DC Explained: 101 Buzz Words

Transcription

1 DC Explained: 101 Buzz Words By Melissa Haggith, Manager 1. AAF AAF stands for Audit and Assurance Faculty. It is part of the Institute of Chartered Accountants England and Wales (ICAEW). They have developed an assurance framework for DC schemes to ensure Trustees have effective controls in place and to give confidence to employers that schemes are well run. 2. ABI The Association of British Insurers the DWP have called upon the ABI and TPR to weed out DC Schemes that offer poor value for money. 3. Absolute Return Fund A type of fund where the manager has wide discretion over the Assets that it will hold. The aim of the fund is always to produce a positive return. Most will have a target of a specified percentage above the return available on cash. 4. Accumulation Stage The period between joining and retiring during which contributions and investments build up. 5. Active Member Discounts Some providers offer discounts on Charges to those Members still active in a pension scheme (i.e. still contributing) whilst applying higher Charges to those Members that have left but kept their pot of money in the scheme. The OFT has called for these to be banned. 6. Administration Reports A report of the administrative activities, allowing trustees to keep a close eye on their performance against agreed service levels, contribution dates, complaint cases etc 7. Age-Related Contributions The Contribution Rate in some schemes is different depending on the age of the Member. Lower compulsory Contribution Rates for younger Members which increase with age. A recent case (HK Danmark v Experian) ruled they were lawful under EU Antidiscrimination law 1

2 8. Annual Management Charge The financial institutions charge for managing the schemes investments held with them. Normally a percentage of the scheme's investments. 9. Annual Flat Rate Administration Charge A fixed cost per Member, or per scheme, payable annually to cover the cost of record keeping and other administrative costs. 10. Annuity When a DC Member reaches retirement they give the money that has built up in their pension pot to an Insurer who then pays the Member an agreed pension for the remainder of the Member s life. Various quotes are normally obtained from different insurers before the Member decides who to take the Annuity out with (see Open Market Option) this is usually the insurer that offers to pay the biggest pension. An Annuity can have different extras added to it eg a spouse s pension or annual increases. The Annuity is usually a legal contract between the Member and Insurer. 11. Annuity Broker An individual or company that shops around for a Member at retirement to find the best Annuity. A DC Scheme will provide an Annuity Broker for its Members. 12. Annuity Rates Determines how much every 1 of retirement income will cost. The higher the rate, the more expensive the Annuity and the less you will receive as income. So if the rate is 20:1 it will cost 20 to buy every 1 of retirement income. If the rate is 8:1 it will only cost you 8 to secure 1 of pension. 13. Assets What Member funds are invested in. Could include; Equities, GILTs, cash, property and Annuities and possibly more complex investments. 14. Auto Enrolment Auto-Enrolment means workers being automatically enrolled into their employer's Qualifying Pension Scheme without any active decision on their part. Between 1 October 2012 and 2017 all Eligible Workers will have to be auto-enrolled into a Qualifying Pension Scheme which must meet minimum standards in respect of the benefits it provides or the amount of contributions paid to it. 15. Benchmark When a scheme considers its Investment Strategy (with the help of a qualified investment advisor), as well as choosing the investments it will also choose the method of measuring their performance. This is done by choosing a Benchmark for example one of dozens of published Indexes such as the FTSE 100 to compare. 2

