Gilberts (Blackpool) Limited Pension Fund

Statement of Investment Principles

September 2020

 

Table of Contents

1. Introduction

2. Investment Objectives

3. Investment Responsibilities

4. Investment Strategy

5. Risk

6. Monitoring of Investment Adviser and Managers

7. Additional Voluntary Contributions (AVCs)

8. Code of Best Practice

9. Compliance

Appendix 1: Asset Allocation Benchmark

Appendix 2: Cashflow and Rebalancing Policy

Appendix 3: Investment Manager Information

Appendix 4: Responsibilities of Parties

 

1 Introduction

 

This Statement of Investment Principles (“the Statement”) has been prepared by the Trustees of the Gilberts (Blackpool) Limited Pension Fund (“the Fund”) in accordance with Section 35 of the Pensions Act 1995, as amended, and its attendant Regulations.

The Statement outlines the principles governing the investment policy of the Fund and the activities undertaken by the Trustees to ensure the effective implementation of these principles.

In preparing the Statement, the Trustees have:

  • Obtained and considered written advice from a suitably qualified individual, employed by their investment consultants, Mercer, whom they believe to have a degree of knowledge and experience that is appropriate for the management of their investments; and
  • Consulted with the Sponsoring Employer, although they affirm that no aspect of their strategy is restricted by any requirement to obtain the consent of the Sponsoring Employer.

The advice and the consultation process considered the suitability of the Trustees’ investment policy for the Fund.

The Trustees will review the Statement formally at least every three years to coincide with the triennial Actuarial Valuation or other actuarial advice relating to the Statutory Funding Requirements. Furthermore, the Trustees will review the Statement without delay after any significant change in investment policy. Any changes made to the Statement will be based on written advice from a suitably qualified individual and will follow consultation with the Sponsoring Employer.

2. Investment Objectives

The Trustees’ primary investment objective for the Fund is to achieve an overall rate of return that is sufficient to ensure that assets are available to meet all liabilities as and when they fall due.

In doing so, the Trustees also aim to maximise returns at an acceptable level of risk taking into consideration the circumstances of the Fund.

The Trustees have received confirmation from the Scheme Actuary during the process of revising the investment strategy that their investment objectives and the resultant investment strategy are consistent with the actuarial valuation methodology and assumptions used in the Statutory Funding Objective.

3. Investment Responsibilities

3.1  Trustees’ Duties and Responsibilities

The Trustees are responsible for setting the investment objectives and determining the strategy to achieve the objectives.  They carry out their duties and fulfil their responsibilities as a single body.

The duties and responsibilities of the Trustees include, but are not limited to, the following tasks and activities:

  • The regular approval of the content of the Statement
  • The appointment and review of the investment adviser
  • The appointment and review of the investment platform provider
  • The choice of appropriate funds to implement the agreed investment strategy
  • The assessment and review of the performance of each investment manager
  • The assessment of the risks assumed by the Fund at total scheme level and manager by manager
  • The approval and review of the asset allocation benchmark for the Fund and de-risking framework
  • The compliance of the investment arrangements with the principles set out in the Statement

3.2   Investment Adviser’s Duties and Responsibilities

The Trustees have appointed Mercer as the independent investment adviser to the Fund. Mercer provides advice as and when the Trustees require it, as well as raising any investment-related issues, of which it believes the Trustees should be aware.  Matters on which Mercer expects to provide advice to the Trustees include the following:

  • Setting of investment objectives
  • Determining investment strategy, asset allocation and de-risking framework
  • Determining an appropriate investment structure
  • Determining funds and investment managers that are suitable to meet the Trustees’ objectives when requested
  • Monitoring the investment managers to ensure their continuing appropriateness to the mandates given
  • Monitoring the Platform provider to ensure its continuing appropriateness for the Fund.
  • Setting cashflow management (investment and withdrawal) policies (see Appendix 2)

The Trustees may seek advice from Mercer with regard to both strategic and tactical investment decisions (see Section 4 – Investment Strategy); however, they recognise that they retain responsibility for all such decisions, including those that concern investments and disinvestments relating to cashflows (see Appendix 2).  Mercer may be proactive in advising the Trustees regarding tactical investment decisions; however, there is no responsibility placed on Mercer to be proactive in all circumstances.

