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 for the period 6 September 2014 to 31 March 2016 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 relating to The People s Pension Scheme ( The People s Pension or the Scheme ) that are in place and were operating during the period. The People s Pension is a Master Trust a multi-employer workplace pension scheme founded by B&CE. It was launched to help employers meet their automatic enrolment duties. The Scheme is a flexible and portable workplace pension that s open to businesses of all sizes and in all sectors. It s designed to make automatic enrolment simple for employers and employees ( Scheme members ). In November 2015 an enhanced service and support package for new and existing customers was launched. B&CE Holdings Limited, formerly named Building and Civil Engineering Holidays 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). B&CE is a not-for-profit organisation with over 70 years experience of providing financial benefits to its members. Before launching The People s Pension, B&CE had successfully pioneered a form of automatic enrolment (since 2003) through its EasyBuild Stakeholder Pension Scheme. B&CE currently manages assets of 2.9 billion, with 3.5 million members and provides financial benefits to over 1,300,000 active individuals on behalf of over 29,000 corporate accounts 1. B&CE is an organisation that operates for the benefit of its members it s for people, not profit. The People s Pension has more than 2 million members, making it the UK s largest private sector automatic enrolment pension scheme. The People s Pension is governed by The People s Pension Trustee Limited (), a wholly-owned subsidiary of the Founder. The Trustee is responsible for running the Scheme and for looking after all the pots of money held by the Scheme. The Trustee board was incorporated on 30 May It is entirely independent of B&CE and made up of the following individuals: Steve Delo, Chairman A former President of the Pensions Management Institute, Steve sits on a number of trustee boards of UK pensions schemes. He has won individual professional awards, including Business Presenter of the Year, Pensions Personality of the Year and Independent Trustee of the Year. Andrew Cheeseman, Trustee Director Andrew is a prominent industry figure, described as a hugely effective, no-nonsense independent trustee. He has previously held senior management and consulting roles in various major pensions businesses. 1 Information correct as at 31 March

4 and Alan Pickering, CBE Trustee Director Alan 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 former National Association of Pension Funds. Sue Lewis, Trustee Director appointed 1 April 2016 An experienced Board member and independent consultant, Sue is Chair of the Financial Services Consumer Panel and a Consumer Advocate Member of the Chartered Insurance Institute s Professional Standards Board. She has held various senior roles in the Civil Service. Ruston Smith, Trustee Director appointed 1 April 2016 Ruston is Group Director People, Pensions and Insurable Risk at Tesco PLC. He s a Non-Executive Director and past Chairman of the former National Association of Pension Funds. Ruston has an MBA and is a Fellow of the Pensions Management Institute and the Institute of Management. 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. Strong governance is a key feature of The People s Pension. The Trustee operates a detailed governance schedule. It is committed to exceptional customer service and support and to providing value for members. 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: Defaqto 5 Star Rating for Auto-Enrolment (2015/2016) Winner of Best Governance Structure (Pensions Insight DC Awards 2015) DC Provider of the Year (UK Pensions Awards 2014) Master Trust Provider of the Year (Pension and Investment Provider Awards 2014). 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, description and operation 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 relates to the period 6 September 2014 to 31 March 2016 in accordance with the Master Trust Supplement to AAF 02/07. 2

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. (i) section 5 of s report fairly presents the control that relate to the control referred to above which were in place throughout the period 6 September 2014 to 31 March 2016; (ii) the control described in section 5 of s report were suitably designed to provide reasonable, but not absolute, assurance that the specified control would have been achieved if the described control operated effectively throughout the period; and (iii) the control that were tested were operating with sufficient effectiveness to provide reasonable but not absolute assurance that the related control were achieved throughout the period 6 September 2014 to 31 March Signed on behalf of : Steve Delo Chairman of The People s Pension Trustee Limited 25 May

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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. 6

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. 97

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 (i.e. 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. 8

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 9

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

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. SAFETY OF ASSETS & RECORDS Commercial & business risks CONTROL OBJECTIVE 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, were invested in mainstream pooled investment funds accessed via a contract of long-term insurance. This was initially with Legal & General Assurance (Pensions Management) Limited ( PMC ), who are part of the Legal & General Group. In January 2016, Scheme assets were moved from PMC across to the new Investment Manager, State Street Global Advisors Limited ( SSGA ). These assets are now invested in mainstream pooled investment funds accessed via a contract of long-term insurance with Managed Pension Funds Limited ( MPF ). MPF is SSGA s flagship UK-domiciled pooled fund vehicle for pension fund investors. Where members elected to invest in the Scheme s Shariah Fund, the assets were held by HSBC Global Asset Management ( HSBC ). The underlying fund is structured as a SICAV (a type of open ended investment company) and domiciled in Luxembourg. These assets are now also accessed via a contract of long-term assurance with MPF. 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 the Investment Manager s performance for the quarter at each quarterly Trustee Board meeting and this is documented in meeting agendas and minutes. The People s Pension Trust Deed and Scheme Rules are the governing documents by which the Scheme is currently administered and managed. These were last updated on 17 November 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

14 and SAFETY OF ASSETS & RECORDS ASSESSING VALUE ASSESSMENT OF INVESTMENT OPTIONS PEOPLE GOVERNANCE 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 and updated on 1 December 2015, as recorded in meeting agendas and minutes. procedure The Trustee is to review the Scheme Discontinuance Plan each year. This is documented in Business Plan and is to be recorded in meeting agendas and minutes. We obtained a copy of the Scheme Discontinuance Plan. We obtained and inspected Business Plan which included s review of the Scheme Discontinuance Plan each year. Business & disaster recovery CONTROL OBJECTIVE 2 Data and systems are backed up regularly, retained offsite 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). B&CE sends a transactional SQL Server data log via its dedicated secure internet link to its own equipment at this secure site every 15 minutes during site operational hours. Upon the application of this transactional data log, B&CE s backup core database is in step with that of the primary database 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. An is also sent should the backup fail. 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 restore the core databases 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. 12