3 16. Benefit Statements All Members of a DC Scheme (or a Defined Benefit scheme with DC benefits under it) must be issued with a Benefit Statement every 12 months showing amongst other things the contributions paid over the scheme year and the value of the fund. 17. Bonds Fundamentally a Bond is a loan. The loan is usually for a defined period (although some are "irredeemable" i.e. Perpetual loans) during which interest is paid (the coupon). The interest will be defined at the time that the loan is taken as a fixed rate or as an index linked rate (see Index Linked Bond). The loan can be to a company, an organisation (e.g. A local authority), a supranational body (e.g. The World Bank) or the government (UK Government Bonds are known as "gilts" because they are gilt edged i.e. highly secure). Bonds can be bought and sold on a secondary market. The price is determined, by and large, by the market s perception of the likelihood that the loan issuer will (a) pay interest when due and (b) be able to repay the loan when its term expires. This means that higher risk entities have to pay higher rates of interest. 18. Charges These are fees deducted from the funds. There are different Charges including Annual Management Charges, Transaction Charges, Consultancy Charges There is a lot of focus on Charges levied on DC Schemes. According to NAPF an additional 0.25% applied to the total funds each year can reduce the final pension by 15%. Many factors currently impact the Charges that are being applied: DWP and TPR are applying pressure on the industry to keep Charges low The Retail Distribution Review and the Pensions Bill 2013 have removed the ability for advisors to take commissions and fees from Members funds OFT review of the competitiveness of the market is due to report in Autumn 2013 DWP has proposed (via the Pensions Bill 2013) it has the power to cap fees on schemes used for Auto-Enrolment (supplemental to its more general power to impose charge limits) 19. Consultancy Charges These are Charges deducted from a Members pension pot or contributions and paid to a third party (Trustee and administration fees do not come under this). These Charges would have been set out in an agreement made between the third party and the employer only. New regulations effective 14 September 2013 bans Consultancy Charges in Auto- Enrolment schemes. At the time of writing this ban does not cover agreements that were in place before 10 May 2013 however the DWP are looking to extend this ban to cover these too. 20. Contract Based Pension A type of DC arrangement (such as Group Personal Pensions). The scheme is run by the contract provider (normally an insurance company). Despite the employer paying into the scheme and offering it to the workforce, it is not party to the contract itself the contract is between the insurer and the Member. There are no trustees. This type of arrangement makes up around 23% of the DC marketplace. 3

4 21. Contribution Rate This is the amount that Members and their employers pay into the scheme per month. It is usually a % of their pay deducted directly from their wages and paid over to the scheme. The amounts will be set out in the scheme Rules. 22. Data Controller Introduced by the Data Protection Act 1998, they control and are legally responsible for all the personal data held on Members and must comply with various rules. 23. Data Processor Introduced by the Data Protection Act, they process personal data but they are not responsible for it or control it. They take instructions from the Data Controller. 24. DC Scheme (Defined Contribution) A scheme where a Member and their employer pay contributions into a pot earmarked solely for that Member. At retirement the resultant pot is used to buy benefits. The size of these benefits will depend on the contributions paid in, investment returns, Charges deducted and Annuity Rates at the time. Also known as Money Purchase 25. DC Code (of Practice) This is the name given to TPRs 13 th Code of Practice. Its focus is on the governance and administration of Occupational Defined Contribution Trust Based Pension Schemes. It provides schemes with 6 DC Principles to follow which are backed by 31 DC Quality Features. 26. DC Efficiency Basically getting more from the contributions paid in. Historically, DC Schemes have not been run well enough to get the best result from the Contributions paid in by the employer and Member e.g. investments hadn t been monitored closely; the Charges deducted were not regularly reviewed resulting in Members having a smaller pot of money at retirement. 27. DCMT (Defined Contribution Master Trust) See MasterTrust 4

5 28. DC Principles There are 6 DC Principles contained in the DC Code. They cover governance and administration of DC, Trust Based Schemes. The 6 principles are: 1) Essential Characteristics be durable, fair and provide GMOs 2) Establishing Governance comprehensive governance framework with transparent and agreed accountabilities and responsibilities 3) People are capable 4) Ongoing governance and monitoring 5) Administration well administered 6) Communication to Members to enable informed decisions These 6 Principles are backed up by 31 Quality Features 29. DC Quality Features There are 31 Quality Features in TPRs 13 th Code of Practice, the DC Code. These back up the 6 DC Principles contained in the DC Code. The 31 Quality features cover the following areas: 1) Understanding Trustee Duties 2) Reviewing and Updating Skills and Knowledge 3) Adequate Internal Controls 4) Setting Investment Objectives and a Default Strategy 5) Security and Liquidity of Scheme Assets 6) Monitoring and Reviewing the Default Strategy 7) Reviewing Investment Fund Performance 8) Investment Decision-Making and Trustee Knowledge 9) Acting in the Best Interests of Members and Beneficiaries 10) Governance of Conflicts of Interests 11) Appointing Advisers and Managing Relations 12) Scheme Record Keeping 13) Maintaining Contributions and Processing Core Scheme Financial Transactions 30. Decumulation Stage When a Member retires the fund they have built up while being a Member of the scheme is converted into retirement income. There are many options available to Members at this stage and the decisions made can make a big difference to the income received in retirement. Options available include buying an Annuity, taking Income Drawdown, Spouse s pension, guarantee, increases, and dependent pension. 31. Deed of Adherence This is the legal document that legally allows an employer to participate in the scheme 32. Default Investment Strategy (the Default ) In a DC Scheme Members are usually given a choice of funds in which to invest their contributions. The Trustees however have to also provide a Default Strategy for those Members that do not choose the funds they want their contributions invested in. Those Members will have them automatically invested in the Default Strategy. The Default Strategy must be appropriate to the population of Members. Various surveys show that 85% of Members will use the Default Fund so careful consideration is required in terms of exposure to risk and the need to provide Good Retirement Outcomes for the Member. 5

