DC OCCUPATIONAL PENSION SCHEMES. Time for Trustees and Sponsoring Employers to consider their options

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1 DC OCCUPATIONAL PENSION SCHEMES Time for Trustees and Sponsoring Employers to consider their options

2 Time to face up to the pressures of your DC Occupational Pension Scheme Record Keeping Administration Cost and Fees TKU Legal Advice Governance WHY REVIEW YOUR DC PENSION SCHEMES? With the advent of auto-enrolment, membership of Defined Contribution (DC) arrangements has grown exponentially. It is therefore unsurprising that legislation and regulation is turning its focus to the DC world, specifically targeting trustee knowledge, understanding and governance arrangements. However, it is not just the new, auto-enrolment DC schemes that will come under increasing scrutiny, legacy trust based DC schemes and DC sections of schemes will be subject to the changing DC landscape too. Consequently, many trustees and sponsors of trust based DC schemes are concerned about the amount of time and money that must be expended on an arrangement which may be outdated, and have little perceived value by scheme members, many of whom may no longer be employees of the sponsor. There are solutions...

3 Example of DC Occupational Pension Scheme Wind-up Timeline +2 MONTHS CONSIDERING Consultancy review including: y Contract y Provider y Contract charges y Fund choices y Fund adjustment on transfer y Trust Deed & Rules y Member communication y Member options on wind-up y Fee or commission +12 MONTHS +10 MONTHS +8 MONTHS +6 MONTHS +4 MONTHS Trustees and Employer agree action plan Member communication detailing options Member responses received ACTION/AGREEMENT Initial steps including: y Member tracing y Unit reconciliation y Data cleanse y Working with the Pensions Regulator y Trigger wind-up of the scheme y Draft member communications COMMUNICATION Member Decision Period including: y Trustees proposed contract y Retirement y Members own policy y Wind-up lump sum y Member presentations TRANSFER OF ASSETS Final Steps including: y Member / IFA queries y Transfer member assets y Close trustee bank account y Final set of scheme accounts Scheme wound-up

4 POTENTIAL BENEFITS MAY INCLUDE: For the Member y Ownership of benefits for the member y Greater contract flexibility y Portability y Modern contracts providing greater fund choice and online access y Attractive charging structure y Greater understanding of consolidated pension benefits For the Sponsoring Employer y Reduction or removal of schemes charges/fees for administration y Key staff focusing on their business role y Reduction in any potential liabilities y Modern contract aligned with auto-enrolment responsibilities y Easier to integrate into overall flexible benefit package y Key staff time freed-up to develop and improve overall benefits package y Consolidation of historic pension schemes For the Trustees y Removal of ongoing liability and responsibility y No requirement for election of MNT/ENT y Can be retained for Governance Committee purposes y Provider can deal directly with any member issues/complaints POTENTIAL IMPLICATIONS OF INACTION: For the Member y Continuing deferral to the trustees for all decisions regarding pension provision y Traditional contracts provide restricted fund choice y Pension scheme information may be harder to access For the Sponsoring Employer y Ongoing charges / fees for pension administration, legal fees, schemes accounts, levies to tpr y Key staff time used for running a pension scheme y Ongoing liabilities y Auto-enrolment responsibilities can lead to multiple pension scheme arrangements y Responsibility and liability for ex-members of staff For the Trustees y Ongoing liability and responsibility until last member transfers from the scheme y As a result of April 2015 changes, additional communication responsibilities and the potential for ongoing responsibility for members post-retirement y Requirement for election of MNT/ENT y Increased focus from tpr on Trustee Responsibility for DC schemes y Time spent ensuring compliance with tpr Trustee Knowledge & Understanding requirements

5 JLT EMPLOYEE BENEFITS EXPERIENCE Since 1996, JLT Employee Benefits (JLT) has operated a dedicated Discontinuance Division with a nationwide footprint. We have over 60 employees who provide project management, consulting, administration and actuarial services specifically to Defined Benefit (DB) and Defined Contribution (DC) Pension schemes that are in the process of wind-up. JLT is appointed to the PPF s Specialist Administration Services and Actuarial Valuation Panels, and is accredited for ISO27001 and ISO9001. CONTACTS IAN EADIE Head of Discontinuance Consulting t: +44 (0) ian_eadie@jltgroup.com TOM POOK Head of Discontinuance Delivery t: +44 (0) tom_pook@jltgroup.com THE TEAM IAN EADIE Head of Discontinuance Consulting Ian has overall responsibility for the Discontinuance Division. Whilst he has involvement across all workstreams, his area of specialism is the PPF, where he undertook various roles, over a period of 8 years, before joining JLT in August Ian is keen to ensure the team is consistently exceeding client expectations. TOM POOK Head of Discontinuance Delivery Tom joined JLT in 2007 and has spent the last five years working exclusively with schemes in wind-up and PPF Assessment. An Associate of the Pensions Management Institute, Tom is responsible for the Pension Administration area of the Division and specialises in the design and implementation of complex pension schemes windup plans for Defined Contribution and Defined Benefit schemes. PHILIP MORAN Discontinuance Consultant Philip joined the JLT group in 2001 and started by providing advice to members at retirement. Since 2008, Philip has provided consultancy services to employers and trustees of DC Pension schemes on matters relating to DC scheme review, reduction in scheme responsibilities / liabilities and scheme wind-up. PHILIP MORAN Discontinuance Consultant t: +44 (0) philip_moran@jltgroup.com JLT Employee Benefits. A trading name of JLT Benefit Solutions Limited. Authorised and regulated by the Financial Conduct Authority. A member of the Jardine Lloyd Thompson Group. Registered Office: St Botolph Building, 138 Houndsditch, London EC3A 7AW. Registered in England No VAT No March