved if the described control were complied with satisfactorily. Trustee Date Signed on behalf of the trustees of The People s Pension 5

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8 and SAFETY OF ASSETS & RECORDS ASSESSING VALUE ASSESSMENT OF INVESTMENT OPTIONS PEOPLE GOVERNANCE 4. SAFETY OF ASSETS & RECORDS Commercial & Business Risks 1. Discontinuance plans, which address how member assets or entitlements are safeguarded in the event of the Master Trust or any key service provider failing, are documented, approved and maintained. Business & Disaster Recovery 2. Data and systems are backed up regularly, retained off site and regularly tested for recoverability. Business and information systems recovery plans are documented, approved, tested and maintained. 3. The capacity of an administration system to take on new business is assessed, approved and regularly monitored. 4. New business take-ons are properly established in accordance with Master Trust s rules and contractual arrangements. Data Quality & Security 5. Member data is complete and accurate and is subject to regular data evaluation. Data transmissions are secure and appropriate measures are implemented to counter the threat from malicious electronic attack. 6. Physical and logical access to computer systems, and member and Master Trust records and data, is restricted to authorised persons. 7. IT equipment is maintained in a controlled environment and the maintenance and development of systems, applications and software is authorised, tested approved and implemented. Protection of assets 8. Member assets or entitlements are safeguarded from loss, misappropriation and unauthorised use in accordance with a defined policy. 9. Cash is safeguarded and all payments are suitably authorised and controlled. 10. Financial protection available to members in the event of default is assessed and documented, and communicated to employers and members on request. 11. Investment decisions relating to the selection of investments on regulated markets and unregulated investments are researched, authorised and monitored. 8

9 and SAFETY OF ASSETS & RECORDS ASSESSING VALUE ASSESSMENT OF INVESTMENT OPTIONS PEOPLE GOVERNANCE ASSESSING VALUE Assessment of Value For Money 12. A value for money review is undertaken and this review is documented, approved and findings actioned. Communication of costs and charges 13. A complete and accurate list of the types of costs and charges incurred by members and employers is documented, monitored and approved. 14. Disclosure of information on costs and charges borne by members is provided to employers at the point of selection and is complete and accurate. 15. Disclosure of information to members of costs and charges (rates (%) and amounts ( )) are complete and accurate. 9

10 and SAFETY OF ASSETS & RECORDS ASSESSING VALUE ASSESSMENT OF INVESTMENT OPTIONS PEOPLE GOVERNANCE ASSESSMENT OF INVESTMENT OPTIONS Appropriateness of the default strategies 16. The design and ongoing suitability of the default strategies is regularly reviewed and monitored. This review is documented and approved. 17. The performance of the default strategies and funds within the default strategies are regularly reviewed and monitored. This review is documented and approved. Appropriateness of the other investment options (ie, non default strategy investment options) 18. The range and risk profile of other investment options are documented, approved and regularly reviewed for suitability. This review is documented. 19. The performance of other investments options is regularly reviewed against relevant investment and (where available) industry benchmarks. This review is documented and approved. Identification of investment and assessment against them 20. A complete and accurate description of all investment options is maintained and approved. 21. A Statement of Investment Principles (SIP) is documented, approved and regularly reviewed. 10

11 and SAFETY OF ASSETS & RECORDS ASSESSING VALUE ASSESSMENT OF INVESTMENT OPTIONS PEOPLE GOVERNANCE PEOPLE Conflicts of interest 22. Conflicts of interest are identified, recorded and managed in accordance with a defined policy which is regularly reviewed and approved. Fit and proper trustees 23. Fitness and propriety requirements are recorded and managed in accordance with a defined policy which is regularly reviewed and approved. 24. The fitness and propriety of trustees is regularly reviewed and monitored prior to appointment and thereafter. This review is documented and approved. 25. Trustee skills and knowledge are managed and maintained in accordance with an approved training programme. The training programme is regularly reviewed and updated. 11

