The Equiniti Pension Plan

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Business. Empowered.
Stuart Cameron, Pensions Services Director, Xafinity
Paul Munro, Principal Consultant, Xafinity
EQUINITI’S PROPOSED
MOVE TO THE NATIONAL
PENSION TRUST
In association with
The purpose of this presentation
 Recap on the Company’s proposal to:
□ Close the Equiniti Pension Plan (EPP) and
□ Equiniti’s participation in the National Pension Trust (NatPen)
 Overview of NatPen:
□ What is a DC Trust and how does it work?
□ Contribution rates
□ What investment options do you have?
□ Your benefit options at retirement
□ What happens if you leave?
□ Options in respect of previous pension benefits
 Protection Benefits
 Next Steps & Timings
 Questions
2
What is the National Pension Trust?
High quality trust based solution
Benefits
High:
 Governance
 Member engagement
 Investment support
 Decumulation support
Low:
 Governance requirements on employer
 Costs to employer
A comprehensive cost effective DC Trust based pension scheme – the
only master trust to be awarded the PQM for its ‘core’ product
3
Strong Governance
Independent Professional Trustee:
■ Governs Trust to a high level
■ Ensures clear communications
channels between all providers
■ Ensures appropriate levels of:
□ Risk management
□ Internal controls
□ Administration service standards
□ Quality of record keeping
■ Maintains an action plan and corrects
any problems
The Trustee is wholly independent
of all service providers
4
Administration
and Advisor
Xafinity
Legal Advice
Hogan Lovells
Communications
Xafinity
Origen
Zurich
Systems
Xafinity
Origen
Zurich
Professional
Trustee
(Bridge
Trustees)
Investment
Platform
Zurich
Investment
Managers
Artemis, Blackrock,
L&G, Newton,
Schroders,
Threadneedle,
Standard Life
Auditor
Baker Tilly
Participating
Employer
How does a Defined Contribution
(DC) Trust work?
5
How DC schemes work
3
2
1
Your Pension Account
Annual Income
Company Pension
Contributions
£
Pension Pot
converted into
benefits
Tax Free Cash
Member
Contributions
Spouse’s /
Dependant’s
Pension
4
Protection
Company Payment
6
Benefits
No change to Contributions
Under age 30
Employee
Nothing
1%
2%
2%+
Employer
4%
5%
6%
6%
Total
4%
6%
8%
8%+
Employee
Nothing
1%
2%
2%+
Employer
6%
7%
8%
8%
Total
6%
8%
10%
10%+
Employee
Nothing
1%
2%
2%+
Employer
8%
9%
10%
10%
Total
8%
10%
12%
12%+
Age 30-44
45 and over
7
Investing the Pension Pot
8
Inflation
9
Asset class returns
Asset class returns over last 25 years
(accumulation of an initial investment of £100)
1,000
£
900
800
700
600
500
400
300
200
100
0
10
Fixed gilts
Index-linked gilts
UK equities
UK property
Cash
Inflation
Global (ex-UK) equities
How to Invest?
■ Previous slides explained why to invest
■ Key consideration is how to invest?
■ There are two ways to invest your contributions:
Choose from a range of Self Select Funds
OR
Choose a pre-defined Lifestyle Strategy
■ Members can rely on the ‘default’ fund, although this is not a
recommendation
11
Investments
PR concerns:
■ Investment return is a key factor in determining retirement income
■ Without support many members are not well placed to make decisions
Independent Professional Trustee has:
■ Developed processes for regularly monitoring, reviewing and (if
required) replacing
□ Default fund
□ Investment manager(s)
□ Fund Range
■ Determined investment strategy based upon membership
■ Ensured that the number and risk profile of funds reflect the typical
member’s financial capability
12
Self Investment Options
Investment options
Nature of
Management
AMC %
High
UK Equity High Alpha Fund
Global Equity Unconstrained Fund
Ethical Fund
UK Equity Fund
Overseas Equity Fund
Global Equity Fund
Property Fund
Adventurous Growth Fund
Active
Active
Active
Passive
Passive
Passive
Active
Active
0.73
0.36
0.38
0.11
0.11
0.11
0.20
0.35
Moderate
Balanced Growth Fund
Diversified Growth Fund
Active
Active
0.26
0.85
Cautious
Cautious Growth Fund
Corporate Bond Fund
Pre-Retirement Fund
Fixed Interest Gilt Fund
Index-Linked Gilt Fund
Active
Passive
Passive
Passive
Passive
0.22
0.11
0.11
0.11
0.11
Minimal
Cash Fund
Active
0.11
13
Lifestyle Options
14
Purpose of a Lifestyle Strategy
The Lifestyle Strategy is based on the following thoughts:
1. Member is willing to take material risk when some way from
retirement to achieve a potentially higher return
2. Member is willing to accept high volatility when some way from
retirement to achieve a potentially higher return
3. Members wish to retire at their Normal Retirement Age
4. Members are concerned about volatility in the run up to retirement
5. Members’ benefits at retirement: 25% cash, 75% of your account
used to provide pension
Therefore, ALL contributions – future contributions and transferred funds
– are invested in the same Lifestyle strategy
15
Balanced Lifestyle Strategy (Default)
 Other lifestyle strategies available: Cautious, Adventurous, and
Global Equity
 The Global Equity Lifestyle Strategy is similar to the default
option under the Equiniti Pension Plan but at a lower AMC
16
Lifestyling may not always be appropriate
■ Will members be in the DC Plan at the agreed
transition point?