Mercer monitors the performance of the Fund’s underlying investment managers against their benchmarks.

Mercer will also advise the Trustees of any significant developments of which it is aware relating to the investment managers, or funds managed by the investment managers in which the Fund is invested, such that in its view there exists a significant concern that any of these funds will not be able to meet their long-term objectives.

A fund based chargeis made for the services provided by Mercer as specified within the contractual agreement. Any additional services provided by Mercer will be remunerated primarily on a time-cost basis.

In particular, Mercer does not receive commission or any other payments in respect of the Fund that might affect the impartiality of its advice, and as noted below, any discounts negotiated with the underlying managers are passed on in full to the Fund.

The Trustees are satisfied that this is the most appropriate adviser remuneration structure for the Fund.

Mercer is authorised and regulated by the Financial Conduct Authority (“FCA”).

3.3  Arrangements with Investment Managers

The Trustees are long term investors and do not look to change the investment arrangements on a frequent basis.

The Trustees, after considering appropriate investment advice, have invested the assets of the Fund through a Trustee Investment Policy (TIP) from Mobius Life Limited (“Mobius”), whose appointment foregoes the need for a Custodian.. The Trustees first invested through the Mobius TIP in March 2015.

Mobius is authorised by the PRA and regulated by the FCA and the PRA.

The Mobius TIP facilitates investment into a range of underlying funds managed by third party investment managers and the value of the Mobius TIP is directly linked to the change in value in the underlying funds. All of the underlying investment managers used by the Fund are authorised and regulated by the FCA.

The underlying investment managers used by the Trustees through the Mobius platform are chosen based on advice from the Investment Adviser. This is based on the Investment Adviser’s view of their capabilities and, therefore, their perceived likelihood of achieving the expected return and risk characteristics required for the asset class being selected.

The Trustees only invest in pooled investment vehicles through the Mobius platform. The Trustees therefore cannot specify the risk profile and return targets of the underlying investment managers, but pooled funds are chosen with appropriate characteristics to align with the overall investment strategy, including the policies set out in this SIP.

Details of the pooled funds used are set out in Appendix 3.

If the investment objective for an investment manager changes, the Trustees will review the fund appointment to ensure it remains appropriate and consistent with their wider investment objectives.

The underlying investment managers are responsible for all decisions concerning the selection and de-selection of the individual securities within the portfolios they manage.

In the case of multi-asset mandates, the underlying investment managers are responsible for all decisions concerning the allocation to individual asset classes and changes in the allocations to individual asset classes.

Both Mobius and the underlying investment managers are remunerated by ad valorem charges based on the value of the assets that they manage on behalf of the Fund. Where possible, discounts have been negotiated by Mercer and Mobius with the underlying managers on their standard charges and these discounts are passed on in full for the benefit of the Fund.

None of the underlying investment managers in which the assets are invested have performance based fees which could encourage the manager to make short term investment decisions to hit their profit targets.

The Trustees therefore consider that the method of remunerating fund managers is consistent with incentivising them to make decisions based on assessments of medium to long-term financial and non-financial performance of an issuer of debt or equity. By encouraging a medium to long-term view, it will in turn encourage the investment managers to engage with issuers of debt or equity in order to improve their performance in the medium to long-term.

The Trustees cannot influence the charging structure of the pooled funds in which the Fund is invested, but are satisfied that the ad-valorem charges for the different underlying funds are clear and are consistent with each fund’s stated characteristics. The Trustees are therefore satisfied that this the most appropriate basis for remunerating the underlying investment managers and is consistent with their policies as set out in this SIP.

Buy-In Policy

The Trustees have secured a buy-in policy with Just Retirement Limited (“Just Retirement”) to pay to the Fund on a monthly basis an amount equal to the pensions in payment at the time of taking out the policy, together with appropriate increases thereafter.

The primary responsibility of Just Retirement is to ensure that the correct amounts are paid to the Fund on a timely basis equivalent to the pensions for the relevant pensioners and their dependants as appropriate.

Just Retirement’s charges for managing the policy were crystalised into the up-front premium that the Trustees paid when securing the policy.

Just Retirement is also authorised by the PRA and the FCA.

