Annual Governance Statement of the Ethika Auto Enrolment Pension Scheme at 31st March 2017.
Prepared in accordance with Regulation 23 of the Occupational Pension Schemes (Scheme Administration) Regulations 1996.
1. MANAGEMENT OF THE SCHEME
The trustees of the Ethika Auto Enrolment Pension Scheme at 31st March 2017 are Barclay Cavendish Trustees Limited, Mr Micheal Hilton and Mr Stuart Porter. The directors of Barclay Cavendish Trustees have 50 years’ experience between them in financial services.
The principal employer may, at any time, appoint or remove a trustee. The corporate entity, Barclay Cavendish Trustees Limited acts within its Articles of Association and Memorandum of Understanding when considering the appointment or removal of directors of Barclay Cavendish Trustees Ltd.
The Trustees meet quarterly to consider issues affecting the pension scheme along with ad hoc meetings to consider any urgent business.
2. DEFAULT ARRANGEMENT
2.1 The Ethika Auto Enrolment Pension Scheme has been specifically designed to meet the challenges of the Auto Enrolment Process offering unrivalled flexibility to our members. The scheme will be made up of a carefully selected blend of Equity and Debt Investments whose profile is consistent with a sustainable, responsible and positive impact investment mandate conceived to deliver strong and secure returns. The investments managed by an out sourced Fund Manager who will be targeted on blended returns of 6-8% whilst maintaining high levels (80% +) of liquidity to cater for the often-transient nature of occupational scheme members.
2.2 A copy of the latest statement of investment principles prepared in accordance with regulation 2A of the Occupational Pension Schemes (Investment) Regulations 2005 is attached.
2.3 The fund manager is Grosvenor Butterworth Financial Services Limited who are regulated by the Financial Conduct Authority.
2.4 A review was undertaken in the last quarter of the year which resulted in a new Statement of Investment Principles from April 2017.
2.5 It is important to note, when understanding the financial development of the scheme, that this is the first complete year of the scheme. Automatic Enrolment will develop significantly from April 2018 and again from April 2019.
3. CORE FINANCIAL TRANSACTIONS
3.1 The requirements of regulation 24 of the Regulations have been met and core financial transactions have been processed promptly and accurately by:
• Operated a “4 eyes” policy on all investment transactions
• Reconciled cash books to scheme documents
• Ensured safe custody of scheme documents with the scheme accountant
• Processed investments of member funds within 7 days of receipt in the scheme bank account
• Regular reconciliations of member records and funds received from employers
4. CHARGES AND TRANSACTION COSTS
4.1 The level of charges and transaction costs applicable to the default fund[s] during the Scheme year are 0.75% of Funds Under Management, plus transaction costs.
4.2 The range of the levels of charges and transaction costs applicable to the Scheme’s other investment funds during the Scheme year are the same at 0.75% of Funds Under Management.
4.3 The Trustees have assessed the extent to which the charges and transaction costs set out above represent good value for members and have concluded:
• In the first year of membership the 0.75% represents good value when compared to the alternative charging structures in the Auto Enrolment sector, the contribution charge plus percentage or the flat fee plus percentage.
• The rate of 0.75% is very competitive compared with the cost of a personal pension.
• That changing the charging policy to a flat rate plus smaller percentage would be better for members in the longer term and therefore will review this during quarter one of 2017/18.
• The trustees have reviewed the costs of administration undertaken by the administrator of the scheme and compared against the fee paid. The trustee considers that the scheme has a very good input from the administrator for the fee paid.
5. TRUSTEE KNOWLEDGE AND UNDERSTANDING
5.1 The requirement under section / of the Pensions Act 2004 (requirement for knowledge and understanding) has been met during the Scheme year by:
• Over 50 years of experience between the Directors of Barclay Cavendish Trustees within Financial Services with two of the directors having financial services backgrounds. Mr Hilton has extensive business experience and Mr Porter works within financial services.
• Having undertaken, in full or part, the regulators learning toolkit modules
• Having reviewed the scheme rules and trust deeds in light of governments changing outlook on pension schemes and master trusts.
5.2 The combined knowledge and understanding of the Directors of Barclay Cavendish Trustees Limited and of the other Trustees, together with the advice which is available to it enables it to properly exercise its functions as Trustee by:
• Appropriate delegation to the administrator
• The support of the Fund Manager
• The advice sought from the network of unconnected business relationships
• Access to legal and accountancy advice from the scheme solicitor and accountant
6. NON-AFFILIATION OF TRUSTEES AND MEMBER REPRESENTATION
6.1 The requirements of regulation 27(2) of the Regulations for a majority of the Trustees to be non-affiliated have been met during the Scheme year by:
• The appointment of two independent trustees who do not have a business relationship with the Scheme, Barclay Cavendish Trustees or the Principle Employer
• The trustees intend to appoint during 2017/18 at least one non-affiliated trustee.
6.2 Mr Stuart Porter and Mr Micheal Hilton were appointed during the Scheme year. The requirements for an open and transparent appointment process were met by:
• The advertising of those roles to employers within the region
6.3 The arrangements the Trustees have put in place to encourage members of the Scheme or their representatives to make their views on matters relating to the Scheme known to the Trustees comprise:
• Trustees intend to appoint a member trustee in the last quarter of the financial year.
• Annual Benefit Statements will seek nominations
• The scheme will have an online portal that will allow members to express a point of view
• Regular newsletters to members on issues that affect them as a whole.
• Regular newsletters to members on known lifestyle issues.
Signed for and on behalf of Ethika Auto Enrolment Pension Scheme
Barclay Cavendish Trustees
21st September 2017