15 and SAFETY OF ASSETS & RECORDS ASSESSING VALUE ASSESSMENT OF INVESTMENT OPTIONS PEOPLE GOVERNANCE 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 13 February procedure 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 s last Business Recovery exercise was carried out on 13 February B&CE s internal audit function shall provide with a report following each exercise. B&CE s Chief Information Officer shall provide with a report commencing in 2015 which includes the robustness of B&CE s data backup and recoverability. The Trustee reviewed this report at the March 2016 quarterly meeting. This is documented in Business Plan and is to be recorded in meeting agendas and minutes. The People s Pension Scheme came under the control environment of PMC and HSBC (both now replaced by SSGA), all of which have provided assurance reports with Information and Technology control including data back up. We obtained and inspected Business Plan, quarterly Trustee Board agendas and minutes and confirmed that had reviewed the internal audit function s report and Chief Information Officer s report, as evidence of the stated process being followed. We obtained and inspected the Chief Information Officer s report. We obtained and inspected Business Plan, quarterly Trustee Board agendas and minutes and confirmed that had reviewed the Chief Information Officer s report on the robustness of B&CE s data backup and recoverability, as evidence of the stated process being followed. We obtained the internal control reports for PMC and HSBC s Luxembourg Branch and SSGA s Service Organization Report

16 and SAFETY OF ASSETS & RECORDS ASSESSING VALUE ASSESSMENT OF INVESTMENT OPTIONS PEOPLE GOVERNANCE CONTROL OBJECTIVE 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. procedure The Trustee s review of B&CE s capacity is carried out periodically during the period at quarterly Trustee meetings 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. We obtained and inspected Business Plan, quarterly Trustee Board agendas, minutes and Scheme Administration Reports and confirmed that had reviewed B&CE s capacity, as evidence of the stated process being followed. 14

17 and SAFETY OF ASSETS & RECORDS ASSESSING VALUE ASSESSMENT OF INVESTMENT OPTIONS PEOPLE GOVERNANCE CONTROL OBJECTIVE 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 auto-enrolment 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 are the governing documents by which the Scheme is currently administered and managed. These were last updated on 17 November Employers wishing to participate in the Scheme are admitted to the Scheme by the Founder in accordance with these 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. procedure Contractual arrangements are made between the Founder and the participating employer with responsibilities of each party clearly defined within the Rules. The Trustee periodically monitors the employer admission process and this is documented in meeting agenda and minutes. Through discussion and observation we reviewed the electronic admission process including the binding of employers. We obtained examples of the Deeds, Memorandum and Trustee agreement, as evidence for the stated process being followed. We obtained and inspected the quarterly Trustee Board agendas and minutes and confirmed that periodically monitors the employer admission process, as evidence of the stated process being followed

18 and SAFETY OF ASSETS & RECORDS ASSESSING VALUE ASSESSMENT OF INVESTMENT OPTIONS PEOPLE GOVERNANCE Data quality & security CONTROL OBJECTIVE 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 . 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. B&CE regularly reviews the completeness and accuracy of the Common data and Conditional data it holds for members of The People s Pension. B&CE has an Intrusion Prevention System deployed to counter the threat from malicious activities on its perimeter UTM Firewall. 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. 16

19 and SAFETY OF ASSETS & RECORDS ASSESSING VALUE ASSESSMENT OF INVESTMENT OPTIONS PEOPLE GOVERNANCE procedure 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 s Chief Information Officer shall provide with a report commencing in 2015 which includes B&CE s IT and processes. The Trustee reviewed this report at their March 2016 quarterly meeting. This is documented in Business Plan and is to be recorded in meeting agendas and minutes. We obtained and inspected Business Plan, quarterly Trustee Board agendas and minutes and confirmed that had reviewed the completeness and accuracy of member data, as evidence of the stated process being followed. We obtained and inspected Business Plan, quarterly Trustee Board agendas and minutes and confirmed that had reviewed any data breaches via the Scheme Administration Reports, as evidence of the stated process being followed. We obtained and inspected the Chief Information Officer s report. We obtained and inspected Business Plan, quarterly Trustee Board agendas and minutes and confirmed that had reviewed the Chief Information Officer s report on the IT and processes, as evidence of the stated process being followed

20 and SAFETY OF ASSETS & RECORDS ASSESSING VALUE ASSESSMENT OF INVESTMENT OPTIONS PEOPLE GOVERNANCE CONTROL OBJECTIVE 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 swipe card access and their Facilities section holds administrative access to the control system. B&CE s administrators using its in-house system are allocated user names and a password is required to access servers, pc s and other network devices. These passwords expire frequently and users are prompted to change them. The system requires best practice from users in relation to setting passwords. Active Directory permissions segregate levels of access and VLAN security is in place. Role based administration is in place within the IT teams and physical floor ports are protected by Network Access control. 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 Prevention 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 security. Reusable apparatus such as memory disks have data erased in house. Non-recyclable components are transported securely to a site where they are destroyed. Physical access to server rooms is restricted to authorised IT personnel and a video monitoring system recording all access events has been installed in B&CE have employed a permanent IT Security Manager who is responsible for all aspects of data and technical security policies, and monitoring of security systems. procedure B&CE s Chief Information Officer shall provide with a report commencing in 2015 which includes B&CE s IT and processes. The Trustee reviewed this report at their March 2016 quarterly meeting. This is documented in Business Plan and is to be recorded in meeting agendas and minutes. We obtained and inspected the Chief Information Officer s report. We obtained and inspected Business Plan, quarterly Trustee Board agendas and minutes and confirmed that had reviewed the Chief Information Officer s report on the IT and processes, as evidence of the stated process being followed. 18

21 and SAFETY OF ASSETS & RECORDS ASSESSING VALUE ASSESSMENT OF INVESTMENT OPTIONS PEOPLE GOVERNANCE CONTROL OBJECTIVE 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. procedure B&CE s Chief Information Officer shall provide with a report commencing in 2015 which includes B&CE s IT and processes. The Trustee reviewed this report at their March 2016 quarterly meeting. This is documented in Business Plan and is to be recorded in meeting agendas and minutes. We obtained and inspected the Chief Information Officer s report. We obtained and inspected Business Plan, quarterly Trustee Board agendas and minutes and confirmed that had reviewed the Chief Information Officer s report on the IT and processes, as evidence of the stated process being followed