12 and SAFETY OF ASSETS & RECORDS ASSESSING VALUE ASSESSMENT OF INVESTMENT OPTIONS PEOPLE GOVERNANCE GOVERNANCE Resource planning 26. A plan is maintained and regularly reviewed to ensure that resources are properly allocated. Scheme Management 27. Roles, responsibilities and duties of all trustees, advisers and service providers are documented, approved and regularly reviewed. 28. Activities undertaken by all scheme advisers and service providers are properly managed and subject to regular performance reviews which are documented and approved. Internal control framework 29. A risk management framework is established to identify, manage and monitor significant operational, financial, regulatory and compliance risks. Core scheme transactions 30. Contributions, benefit payments, investment transactions and calculations and related income and expenditure are completely and accurately processed in a timely manner and recorded in the proper period. 31. Contributions are invested in accordance with member instructions or the default policy. 32. Transaction errors are rectified and members are treated fairly as a result of that rectification. Receipt of contributions 33. Late and inaccurate contributions are pursued and resolved. Retirement process 34. Retirements are managed in accordance with a documented process which is regularly reviewed and approved. 35. Retirement products selected by members are monitored and the range of retirement products made available is reviewed regularly for ongoing suitability. 36. Members are regularly made aware of their investment choices, the importance of reviewing the suitability of their investment choices and that their level of contributions is a key factor in determining the overall size of their pension fund. Communications 37. Scheme communications are accurate, clear and understandable and are produced in accordance with a documented communications plan. The plan is regularly reviewed and monitored. 38. Communications contain information to support the decisions members need to make at retirement. 12

13 and SAFETY OF ASSETS & RECORDS ASSESSING VALUE ASSESSMENT OF INVESTMENT OPTIONS PEOPLE GOVERNANCE 5. and This Master Trust Supplement to AAF 02/07 focusses on s governance of how B&CE conducts its business and controls and manages its risks. The Scheme s Investment Managers, Legal & General Investment Management (Holdings) Limited (LGIM) and HSBC Securities Services (HSBC) have produced reports for their clients and auditors so they can understand how they conduct their business and control and manage risks. The latest reports cover the period 1 January to 31 December 2013 and many of the Objectives within these ISAE 3402 Assurance Reports are similar to those contained within the Master Trust Supplement to AAF 02/07. SAFETY OF ASSETS & RECORDS Commercial & Business Risks 1. Discontinuance plans, which address how member assets or entitlements are safeguarded in the event of the Master Trust or any key service provider failing, are documented, approved and maintained. All Scheme assets, except those invested in the Scheme s Shariah Fund, are invested in mainstream pooled investment funds accessed via a contract of long-term insurance with Legal & General Assurance (Pensions Management) Limited ( PMC ), who are part of the Legal & General Group. Where members elect to invest in the Scheme s Shariah Fund, the assets are held in a similar way by HSBC Life (UK) Limited. PMC has a floating charge agreement protecting members in the event of a failure as invested pension funds remain the property of the clients and do not form part of assets available to PMC creditors. The Trustee reviews the financial position of the Scheme at each quarterly Trustee Board meeting and this is documented in meeting agendas and minutes. The Trustee monitors the financial position of the Scheme through the Administration Reports provided to at each Trustee Board meeting. These reports show a summary of the Scheme s financial details including the assets under management, contributions received, funds claimed and transfers out, sections joining the Scheme and sections ceasing to participate in the Scheme. The Trustee also reviews LGIM s investment report for the quarter at each quarterly Trustee Board meeting and this is documented in meeting agendas and minutes. The Trustee s annual report and financial statements for the year ended 31 March 2014 were signed by Board at their meeting on 2 September The financial statements were prepared on a going concern basis as there is nothing to indicate that either the Scheme will be wound up in the coming 12 months, or that will cease acting as corporate trustee to the Scheme. B&CE concluded that there were no material uncertainties casting significant doubt about the ability of to continue as a going concern. 13

