PENSIONS WEBINAR PRACTICAL GUIDANCE - COMPLETING YOUR GOVERNANCE STATEMENT

Transcription

1 PENSIONS WEBINAR PRACTICAL GUIDANCE - COMPLETING YOUR GOVERNANCE STATEMENT

2 Your presenters today Karen Tasker Audit Director Karen has over 25 years experience of working with pension clients including hybrid schemes and CIF s with complex financial instruments. Karen has built up a depth of expertise assisting clients with auditing and disclosure issues that they have encountered. Karen chairs the Pensions Research Accounting Group ("PRAG")" DC Working Party and is an active member of the NAPF and PMI Groups. With an interest and focus on pension scheme governance and risk management, Karen regularly speaks at industry events and also produces guidance and articles on the topic. Helen Hord Audit Senior Manager helen.hord@rsmuk.com Helen joined RSM as a specialist pensions Audit Senior Manager in 2015 having spent 17 years with a Big 4 firm. Helen has significant experience in the managing of pension scheme audits over the past 11 years. She is also secretary to the PRAG DC Working Party and has been involved in schemes of varying sizes and complexity including several DC and hybrid schemes.

3 Webinar agenda What are the legal requirements? What does the TPR expect from the chair? Action plan and further guidance. Any questions?

4 What are the legal requirements? The Occupational Pension Schemes (Charges and Governance) Regulations 2015 Statutory Instrument section 17. The annual statement regarding governance must be: prepared within seven months of the end of the scheme year; included in annual statutory report and accounts ended from 6 July 2015; signed by chair of trustees; and personal mandatory fine on trustees 500-2,000. What can you expect from your auditor?

5 What are the legal requirements? Statement required by relevant schemes. The challenge Relevant scheme an occupational pension scheme which provides money purchase benefits. Exemptions, for example: a scheme which provides no money purchase benefits other than AVCs; and relevant small scheme (< 12 members, all of which are Trustees).

6 What does TPR expect from the Chair? Contemporaneously document actions Describe and explain Not a tick box exercise Meaningful narrative Meaningful narrative

7 Key areas of focus Review of default fund Statement of investment principles Core financial transactions Charges and transaction costs Good value for members TKU requirements met

8 Default arrangement Include the latest statement of investment principles (SIP) governing decisions about investments for the purposes of the default arrangement. Describe any reviews undertaken during the scheme year of the default strategy and explain any changes resulting from the review. Where no review was undertaken during the scheme year, give the date of the last review.

9 Core financial transactions Set out how the obligation to process core financial transactions promptly and accurately has been met during the scheme year. Which transactions? Does the SLA cover core financial transactions? Have the measures in place been reviewed and reported on by the administrator? Can those transactions be evidenced as being dealt with promptly and accurately? Regulations do not define promptly.

10 Which transactions to consider? Investment of contributions Transfers in/out Investment switching Benefit payments Evidencing accuracy Accounting processes

11 Charges and transaction costs State the level and range of charges and transaction costs applicable to the default strategy (or default strategies) and all funds which are not part of the default arrangement in which assets relating to members are invested, during the scheme year. Indicate information about transaction costs which the trustees have been unable to obtain and explain what steps are being taken to obtain that information in the future. The effect of the changes on member outcomes should be made clear.

12 Value for members Explain the Trustees assessment of the extent to which charges and transaction costs represent good value for members. Create a Good Value policy document. No legal definition.

13 Demonstrating compliance A clear and considered process of value for members. Structure and preparation. Definitions and terms are clearly defined. Reference to any legislative and regulatory guidance. Evaluation process transparent and measurable; qualitative considerations. Describe and explain Meaningful narrative Meaningful narrative

14 Trustee knowledge and understanding Describe how the Trustees requirement for knowledge and understanding have been met during the Scheme year. Explain how the combined knowledge and understanding of the Trustees, together with the advice which is available to them, enables them to properly exercise their functions as Trustees.

15 Relevant multi-employer schemes Explain how the non-affiliation requirements have been met. Explain how the appointment process met the open and transparent requirements. Explain what arrangements have been put in place to encourage members of the Scheme to make their views known.

16 Practical steps Incorporate into your business plan to avoid a fine. Agree a checklist 02 Liaise with service providers Describe and explain Agree timescale 04 Monitor and review Meaningful narrative Meaningful narrative Sign off at Trustee meeting

17 Further guidance PRAG Society of Pension Professionals template - PLSA

18 QUESTIONS AND ANSWERS?

19 THANK YOU FOR YOUR TIME AND ATTENTION