6 33. Defined Ambition (DA) A new concept in occupational pension schemes. It s a mix between Defined Benefit and Defined Contribution. The aim is to combine the best features of both in some way e.g. a guaranteed return in a DC Scheme. 34. Defined Contribution (DC) (also known as Money Purchase) See DC Scheme 35. Defined Contribution Investment sub Committee (DCIC) A specialised committee formed for the sole purpose of researching the options available for a DC Scheme s Investment Strategy. Investment Strategy has a significant impact on a Members end benefits at retirement and therefore the DCIC should form a crucial part of any DCs Good Governance function. 36. Definitive Deed & Rules (also known as Trust Deed & Rules) The Deed is a legal document that brings the Rules into force. It can also set out the Trustees and Employer s powers. The Rules set out how the scheme should be operated. All actions, benefits, decisions etc must be carried out in accordance with the Rules. Only regulations will override the Rules. 37. Eligible Jobholder/Worker The employees that must be automatically enrolled into a Qualifying Workplace Pension. The criteria of an Eligible Jobholder is as follows: 1) between 22 and State Pension Age 2) working in the UK 3) earning more than 9,440 (2013/14 tax year) Any employee not meeting the above criteria must be given the option to join. 38. Employee Engagement This is getting the employee/member interested in their retirement provision and interested in wanting to make informed decisions rather than leaving it to chance. The amount of information and how that is presented is key so that it gets their attention, interest and understanding. 39. Equities (Shares) One of the major investment types. When you own equity (or shares) in a business you are the beneficial owner of a slice of that business. When that business makes a profit, you may get a slice of that profit (the dividend). The shares also come with other rights, for example, to vote in key company decisions. If you own enough shares you may even get a seat on the company s board. Shares can be bought and sold. The price you will get or pay will depend on the markets perception of the value of those shares. Share prices can be impacted by factors relating to that company, the sector it works in, the Market as a whole and other factors. 6

7 40. Equity Risk Premium The extra investment return expected to be generated over and above the return on gilts in return for taking the extra risk of investing in Equities. 41. Ethical Social Governance (ESG) A screening process undertaken increasingly more frequently by potential investors using non-financial performance measures. One measure of the screening process is staff welfare which includes good retirement provision such as a well run DC Scheme. 42. Fund Manager They are responsible for the day-to-day management of the investment funds and are accountable to the trustees for their performances. 43. Financial Conduct Authority (FCA) They regulate the Financial Services Industry in the UK. They are currently working closely with The Pensions Regulator to ensure regulatory frameworks for Trust-based and Contract-Based Pensions offer robust governance and fair treatment for Members. 44. Freestyle Investment Options Aimed at Members who have a good understanding of investments and want to take an active role in monitoring those investments and switching accordingly. 45. Good Employer Outcomes (GEOs) Essentially the benefits to an employer if their DC Scheme is run successfully. These include: 1) being able to manage employees out of the business when it suits them instead of when the employee can afford to leave 2) a good reputation as an employer giving them the ability to attract and retain motivated happy employees 3) protection against formal complaints or litigation if staff reach retirement with inadequate DC savings 4) Helps towards the ESC screening score a good DC Scheme counts towards staff welfare which is part of the ESC screening. ESC screening is being used more frequently by investors 5) Cost efficiency and control thus enabling employers to make the most out of their investment. 46. Good Governance Essentially it is: 1) doing the right things at the right time and in the right way; and 2) identifying a Strategic Objective, having a plan to achieve it and executing that plan For DC Schemes this means focussing on GMOs (and also GEOs) 7