14 and SAFETY OF ASSETS & RECORDS ASSESSING VALUE ASSESSMENT OF INVESTMENT OPTIONS PEOPLE GOVERNANCE The People s Pension Trust Deed and Scheme Rules dated 25 October 2013 are the governing documents by which the Scheme is currently administered and managed. These Rules include provisions for the eventuality of the termination and winding up of the Scheme as well as the possibility of the merger with another scheme. Legal advice was taken when these Rules were prepared, and was involved in agreeing the provisions. In accordance with the Rules, no amendment can be made without the written consent of, who would consider the proposed changes to the Rules in light of their obligations and responsibilities towards members and other beneficiaries of the Scheme. The Trustee has prepared a Scheme Discontinuance Plan considering the events that could trigger the discontinuance of the Scheme and how may fulfil their overarching duty to act in the best interest of the beneficiaries of the Scheme. The Scheme Discontinuance Plan was agreed by on 2 September 2014 as recorded in meeting agenda and minutes. The Trustee is to review the Scheme Discontinuance Plan each year at the third quarter meeting. This is documented in Business Plan and is to be recorded in meeting agendas and minutes. Business & Disaster Recovery 2. Data and systems are backed up regularly, retained off site and regularly tested for recoverability. Business and information systems recovery plans are documented, approved, tested and maintained. The People s Pension Scheme member and employer customer records are held on B&CE s in-house computer system. These records are backed up to a secure site in Leatherhead (approximately 40 minutes away from B&CE s office) every 15 minutes. B&CE sends a transactional data log via its dedicated secure internet link to its own equipment at this secure site. B&CE s system at the secure site then mirrors the position of its system at its Head Office in Crawley. An confirming whether each backup has been carried out successfully is automatically sent to B&CE s IT team after each backup is performed. All system data is saved to servers with RAID disk systems (a combination of RAID 5 & 10). These servers continually copy data from one to the other so that they mirror each other and there is no disruption should one of the servers fail. B&CE transfers server data from the disk systems to tapes which are transported to another secure site location in Crawley, on a daily basis. The secure sites in Leatherhead and Crawley are both ISO27001 certified locations. B&CE s IT Department test for business recoverability each month during maintenance weekends and follow documented and checks. Each of B&CE s business areas has their own individual Business Continuity Plan detailing the steps each area will take following an incident, to return to business as usual in the quickest possible time. These Business Continuity Plans are reviewed each quarter. B&CE s test window for its business continuity testing runs from September to September. B&CE s last Business Recovery exercise was carried out on 2 September When a Business Recovery exercise is performed, B&CE s internal audit function will observe the exercise and provide assurance on its effectiveness. B&CE plan to conduct their next test during B&CE s internal audit function shall provide with a report following this exercise. 14

15 and SAFETY OF ASSETS & RECORDS ASSESSING VALUE ASSESSMENT OF INVESTMENT OPTIONS PEOPLE GOVERNANCE B&CE s Director of IT & Group Services shall provide with a yearly report each March which includes the robustness of B&CE s data backup and recoverability. The Trustee is to review these reports at the second quarter meeting. This is documented in Business Plan and is to be recorded in meeting agendas and minutes. 3. The capacity of an administration system to take on new business is assessed, approved and regularly monitored. B&CE regularly reviews the capacity of its administration systems and resources. B&CE s Director of Finance produces a quarterly forecast of Scheme membership and also uses Capacity and Forecasting Tools for resource planning. The Trustee s review of B&CE s capacity is carried out periodically and is documented in meeting agendas and minutes. The Trustee monitors B&CE s capacity through the Scheme Administration Reports provided to at each Trustee Board meeting. These reports include active and deferred Scheme membership figures. 4. New business take-ons are properly established in accordance with Master Trust s rules and contractual arrangements. The People s Pension is a multi-employer workplace pension scheme specifically tailored to deal with pensions autoenrolment and is available to all employers from any sector. The Scheme was established by the Founder, through a deed dated 28 June The People s Pension Trust Deed and Scheme Rules dated 25 October 2013 are the governing documents by which the Scheme is currently administered and managed. Employers wishing to participate in the Scheme are admitted to the Scheme by the Founder in accordance with these Rules. Contractual arrangements are made between the Founder and the participating employer with responsibilities of each party clearly defined within the Rules. The employer agrees to be bound by the provisions of the Scheme Rules via an electronic admission process. Each participating employer has their own section within the Scheme. Legal advice was taken when the electronic admission process was developed. The Founder may, at the request of a participating employer, agree to make a variation to a section of the Scheme by way of Deed and will seek the agreement of. The Founder may make a minor change to the section of the Scheme by way of Memorandum without seeking the agreement of but will make the Memorandum available to for review. Data Quality & Security 5. Member data is complete and accurate and is subject to regular data evaluation. Data transmissions are secure and appropriate measures are implemented to counter the threat from malicious electronic attack. B&CE s computer system records are updated daily through ad hoc instructions received from Scheme members and information received from employers participating in the Scheme. As part of its Data Protection Policy, B&CE uses encryption to protect the contents of files being transmitted via . B&CE regularly reviews the completeness and accuracy of the Common data and Conditional data it holds for members of The People s Pension. Should any breach of data protection regulations occur, B&CE will inform as soon as reasonably possible or at their next quarterly Trustee Board meeting, depending upon the nature of the breach. 15

