Master Trust Authorisation
We worked with the Trustees and Senior Management team of several of the largest Master Trusts in the UK, to formulate their Authorised application to the Pensions Regulator.
This covered detailed review and investigation of the legislative and regulatory requirements of the five key areas against their current practice:
• Fit and Proper Persons
• Financial Sustainability
• Business Plan
• Systems and Processes
• Continuity Strategy
We then were involved in the drafting of all required documentation, submission to TPR and dealing with subsequent queries, leading to successfully becoming Authorised .
We have subsequently worked with a number of Master Trusts to complete and submit their Annual Supervisory Returns , required to keep their Authorised status.
Transfer of DC Schemes to Master Trusts
We have worked with numerous clients to consider the future of their DC scheme or DC section of a DB/DC hybrid scheme and the subsequent transfer of members and assets to a master trust . The projects involved detailed consideration of the benefits and issues of the different options, full market reviews of potential providers and implementation assistance (legal requirements, member communications, asset transition etc.)
In each case, members have benefited from enhanced investment, communication options and lower charges whilst the sponsoring employer has seen a reduction in the running costs of the arrangement.
The Pensions Regulator’s Codes of Practice
We undertook a significant project to analyse the position of a large DB/DC hybrid scheme of a FTSE-30 organisation against the Pension Regulator’s Codes of Practice .
This included an initial detailed summary of the content of each Code and specific requirements of the sponsoring employer and the Trustee. We then compared the current practice of all elements of the way the scheme was being run with the requirements of each Code of Practice.
This covered administration procedures, pension team staffing requirements, trustee documentation, member communication materials, trustee and support staff training, trustee nominations, investment review and monitoring procedures, processes for payment of contributions, internal controls, internal disputes procedures, revisions to the Scheme’s Contribution Schedule and Statement of Investment Principles and general legislative requirements.
The review lead to a number of changes being recommended and implemented together with formal procedures designed to maintain full compliance with the Codes.
Lifetime and Annual Allowance changes
We worked with a very large hybrid DB/DC scheme to communicate the impact of the changes in Lifetime and Annual Allowances. This included an analysis of the membership for potentially impacted employees, drafting of relevant member communication materials and numerous employee presentations and 1-1 sessions.
Interim Pensions Manager
We have ‘stepped in’ to the role of interim Pensions Manager for a FTSE100 organisation on two occasions during periods of reduced resources and high workload.
Our work included managing a sale and transfer of a large subsidiary, dealing with general member queries and complaints, drafting proposal papers for the Trustee, leading projects covering GMP Equalisation, Pension Dashboard readiness, updating the scheme website and modelling tools and a segmented member communication exercise.
We acted as Scheme Secretary to a large master trust during a significant period of change within the scheme and saw this through to its eventual winding-up.
Our work included organising and taking minutes for trustee meetings, running the scheme calendar, negotiation with suppliers and ensuring general compliance with reporting and regulatory requirements.
DC Trusteeship / Governance
We have provided trustee and governance services to DC master trusts . This has covered regular governance areas including administration and investment performance monitoring, production of Trustee Report and Accounts and ‘Value For Money’ judgement for the Chairman’s DC Statement.
In addition, we have been involved with specific projects including: investment review , review of member communication materials, update of annual benefit statements , administration issues following failure of the administration system to implement lifestyle switching correctly, detailed discussions around wind-up and related costs and potential transfer vehicles.
Asset Manager DC Proposition Design
We worked closely with a major asset manager to design and implement a DC proposition .
We started by gaining a full understanding of their current capabilities and strengths, together with details of their existing client base and distribution channels . We then produced a series of short reports to bring them up to date with the current UK DC pensions landscape.
- Innovations in the DC market over the last 20 years (successes and failures).
- Propositions of the major current providers (investment managers, insurance companies and consultants).
- Industry best practice approaches to administration, communications and decumulation services.
- DC delivery vehicles including trust and contract based schemes and master trusts.
- Profiles of typical DC ‘buyers’ and their different requirements.
- The role and influence of the major consultants.
- Sales and marketing /distribution options.
