“Facing The Midlands Group Conference · TPR Discussion Paper ... PMI Midlands Group, Annual Half...
Transcript of “Facing The Midlands Group Conference · TPR Discussion Paper ... PMI Midlands Group, Annual Half...
“Facing The Challenges”Midlands Group Conference
7th June 2017
Sponsored by
Chairperson’s IntroductionAndy GreigChairperson
21st Century Trusteeship - What Does the Future Hold?
Matthew GilesPMI Midlands Group, Annual Half Day Conference 7 June 2017
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What’s it all about? The edited highlights!111
222 Why it’s not worth the paper it’s written on!
In a change to the advertised programme……
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How did we get here?
• July 2016 • “21st Century Trusteeship and
Governance”
TPR Discussion Paper
• Deadline 9 September 2016• 74 responses submitted
Responses
• December 2016• Summarises responses • What next?
TPR Discussion Paper Response
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Trustee qualifications
Issue
• Should there be a minimum qualification or a barrier to entry for professional trustees, chairs or lay trustees?
Responses
• Few thought mandatory qualifications appropriate• Hard to demonstrate behavioural qualities
What next?
• Statement of standards for chairs and professional trustees• Further consideration of “fit and proper” regime
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CPD and Trustee Toolkit
Issue
• Would a CPD framework for trustees help them meet the challenges of governance?
• Should the Trustee Toolkit be compulsory?
Responses
• Most opposed formal frameworks• Learning needs to be flexible to reflect scheme specific
requirements
What next?
• Further guidance, practical tools and products • Streamline existing material and better signposting
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Trustee probation periods
Issue
• Would a six month probationary period for new trustees help them build TKU?
Responses
• Difficult to administer • Would cause decision making issues in the interim
What next?
• No follow up proposed• Education campaign to be launched in 2017
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Conflicts of interest
Issue
• What is the best way of managing conflicts of interest?
Responses
• Conflicts are inevitable• Aim should be to manage not eliminate them
What next?
• Further guidance!• Will it address confidentiality issues this time?
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Reporting
Issue
• Chair’s statement for DB schemes?• Scheme return to focus more on governance?
Responses
• Respondents advocated greater reporting on compliance with governance standards
What next?
• TPR to liaise with DWP on encouraging better governance & which framework will work best for DB scheme reporting?
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Enforcement
Issue
• What should be done with schemes unwilling / unable to deliver good governance?
Responses
• Focus on education and support• Consolidation feasible in DC but not in DB
What next?
• Updated compliance and enforcement policy, wider use of powers
• Recommend consideration of consolidation
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• Those that engage tend to practise good governance
• And are inclined against generic regulation
Limited engagement
333111 222• Most respondents have there own
commercial agenda
Vested interests
• TPR’s capacity to do much more than educate and guide is very limited
Capacity crunch
Three fundamental flaws
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Any questions?
Matthew GilesPartner, Pensions
T +44 121 222 3296E [email protected]
•
SPB Pensions by Numbers Our pensions team boasts:
More than 500 years combined pensions experience
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More than 4,000 delegates attended our events over the last five years 12 national and international industry awards in last 12 years
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21st Century Trusteeship - What Does the Future Hold?
Matthew GilesPMI Midlands Group, Annual Half Day Conference 7 June 2017
The information in this presentation is proprietary and confidential and shall not be disclosed to or used by a third party unless
specifically authorised by the relevant GKN plc group company
GKN – Pension DeriskingSteve Jones| 7 June 2017
Proprietary and confidential restrictions on title slide apply throughout this presentation
Introduction
£2.4 bn
Pensioners
Deferred
Active
Assets Liabilities
£2.7 bn
In 2012 - one Defined Benefit Scheme for the UKLarge proportion of orphaned liabilitiesOver 60% of the Scheme related to pensions in payment
Proprietary and confidential restrictions on title slide apply throughout this presentation
Splitting the Scheme - 2012
OriginalScheme
2012Scheme
LegacyScheme
PensionersDeferredActive
Orphan pensioner liabilities and WULS eligible members in “Legacy Scheme”All other members transferred to new “2012 Scheme”
Proprietary and confidential restrictions on title slide apply throughout this presentation
Buy-in number 1
Sponsor was willing to make an additional contribution to cover the difference between buy-out cost and the funding cost – to a limit!Size of the deal was constrained by the size of this contribution£120m of liabilities secured with Rothesay Life
Key learning – we had an expensive benefit structure
Proprietary and confidential restrictions on title slide apply throughout this presentation
Pension Increase Exchange
Assets Liabilities
Proprietary and confidential restrictions on title slide apply throughout this presentation
Buy-in number 2
Agreed with insurer up front that they would re-shape buy-in policy if covered members accepted PIE offerA substantial amount didThis led to a return of premium to the SchemeBetter terms were on offer if additional lives insured rather than cash returnedThis refund covered the funding strain of an additional c£50m of insurance
c40% increase in the size of the buy-in for a given Company contribution by reshaping the benefits
Proprietary and confidential restrictions on title slide apply throughout this presentation
Splitting the Scheme again!
GKN Group Pension Scheme 2016 Settled liabilities
Pension Insurance
After Settlement
Non WULS deferreds
Residual pensioners
Pensioners
Members accepting WULS
Pensioners not accepting PIE
Deferreds
GKN Scheme
Prior Position
Pensioners
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Winding up the Scheme
Project consisted of three major workstreams:−Broking the market for the buy-out−Making WULS/trivial commutation offers to eligible members−GMP reconciliation
Wind up triggered in December 2016 and required £15 million cash injection from GKN
Project removed − 30% of the Scheme’s liabilities (£285 million) from the balance sheet − 45% of the members from the Scheme (and their associated administration costs)
Remaining Scheme is marginally better funded and over 25% of the Scheme is covered by buy-in policies
Proprietary and confidential restrictions on title slide apply throughout this presentation
Key Lessons?
Clean data is crucialVaried communication Close co-operation between Sponsor and TrusteeAdvisor team
Bob Coppage – Update from the PMI
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