8 47. Good Member Outcomes (GMOs) A GMO is an adequate income in retirement : There are 6 elements needed to achieve this: 1) appropriate contribution decisions 2) appropriate investment decisions 3) effective and efficient communication 4) protection of Assets 5) value for money 6) appropriate decumulation decisions 48. Good Retirement Outcomes (GROs) What people deem to be a GRO varies. For some it is a certain financial outcome, others a certain standard of living in retirement and others it s meeting expectation levels. In order for a Member to obtain a Good Retirement Outcome they need effective communication and advice during both the Accumulation Stage and Decumulation Stage. 49. Governor The person/company/body responsible for the task of ensuring GMOs and Good Governance. 50. HK Danmark v Experian This case was taken to the European Court to determine whether under EU antidiscrimination law it was lawful for Members of DC Schemes to pay differing Contribution Rates depending on their age (Age-Related Contributions). It was ruled that it was lawful. In reaching their decision the court considered the legitimate aims of the company and the trustees younger Members had a lower compulsory Contribution Rate so it was affordable to them and older Members had a higher Contribution Rate to ensure they had saved enough for their retirement. 51. Hybrid Scheme This is a scheme where the benefits are a mixture of Defined Contribution and Defined Benefit. 52. ICAEW The Institute of Chartered Accountants in England and Wales. The ICAEW are currently developing an Assurance Framework for DC Schemes with the aim to ensure trustees have effective controls in place and to give confidence to employers that schemes are well run. 8

9 53. Income Drawdown When a Member reaches retirement, instead of purchasing an Annuity with their fund, they can instead take a regular income directly out of it. There are certain restrictions surrounding how much can be taken, for how long and who can take Income Drawdown. 54. Investment Monitoring These are regular reviews of the chosen investments to ensure the Investment Strategy is working successfully. This monitoring process would normally include comparing the performance of the schemes investments with the performance of the chosen Benchmark to determine whether the scheme investments are under or over performing. 55. Investment Strategy A plan of action with the scheme s investments that will hopefully end with a desired result. 56. Independent Trustee A Trustee otherwise independent of the employer and pension scheme. Becoming increasingly common and beneficial now that the industry is under such scrutiny by the government and regulatory bodies. 57. Information Commissioners Office (ICO) Responsible for enforcing the Data Protection Act. The Data Controllers and Data Processors must register with the ICO 58. Index Linked Bond A type of Bond issued by the UK government where the interest rate increases from year to year to reflect an index (normally the retail prices index). 59. Investment Portfolio A collection of investment funds chosen by the Trustee for Members to chose to invest their contributions in. Normally includes a variety of risk. 60. Lifetime Allowance The total amount of pension saving by an individual within any pension scheme that receive tax relief. 61. Longevity The lengths of time pensioners live for. 9

10 62. Master Trust A DC, Trust Based, Multi-Employer occupational pension scheme. The Trust Deed and Rules cover all employers with each employer having its own section setting out its benefit and contribution levels. They all share the same service providers and trust wide governance structure. By being part of a Master Trust employers and Members have the benefits associated with a Trust Based pension but at a reduced cost. 63. Member Anyone who is or was contributing into the scheme or who has contributions paid into the scheme on their behalf. Active Members are those still contributing, deferred Members have left but kept their pot of money in the scheme. 64. Member Communication Any literature read by Members. Includes posters in the workplace, welcome packs, annual statements, retirement packs, booklets, leaflets. Can be issued in writing, face to face, via text, etc 65. Money Purchase Scheme (also known as Defined Contribution) See DC Scheme 66. Multi-Employer Scheme A scheme with more than one participating employers. These schemes can either be for associated (e.g. parent company and subsidiaries) or non-associated companies (e.g. Master Trusts). 67. Myners Report Published 10 years ago it introduced the 10 Principles of Good Governance covering decision making, objectives, asset allocation, mandates, Benchmarks, performance measuring and reporting. 68. NAPF The National Association of Pension Funds. It has 1,300 Members from pension providers to advisers. They are a leading body in the pensions industry lobbying government and regulators on behalf of its Members. 69. NAPF Workplace Pension Survey A regular survey carried out by NAPF of the UK population to obtain the general publics view on pensions and savings. 70. NEST The National Employment Savings Trust. NEST is a Trust-Based occupational Defined Contribution Scheme. Starting from 1 October 2012, UK employers are required to automatically enrol Eligible Jobholders in a Qualifying Workplace Pension Scheme. Designed for low earners and those who are new to pension saving, NEST is one of the pension schemes that employers can use to meet these duties. Alternatively, employers will be able to use their existing pension arrangements or put in place new arrangements, provided they meet certain Qualifying Criteria. 10

