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Turnbull for pension schemes. The team. Angela Crum-Ewing David Jones Julie Long Rob Boddye Steve Balmont Terry Raby. Pension schemes - a risk management problem. Substantial importance £700 billion NAPF member’s funds £1,600 billion UK equity market capitalisation Complexity

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Presentation Transcript

The team
The team

  • Angela Crum-Ewing

  • David Jones

  • Julie Long

  • Rob Boddye

  • Steve Balmont

  • Terry Raby


Pension schemes a risk management problem
Pension schemes - a risk management problem

  • Substantial importance

    • £700 billion NAPF member’s funds

    • £1,600 billion UK equity market capitalisation

  • Complexity

  • Interests of both sponsors and employees that funds are well managed


Combined code turnbull solution
Combined Code/ Turnbull solution

  • Familiarity

  • Big picture

  • Flexible

  • Common-sense requirements of the code

    • Maintain a sound system of internal control

    • Review its effectiveness

  • Motivated by losses from corporate failures


Method
Method

  • How to manage risk

  • Areas of Risk

    • Trusteeship

    • Perceived Value of Benefits

    • Administration

    • Investments

    • Corporate Change

  • Disclosure

    • Trustees statement on internal control


How to manage risk
How to manage risk

  • Roles of trustees and their delegates

  • Maintain a sound system of internal control

    • Risk identification

    • Likelihood

    • Risk management (controls)

    • Residual


How to manage risk1
How to manage risk

  • Review the effectiveness of internal control

    • Review reports received during the year

    • Annual assessment of changes in significant risks

    • Scope & quality of ongoing monitoring

    • Significant control weaknesses

    • Independent assurance - Internal Audit

      • Use of sponsor’s internal auditors

      • Assurance re system of internal control


Areas of risk trusteeship
Areas of Risk - Trusteeship

  • Appointment

  • Competence – knowing the scheme

  • Competence - understanding powers & duties

  • Advice

  • Delegates


Areas of risk perceived value of benefits
Areas of Risk - Perceived Value of Benefits

  • Adequate understanding , adequate information

  • Benefits relevant to patterns of employment & life

  • Socially responsible investment


Areas of risk administration
Areas of Risk - Administration

  • Record keeping

  • Benefit payments

  • Contributions

  • Systems infrastructure

  • AVC assets


Areas of risk investments
Areas of Risk - Investments

  • Matching assets & liabilities

  • Investment performance

  • Manager appointment & ongoing monitoring

  • Manager internal control & regulatory environment

  • Investment restrictions, manager activism

  • Security of Assets

  • Custodian internal control & regulatory environment

  • Taking assets out of custody


Areas of risk corporate change
Areas of Risk - Corporate Change

  • Mergers, acquisitions etc


Disclosure
Disclosure

  • ‘- the trustees... use the annual report to demonstrate how they have discharged their duties and as a means of satisfying themselves that they have properly met theirresponsibilities’ SORP para 1.4

  • Combined Code requirements are to

    • maintain a sound system of internal control and review its effectiveness

  • So the Turnbull reporting requires

    • Acknowledgement of responsibility for maintaining and reviewing

    • Disclosing that there is an ongoing risk management process

    • Summarising the process involved in reviewing


Summary
Summary

  • Pension schemes are important & complex

  • Require risk management methods

  • Combined Code Turnbull solution

    • familiar, big picture , flexible

  • Generic risks

  • About three months away


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