16 and SAFETY OF ASSETS & RECORDS ASSESSING VALUE ASSESSMENT OF INVESTMENT OPTIONS PEOPLE GOVERNANCE The Trustee will review the completeness and accuracy of member data at each Trustee Board meeting and this will be documented in meeting agendas and minutes. The Trustee will monitor the completeness and accuracy of member data through the Scheme Administration Reports provided to at each Trustee Board meeting. These reports will show the percentage of Scheme membership where Common data and Conditional data are present. These will also include details of any Data Protection breaches which have occurred during the quarter. B&CE has an Intrusion Detection System deployed to counter the threat from malicious activities. This is a component of B&CE s firewall, from a leading provider, protecting their internal systems, in-house hosted website and mail server from unauthorised access from the internet. B&CE has also deployed licensed software that manages the roll out of antivirus updates on user computers and B&CE s mail servers. Virus definitions are downloaded daily to the server and on first boot to user systems and then every hour. B&CE has also engaged a leading IT security specialist firm to carry out regular IT security testing. 6. Physical and logical access to computer systems, and member and Master Trust records and data, is restricted to authorised persons. B&CE s Crawley office is protected by a CCTV system, a 24 hour guard and an alarm. All electronic data is held on servers in a secure, locked room. Only authorised members of B&CE s IT Department have access to the key and their Business Services area holds a master key. B&CE s administrators using its in-house system are allocated user names and a password is required to access servers and network devices. These passwords expire frquently and users are prompted to change them. The system requires best practice from users in relation to setting passwords. User functionality within B&CE s in-house system is restricted using appropriate permissions. Functional groups of users are maintained, each with appropriate levels of access permissions based upon their job function. Only authorised IT administrators can define user and user group policies, rights and permissions, which are enforced by the system. Updates to system records have an audit trail, showing the user ID, date and timestamp. B&CE has an Intrusion Detection System deployed to counter the threat of unauthorised access from the internet. This is a component of B&CE s firewall protecting its internal systems, in-house hosted website and mail server. B&CE has also engaged a leading IT security specialist firm to carry out regular IT security testing. To access server and network devices from remote locations, a secure connection to B&CE s firewall using a network logon account is required, as well as having remote access enabled by B&CE s IT Department. This is all controlled using Windows active directory. Reusable apparatus such as memory disks have data erased in house. Non-recyclable components are transported securely to a site where they are destroyed. B&CE s Director of IT & Group Services shall provide with a yearly report each March which includes B&CE s IT and processes. The Trustee is to review these reports at each second quarter meeting. This is documented in the Trustee Business Plan and is to be recorded in meeting agendas and minutes. 16

17 and SAFETY OF ASSETS & RECORDS ASSESSING VALUE ASSESSMENT OF INVESTMENT OPTIONS PEOPLE GOVERNANCE 7. IT equipment is maintained in a controlled environment and the maintenance and development of systems, applications and software is authorised, tested approved and implemented. All electronic data at B&CE s Crawley Office is held on servers in a secure, locked room. This room is equipped with air conditioning and a system is in place to control the temperature and humidity. The room is protected by an inert gas fire suppressant system. B&CE regularly updates its website and mail server with the latest security patches. These new patches and updates are logged on B&CE s TOPdesk service management system. B&CE then download these patches and deploy them to test systems in a model office as soon as practically possible. B&CE test the patches in the model office test environment for two weeks before applying them to their core site servers, web servers and half their end user systems. The following weekend, B&CE s secure site in Leatherhead is updated along with the remaining user systems. Super critical patches may be fast-tracked after specific testing if required. B&CE use software auditing solutions to ensure systems are maintained at the up-to-date patch state. Protection of assets 8. Member assets or entitlements are safeguarded from loss, misappropriation and unauthorised use in accordance with a defined policy. All Scheme assets, except those invested in the Scheme s Shariah Fund, are invested in mainstream pooled investment funds accessed via a contract of long-term insurance with Legal & General Assurance (Pensions Management) Limited ( PMC ), who are part of the Legal & General Group. Where members elect to invest in the Scheme s Shariah Fund, the assets are held in a similar way by HSBC Life (UK) Limited. PMC has a floating charge agreement protecting members in the event of a failure as invested pension funds remain the property of the clients and do not form part of assets available to PMC creditors. The Trustee has a written Statement of Investment Principles setting out the principles governing how decisions about investments must be made. The Trustee formally reviews the Statement of Investment Principles each year and this was last updated in September The next review is due to be carried out in March 2015 as documented in Business Plan. The Trustee reviews LGIM s quarterly investment reports. These contain details of any stock lending and collateralisation which will review at each quarterly Trustee Board meeting. This will be documented in meeting agendas and minutes. The People s Pension has a daily valuation cycle with automated electronic transaction instructions sent between B&CE s in-house system and the investment managers via SWIFT. B&CE s Finance Team check the instructions before sending these to the investment managers and automated validation checks are performed on the valuation details received from the investment managers. The valuation process ends with automated validation checks confirming at a member level that the member funds and unit movements agree with the overall valuation totals. B&CE s internal audit function shall provide with a yearly s report by the end of each May, which includes the effectiveness of B&CE s valuation process. The Trustee is to review these reports at each second quarter meeting. This is documented in Business Plan and is to be recorded in meeting agendas and minutes. 17