22 and SAFETY OF ASSETS & RECORDS ASSESSING VALUE ASSESSMENT OF INVESTMENT OPTIONS PEOPLE GOVERNANCE Protection of assets CONTROL OBJECTIVE 8 Member assets or entitlements are safeguarded from loss, misappropriation and unauthorised use in accordance with a defined policy. The Trustee has a written Statement of Investment Principles setting out the principles governing how decisions about investments must be made. All Scheme assets, except those invested in the Scheme s Shariah Fund, were invested in mainstream pooled investment funds accessed via a contract of long-term insurance. This was initially with PMC. In January 2016, Scheme assets were moved from PMC across to the new Investment Manager, SSGA. These assets are now invested in mainstream pooled investment funds accessed via a contract of long-term insurance with MPF. MPF is SSGA s flagship UK-domiciled pooled fund vehicle for pension fund investors. Where members elected to invest in the Scheme s Shariah Fund, the assets were held by HSBC. The underlying fund is structured as a SICAV (a type of open ended investment company) and domiciled in Luxembourg. These assets are now also accessed via a contract of long-term assurance with MPF. A Member Protection Statement is available to Scheme members upon request and is also available on B&CE s website. The People s Pension has a daily valuation cycle with automated electronic transaction instructions sent between B&CE s inhouse 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. 20

23 and SAFETY OF ASSETS & RECORDS ASSESSING VALUE ASSESSMENT OF INVESTMENT OPTIONS PEOPLE GOVERNANCE procedure The Trustee is to review the Statement of Investment Principles periodically, at least every three years and without delay after any significant change in investment policy. This is documented in Business Plan and is to be recorded in meeting agendas and minutes. The Trustee reviews the Investment Manager s or Investment Adviser s quarterly investment reports. The Trustee will periodically review any stock lending and collateralisation during the period at Trustee Investment Committee meetings. This will be documented in meeting agendas and minutes. B&CE s internal audit function shall provide with a s Report commencing in 2015 which includes the effectiveness of B&CE s valuation and unit reconciliation process. The Trustee reviewed this report at their March 2016 quarterly meeting. This is documented in Business Plan and is to be recorded in meeting agendas and minutes. We obtained and inspected Business Plan, quarterly Trustee Board agendas, minutes and Statement of Investment Principles, and confirmed that had reviewed the Statement of Investment Principles at least every three years and without delay after any significant change in investment policy, as evidence of the stated process being followed. We obtained and inspected Business Plan, quarterly Trustee Board agendas and minutes, Trustee Investment Committee agendas and minutes and confirmed that the Trustee had reviewed the Investment Manager s or Investment Adviser s quarterly investment reports, including details of stock lending and collateralisation, as evidence of the stated process being followed. We obtained and inspected the B&CE s internal audit function s s Report. We obtained and inspected Business Plan, quarterly Trustee Board agendas and minutes and confirmed that the Trustee had reviewed the internal audit function s s Report on the effectiveness of B&CE s valuation and unit reconciliation process, as evidence of the stated process being followed

24 and SAFETY OF ASSETS & RECORDS ASSESSING VALUE ASSESSMENT OF INVESTMENT OPTIONS PEOPLE GOVERNANCE CONTROL OBJECTIVE 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 the HSBC Bank PLC setting out a list of authorised signatories and the authorisation levels for accepting payment instructions. It is impractical for to give their authorisation to the Investment Manager for each and every payment. However, the Investment Manager will only ever accept instructions to change the details of the authorised Trustee bank account if the instructions are signed by two authorised signatories made up of directors and B&CE directors. procedure B&CE s internal audit function shall provide with a s Report commencing in 2015 which includes B&CE s payment processes and. The Trustee reviewed this report at their March 2016 quarterly meeting. This is documented in Business Plan and is to be recorded in meeting agendas and minutes. We obtained and inspected the B&CE s internal audit function s s Report. We obtained and inspected Business Plan, quarterly Trustee Board agendas and minutes and confirmed that had reviewed the internal audit function s s Report on B&CE s payment process and, as evidence of the stated process being followed. 22

25 and SAFETY OF ASSETS & RECORDS ASSESSING VALUE ASSESSMENT OF INVESTMENT OPTIONS PEOPLE GOVERNANCE CONTROL OBJECTIVE 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 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 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 and is also available on B&CE s website (see above). After completing a review of member communications offered by the Scheme at the beginning of 2015, agreed the key Scheme documentation which should be referred to for approval. 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. procedure The Trustee s review of any changes to key Scheme documentation is carried out periodically during the period at quarterly Trustee Board meetings and is documented in the Trustee meeting agendas and minutes. The Trustee will monitor changes to key Scheme documentation through B&CE s Scheme Administration Reports and other reports relating to changes in scheme documentation provided to 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. We obtained and inspected Business Plan, quarterly Trustee Board agendas, minutes and Scheme Administration Reports and confirmed that had monitored details of any changes to key Scheme documentation and those documents that have been re-approved during the quarter, as evidence of the stated process being followed

26 and SAFETY OF ASSETS & RECORDS ASSESSING VALUE ASSESSMENT OF INVESTMENT OPTIONS PEOPLE GOVERNANCE CONTROL OBJECTIVE 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 Statement of Investment Principles were updated in September 2014 and again in August The Trustee ratified this latest version in their meeting on 2 September All Scheme assets, except those invested in the Scheme s Shariah Fund, were invested in mainstream pooled investment funds accessed via a contract of long-term insurance. This was initially with PMC. In January 2016, Scheme assets were moved from PMC across to the new Investment Manager, SSGA. These assets are now invested in mainstream pooled investment funds accessed via a contract of long-term insurance with MPF. MPF is SSGA s flagship UK-domiciled pooled fund vehicle for pension fund investors. Where members elect to invest in the Scheme s Shariah Fund, the assets were held by HSBC. The underlying fund is structured as a SICAV (a type of open ended investment company) and domiciled in Luxembourg. These assets are now also accessed via a contract of long-term assurance with MPF. procedure The Trustee, in conjunction with an authorised, regulated investment adviser, regularly reviews the suitability of the regulated investment funds available to members. The Trustee is to review the Statement of Investment Principles periodically, at least every three years and without delay after any significant change in investment policy. This is documented in Business Plan and is to be recorded in meeting agendas and minutes. The Trustee monitors the performance of the funds available to members through the Investment Manager s Reports or B&CE s Investment Overview Reports or Scheme Administration Reports. The quarterly Investment Manager s or B&CE s Investment Overview Reports or Scheme Administration Reports contain information about the performance of the funds compared with the total return of the relevant benchmark index. We obtained and inspected Business Plan, quarterly Trustee Board agendas and minutes, Trustee Investment Committee agendas and minutes and confirmed that had, in conjunction with an authorised, regulated investment adviser, regularly reviewed the suitability of the regulated investment funds available to members, as evidence of the stated process being followed. We obtained and inspected Business Plan, quarterly Trustee Board agendas and minutes and confirmed that had reviewed the Statement of Investment Principles periodically and without delay after any significant change in investment policy, as evidence of the stated process being followed. We obtained and inspected Business Plan, quarterly Trustee Board agendas and minutes, Trustee Investment Committee agendas and minutes and confirmed that had reviewed the Investment Manager s quarterly investment report or B&CE s Investment Overview Reports or Scheme Administration Reports which contains information about the performance of the funds compared with the total return of the relevant benchmark index, as evidence of the stated process being followed. 24