3.4  Summary of Responsibilities

A summary of the responsibilities of all relevant parties, including the Scheme Actuary and the administrators, so far as they relate to the Fund’s investments, is set out at Appendix 4.

4. Investment Strategy

4.1   Setting Investment Strategy

The Trustees have determined their investment strategy after considering the Fund’s liability profile and requirements of the Statutory Funding Objective, the Fund’s buy-out position, their own appetite for risk, the views of the Sponsoring Employer on investment strategy, the Sponsoring Employer’s appetite for risk, and the strength of the Sponsoring Employer’s covenant.  The Trustees have also received written advice from their Investment Adviser.

In making this decision, the Trustees have been satisfied that this is consistent with its investment objectives and is supported by both the Sponsoring Employer and the Sponsoring Employer’s covenant.

In respect of the investment of contributions and any disinvestments to meet member benefit payments, the Trustees have decided on a structured approach to rebalance the assets in accordance with the overall strategy.  This approach is set out in Appendix 2.

4.2       Investment Decisions

The Trustees distinguish between three types of investment decision: strategic, tactical and stock-level.

Strategic Investment Decisions

These decisions are long-term in nature and are driven by an understanding of the objectives, needs and liabilities of the Fund.

The Trustees take all such decisions themselves.  They do so after receiving written advice from their investment adviser and consulting with the Sponsoring Employer.  Examples of such decisions and of tasks relating to the implementation of these decisions include the following:

  • Setting investment objectives
  • Determining the split between the growth and the stabilising portfolios
  • Determining the allocation to asset classes within the growth and stabilising portfolios
  • Determining the Fund benchmark
  • Reviewing the investment objectives, strategic asset allocation and de-risking framework

Tactical Investment Decisions

These decisions are short-term and based on expectations of near-term market movements.  Such decisions may involve deviating temporarily from the strategic asset allocation and may require the timing of entry into, or exit from, an investment market or asset class.

These decisions are the responsibility of the Trustees.   However, where such decisions are made within a pooled fund, they are the responsibility of the investment manager of the fund.

Stock Selection Decisions

All such decisions are the responsibility of the investment managers of the pooled funds in which the Fund is invested.

4.3       Types of Investments to be Held

The Trustees are permitted to invest across a wide range of asset classes.

All the funds in which the Fund invests are pooled and unitised. The use of derivatives is as permitted by the guidelines that apply to the pooled funds.

The Trustees recognise the benefits of diversification across growth asset classes, as well as within them, in reducing the risk that results from investing in any one particular market. The Trustees have therefore decided to invest in Diversified Growth Funds (DGFs), which are actively managed multi-asset funds. The managers of the DGFs invest in a wide range of assets and investment contracts in order to implement their market views.

The Trustees note that the actuarial value of the Fund’s future benefits payments to members is sensitive to changes in long term interest rates and long term inflation expectations. The Trustees have decided to invest in Liability Driven Investment (“LDI”) funds which aim to respond in a similar way to changes in these factors and reduce the volatility of the Fund’s funding position. This is referred to as hedging.

The Trustees have also undertaken a buy-in with Just Retirement which will pay to the Fund an amount equivalent to the pensions for the relevant pensioners and their dependants as appropriate.

4.4 Financially Material considerations

The Trustees consider many risks which they anticipate could impact the financial performance of the Fund’s investments over the Fund’s expected lifetime. Such risks are set out in the next section of this statement.

The Trustees recognise that environmental, social and corporate governance (“ESG”) factors, such as climate change, can influence the investment risk and return outcomes of the Fund’s portfolio and it is therefore in members’ and the Fund’s best interests that these factors are taken into account within the investment process.

The Trustees further recognise that investing with a manager which approaches investments in a responsible way and takes account of ESG related risks may lead to better risk adjusted performance results as omitting these risks in investment analysis could skew the results and underestimate the level of overall risk being taken. Therefore, other factors being equal, the Trustees would seek to invest in funds which incorporate ESG principles.

In setting their investment strategy, the Trustees have prioritised funds which provide leveraged protection against movements in the Fund’s liability value and also funds which provide actively managed diversification across a wide range of investment markets and consider the financially significant benefits of these factors to be paramount.