18 and SAFETY OF ASSETS & RECORDS ASSESSING VALUE ASSESSMENT OF INVESTMENT OPTIONS PEOPLE GOVERNANCE 9. Cash is safeguarded and all payments are suitably authorised and controlled. B&CE s Finance Team has a documented set of and controls for the authorisation of payments. In February 2013, reviewed B&CE s process for making payments via its in-house system. User functionality within this system is restricted using appropriate permissions enabling a clear segregation of duties. All payments are checked before being authorised and the system prohibits the initiation and authorisation of payments by the same user. Once a payment has been authorised a second set of authorisation processes begins within the Finance Team which involves dual authorisation, including Senior Management authorisation. The Trustee has a mandate with HSBC setting out a list of authorised signatories and the authorisation levels for accepting payment instructions. It is impractical for to give their authorisation to LGIM for each and every payment. However, LGIM will alert the Trustee in the event they were ever instructed to make payment into any account other than a Trustee account, or if the authorised bank account was ever changed. LGIM also confirmed that if they have been instructed to pay monies into the Trustee bank account and they wrongly paid the monies into another bank account, they would accept liability for any loss caused by the negligence, wilful default or fraud of the company or another group company. B&CE s internal audit function shall provide with a yearly s report by the end of each May, which includes B&CE s payment processes and. The Trustee is to review these reports at each second quarter meeting. This is documented in Business Plan and is to be recorded in meeting agendas and minutes. 10. Financial protection available to members in the event of default is assessed and documented, and communicated to employers and members on request. The Trustee and B&CE have consulted with the Financial Services Compensation Scheme and LGIM to assess the financial protection open to members. The Scheme does not offer unregulated investments to members and there are appropriate compensation arrangements in place in respect of the regulated investments offered to members. Upon joining the Scheme, new members are provided with a Member s Booklet. This now directs new members to The People s Pension website at for further details about the financial protection to members. A Member Protection Statement is available to Scheme members upon request. A Technical Guide is also available to employer customers upon request, which includes details of the financial protection to members. As part of B&CE s documentation re-approval process, documentation is reviewed at least once each year to ensure they continue to provide accurate information. The Trustee has agreed a list of key Scheme documentation which should be referred to for approval. The Trustee s review of any changes to key Scheme documentation will be carried out at each quarterly Trustee Board meeting. This is documented in Business Plan and is to be recorded in meeting agendas and minutes. The Trustee will monitor changes to key Scheme documentation through the Scheme Administration Reports provided to the Trustee at each Trustee Board meeting. These will include details of any proposed changes to key Scheme documentation and those documents that have been re-approved during the quarter. 18

