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Code of Practice 13/ DC Regulatory Guidance

Code of Practice 13/ DC Regulatory Guidance. Agenda. Background Code of Practice 13 v. DC Regulatory Guidance DC Focus areas Action: Timeline. 2. Chris Roberts. Consultant & Client Manager Spence & Partners Limited Founding representative on DC Governance Committee

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Code of Practice 13/ DC Regulatory Guidance

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  1. Code of Practice 13/ DC Regulatory Guidance

  2. Agenda Background Code of Practice 13 v. DC Regulatory Guidance DC Focus areas Action: Timeline 2

  3. Chris Roberts • Consultant & Client Manager • Spence & Partners Limited • Founding representative on DC Governance Committee • Experienced in historic and recent Trust based DC pension reviews Private and Confidential

  4. Introduction Background Confidential: internal use only 4

  5. Background Private and confidential

  6. Code of Practice 13 v. DC Regulatory Guidance

  7. Code of Practice 13 v. DC Regulatory Guidance Private and confidential

  8. DC focus areas

  9. DC focus areas • Investment (CoP/RG) • Governance (RG) • Administration (CoP/ RG) • Member communications (RG) Private and Confidential

  10. Investment (CoP 12 OF; RG1 QF; 70 paragraphs (i) ‘Set investment objectives; default strategy’ • Identify / document each fund’s investment objective • Fund options and default meet needs of actives and deferreds • Review investment objectives for each fund options Private and Confidential

  11. Investment (Contd.) (ii) ‘security / liquidity of scheme assets’ • Assets traded on regulated markets • Understand financial protections for members (e.g. FSCS) • Mitigate impact of business / commercial risks on members Private and Confidential

  12. Investment (Contd.) (iii) ‘monitor / review default strategy and fund performance’ • Performance / ongoing suitability • Agree triggers for review • New DC investment products • Changing membership profiles • Changing regulatory requirements Private and Confidential

  13. Investment (Contd.) (iv) ‘communication with members’ • Regular communication re. member’s investment strategy and implications Private and Confidential

  14. Governance (i) ‘ensure members receive value for money’ (VFM) • 4 Step VFM review: • Collect information (benefits and costs of membership) • Criteria for assessing VFM • Compare criteria with other schemes • Evaluate and act Private and Confidential

  15. Governance (contd.) (ii) ‘transparency of costs and charges’ • Clearly disclosed to members • Clearly disclosed to employer at point of product selection (iii) ‘contribution levels’ • Offer flexible contribution structures • Advise members of impact of contribution level on pension pot/ ability to pay more, etc. • Monitor efficiency of contribution amendment process Private and Confidential

  16. Administration (i) ‘Focus on internal controls given particular risks in DC schemes’ • Provision of SMPI • Review lifestyling mechanics • Review contributions and investments • Maintenance of Payment Schedule Private and Confidential

  17. Administration (contd.) (ii) ‘establish robust retirement process’ • Help members optimise income at retirement • Options clearly communicated so as to support member in selecting most appropriate option • Any insurer drafted communications to be compliant with ABI Code of Conduct on retirement choices • Information regarding appointment of advisor / annuity broker • 5 Stage Retirement Process suggested Private and Confidential

  18. Member communications • Improve retirement outcomes through communications which are: • Accurate • Clear • Understandable • Engaging Private and Confidential

  19. Actions: timeline

  20. Actions: timeline Private and confidential

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