11 71. Office of Fair Trading (OFT) Established in 1973 it is the UK s consumer and competition authority. It published a report on the Defined Contributions pensions market. Its main concerns in the DC market relate to Charges, Governance and Scale. 72. Opt Out Under Auto-Enrolment all employees (see Eligible Jobholders/Workers) are automatically enrolled to their employers workplace pension. Contributions will automatically be deducted and paid into the scheme. For these contributions to cease and for the Member to leave the scheme they will have to elect in writing to Opt-Out. 73. Open Market Option (OMO) When a Member retires and wants to take his pension they can either use the Annuity provider elected by the Trustees or take an Open Market Option. The OMO is essentially shopping around to get the best Annuity (pension) for their pot of money. 74. Participating Employer Any employer participating in the scheme that is not the Principal Employer. Also known as Associated Employers. 75. Payment Schedule This sets out the contributions and expenses the employer must pay to a DC Scheme and their timings. Trustees must consider reporting breaches to TPR. 76. Pension Liberation It s the transfer of pension savings into an arrangement that allows early access to the funds. Tax Charges and penalties are incurred as well as substantial Charges often resulting in the loss of over half the pension fund. Most pension liberation schemes are fraudulent. 77. Pensions Bill 2013 Amongst other things it removed the ability for advisers to take commissions and fees from Member s funds. Proposes a flat rate state pension of 144 pw. 78. Pension Quality Mark Ready (PQM Ready) Devised by the NAPF it is an award given to Multi-Employer Schemes or Master Trusts. The purpose is to show present and potential employers (and advisers) that a certain standard has been achieved. The standards met cover trustee training, Member Communication material, administration processes, Investment Strategy & monitoring, Employee Engagement, retirement processes & support and scheme Charges. The standards achieved DO NOT include the individual employer sections therefore the PQM Ready logo cannot be used in any Member Communication. 11

12 79. Pension Quality Mark (PQM) Devised by NAPF, it is an award given to Multi-Employer Schemes and Master Trusts to show that certain standards have been met. The standards include all those under the PQM Ready award but goes further by assessing the standards under the individual employer sections including contribution levels. The PQM Ready logo can be used on Member Communications. 80. Phasing The practise of having increasing compulsory Contribution Rates as a Member gets older. The aim behind it is to ensure adequate funds have built up to secure an adequate retirement income. This practise was challenged in the case of HK Danmark v Experian but was ruled lawful. 81. Pre-retirement seminar A seminar put on for Members nearing retirement to get them to think about all the options open to them so they can make informed decisions and secure the best and most appropriate (e.g. with or without spouse s pension, increases etc) retirement income possible with their pension pot. 82. Principal Employer The employer that set up the scheme. A scheme may have many employers taking part, only 1 can be the principal. Others are normally referred to as participating. The original Principal Employer will be the employer that set the scheme up (they would have signed the Trust Deed & Rules). A participating employer can take over as the Principal Employer. The Principal Employer will be able to make certain decisions and have various powers under the Rules. 83. Proactive Default It is the regular review of the Default Fund to ensure it is still capable of achieving Good Member Outcomes, Good Employer Outcomes and Good Retirement Outcomes. Important as surveys show 85% of Members use the Default Fund. 84. Professional Trustee Experienced trustees that charge for their services. As they are independent from the employer there is no conflict of interest. They have vast experience and specialist skill enabling trustee boards to tackle difficult decisions. 85. Qualifying Criteria The criteria a DC Scheme needs to meet to be used for Auto-Enrolment. It needs to provide certain minimum contribution levels, be tax registered, allow employees to join immediately upon becoming an Eligible Jobholder/Worker, doesn t require the employee to consent to join and doesn t require them to do anything before they can join eg submit a form. 86. Qualifying Pension Scheme To meet the requirements of Auto-Enrolment, employers must automatically enrol their Eligible Workers in a Qualifying Pension Scheme. Qualifying Pension Schemes must meet certain Qualifying Criteria. 12