19 and SAFETY OF ASSETS & RECORDS ASSESSING VALUE ASSESSMENT OF INVESTMENT OPTIONS PEOPLE GOVERNANCE 11. Investment decisions relating to the selection of investments on regulated markets and unregulated investments are researched, authorised and monitored. The People s Pension does not offer unregulated investment options to members and any use of such investments would require approval by. The Trustee, in conjunction with an authorised, regulated investment adviser, regularly reviews the suitability of the regulated investment funds available to members and the Statement of Investment Principles. All Scheme assets, except those invested in the Scheme s Shariah Fund, are invested in mainstream pooled investment funds accessed via a contract of long-term insurance with Legal & General Assurance (Pensions Management) Limited ( PMC ), who are part of the Legal & General Group. Where members elect to invest in the Scheme s Shariah Fund, the assets are held in a similar way by HSBC Life (UK) Limited. PMC has a floating charge agreement protecting members in the event of a failure as invested pension funds remain the property of the clients and do not form part of assets available to PMC creditors. The Trustee monitors the performance of the funds available to members through the LGIM investment report for the quarter, presented to at each Trustee Board meeting. The quarterly LGIM investment report contains information about the performance of the funds compared with the total return of the relevant benchmark index. The Scheme offers passive tracking funds. The Trustee monitors whether the fund performance during the quarter is within expected tolerances for the asset class in question. Any greater variance would be queried with LGIM. The Statement of Investment Principles was last updated in September The Trustee is to review the Statement of Investment Principles each year at the first quarter meeting. This is documented in Business Plan and is to be recorded in meeting agendas and minutes. These annual reviews form part of s triennial review of the Statement of Investment Principles documented in the Trustee Business Plan. 19

20 and SAFETY OF ASSETS & RECORDS ASSESSING VALUE ASSESSMENT OF INVESTMENT OPTIONS PEOPLE GOVERNANCE ASSESSING VALUE Assessment of Value For Money 12. A value for money review is undertaken and this review is documented, approved and findings actioned. Value for money is one of the key attributes of The People s Pension, which has a simple transparent 0.5% Annual Management Charge (AMC). The Trustee and B&CE recognised that in the Scheme s early years, the Scheme s costs would outweigh the income generated from the AMC. The Scheme Administration Reports provided to at each Trustee Board meeting show the Balancing Amount paid by B&CE to offset this deficit. B&CE regularly reviews The People s Pension against the Government established NEST (National Employment Savings Trust) and other major Master Trusts in the market place. This analysis includes a value for money assessment. B&CE s Chief Operating Officer shall provide with a yearly value for money review each January. The Trustee is to review these reports at each first quarter meeting. This is documented in Business Plan and is to be recorded in meeting agendas and minutes. These annual reviews form part of s triennial value for money review documented in Business Plan. Communication of costs and charges 13. A complete and accurate list of the types of costs and charges incurred by members and employers is documented, monitored and approved. The People s Pension has a charging structure of a 0.5% Annual Management Charge (AMC). LGIM s & HSBC s investment service fees are deducted from the AMC paid to, with no additional cost to members. The People s Pension Trust Deed and Scheme Rules dated 25 October 2013 are the governing documents by which the Scheme is currently administered and managed. These set out the specific circumstances in which and/or Founder has a power to impose a charge on a participating employer or Scheme member. The Trustee and Founder have agreed a Balance of Powers Schedule setting out a complete and accurate list of the types of costs and charges incurred by members and employers. In the event of any subsequent change to the Scheme Rules, and Founder will consider what effect, if any, these changes have on the Balance of Powers Schedule. 20

21 and SAFETY OF ASSETS & RECORDS ASSESSING VALUE ASSESSMENT OF INVESTMENT OPTIONS PEOPLE GOVERNANCE 14. Disclosure of information on costs and charges borne by members is provided to employers at the point of selection and is complete and accurate. A simple transparent charging structure is one of the key foundations of The People s Pension and the Scheme s simple 0.5% Annual Management Charge (AMC) is mentioned in literature provided to employers (as well as to members and advisers). Employers can also find confirmation of the Scheme s 0.5% AMC on The People s Pension website at www. thepeoplespension.co.uk/employers. Communications to B&CE s employer customers, including B&CE s recent newsletter in July 2014, explain that employees of those employers who were B&CE customers on 31 January 2012 and have remained so until their staging date, benefit from a 0.0% AMC during the 12 months following their staging date. A Costs & Charges document is available to employers upon request, which sets out the charging structure of The People s Pension in the format as prescribed by the Pension Charges Made Clear: Joint Industry Code of Conduct. 15. Disclosure of information to members of costs and charges (rates (%) and amounts ( )) are complete and accurate. A simple transparent charging structure is one of the key foundations of The People s Pension. Upon joining the Scheme, new members are provided with a Member s Booklet confirming there is just one simple Annual Management Charge (AMC) of 0.5% of the value of their fund, which is automatically reflected in the value of their fund. The Member s Booklet states that this equates to just 50 pence a year for every 100 invested. Scheme members can also find confirmation of the Scheme s simple 0.5% AMC on The People s Pension website at The Scheme members annual benefit statement also states that there is an AMC of 0.5% and that this is reflected in the price of the units. A Costs & Charges document is also available to Scheme members upon request, which sets out the charging structure of The People s Pension in the format as prescribed by the Pension Charges Made Clear: Joint Industry Code of Conduct. Scheme members of employers who were B&CE customers on 31 January 2012 and have remained so until their staging date, benefit from a 0.0% AMC during the 12 months following their staging dates. This is conveyed to entitled members through their annual benefit statements, which show the percentage of the AMC applied to their fund. 21