27 and SAFETY OF ASSETS & RECORDS ASSESSING VALUE ASSESSMENT OF INVESTMENT OPTIONS PEOPLE GOVERNANCE ASSESSING VALUE Assessment of value for money CONTROL OBJECTIVE 12 A value for money review is undertaken and this review is documented, approved and findings auctioned. Value for Members 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 periodically 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 yearly Value For Member assessment. procedure B&CE shall provide with a Value For Money report in The Trustee reviewed this report at their March 2015 quarterly meeting and this is to be recorded in meeting agendas and minutes. B&CE and will produce a Value For Members report each year from We obtained and inspected a copy of the 2015 Value For Money report. We obtained and inspected meeting agenda and minutes for the March 2015 quarterly meeting which included s review of the Value For Money report, as evidence of the stated process being followed. We obtained and inspected a copy of the 2016 Value For Members report

28 and SAFETY OF ASSETS & RECORDS ASSESSING VALUE ASSESSMENT OF INVESTMENT OPTIONS PEOPLE GOVERNANCE Communication of costs and charges CONTROL OBJECTIVE 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). The Investment Managers 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 are the governing documents by which the Scheme is currently administered and managed. These were last updated on 17 November 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. From 23 November 2015, employers with a staging date of January 2016 onwards who sign up to participate in the Scheme must now pay a one off set up fee of 500 plus VAT. Employers with a 2015 staging date who sign up from 1 January 2016 onwards will also be charged this fee. Employers who sign up through an intermediary will pay a reduced charge of 300 plus VAT. Existing employers will not be charged, and there is no charge for adding additional accounts for subsidiary or associated employers. 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. procedure 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. We obtained and inspected meeting minutes which included s review of the Balance of Powers Schedule following the change to the Scheme Rules, as evidence of the stated process being followed. 26

29 and SAFETY OF ASSETS & RECORDS ASSESSING VALUE ASSESSMENT OF INVESTMENT OPTIONS PEOPLE GOVERNANCE CONTROL OBJECTIVE 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 Communications to B&CE s employer customers have explained 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. procedure Arrangements as stated above. We confirmed that the arrangements are still in place, as evidence of the stated process being followed. CONTROL OBJECTIVE 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. 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. procedure Arrangements as stated above. We confirmed that the arrangements are still in place, as evidence of the stated process being followed

30 and SAFETY OF ASSETS & RECORDS ASSESSING VALUE ASSESSMENT OF INVESTMENT OPTIONS PEOPLE GOVERNANCE ASSESSMENT OF INVESTMENT OPTIONS Appropriateness of the default strategies CONTROL OBJECTIVE 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 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. In June 2015 decided that a Trustee Investment Committee should be established with responsibility for the continuous monitoring of: member behaviours, identifying trends and recommending future strategy; developments within the market; and setting asset allocation. The Trustee decided that this Trustee Investment Committee would be chaired by Mr Alan Pickering and made up of the each of Directors. procedure The Trustee formally reviews the suitability of the default strategy each year. This is documented in Business Plan and is to be recorded in meeting agendas and minutes and Trustee Investment Committee meeting agendas and minutes. We obtained and inspected Business Plan, quarterly Trustee Board agendas and minutes, Trustee Investment Committee agendas and minutes and confirmed that had reviewed the suitability of the default strategy, as evidence of the stated process being followed. 28

31 and SAFETY OF ASSETS & RECORDS ASSESSING VALUE ASSESSMENT OF INVESTMENT OPTIONS PEOPLE GOVERNANCE CONTROL OBJECTIVE 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 monitors the default strategy, through the Investment Manager s investment report for the quarter or Investment Adviser s Reports presented to at each Trustee Board meeting. The quarterly Investment Manager s investment report or B&CE s Investment Overview Reports or Scheme Administration Reports contain 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 the Investment Manager. procedure 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 and Trustee Investment Committee meeting agendas and minutes. We obtained and inspected Business Plan, quarterly Trustee Board agendas and minutes, Trustee Investment Committee agendas and minutes and confirmed that monitors the performance of the default strategy, as evidence of the stated process being followed

32 and SAFETY OF ASSETS & RECORDS ASSESSING VALUE ASSESSMENT OF INVESTMENT OPTIONS PEOPLE GOVERNANCE Appropriateness of the other investment options (ie, non-default strategy investment options) CONTROL OBJECTIVE 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. The Trustee has taken professional advice from the current investment adviser on the non-default funds available to members. procedure The Trustee formally reviews the suitability of the non-default funds each year. This is documented in Business Plan and is to be recorded in meeting agendas and minutes and Trustee Investment Committee meeting agendas and minutes. We obtained and inspected Business Plan, quarterly Trustee Board agendas and minutes, Trustee Investment Committee agendas and minutes, and confirmed that had reviewed the suitability of the non-default funds during the year, as evidence of the stated process being followed. 30

33 and SAFETY OF ASSETS & RECORDS ASSESSING VALUE ASSESSMENT OF INVESTMENT OPTIONS PEOPLE GOVERNANCE CONTROL OBJECTIVE 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 monitors the non-default strategy investments options through the Investment Manager s investment report for the quarter or B&CE s Investment Overview Reports or Scheme Administration Reports presented to at each Trustee Board meeting. The quarterly Investment Manager s investment report or B&CE s Investment Overview Reports or Scheme Administration Reports contain 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 the Investment Manager. procedure 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 and Trustee Investment Committee meeting agendas and minutes. We obtained and inspected Business Plan, quarterly Trustee Board agendas and minutes, Trustee Investment Committee agendas and minutes and confirmed that had reviewed the performance of the nondefault funds at each quarterly Trustee Board meeting, as evidence of the stated process being followed