The Trustees note that ESG considerations are not paramount to the first level decision making process within the funds which provide either actively managed diversification or leveraged liability protection. However, in the actively managed Diversified Growth Funds in which the Fund invests, whilst managers typically do not put ESG considerations at the heart of the asset allocation decision, they will embed ESG considerations into the management of the underlying asset classes where it is appropriate to do so.

The Trustees will review their approach to ESG on an ongoing basis to make sure that their policy evolves in line with emerging trends and developments.

The Trustees are therefore satisfied that ESG factors are appropriately reflected in the overall investment approach.

4.5  Non – Financial Matters

The Trustees have determined that the financial interests of the Fund members are their first priority when choosing investments.

They have decided not to consider non-financial considerations, such as ethical views, or to take members’ preferences into account when setting the investment strategy for the Fund.

4.6  Stewardship

The Fund is invested solely in pooled investment funds. The Trustees’ policy is to delegate responsibility for engaging with, monitoring investee companies and exercising voting rights to the pooled fund investment managers and expects the investment managers to use their discretion to act in the long term financial interests of investors.

If the Trustees are specifically invited to vote on a matter relating to corporate policy, they would exercise their right in accordance with what they believe to be the best interests of the majority of the Fund’s membership.

If a new investment manager is selected, the Trustees will consider the Investment Adviser’s ESG score, which incorporates an assessment of engagement and voting as part of the process.

 

5. Risk

Under the Pensions Act 2004, the Trustees are required to state their policy regarding the ways in which risks are to be measured and managed.  These are set out below.

Solvency Risk and Mismatching Risk

  • These are measured through a qualitative and quantitative assessment of the expected development of the assets relative to the liabilities.
  • These are managed by setting a scheme-specific strategic asset allocation with an appropriate level of risk.

Manager Risk

  • This is assessed as the expected deviation of the prospective risk and return, as set out in the managers’ objectives, relative to the investment policy.
  • It is measured by monitoring the actual deviation of returns relative to the objective.
  • It is managed through diversification of the Fund’s assets across a range of funds with different investment styles, by monitoring and advice from the Investment Adviser where there have been significant changes to the managers’ capabilities, and by using the Mobius Platform, which enables quick and efficient replacement of managers if appropriate.
  • In relation to the buy-in policy, the Trustees will monitor the position to ensure that Just Retirement continues to make the appropriate payments to the Fund in respect of the relevant members and their dependants on a timely basis

Liquidity Risk

  • This is monitored according to the level of cashflows required by the Fund over a specified period.
  • It is managed by holding an appropriate amount of readily realisable investments. The Fund’s assets are invested in pooled funds which are readily realisable.
  • The buy-in policy is a contract of insurance to pay to the Fund an amount equivalent to the pensions for the specified pensioners and their dependants. It is not readily realisable.

Political Risk

  • This is measured by the level of concentration in any one market leading to the risk of adverse influence on investment values arising from political intervention.
  • It is managed by regular reviews of the investments and through investing in funds which give a wide degree of diversification.

Corporate Governance Risk

  • This is assessed by reviewing the Fund’s investment managers’ policies regarding corporate governance.
  • It is managed by delegating the exercise of voting rights to the managers, who exercise this right in accordance with their published corporate governance policies. Summaries of these policies are available to the Trustees and take into account the financial interests of the shareholders, which should ultimately be to the Fund’s advantage.

Sponsor Risk

  • This is assessed as the level of ability and degree of willingness of the sponsor to support the continuation of the Fund and to make good any current or future deficit.
  • It is managed by assessing the interaction between the Fund and the sponsor’s business, as measured by a number of factors, including the creditworthiness of the sponsor and the size of the pension liability relative to the sponsor. Regular updates on employer covenant are provided to the Trustees by senior staff of the sponsor.
  • It is also managed by seekfing to reduce the level of risk within the Fund over time, to reduce the reliance on the covenant of the employer.

Legislative Risk

  • This is the risk that legislative changes will require action from the Trustees so as to comply with any such changes in legislation.
  • The Trustees acknowledge that this risk is unavoidable but will seek to address any required changes so as to comply with changes in legislation.