22 and SAFETY OF ASSETS & RECORDS ASSESSING VALUE ASSESSMENT OF INVESTMENT OPTIONS PEOPLE GOVERNANCE ASSESSMENT OF INVESTMENT OPTIONS Appropriateness of the default strategies 16. The design and on-going suitability of the default strategies is regularly reviewed and monitored. This review is documented and approved. The Trustee, in conjunction with an authorised, regulated investment adviser, regularly reviews the suitability of the funds and the Statement of Investment Principles. The Trustee s initial investment adviser carried out an Investment Review in August This confirmed that the Scheme s default investment strategy was appropriate to meet the expected needs of Scheme members. This was underpinned by the Trustee s ambition to provide members with a good quality scheme with a low cost. The Trustee has taken professional advice from the current investment adviser on the default strategy available to members. The investment adviser also provides advice to on an ad hoc basis, as and when requested. The Trustee formally reviews the suitability of the default strategy each year and the next review is due to be carried out in March This is documented in Business Plan and is to be recorded in meeting agendas and minutes. These annual reviews form part of s triennial review of the default strategy documented in Business Plan. 17. The performance of the default strategies and funds within the default strategies are regularly reviewed and monitored. This review is documented and approved. The Trustee s review of the performance of the default strategy is carried out at each quarterly Trustee Board meeting and is documented in meeting agendas and minutes. The Trustee monitors the default strategy through the LGIM investment report for the quarter, presented to at each Trustee Board meeting. The quarterly LGIM investment report contains information about the performance of the funds compared with the total return of the relevant benchmark index. The Scheme offers passive tracking funds. The Trustee monitors whether the fund performance during the quarter is within expected tolerances for the asset class in question. Any greater variance would be queried with LGIM. Appropriateness of the other investment options (ie, non-default strategy investment options) 18. The range and risk profile of other investment options are documented, approved and regularly reviewed for suitability. This review is documented. The Trustee, in conjunction with an authorised, regulated investment adviser, regularly reviews the suitability of the funds and the Statement of Investment Principles. The Trustee s initial investment adviser carried out an Investment Review in August This confirmed that the non-default funds offered by the Scheme were appropriate to meet the expected needs of Scheme members. The Trustee aimed to keep investment options simple by giving members a small number of funds to choose from. 22

23 and SAFETY OF ASSETS & RECORDS ASSESSING VALUE ASSESSMENT OF INVESTMENT OPTIONS PEOPLE GOVERNANCE The Trustee has taken professional advice from the current investment adviser on the non-default funds available to members. The Trustee formally reviews the suitability of the non-default funds each year and the next review is due to be carried out in March This is documented in Business Plan and is to be recorded in meeting agendas and minutes. 19. The performance of other investments options is regularly reviewed against relevant investment and (where available) industry benchmarks. This review is documented and approved. The Trustee has taken professional advice on the range of investment options available to Scheme members. The Trustee s review of the performance of the non-default strategy investment options is carried out at each quarterly Trustee Board meeting and is documented in meeting agendas and minutes. The Trustee monitors the non-default strategy investments options through the LGIM investment report for the quarter, presented to at each Trustee Board meeting. The quarterly LGIM investment report contains information about the performance of the funds compared with the total return of the relevant benchmark index. The Scheme offers passive tracking funds. The Trustee monitors whether the fund performance during the quarter is within expected tolerances for the asset class in question. Any greater variance would be queried with LGIM. Identification of investment and assessment against them 20. A complete and accurate description of all investment options is maintained and approved. Upon joining the Scheme, new members are provided with a Member s Booklet providing a complete and accurate description of the different investment profiles and fund choices available to Scheme members. Scheme members can also find these details on The People s Pension website at A Statement of Investment Principles setting out a complete and accurate description of all investment options is also available to employers and Scheme members upon request. The Trustee s review of periodic changes to the Member s Booklet is documented in meeting minutes. 21. A Statement of Investment Principles (SIP) is documented, approved and regularly reviewed. The Trustee has prepared, after taking advice from an authorised, regulated investment adviser, a written Statement of Investment Principles setting out the principles governing how decisions about investments must be made. The Trustee reviews LGIM s investment report for the quarter at each quarterly Trustee Board meeting and this is documented in meeting agendas and minutes. The Statement of Investment Principles was last updated in September The Trustee is to review the Statement of Investment Principles each year at the first quarter meeting. This is documented in Business Plan and is to be recorded in meeting agendas and minutes. These annual reviews form part of s triennial review of the Statement of Investment Principles documented in the Trustee Business Plan. 23