■ Retirement at different age to Scheme Normal
Retirement Age
■ Pension drawdown rather than annuity
■ Timing on investment switches
■ Range of self select funds offered will enable
members to set their own strategy
■ Lifestyle investment is a strategy for you to consider,
but this is not a recommendation
17
Making your investment choices
■ Xafinity believes it is important that members make a considered choice when
■
it comes to setting their investment strategy.
This may involve consulting an independent financial adviser, though many
individuals find that the information available on the NatPen website provides
sufficient information and education to make an initial informed choice.
Trust Investment Navigator
Modelling tools
The Investment Navigator is
accessible on the NatPen
Website.
Once your details have been uploaded
and you access the secure NatPen site,
you can model what your retirement
benefits might be.
It has been designed to help
provide you with a clearer view
of:
What kind of investor you are;
and
What kind of investment
strategy could help you reach
your long term goals
18
The model will take account of your
contributions, your current fund value
and how long it is until your selected
retirement date.
The value of other DC benefits can also
be included.
Monitoring your investment choices
■ It is important to review the value of your investments annually and to
■
■
19
reconsider your investment strategy at least every three years.
Again, this may involve consulting an independent financial adviser.
Various information is available to you on the NatPen website:
Member Communication
20
Communications & Helpline
Member Helpline
Interactive web enabled systems*
 Provides access to:
□ Booklet and Investment Guide
□ Fund factsheets
□ Administration forms
□ Benefit Statements
□ News Updates
*Hard copies available
 Allows member to:
□ Undertake “what if” calculations
□ Obtain real time annuity quotations
□ Request fund switches
□ View statement of account over any time period
□ View contribution and transaction details
□ Update personal details
21
Auto-enrolment – What impact will it have?
■ Staff are already automatically enrolled into the Equiniti Pension
■
■
■
■
22
Plan from the day they join Equiniti. In future, new staff will be
contractually enrolled into NatPen.
The contributions to the EPP (and to NatPen) exceed the
amounts currently required to comply with the new statutory
auto-enrolment requirements.
Equiniti Group’s “Staging Date” under the new auto-enrolment
requirements is 1 September 2013.
As a result of the way the Equiniti’s pensions arrangements and
contribution structure were established, auto-enrolment will
have a low impact when compared to many employers’ pension
arrangements.
For practical purposes, the Company intends to postpone the
automatic enrolment of employees who have not yet joined the
EPP until 1 November 2013.
Options at Retirement
23
Decision Tree
 Trustee-established service to




24
help you review your benefit
options at retirement
Clear and simple language
Allows a member to
understand their options
Information not advice
Professional and bespoke
Retirement Support
■ Open market (whole of market)
■ Benefit Design support
□ Escalation / Spouse /
■
■
■
25
Guaranteed Period
□ Impaired life annuity
On-line access to model
different bases
□ Prior to retirement
□ At retirement
Free Member Helpline
Tailored report
Retirement Support
The NatPen approach addresses tPR concerns about
retirement decisions
Shopping around can be significantly beneficial
The availability of an independently selected Annuity Service
■ Provides members with the best opportunity to select the option that is suitable for
them
■ Ensures efficient processes are in place to convert members’ funds
■ Emphasises the importance of proper advice
26
Protection Benefits
27
Death in Service Benefits
■ If you join NatPen, the benefit payable on death in service is:
□ The value of your DC Fund at the date of your death;
□ In addition, an insured lump sum payment of 4 x Basic Salary* at date of death is
payable from a separate Group Life Assurance trust established by Equiniti.
■ Pension benefits from previous arrangements may be payable in addition
* Members are able to increase or reduce the level of lump sum benefit through Flex benefits
system
All employees are covered for 2 x Basic Salary, irrespective of pension scheme
membership
28
What happens if I leave Equiniti?
29
Leaving Equiniti
 If your employment with Equiniti ceases you can no longer be an
active member of NatPen and contributions will stop
 If you have been in NatPen for more than 2 years, you can
□ Leave your funds invested
□ Transfer the money from your pension account to your new
employer’s pension scheme, (provided it will accept the transfer) or
a personal pension.
 If you have been in the plan for between 3 months and 2 years you
can
□ Leave your funds invested (if more than £5k)
□ Transfer the money from your pension account (as above) , or
□ Take a refund of your contributions (less a tax charge).
30
Transfers in from other
arrangements
31
Existing pension plans
Other pension schemes
 NatPen is able to accept transfers of benefits from other registered
pension schemes
 Alternatively, your other funds can remain where they are and will
remain subject to the fund charges for your existing scheme.
The Equiniti Pension Plan
 Once current staff are enrolled in NatPen, the EPP will be wound up.
 Before the wind-up commences, you will have the opportunity to
transfer your funds in the EPP to NatPen (or to a separate
arrangement of your choice).
 Unless you transfer to NatPen or another arrangement, your EPP fund
value will be transferred over to NatPen under an independently
certified transfer plan agreed by the EPP Trustees.
 Investment options letters will be issued to home addresses (Ensure
yours is up to date!)
32
Forms for completion:
■ Beneficiary Nomination
■ Investment instruction
33
■ A separate form should be
completed for the Death in
Service lump sum, which
is payable under a
separate trust.
34
35
Next Steps
 If the Company’s proposal is implemented you will need to:
□ Consider whether you want to change the level of contributions you are
□
paying
Review your Investment options
 Irrespective whether you join NatPen or not you should complete a
Nomination Form to ensure that any lump sum benefits can be paid to
your beneficiaries promptly.
 Staff considering opting out are encouraged to seek personal
independent financial advice
36
Any Questions?
37
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