Credit Risk

  • This is the risk that is associated with the inability of a borrower to repay, in full or part the monies which it owes to a creditor.
  • The Fund invests in pooled investment vehicles and is therefore directly exposed to credit risk in relation to the instruments it holds in the pooled investment vehicles and is indirectly exposed to credit risks arising on the financial instruments held by the pooled investment vehicles.
  • The Fund’s holdings in pooled investment vehicles are unrated. Direct credit risk arising from pooled investment vehicles is mitigated by the underlying assets of the pooled arrangements being ring-fenced from the pooled manager, the regulatory environments in which the pooled managers operate and diversification of investments amongst a number of pooled arrangements.
  • Indirect credit risk arises in relation to underlying bond investments held in the pooled funds. This risk is mitigated by investing in funds with diversified portfolios and in respect of the LDI funds is managed by the investment manager’s counterparty management and collateralisation procedures.
  • The Trustees have invested the assets via the Mobius Platform. Mobius carries out due diligence checks before making a new pooled fund available, and on an ongoing basis monitors changes to the regulatory and operating environments of the underlying pooled investment managers.

Market Risk

  • This is the risk the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk includes currency risk, interest rate risk and other price risk as described below.

Currency Risk

  • This is the risk that occurs when the price of one currency moves relative to another (reference) currency.  In the context of a UK pension scheme, it may be invested in overseas stocks or assets, which are either directly or indirectly linked to a currency other than Sterling.  There is a risk that the price of that overseas currency will move in such a way that devalues that currency relative to Sterling, thus negatively impacting the overall investment return.
  • This risk is managed by investing in DGFs. Within the DGFs the management of currency risk related to overseas investments is delegated to the underlying investment managers. However, the DGFs have a Sterling benchmark and by investing in a diversified investment portfolio, the impact of currency risk is mitigated.
  • The Fund invests in an Equity Linked LDI fund. This fund gains its exposure to equities through equity futures, and these effectively give the investor currency hedged returns on the overseas element of the equity exposure.

Interest rate risk

  • This is the risk that an investment’s value will change due to a change in the level of interest rates.  This affects debt instruments more directly than growth instruments.
  • The Trustees recognise that the Fund’s liabilities are exposed to a significant level of interest rate risk movement and for this reason it is desirable for the Fund’s assets to be exposed to A similar level of interest rate risk.
  • The Trustees have therefore invested in LDI funds to manage this risk, with the LDI strategy set so as to provide an acceptable level of hedging against the interest rate and inflation risk inherent within the Fund’s liabilities

Other Price Risk

  • This is the risk of volatility that principally arises in relation to the return seeking assets.
  • The Trustees acknowledge that a scheme can manage its exposure to price risk by investing in a diverse portfolio across various markets and have therefore invested the Fund’s return seeking assets in DGFs in order to achieve a diversified exposure to different investment markets and manage this risk. Under the liability de-risking plan, the exposure to equities through the investment in Equity Linked LDI will be limited to a maximum of 25%.

ESG Risk

  • This is the risk that Environmental, Social or Corporate Governance concerns, including climate change, have a financially material impact on the return of the Fund’s assets.
  • The Trustees manage this risk by investing in well-respected investment managers where ESG principles are an established part of the investment decision making process and by regularly reviewing the ESG scoring of the investment consultant’s scoring of the Fund’s managers.

6 Monitoring of Investment Adviser and Managers

6.1        Investment Adviser

The Trustees continually assess and review the performance of their adviser in a qualitative way.

6.2        Investment Managers

The Trustees receive quarterly monitoring reports on the performance of the underlying investment managers from Mercer on a quarterly basis, which presents performance information over 3 months, 1 year and 3 years.  The reports show the absolute performance on a net of fees basis and performance of the manager’s stated target performance (over the relevant time period). It also provides returns of market indices so that these can also be used to help inform the assessment of the underlying managers’ performance.

The reporting also reviews the performance of the Fund’s assets in aggregate against the Fund’s strategic benchmark and also of the development of the Fund’s assets relative to its liabilities.

In conjunction with advice and information from their Investment Adviser, the Trustees have the role of replacing the underlying investment managers where appropriate. They take a long-term view when assessing whether to replace the underlying investment managers and such decisions would not be made based solely on short-term performance concerns. Instead, changes would be driven by a significant downgrade of the investment manager by Mercer. This in turn would be due to a significant reduction in Mercer’s confidence that the investment manager will be able to perform in line with their fund’s mandate over the long term.

