DC change projects · PDF file 1 £3,500,000 £3,000,000 £2,500,000...

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Transcript of DC change projects · PDF file 1 £3,500,000 £3,000,000 £2,500,000...

  • DC change projects

    As one of only a very small number of truly independent DC advisers that exist in the UK today, we are able to provide clients with clear, unbiased advice supported by extensive provider market research.

    isio.com

  • Cost benefit analysis

    Barriers to change

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    £3,500,000

    £3,000,000

    £2,500,000

    £2,000,000

    £1,500,000

    £1,000,000

    £500,000

    -£500,000

    £0

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    YEAR SAVINGS CUMULATIVE SAVINGS

    Typically, on any DC change exercise from a trust based arrangement, the following

    areas require initial investigation as to whether they are a clear

    barrier to change, whether there are any mitigations to

    manage them and document for audit trail purposes.

    Detailed cost/benefit analysis to confirm financial case

    for change and benefits to employer and members.

    Gap analysis against key objectives to identify most

    suitable DC delivery vehicle.

    Trust Deed and contracts of

    employment

    Cash protections

    Early retirement protections

    Impact on ancillary benefits

    Hybrid structure trapped surplus

    Ex-DB member PCLS conversion

    Links to DB AVCs

    Impact on member charges

    Asset transition costs/impact

    Key features of different DC vehicles

    MASTER TRUST CONTRACT BASED

    Cost of future changes

    Operational costs

    Reporting requirements

    Leaver options

    Governance Independent scheme specific High level book of business

    Deferred pot Personal arrangement

    Cost borne by trustee/company

    Borne by trustee/company

    Cost borne by provider

    Borne by sponsors Borne by member

    Borne by provider/member

    Potential savings from changing the DC vehicle - no future employer subsidy paid by the Company

    Savings Over the 10 year period to 2030, the employer could expect to save £3.1m It would take about 1-2 years to recoup the project costs

  • Indicative timeline

    Isio credentials

    Investment and asset transition

    Proof of concept

    Design objectives

    DC provider selection Consult

    Engage Trustee approval Implementation Governance

    Transition

    Proof of concept and design objectives

    Assessment process Implementation

    Scheme go liveGo/No-go Go/No-go

    Future governance

    The default investment strategy is a key criteria

    as it directly impacts on a member’s DC pot value at retirement. Isio’s specialist transitions team oversees

    asset transfers, thereby managing risks and costs

    to members.

    Previously KPMG Pensions, our team has over 25 years of

    pension market experience with a multi-disciplinary

    pension offering covering: DC and DB consultancy, actuarial

    administration, investment, pensions tax, communications

    and assurance. We have a team of over 500 pensions

    professionals across the UK and have a track record of absolute

    commitment to quality of advice and service.

    Independence – we are independent of all providers and investment managers and are not a product provider in our own right, unlike some of our competitors who now promote their own products.

    DC experience – we work with many DC schemes with total assets under advice estimated to be in excess of £17 billion. This has given us experience of a wide range of projects for a wide range of clients.

    DC investment and asset transition experts – we have an in-house team of DC investment and asset transition experts that carry out research into the DC provider market, forming a view on, amongst other things, the quality of the off the shelf default strategies available and capability for the transition team for each provider.

    Market knowledge – our consultants liaise directly with pension providers i.e. no central research team. This means our consultants are up to date and fully briefed on market developments. It also means that we have well established provider relationships.

    Ideas and innovation – we are not compromised by our own products. We have developed market leading approaches to scheme governance and assessing value for members (a key focus from the Pensions Regulator). Our deep understanding of the Regulatory framework helps us to build and innovate.

    Investment - key considerations

    Suitability of default investment strategy

    Fund range and alternative lifestyles

    Sole or dual governance

    Environmental, social and governance considerations

    Key risks in an asset transition

    Minimising transaction costs as far as possible

    Managing market exposure as far as possible

    Reducing the operational risks present

    Completing the transfer in a timely manner

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  • The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. 2020

    Isio Group Limited is an Appointed Representative of KPMG LLP which is authorised and regulated by the Financial Conduct Authority FRN 210513

    Contact

    Richard Birkin Head of DC Pensions Advisory

    Tel: 0121 227 3544 richard.birkin@isio.com

    isio.com