- Impact of the latest requirements of the charging cap .
- Requirement (costs, resources, partnerships) for delivery and implementation.
Following presentations of these reports to senior management we worked with the investment managers and the sales and marketing team to develop a clear and focused DC proposition and implementation plan for them to take to market.
Master trust implementation
We have worked with a number of organisation on various stages of the feasibility, design and implementation of master trust ‘products’. This included detailed consideration and input in the following areas:
- Business case – Market analysis, profitability forecasts, alternative options.
- Competitor analysis – Existing and potential future master trust providers, product features, strengths and weaknesses.
- Administration options – In-house or outsource.
- Investment approach – Off the shelf or in-house fiduciary managed funds, lifestyle or target date funds.
- Governance requirements – Independent trustee requirements, roles and specifications, individual or corporate Trustee
- Contents of Trust Deed and Rules – Drafting of high level specification/requirements, review of initial draft against requirements.
- Member communications – Drafting and strategy.
- Post retirement provision – What post-retirement benefits should be offered from within the scheme.
- Project management – Required steps for implementation, oversight of progress.
- Sales and marketing programme – Drafting and strategy.
We fully reviewed the capabilities of an existing in-house administration team and made recommendations for changes to the internal processes and relevant staffing in order to maximise the efficiency of the team.
We then thoroughly appraised the major outsourced administration providers in the market place and negotiated very competitive ‘best offer’ terms. We presented our findings both to the company and its trustees, ultimately leading to a very successful outsourcing of scheme administration, with transferring staff and trustees all happy with the outcome.
Post-retirement benefit provision
We worked with a DC scheme to consider their options as to how they might offer pension flexibilities to their members. This included whether they should be offered from within the scheme or from an external provider.
To do this we considered the practical implications of offering the options through the scheme on areas such as tax, payroll, member communication, administration and investment .
We then compared this with the implications of selecting a ‘preferred’ provider to offer ‘at retirement’ options, including the different types of ‘product’ (master trust and self-invested personal pensions), the criteria that could be used to select a provider, how they could be subsequently monitored and the legal position of the trustees in making what could be perceived as a recommendation to members.
Following a decision to use a preferred provider, we assisted the scheme to select a suitable provider and implement to the new processes including fully revising the approach to member communications in the years leading up to retirement.
We have great experience in this area, covering the whole merger process of many different scheme types.
In one case, we produced and presented a feasibility study and business case to get the appropriate approvals from the Board. We then developed proposals for the trustees and company representatives (including those from HR and Finance), before helping with the formal negotiation of merger terms, effectively acting as facilitators between the company and trustees.
We also produced detailed communications to members (from the company and trustees) explaining the rationale and benefits of the changes, leading to a successful merger of the two schemes and significant cost savings.
Collective Defined Contribution Scheme
We worked with a significant employer and a new Trustee board on their investigations into the Pension Regulator’s Authorisation requirements for a Collective Defined Contribution scheme.
We provided initial guidance and training on all aspects of the requirements, based on our extensive experience of Authorising Master Trusts, suitably adapted for the differences between them.
We then produced detailed financial modelling, analysis and documentation to the Trustees for their Authorisation application, covering in particular, the Cost Assets and Liabilities Plan (CALP – effectively the financial elements of a Business Plan) and their Continuity Strategy (contingency planning to protect members in the event of eg the insolvency of the sponsoring employer).
Following our assistance in responding to the Pension Regulator’s queries on the application, we were very pleased to receive their formal Authorisation of the scheme.
We’ve worked with FTSE 100 employers, and many smaller employers, on auto-enrolment implementation and re-enrolment projects.
For example, we have guided employers through the auto-enrolment requirements and the implementation process. We pulled together employee data from multiple payroll sources, assessed the predicted costs based on various contribution schedules and possible take-up rates, and helped to develop pension scheme design. We then co-ordinated implementation activity across the trustee, pension providers, HR, payroll, finance, pensions administrators, systems suppliers and other third-parties.
Finally, we helped produce employee communications for consultation and auto-enrolment purposes.