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Notes Rentokil Initial2015 Pension Scheme Professional Advisers and Principal Employer
Trustee: Rentokil Initial Pension Trustee Limited
Scheme Actuary: D Lindsay, Aon Hewitt Limited
Scheme Administrator: Capita Employee Solutions
Independent Auditors: PricewaterhouseCoopers LLP
Banker: National Westminster Bank plc
Investment Managers: Aberdeen Standard Investments (formerly Standard Life Investments Limited) Insight Investments Funds Management Limited Clerical Medical Managed Funds
AVC Providers: Equitable LifeAssurance Society (until 01.01.2020) Utmost Lifeand Pensions (from 01.01 .2020) Prudential Plc ReAssure Ltd Phoenix Asset Management Aberdeen Standard
Annuity Provider: Pension Insurance Corporation Aviva Insurance Zurich Insurance Legal &General
Legal Adviser: Linklaters LLP
Investment adviser: WillisTowers Watson
Investment custodian: Bank of New York Europe Limited
Principal Employer: Rentokil Initialplc
Contact for further information: Rentokil Initialplc Compass House Manor Royal Crawley RH1O9PY
Email: rensionsirentokil-initial.com
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C Rentokil Initial2015 Pension Scheme Trustee’s Report
During the year ended 31 December 2019, the Trustee met 6 times to review the strategy of the Scheme and to consider matters relating to regulatory issues, administration, membership and the financial statements and to receive reports on the investment management and investment performance and to discuss the buy-out of the Scheme’s benefits with Pension Insurance Corporation. Scheme advisers The names of the professional advisers to the Trustee and other individuals and organisations who have acted for or were retained by the Trustee during the year are listed on page 2. Calculation of Transfer values Cash equivalents paid during the year with respect to transfers have been calculated and verified in the manner prescribed by the Pension Schemes Act 1993 and do not include discretionary benefits. Financial Development
The financial statements included in this annual report are the accounts required by the Pensions Act 1995. They have been prepared and audited in compliance with regulations made under section 41(1) and (6) of that Act except that they were not signed within the seven-month timeline. They showed that the value of the Scheme’s net assets totalled £1,645,692k as at 31 December 2019 (2018: £1 ,575,553k). Contributions
During the year ended 31 December 2019 no contributions were due or paid to the Scheme by the Principal Employer.
As the Scheme was shown to be in surplus by the actuarial valuation dated 31 December 2018, no additional contributions are required to be paid to the Scheme. Group transfer in
On 28 November 2018 all the assets and liabilities of the Initial Hospital Services Ltd No.1 Pension Scheme were transferred into the Scheme. The fund value as at 28 November 2018 was £4,160k which was held in a managed fund with Clerical Medical. The membership of the InitialHospital Services Ltd No.1 Pension Scheme at this time comprised 74 pensioners and 53 deferred pensioners.
Buy in
During December 2018 the Scheme entered into a Buy in policy with Pension Insurance Corporation (PlC). Some of the Scheme’s investments in Insight and Aberdeen Standard Investments were sold, with the cash proceeds being used to purchase a bulk annuity. The risk transfer date was 5 December 2018. The value of the buy-in policy at 31 December 2018 was £1 512,200k, this covers all members.
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• Rentokil Initial2015 Pension Scheme Trustee’s Report Report on Actuarial Liabilities
As required by Financial Reporting Standard 102, ‘The Financial Reporting Standard applicable in the United Kingdom and the Republic of Ireland” (FRS 102), the financial statements do not include liabilities in respect of promised retirement benefits. Under Section 222 of the Pensions Act 2004, every scheme is subject to the Statutory Funding Objective, which is to have sufficient and appropriate assets to covet its technical provisions. The technical provisions represent the present value of the benefits members are entitled to; assessed using the assumptions agreed between the Trustee and the Employer and set out in a Statement of Funding Principles, which is available to Scheme members on request. The last actuarial valuation of the Scheme was carried out as at 31 December 2018. These showed:
31 December2015 31 December2018
The value of the liabilitieswas: £1,413.7 m £1,569.5 m The value of the assets at that date was: £1,424.5 m £1,613.5 m Surplusofassets relativeto liabilities: £10.8 m £44.0 m
Fundinglevel(ratioofassets to liabilities): 100.6% 102.8% The method and significant actuarial assumptions used to determine the technical provisions are as follows: Method
The actuarial method to be used in the calculation of the technical provisions is the Projected Unit Method. Discount interest rate: term dependent forward rates set by reference to the fixed-interest gilt forward yield curve (as derived from Bank of England data) at the valuation date plus a premium of 0.5% pa. until 31 December 2025, reducing linearlyto 0.0% p.a. by 31 December 2033. The same discount rate is used for both pre-retirement and post-retirement liabilities. Future Retail Price inflation: term dependent rates implied from the fixed-interest and index-linked gilt curves (as derived from Bank of England data) at the valuation date. Future Consumer Price inflation: term dependent rates derived from the assumption for future retail price inflation less an adjustment equal to 1.1% per annum. Future Pension increases: term dependant rates derived from the assumption for future inflation allowing for assumed inflation volatility and the caps and floors on pension increases according to the provisions in the Scheme’s rules.