34 and SAFETY OF ASSETS & RECORDS ASSESSING VALUE ASSESSMENT OF INVESTMENT OPTIONS PEOPLE GOVERNANCE Identification of investment and assessment against them CONTROL OBJECTIVE 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. procedure The Trustee s review of periodic changes to the Member s Booklet is documented in meeting minutes. We obtained and inspected the quarterly Trustee Board agendas and minutes and confirmed that periodic changes to the Member s Booklet is documented, as evidence of the stated process being followed. 32

35 and SAFETY OF ASSETS & RECORDS ASSESSING VALUE ASSESSMENT OF INVESTMENT OPTIONS PEOPLE GOVERNANCE CONTROL OBJECTIVE 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 Statement of Investment Principles was last updated in August The Trustee ratified this latest version in their meeting on 2 September procedure The Trustee reviews the Statement of Investment Principles periodically, at least every three years and without delay after any significant change in investment policy. This is documented in Business Plan and is to be recorded in meeting agendas and minutes and Trustee Investment Committee meeting agendas and minutes. We obtained and inspected Business Plan, quarterly Trustee Board agendas and minutes, Trustee Investment Committee agendas and minutes and confirmed that had reviewed the Statement of Investment Principles periodically and without delay after any significant change in investment policy, as evidence of the stated process being followed

36 and SAFETY OF ASSETS & RECORDS ASSESSING VALUE ASSESSMENT OF INVESTMENT OPTIONS PEOPLE GOVERNANCE PEOPLE Conflicts of interest CONTROL OBJECTIVE 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. In their letters of engagement, service providers are asked to inform of any conflict of interest that may arise as soon as reasonably possible. procedure 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. The Trustee is to review their Conflicts of Interest policy and Conflicts of Interest log each year. This is documented in the Trustee Business Plan and is to be recorded in meeting agendas and minutes. We obtained and inspected the quarterly Trustee Board agendas and minutes, as evidence of the stated process being followed. We obtained and inspected Business Plan, quarterly Trustee Board agendas and minutes and confirmed that had reviewed their Conflicts of Interest policy and Conflicts of Interest log each year, as evidence of the stated process being followed. 34

37 and SAFETY OF ASSETS & RECORDS ASSESSING VALUE ASSESSMENT OF INVESTMENT OPTIONS PEOPLE GOVERNANCE Fit and proper trustees CONTROL OBJECTIVE 23 Fitness and propriety requirements are recorded and managed in accordance with a defined policy which is regularly reviewed and approved. The original Trustee directors were Alan Pickering and PAN Governance LLP. Alan Pickering has over 40 years experience across a wide variety of pension industry areas, including serving as chair of the former National Association of Pension Funds. PAN Governance LLP acted as Corporate Director and was represented by Steve Delo and Andrew Cheeseman. Due to the new governance standards introduced in April 2015, it was decided that Pan Governance LLP would resign with effect from 31 March 2015 and that Steve Delo and Andrew Cheeseman would be appointed as individual directors from that date. Steve Delo is a former President of the Pensions Management Institute and Andrew Cheeseman is a prominent industry figure. procedure 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 Each director of is to periodically make a declaration to B&CE and other Trustee directors, 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. We obtained and inspected Directors letters of appointment and confirmed that these included declarations that they have the expertise and experience of acting as a trustee of an occupational pension scheme. We obtained and inspected Business Plan, quarterly Trustee Board agendas and minutes and confirmed that each director of periodically made a declaration to B&CE and other Trustee directors, confirming their fitness and propriety and undertaking to notify B&CE of any changes in these circumstances, as evidence of the stated process being followed

38 and SAFETY OF ASSETS & RECORDS ASSESSING VALUE ASSESSMENT OF INVESTMENT OPTIONS PEOPLE GOVERNANCE CONTROL OBJECTIVE 24 The fitness and propriety of trustees is regularly reviewed and monitored prior to appointment and thereafter. This review is documented and approved. Prior to their appointment, any new Trustee will be required to complete a declaration confirming their fitness and propriety. procedure 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. A review of the fitness and propriety of each Trustee Director is carried out by the Chairman of periodically. This is documented in Business Plan and is to be recorded in meeting agendas and minutes. We obtained and inspected Directors letters of appointment and confirmed that these included declarations that they have the expertise and experience of acting as a trustee of an occupational pension scheme, as evidence of the stated process being followed. We obtained and inspected Business Plan, quarterly Trustee Board agendas and minutes and confirmed that a review of the fitness and propriety of each Trustee Director was carried out by the Chairman of periodically, as evidence of the stated process being followed. 36

39 and SAFETY OF ASSETS & RECORDS ASSESSING VALUE ASSESSMENT OF INVESTMENT OPTIONS PEOPLE GOVERNANCE CONTROL OBJECTIVE 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 and changes to scheme documentation. procedure During the year 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. The review was carried out at the March 2016 quarterly Trustee meeting. This is documented in Business Plan and is to be recorded in meeting agendas and minutes. We obtained and inspected the quarterly Trustee Board agendas and minutes and confirmed that directors consider whether there are any other matters that they would like training on, as evidence of the stated process being followed. We obtained and inspected Business Plan, quarterly Trustee Board agendas and minutes and confirmed that the skills and knowledge of directors was reviewed at the quarterly meeting in March, as evidence of the stated process being followed

40 and SAFETY OF ASSETS & RECORDS ASSESSING VALUE ASSESSMENT OF INVESTMENT OPTIONS PEOPLE GOVERNANCE GOVERNANCE Resource planning CONTROL OBJECTIVE 26 A plan is maintained and regularly reviewed to ensure that resources are properly allocated. The Trustee meets with B&CE each quarter to discuss key issues affecting the Scheme. The Trustee has prepared a Trustee Business Plan outlining the and aims of together with s plans for the effective governance of the Scheme throughout the year. procedure The Trustee considers Business Plan at each quarterly meeting. This is documented in Business Plan and is recorded in meeting agendas and minutes. We obtained and inspected Business Plan, quarterly Trustee Board agendas and minutes and confirmed that Business Plan was reviewed at each quarterly meeting, as evidence of the stated process being followed. 38