Changes will also be made to the underlying managers if there is a strategic change to the overall strategy that no longer requires exposure to that asset class or manager.

6.3        PORTFOLIO TURNOVER COSTS

The Trustees do not currently monitor portfolio turnover costs for the funds in which the Fund is invested, although notes that the performance monitoring which it receives is net of all charges, including such costs. Portfolio turnover costs means the costs incurred as a result of the buying, selling, lending or borrowing of investments.

The Trustees are also aware of the requirement to define and monitor targeted portfolio turnover and turnover range.

Given that the Fund invests in a range of pooled funds, many of which invest across a wide range of asset classes, the Trustees do not have an overall portfolio turnover target for the Fund.

The Trustees are working with Mercer to determine the most appropriate way to obtain and monitor the information required in relation to the pooled funds in which the Fund is invested.

 

7. Additional Voluntary Contributions (AVCs)

There are no AVCs held within the Fund.

 

8. Code of Best Practice

 

The Trustees note that in March 2017, the Pensions Regulator released ‘Investment Guidance for Defined Benefit Pension Schemes’.

The Trustees receive investment advice which ensures that the principles contained within this guidance are applied to the Fundas far as it is relevant to the Fund’s circumstances.

The Trustees meet with their investment adviser on a regular basis, monitoring developments both in relation to the Fund’s circumstances and in relation to evolving guidance, and will revise the Fund’s investment approach if considered appropriate.

9. Compliance

The Fund’s Statement of Investment Principles and annual report and accounts are available to members on request.

A copy of the Fund’s current Statement plus Appendices is also supplied to the Sponsoring Employer, the Fund’s auditors and the Scheme Actuary.

This Statement of Investment Principles, taken as a whole with the Appendices, supersedes all others.

Approved by the Trustees on 17th September 2020.

 

  

Appendix 1: Asset Allocation Benchmark

 

The Scheme’s strategic asset allocation benchmark is set out below:

 

Asset Class Strategic Allocation (%) Guideline Range (%)
Growth Assets 85.0 +/- 7.5
Diversified Growth 85.0 +/- 7.5
Hybrid Assets 15.0 +/- 7.5
Liability Driven Investment

– Equity Linked (Real)

15.0 +/- 7.5
Total 100.0%  

The policy for rebalancing and investment / disinvestment of cashflows is set out in Appendix 2.

Appendix 3 provides information about the selection of investment managers.

Buy-In Policy

In addition to the above, the Trustees have secured a buy-in policy with Just Retirement to pay to the Fund an amount equivalent to the pensions in payment at the time of taking out the policy, together with appropriate increases thereafter as well as pensions for their dependents as required under the Fund’s rules.

Appendix 2: Cashflow and Rebalancing Policy

Rebalancing and Cashflow Policy

The Trustees are satisfied that there should be no automatic rebalancing policy in place. Instead the Trustees will use the reporting provided by Mercer to determine if any funds have moved outside their guideline range, and if so consider taking appropriate action.

The Trustees note that the LDI funds will move significantly in value in response to changing liability values and that buying or selling LDI funds would change the level of liability hedging. The LDI funds have therefore been excluded from the rebalancing process.

The Trustees have agreed an appropriate cashflow policy, with cashflows being taken from the non LDI assets.

LDI Recapitalisation

The Trustees note that the LDI manager may require additional assets or may release assets from time to time in order to support the operation of the LDI funds. The Trustees have put in place a policy with Mobius regarding this recapitalisation/release procedure.

Changes

The Trustees, will review the cashflow, rebalancing and LDI recapitalisation policy from time to time to ensure that they remain appropriate.

For avoidance of doubt, this Statement will not be revised purely in relation to a change in these policies.

 

Appendix 3: Investment

 

Investment Manager Information

The table below shows a summary of the funds used by the Fund along with their respective charges. All the funds are invested in through the Mobius Platform, and the charges below include the fees of Mobius and the underlying investment managers.

For avoidance of doubt, this SIP will not be updated solely in response to a replacement of one of the underlying investment managers, although it will continue to be reviewed on a regular basis.