24 and SAFETY OF ASSETS & RECORDS ASSESSING VALUE ASSESSMENT OF INVESTMENT OPTIONS PEOPLE GOVERNANCE PEOPLE Conflicts of interest 22. Conflicts of interest are identified, recorded and managed in accordance with a defined policy which is regularly reviewed and approved. The Trustee has a written Conflicts of Interest policy. This sets out s process for determining when a potential conflict situation might arise, how would evaluate this and how will deal with it once it has been identified. The Trustee also maintains a Conflicts of Interest register recording any actual conflicts of interest as well as any potential and perceived conflicts of interest. In their letters of appointment, directors declared they were not aware of any conflict of interest or potential conflict of interest arising from their appointment. The Trustee directors also agreed to notify B&CE and other Trustee directors if they became aware of any such conflict during their appointment. At each quarterly Trustee Board meeting is asked whether there are any conflicts of interest to be considered. This is documented in meeting agendas and minutes. In their letters of engagement, service providers are asked to inform of any conflict of interest that may arise as soon as reasonably possible. The Trustee is to review their Conflicts of Interest policy and Conflicts of Interest log each year at the fourth quarter meeting. This is documented in Business Plan and is to be recorded in meeting agendas and minutes. Fit and proper trustees 23. Fitness and propriety requirements are recorded and managed in accordance with a defined policy which is regularly reviewed and approved. The existing Trustee directors are PAN Governance LLP and Alan Pickering. PAN Governance LLP act as Corporate Director and is represented by Steve Delo and Andrew Cheeseman. Steve Delo is a former President of the Pensions Management Institute and Andrew Cheeseman is a prominent industry figure. Alan Pickering has over 40 years experience across a wide variety of pension industry areas, including serving as chair of the National Association of Pension Funds (NAPF). In their letters of appointment, the existing Trustee directors have included declarations that they have the expertise and experience of acting as a trustee of an occupational pension scheme. The Articles of Association of sets out circumstances in which a Director is required to vacate their office. The Trustee last reviewed their fitness and propriety requirements policy in August Prior to their appointment, any new Trustee will be required to complete a declaration confirming their fitness and propriety. 24

25 and SAFETY OF ASSETS & RECORDS ASSESSING VALUE ASSESSMENT OF INVESTMENT OPTIONS PEOPLE GOVERNANCE Each director of is to make a declaration to B&CE and other Trustee directors each year at the fourth quarter meeting, confirming their fitness and propriety and undertaking to notify B&CE of any changes in these circumstances. This is documented in Business Plan and is to be recorded in meeting agendas and minutes. 24. The fitness and propriety of trustees is regularly reviewed and monitored prior to appointment and thereafter. This review is documented and approved. In their letters of appointment, the existing Trustee directors included declarations that they have the expertise and experience of acting as a trustee of an occupational pension scheme. Prior to their appointment, any new Trustee will be required to complete a declaration confirming their fitness and propriety. A review of the fitness and propriety of each Trustee Director is carried out by the Chairman of each year at the fourth quarter meeting. This is documented in Business Plan and is to be recorded in meeting agendas and minutes. 25. Trustee skills and knowledge are managed and maintained in accordance with an approved training programme. The training programme is regularly reviewed and updated. The training undertaken by each of director of is recorded in their individual training logs. As documented in Trustee meeting agendas and minutes, B&CE provides with briefings on matters relevant to the Scheme such as legislative changes. At each quarterly Trustee Board meeting directors also consider whether there are any other matters that they would like training on. This is documented in meeting agendas and minutes. The skills and knowledge of directors is included in a review carried out by the Chairman of each year at the fourth quarter meeting. This is documented in Business Plan and is to be recorded in meeting agendas and minutes. 25