41 and SAFETY OF ASSETS & RECORDS ASSESSING VALUE ASSESSMENT OF INVESTMENT OPTIONS PEOPLE GOVERNANCE Scheme management CONTROL OBJECTIVE 27 Roles, responsibilities and duties of all trustees, advisers and service providers are documented, approved and regularly reviewed. The People s Pension Trust Deed and Scheme Rules are the governing documents by which the Scheme is currently administered and managed. These were last updated on 17 November The Trustee and Founder have jointly reviewed the Scheme Rules and have agreed a Balance of Powers document setting out how the various powers, duties and discretions within the Scheme Rules are to be exercised, which party exercises the powers, and what constraints there are. procedure The duties, delegated responsibilities and accountabilities of, advisers and service providers are acknowledged in the contracts that has entered into with each adviser and service provider. The Trustee has agreed a policy and schedule for their monitoring and reviewing of s service providers and advisers, which is documented in Business Plan. We obtained and inspected the contracts with, advisers and service providers, as evidence of the stated process being followed. We obtained and inspected a copy of s policy and schedule for their monitoring and reviewing of s service providers and advisers. We obtained and inspected Business Plan, quarterly Trustee Board agendas and minutes and confirmed that had agreed a policy and schedule for their monitoring and reviewing of s service providers and advisers, as evidence of the stated process being followed

42 and SAFETY OF ASSETS & RECORDS ASSESSING VALUE ASSESSMENT OF INVESTMENT OPTIONS PEOPLE GOVERNANCE CONTROL OBJECTIVE 28 Activities undertaken by all scheme advisers and service providers are properly managed and subject to regular performance reviews which are documented and approved. The People s Pension Trust Deed and Scheme Rules are the governing documents by which the Scheme is currently administered and managed. These were last updated on 17 November The Trustee and Founder have jointly reviewed the Scheme Rules and have agreed a Balance of Powers document setting out how the various powers, duties and discretions within the Scheme Rules are to be exercised, which party exercises the powers, and what constraints there are. procedure The Trustee s monitoring of activities carried out by service providers and advisers to the Scheme is carried out at each quarterly Trustee Board meeting and is documented in the Trustee meeting agendas and minutes. At each quarterly Trustee Board meeting B&CE provides a quarterly Administration Report to which is reviewed by B&CE s Director of Finance and Chief Operating Officer, before being presented to. These reports include: a summary of active and deferred members, new joiners, leavers and opt-outs; contributions received, assets under management, funds claimed and transferred out; investment fund performance against benchmark fund performance; B&CE s performance against the service levels agreed with ; and a summary of any complaints received during the quarter and any compensation paid to Scheme members. The Trustee also reviews the Investment Manager s performance for the quarter at each quarterly Trustee Board meeting and this is documented in meeting agendas and minutes and Trustee Investment Committee meeting agendas and minutes. The Trustee has agreed a policy for their monitoring and reviewing of s service providers and advisers, together with a review schedule which is documented in the Trustee Business Plan. We obtained and inspected Business Plan, quarterly Administration Reports, quarterly Trustee Board agendas and minutes and confirmed that had reviewed B&CE s: summary of: active and deferred members, new joiners, leavers and opt-outs; contributions received, assets under management, funds claimed and transferred out; investment fund performance against benchmark fund performance; B&CE s performance against the service levels agreed with ; and any complaints received during the quarter and any compensation paid to Scheme members, through the Scheme Administration Reports. as evidence of the stated process being followed. We obtained and inspected Business Plan, quarterly Trustee Board agendas and minutes, Trustee Investment Committee agendas and minutes and confirmed that the Trustee had reviewed the Investment Manager s performance, as evidence of the stated process being followed. We obtained and inspected Business Plan, quarterly Trustee Board agendas and minutes and confirmed that the Trustee had agreed a policy and schedule for their monitoring and reviewing of s service providers and advisers, as evidence of the stated process being followed. 40

43 and SAFETY OF ASSETS & RECORDS ASSESSING VALUE ASSESSMENT OF INVESTMENT OPTIONS PEOPLE GOVERNANCE Internal control framework CONTROL OBJECTIVE 29 A risk management framework is established to identify, manage and monitor significant operational, financial, regulatory and compliance risks. The Trustee has implemented an effective risk management process which forms a key part of s internal control and governance framework. The Trustee identifies the risks applying to the Scheme, assesses these by considering the impacts and likelihood of their occurrence and manages the risks by identifying suitable controls and countermeasures to mitigate the risks. The Trustee records this information on a Risk Register and allocates two scores to each risk, which are: an untreated score with no controls in place; and a current risk score assuming all countermeasures to mitigate the risks have been implemented and put into operation. The Trustee Risk Register has been moved to an electronic risk management software system. procedure The Trustee Risk Register includes all risks identified within the Master Trust Supplement to ICAEW AAF 02/07. The Trustee reviews a segment of the Risk Register periodically at Trustee Board meetings and this is documented in meeting agendas and minutes. The Trustee has begun a series of meetings with B&CE s Trustee Pensions Manager to review segments of risk register and identify mitigating actions. We obtained and inspected Risk Register and the electronic risk management software system. We obtained and inspected Business Plan, quarterly Trustee Board agendas and minutes and confirmed that reviews a segment of the Risk Register at each quarterly Trustee Board meeting, as evidence of the stated process being followed. We obtained and inspected Business Plan, Trustee Board agendas and minutes and confirmed that had begun a series of meetings with B&CE s Trustee Pensions Manager to review segments of the risk register and identify mitigating actions

44 and SAFETY OF ASSETS & RECORDS ASSESSING VALUE ASSESSMENT OF INVESTMENT OPTIONS PEOPLE GOVERNANCE Core scheme transactions CONTROL OBJECTIVE 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. B&CE has processes and in place for carrying out core scheme transactions and ensures that related income and expenditure are completely and accurately processed in a timely manner and recorded in the proper period. procedure The Trustee monitors B&CE s performance of core scheme transactions. This is reviewed at each quarterly Trustee Board meeting and documented in meeting agendas and minutes. The Trustee reviews this through the Scheme Administration Reports provided to at each Trustee Board meeting. These reports show B&CE s performance against the service levels agreed with. B&CE s internal audit function shall provide with a s Report commencing in 2015 which includes B&CE s complete, accurate and timely processing of core scheme financial transactions. The Trustee reviewed this report at their March 2016 quarterly meeting. This is documented in Business Plan and is to be recorded in meeting agendas and minutes. We obtained and inspected Business Plan, quarterly Trustee Board agendas and minutes, including s review of B&CE s performance of core scheme transactions against the service levels agreed, through the Scheme Administration Reports, as evidence of the stated process being followed. We obtained and inspected the B&CE s internal audit function s s Report. We obtained and inspected Business Plan, quarterly Trustee Board agendas and minutes and confirmed that had reviewed the internal audit function s s Report on B&CE s complete, accurate and timely processing of core scheme financial transactions at the quarterly meeting in March 2016, as evidence of the stated process being followed