Mortality for the period in retirement, standard SAPS S2 ‘AllLives’tables, adjusted to allow for individual years of birth, with the followingscaling factors: Category Sex
M F Deferreds 108% 108% Pensioners 98% 107% Dependant pensioners 96% 96%
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with Rentokil Initial 2015 Pension Scheme Trustee’s Report Asset allocations and performance
The current asset allocation was agreed in December 2018 following the decision by the Trustee to undertake a buy-in of all Scheme liabilities with Pensions Insurance Corporation (PlC). The asset allocation excluding the buy-in policy is shown below:
Allocation % 12 Month 3 Year 5 Year Performance % Performance % Performance %
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InsightInvestment — Cash 80.0 0.8 0.6 6.2
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Scheme total 100.0 2.3 1.4 4.9
Source: Insight Investment, Aberdeen Standard Investments
Note: Excludes cash held in Trustee bank account. Performance shown gross of investment managers fees.
COVID-19
The outbreak of the novel Coronavirus (COVID-19), declared by the World Health Organisation as a global health emergency on the 30th January 2020, has caused disruption to businesses and economic activity which has been reflected in recent fluctuations in global stock markets. The Trustee has been monitoring developments relating to COVID-19 and is coordinating its operational response based on existing business continuity plans and on guidance from global health organisations, UK government and general pandemic response best practice.
The emergence and spread of COVID-19 is a non-adjusting post balance sheet event as it does not impact the valuation of the assets at the year end date. The Trustee has secured a buy-in policy with the Pension Insurance Corporation which secures members’ liabilities and therefore it does not anticipate any significant impact on the Scheme as a result of COVID-19. Further investment disclosures Further details on the Investment Strategy, objectives and Investment risks are disclosed in note 21 on pages 31 to 33.
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Website:www.gov. Rentokil Initial2015 Pension Scheme Trustee’s Report Statement of Trustee’s Responsibilities
Trustee’s responsibilities in respect of the financial statements
The financial statements, which are prepared in accordance with United Kingdom Generally Accepted Accounting Practice, including the Financial Reporting Standard applicable in the UK and Republic of Ireland (“FRS 102”), are the responsibility of the Trustee. Pension scheme regulations require, and the Trustee is responsible for ensuring, that those financial statements:
• show a true and fair view of the financial transactions of the Scheme during the Scheme year and of the amount and disposition at the end of the Scheme year of its assets and liabilities, other than liabilities to pay pensions and benefits after the end of the Scheme year; and
• contain the information specified in Regulation 3A of the Occupational Pension Schemes (Requirement to obtain Audited Accounts and a Statement from,the Auditor) Regulations 1996, including making a statement whether the financial statements have been prepared in accordance with the relevant financial reporting framework applicable to occupational pension schemes.
In discharging these responsibilities, the Trustee is responsible for selecting suitable accounting policies, to be applied consistently, making any estimates and judgements on a prudent and reasonable basis, and for ensuring that the financial statements are prepared on a going concern basis unless it is inappropriate to presume that the Scheme willcontinue as a going concern.
The Trustee is also responsible for making available certain other information about the Scheme in the form of an annual report. The Trustee also has a general responsibility for ensuring that accounting records are kept and for taking such steps as are reasonably open to it to safeguard the assets of the Scheme and to prevent and detect fraud and other irregularities, including the maintenance of an appropriate system of internal control.
Trustee’s responsibilities in respect of contributions
The Trustee is responsible under pensions legislation for preparing, and from time to time reviewing and if necessary revising, a schedule of contributions showing the rates of contributions payable to the Scheme by or on behalf of employers and the active members of the Scheme and the dates on or before which such contributions are to be paid.