13 87. Quantitative Measurement A way for a Member to measure the progress towards their desired Targeted Outcomes enabling them to adjust their contributions accordingly. 88. Risk Management An essential part of any Good Governance strategy. It identifies all the risks a DC Scheme is exposed to and puts a plan in place to mitigate them. Areas of risk include administration, communications, fraud, investment, operational, regulatory, and decumulation. 89. Risk Register This records all the areas where the scheme is exposed to risk and outlines the processes in place to mitigate them. 90. Robust Default Fund The Default Fund has to be research based and appropriate for the membership eg not too risky if the majority of the Members are over Scale In relation to the DC this relates to the size of the DC Schemes available. There is concern over whether the DC Schemes available for Auto-Enrolment are large enough to generate value for money for the Members. Very large DC Schemes have stronger bargaining powers and can negotiate Charges which could have a significant impact on the Members pot. 92. Scheme Calendar A diary to ensure all scheme tasks are planned for and take place at the right times 93. Service Level Agreement A contract with the service provider e.g. administrator which sets out all the services they will provide. It will normally include turnaround times and agreed fees. The service provider will/should be measured against this agreement. 94. Single Tier Pension The government announced proposals in January 2013 to replace the current basic and additional pension state system with a single tier pension. Will be introduced in Sponsoring Employer See Principal Employer 13

14 96. Staging Date The date an employer has to introduce Auto-Enrolment to its workforce. Auto-Enrolment is being introduced over a 6 year period starting in All employers will have a Staging Date, when this is will depend on the size of its PAYE as at 1 April 2012 with the largest employers being first and the smallest at the end of the 6 year period. Staging Dates can be brought forward but only certain small employers can put their Staging Dates back. 97. Strategic Objective This is what the Governors of a DC Scheme aim to achieve. It is thought the ideal is to provide robust and Proactive Defaults as their investments and provide an environment where Members have the ability to make, informed decisions. 98. Super Trust A very large Master Trust. The NAPF nominally define a Super Trust as having Assets in excess of 10bn and being not for profit. 99. Target Date Funds An investment fund that aims to produce a specified return by a given date or date range Targeted Outcomes Desired levels of outcome are/should be determined by the employer as part of the scheme design process. This could include the percentage of replacement income. The target levels will be based on Member profiles. Any Investment Strategy should try to ensure these Targeted Outcomes are met. The Targeted Outcomes should be communicated to members and informed of the likelihood of their DC pot meeting these outcomes Tax Free Cash Sum (known as a Pension Commencement Lump Sum) The amount of benefit that can be taken as cash on retirement. The payment is not subject to tax. PTL would be happy to help you if you require any further explanation of the terms and activities listed in this document (or indeed any other term you would like defined that is not listed), please do not hesitate to contact us on or by ing info@ptluk.com And if that wasn t enough, here are 9 more

15 102. The Association of Corporate Trustees (TACT) Set up in 1974 to achieve high standards of trustee services. It considers and takes action on relevant issues including law, taxation, investment and regulations. Its members are the leading Corporate Trustees in the UK who between them look after more than 1trillion The Pensions Ombudsman The Pensions Ombudsman investigates and decides upon complaints and disputes in a scheme when all other attempts to resolve the issue have failed TPAS The Pensions Advisory Service provides free information, advice & guidance on all aspects of pensions to Members and can help with disputes. The Trustees need to make the Members aware of its existence TPR The Pensions Regulator the body that regulates the work based pension schemes in the UK TPRs Code of Practice TPR produces Codes of Practice to assist schemes in being compliant with the various pension laws and regulations. There are currently 13 Codes available at Codes of practice The Pensions Regulator 107. Transaction Charges What the Fund Managers charge every time there is a transaction (buying or selling) on the funds they invest. There is a move to have Fund Managers publicize Transaction Charges in a consistent way so pension schemes can see the costs and make direct comparisons between Fund Managers Trivial Commutation If a Member s benefit is very small the entire amount can be taken as cash. The amount may be subject to tax in part Trust Based Pension Established using a Trust Deed and Rules. It is managed by Trustees whose duty is to act in the interests of the beneficiaries. They are responsible for the administration, investment and running of the scheme but have the power to delegate these tasks Un-pensioned Employees that currently have no retirement provision outside of the state scheme. Auto-Enrolment was introduced to ensure these un-pensioned employees had some private pension provision. 15