Investment Manager / Fund Objective Total Expense Ratio (%, p.a.) Date First

Invested

Diversified Growth Funds
Baillie Gifford Diversified Growth Pension Fund To outperform the UK base rate by at least 3.5% per annum net of fees over rolling five year periods with an annual volatility of less than 10% 0.75 February 2013
Threadneedle Multi Asset Fund To outperform the UK Base Rate by at least 4% over a 5 to 7 year-cycle gross of fees 0.38 April 2015
Nordea Diversified Return Fund To provide capital preservation over a three-year horizon,  specifically targeting LIBOR + 4% (gross of fees) with less than half the volatility of global equities 0.72 February 2017
Equity-Linked LDI Funds
BMO Equity-Linked Real LDI Fund To provide liability hedging by offering interest rate and inflation protection which replicates the liability profile of a typical UK defined benefit pension plan and provide returns on a combination of global equity indices through the use of equity futures. 0.33 February 2017

 

Appendix 4: Responsibilities of Parties

Trustees

The Trustees’ responsibilities include the following:

  • Reviewing at least triennially, and more frequently if necessary, the content of this Statement in consultation with the Investment Adviser and modifying it if deemed appropriate
  • Reviewing the investment strategy following the results of each actuarial review, in consultation with the Investment Adviser and Scheme Actuary
  • Appointing the investment manager(s), platform provider and custodian (if required)
  • Selecting appropriate investment managers and appropriate funds
  • Assessing the quality of the performance and processes of the underlying investment manager(s) by means of regular reviews of investment returns and other relevant information, in consultation with the Investment Adviser
  • Consulting with the Sponsoring Employer regarding any proposed amendments to this Statement
  • Monitoring compliance of the investment arrangements with this Statement on a continuing basis

Investment Adviser

The Investment Adviser’s responsibilities include the following:

  • Participating with the Trustees in reviews of this Statement of Investment Principles
  • Production of performance monitoring reports
  • Advising the Trustees, at their request, on the following matters:
    • Through consultation with the Scheme Actuary, how any changes within the Fund’s benefits, membership, and funding position may affect the manner in which the assets should be invested
    • How any significant changes in the investment managers’ organisations could affect the interests of the Fund
    • How any changes in the investment environment could present either opportunities or problems for the Fund
  • Undertaking project work, as requested, including:
    • Reviews of asset allocation policy
    • Research into and reviews of investment managers
  • Advising on the selection of new managers and/or custodians
  • Informing the Trustees of any significant changes or concerns in relation to the Platform provider’s suitability for the Plan

Investment Managers

The responsibilities of the underlying investment managers through the Mobius Platform include the following:

  • Informing the Platform provider of any changes in the internal performance objectives and guidelines of their funds
  • Having regard to the need for diversification of investments, so far as appropriate for the particular mandate, and to the suitability of investments
  • Managing their funds in accordance with their stated mandates

The underlying investment managers for the Fund are not directly appointed by the Trustees and therefore do not have any direct responsibility to the Trustees.

Buy-In Policy

The primary responsibility of Just Retirement is to ensure that the correct amounts are paid to the Fund on a timely basis equivalent to the pensions for the relevant pensioners and their dependants as appropriate.

Platform Provider

The platform provider’s responsibilities include the following:

  • Ensure contributions are invested/disinvested in accordance with instructions, and that switches are processed accordingly
  • Ensure instructions are in accordance with the Authorised Signatory Lists
  • Informing the Trustees of any changes of which they are informed in the internal performance objectives and guidelines of any pooled fund used by the Fund as and when they occur
  • Providing the Trustees, on a quarterly basis (or as frequently as agreed), with a statement and valuation of the assets and appropriate management information and reporting.

Scheme Actuary

The Scheme Actuary’s responsibilities include the following:

  • Liaising with the Investment Adviser regarding the suitability of the Fund’s investment strategy given the financial characteristics of the Fund
  • Assessing the funding position of the Fund and advising on the appropriate response to any shortfall
  • Performing the triennial (or more frequent, as required) valuations and advising on the appropriate contribution levels

Administrator

The Administrator’s responsibilities include the following:

  • Ensuring there is sufficient cash available to meet benefit payments as and when they fall due
  • Paying benefits and making transfer payments
  • Investing contributions not required to meet benefit payments with the Investment Managers according to the Trustees’ instructions.