45 and SAFETY OF ASSETS & RECORDS ASSESSING VALUE ASSESSMENT OF INVESTMENT OPTIONS PEOPLE GOVERNANCE CONTROL OBJECTIVE 31 Contributions are invested in accordance with member instructions or the default policy. The Trustee monitors B&CE s carrying out of member instructions. This is reviewed at each quarterly Trustee Board meeting and documented in meeting agendas and minutes. The Trustee reviews this through the Scheme Administration Reports provided to at each Trustee Board meeting. These reports show B&CE s performance against the service levels agreed with. These reports also include a reconciliation of contributions received against the contributions invested together with a summary of investments within each fund. B&CE has processes and in place for carrying out investments in accordance with each member s instructions. procedure B&CE s internal audit function shall provide with a s Report commencing in 2015 which includes B&CE s investment of contributions in accordance with member instructions or the default policy. The Trustee reviewed this report at their March 2016 quarterly meeting. This is documented in Business Plan and is to be recorded in meeting agendas and minutes. We obtained and inspected the B&CE s internal audit function s s Report. We obtained and inspected Business Plan, quarterly Trustee Board agendas and minutes and confirmed that had reviewed the internal audit function s s Report on B&CE s investment of contributions in accordance with member instructions or the default policy, at the quarterly meeting in March 2016, as evidence of the stated process being followed

46 and SAFETY OF ASSETS & RECORDS ASSESSING VALUE ASSESSMENT OF INVESTMENT OPTIONS PEOPLE GOVERNANCE CONTROL OBJECTIVE 32 Transaction errors are rectified and members are treated fairly as a result of that rectification. The Trustee monitors B&CE s performance. This is reviewed at each quarterly Trustee Board meeting and documented in the Trustee meeting agendas and minutes. procedure The Trustee reviews B&CE s performance through the Scheme Administration Reports provided to at each Trustee Board meeting. In the event of any transaction errors occurring, B&CE will provide with details of the error, what actions have been taken to prevent a reoccurrence, whether the member has suffered a loss and what actions have been taken to remedy the situation. B&CE s internal audit function shall provide with a s Report commencing in 2015 which includes B&CE s resolution of transaction errors. The Trustee reviewed this report at their March 2016 quarterly meeting. This is documented in Business Plan and is to be recorded in meeting agendas and minutes. We obtained and inspected Business Plan, quarterly Trustee Board agendas, minutes and Scheme Administration Reports and confirmed that had reviewed B&CE s resolution of transaction errors, as evidence of the stated process being followed. We obtained and inspected the B&CE s internal audit function s s Report. We obtained and inspected Business Plan, quarterly Trustee Board agendas and minutes and confirmed that had reviewed the internal audit function s s Report on B&CE s resolution of transaction errors at the quarterly meeting in March 2016, as evidence of the stated process being followed. 44

47 and SAFETY OF ASSETS & RECORDS ASSESSING VALUE ASSESSMENT OF INVESTMENT OPTIONS PEOPLE GOVERNANCE Receipt of contributions CONTROL OBJECTIVE 33 Late and inaccurate contributions are pursued and resolved. B&CE has in place for the monitoring and resolution of late and inaccurate contributions. The Pensions Regulator visited B&CE in October 2015 as part of their review of how large pension scheme providers were implementing their Codes of Practice on identifying, monitoring and material payment failures. In March 2016 also reviewed B&CE s for monitoring the payment of contributions in accordance with The Pensions Regulator s Code of Practice No.5. procedure The Trustee reviews late and inaccurate contributions at each quarterly Trustee Board meeting which is documented in meeting agendas and minutes. The Trustee has identified a number of scenarios which could give rise to a higher risk of Material Payment Failure and have approved B&CE s testing of a sample population throughout the year. The Trustee monitors these through the quarterly Scheme Administration Reports provided to at each Trustee Board meeting. These reports show details of any late payments and any employers reported to The Pensions Regulator for material breaches. B&CE shall provide with a report commencing in 2015 reviewing the effectiveness of the processes and for dealing with contributions in arrears. The Trustee reviewed this report at their March 2016 quarterly meeting. This is documented in Business Plan and is to be recorded in meeting agendas and minutes. We obtained and inspected Business Plan, quarterly Trustee Board agendas and minutes, including the Trustee s review of B&CE s monitoring of late and inaccurate contributions, through the Scheme Administration Reports, as evidence of the stated process being followed. We obtained and inspected B&CE s report on the effectiveness of the processes and for dealing with contributions in arrears. We obtained and inspected Business Plan, quarterly Trustee Board agendas and minutes and confirmed that had reviewed B&CE s report on the effectiveness of the processes and for dealing with contributions in arrears, at the quarterly meeting in March 2016, as evidence of the stated process being followed

48 and SAFETY OF ASSETS & RECORDS ASSESSING VALUE ASSESSMENT OF INVESTMENT OPTIONS PEOPLE GOVERNANCE Retirement process CONTROL OBJECTIVE 34 Retirements are managed in accordance with a documented process which is regularly reviewed and approved. The People s Pension Trust Deed and Scheme Rules are the governing documents by which the Scheme is currently administered and managed. These were last updated on 17 November These Rules include provisions for the commencement of benefits and ways of providing a pension, through the purchase of an annuity in the name of the member. The People s Pension does not provide members with a pension from the Scheme. Scheme members can use their Open Market Option to shop around for their retirement income product. B&CE was offering a lifetime annuity product from a long established UK insurer specialising in providing enhanced annuities for people with health/lifestyle conditions. This arrangement ended following the new pension freedoms introduced in April Since May 2015, members meeting certain criteria have had the option of cashing in some or all of their pension pot as a flexible lump sum. B&CE has in place for managing the retirement process and ensuring this meets regulatory requirements, including the Association of British Insurers code of conduct on retirement choices and The Pension Regulator s guidance on communicating with members about pensions flexibilities. procedure B&CE s Director of Operations shall provide with a report commencing in 2015 which includes B&CE s retirement process and. The Trustee reviewed this report at their March 2016 quarterly meeting. This is documented in Business Plan and is to be recorded in meeting agendas and minutes. We obtained and inspected B&CE s Director of Operations report on B&CE s retirement process and. We obtained and inspected Business Plan, quarterly Trustee Board agendas and minutes and confirmed that had reviewed B&CE s Director of Operations report on B&CE s retirement process and, as evidence of the stated process being followed. 46

