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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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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 • Experienced in historic and recent Trust based DC pension reviews Private and Confidential
Introduction Background Confidential: internal use only 4
Background Private and confidential
Code of Practice 13 v. DC Regulatory Guidance Private and confidential
DC focus areas • Investment (CoP/RG) • Governance (RG) • Administration (CoP/ RG) • Member communications (RG) Private and Confidential
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
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
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
Investment (Contd.) (iv) ‘communication with members’ • Regular communication re. member’s investment strategy and implications Private and Confidential
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
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
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
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
Member communications • Improve retirement outcomes through communications which are: • Accurate • Clear • Understandable • Engaging Private and Confidential
Actions: timeline Private and confidential