49 and SAFETY OF ASSETS & RECORDS ASSESSING VALUE ASSESSMENT OF INVESTMENT OPTIONS PEOPLE GOVERNANCE CONTROL OBJECTIVE 35 Retirement products selected by members are monitored and the range of retirement products made available is reviewed regularly for ongoing suitability. The People s Pension Trust Deed and Scheme Rules are the governing documents by which the Scheme is currently administered and managed. These were last updated on 17 November These Rules include provisions for the commencement of benefits and ways of providing a pension, through the purchase of an annuity in the name of the member. The People s Pension does not provide members with a pension from the Scheme. Scheme members can use their Open Market Option to shop around for their retirement income product. B&CE was offering a lifetime annuity product from a long established UK insurer specialising in providing enhanced annuities for people with health/lifestyle conditions. B&CE regularly reviewed the insurer s performance against their Service Agreement and monitored their annuity rates against benchmarks. This arrangement ended following the new pension freedoms introduced in April Since May 2015, members meeting certain criteria have had the option of cashing in some or all of their pension pot as a flexible lump sum. procedure The Trustee is to review the retirement options made available to Scheme members each year at their June quarterly meeting. This is documented in Business Plan and is to be recorded in meeting agendas and minutes. We obtained and inspected Business Plan, quarterly Trustee Board agendas and minutes and confirmed that had reviewed the retirement options made available to members at their quarterly meeting in June, as evidence of the stated process being followed

50 and SAFETY OF ASSETS & RECORDS ASSESSING VALUE ASSESSMENT OF INVESTMENT OPTIONS PEOPLE GOVERNANCE CONTROL OBJECTIVE 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. 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 The Scheme members annual benefit statement contains details of the funds in which the member is investing and reminds them that their level of contributions affects their income in retirement. procedure B&CE s Risk & Regulatory Compliance Team shall provide with a Marketing and Communications report commencing in 2015 which includes a review of how the Scheme s communications meet this objective. The Trustee reviewed this report at their March 2016 quarterly meeting. This is documented in Business Plan and is to be recorded in meeting agendas and minutes. We obtained and inspected the B&CE s Risk & Regulatory Compliance Team s Marketing and Communications report. We obtained and inspected Business Plan, quarterly Trustee Board agendas and minutes and confirmed that had reviewed B&CE s Risk & Regulatory Compliance Team s report on Marketing and Communications at their quarterly meeting in March 2016, as evidence of the stated process being followed. 48

51 and SAFETY OF ASSETS & RECORDS ASSESSING VALUE ASSESSMENT OF INVESTMENT OPTIONS PEOPLE GOVERNANCE Communications CONTROL OBJECTIVE 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. procedure B&CE shall provide with a communications plan commencing in This sets out the communications over the Member Journey, from the employer signing up to participate in the Scheme, through to the payment of member benefits. The Trustee reviewed this plan at their December 2015 quarterly meeting. This is documented in Business Plan and is to be recorded in meeting agendas and minutes. B&CE s Risk & Regulatory Compliance Team shall provide with a Marketing and Communications report commencing in 2015 on the effectiveness of B&CE s document approval process and scheme communications. The Trustee reviewed this report at their March 2016 quarterly meeting. This is documented in Business Plan and is to be recorded in meeting agendas and minutes. We obtained and inspected the B&CE s communications plan setting out the communications over the Member Journey, from the employer signing up to participate in the Scheme, through to the payment of member benefits. We obtained and inspected Business Plan, quarterly Trustee Board agendas and minutes and confirmed that had reviewed B&CE s communications plan at the quarterly meeting in December 2015, as evidence of the stated process being followed. We obtained and inspected the B&CE s Risk & Regulatory Compliance Team s Marketing and Communications report. We obtained and inspected Business Plan, quarterly Trustee Board agendas and minutes and confirmed that had reviewed the B&CE s Risk & Regulatory Compliance Team s report on the effectiveness of B&CE s document approval process and scheme communications at the quarterly meeting in March 2016, as evidence of the stated process being followed

52 and SAFETY OF ASSETS & RECORDS ASSESSING VALUE ASSESSMENT OF INVESTMENT OPTIONS PEOPLE GOVERNANCE The People s Pension does not provide members with a pension from the Scheme. Scheme members can use their Open Market Option to shop around for their retirement income product. The retirement wake up letter sent to Scheme members is accompanied by The Money Advice Service s Your pension: it s time to choose booklet. This explains the various options for converting a pension fund into an income in retirement and the decisions that the member will have to make. B&CE was offering a lifetime annuity product from a long established UK insurer specialising in providing enhanced annuities for people with health/lifestyle conditions. This arrangement ended following the new pension freedoms introduced in April Since May 2015, members meeting certain criteria have had the option of cashing in some or all of their pension pot as a flexible lump sum. B&CE has in place for managing the retirement process and ensuring that communications to members approaching retirement meet regulatory requirements, including the Association of British Insurers code of conduct on retirement choices and The Pension Regulator s guidance on communicating with members about pensions flexibilities. procedure B&CE s Risk & Regulatory Compliance Team shall provide with a Marketing and Communications report commencing in 2015 which includes a review of how the Scheme s communications meet this objective. The Trustee reviewed this report at their March 2016 quarterly meeting. This is documented in Business Plan and is to be recorded in meeting agendas and minutes. We obtained and inspected the B&CE s Risk & Regulatory Compliance Team s Marketing and Communications report. We obtained and inspected Business Plan, quarterly Trustee Board agendas and minutes and confirmed that had reviewed the B&CE s Risk & Regulatory Compliance Team s Marketing and Communications report at the quarterly meeting in March 2016, as evidence of the stated process being followed. 50

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