The Trustee is also responsible for keeping records in respect of contributions received in respect of any active member of the Scheme and for adopting risk-based processes to monitor whether contributions that fall due to be paid are paid into the Scheme in accordance with the schedule of contributions.
Where breaches of the schedule occur, the Trustee is required by the Pensions Acts 1995 and 2004 to consider making reports to the Pensions Regulator and to members.
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Date Rentokil Initial 2015 Pension Scheme Actuary’s Certification of the Schedule of Contributions
Certification of schedule of contributions
Rentokil Initial 2015 Pension Scheme
Adequacy of rates of contributions
1. I certify that, in my opinion, the rates of contributions shown in this schedule of contributions are such that the statutory funding objective could have been expected on 31 December 2018 to continue to be met for the period for which the schedule is to be in force.
Adherence to statement of funding principles
2. I hereby certify that, in my opinion, this schedule of contributions is consistent with the Statement of Funding Principles dated 27 November2019.
The certification of the adequacy of the rates of contributions for the purpose of securing that the statutory funding objective can be expected to be met is not a certification of their adequacy for the purpose of securing the scheme’s liabilities by the purchase of annuities, ifthe scheme were to be wound up. Signature L ,._.S,.s- ... 28 November2019 David Lindsay Fellow of the Institute and Faculty of Actuaries
Aon Hewitt Limited
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14 Rentokil Initial2015 Pension Scheme Independent auditors’ report to the Trustee of the Rentokil Initial 2015 Pension Scheme Report on the audit of the financial statements Opinion
In our opinion, Rentokil Initial2015 Pension Scheme’s financial statements: • show a true and fair view of the financial transactions of the Scheme during the year ended 31 December 2019, and of the amount and disposition at that date of its assets and liabilities, other than liabilitiesto pay pensions and benefits after the end of the year;
• have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards comprising FRS 102 “The Financial Reporting Standard applicable in the UKand Republic of Ireland’, and applicable Iaw);.and
• contain the information specified in Regulation 3A of the Occupational Pension Schemes (Requirement to obtain Audited Accounts and a Statement from the Auditor) Regulations 1996.
We have audited the financial statements, included in the report and financial statements, which comprise: the statement of net assets available for benefits as at 31 December 2019; the fund account for the year then ended; and the notes to the financial statements, which include a description of the significant accounting policies. Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (‘ISAs (UK)”) and applicable law. Our responsibilities under ISAs (UK)are further described in the Auditors’ responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence
We remained independent of the Scheme in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK,which includes the FRC’s Ethical Standard, and we have fulfilledour other ethical responsibilities in accordance with these requirements. Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which lSAs (UK)require us to report to you where:
• the Trustee’s use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or
• the Trustee has not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the Scheme’s ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.
However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the Scheme’s abilityto continue as a going concern.
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The Rentokil Initial2015 Pension Scheme Statement of Net Assets available for benefits as at 31 December 2019 Asat Asat 31 December 31 December 2019 2012 Note £‘OOO £‘OOO Investment assets: 10 Bonds 16 8,286 8359 Pooled investment vehicles 14 51,290 29273 Derivatives 15 84 8
Insurance policies . 17 1,578,600 1,512,200 AVC investments 18 894 1,045 Cash 10 3,504 5,107 Other investment balances 19 724 134 1,642,682 1,556,126 Investment liabilities: 10 Derivatives 15 (32) (32)
Total net investment assets 1,642,682 1,556,094
Current assets 22 5,492 28,082 Current liabilities 23 (2,482) (8,623) Net assets available for benefits 1,645,692 1,575,553
The financial statements summarise the transactions of the Scheme and deal with the net assets at the disposal of the Trustee. They do not take account of obligations to pay pensions and benefits which fall due after the end of the Scheme year. The actuarial position of the Scheme, which takes into account such obligations for the defined benefit section, is dealt with in the Report on Actuarial Liabilities on page 8 to 9 of the annual report and these financial statements should be read in conjunction with this report. The accompanying notes on pages 21 to 35 are an integral part of these financial statements. The financial statements on pages 19 to 35 were approved by the Trustee on and signed on its behalf by / ./
Trustee Director Trustee Director For and on behalf of Rentokil Initial Pension Trustee Limited
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5. Rentokil Initial 2015 Pension Scheme Notes to the Financial Statements 6. Benefits paid or payable Year ended Year ended 31 December 31 December 2019 2078 £‘OOO £‘OOO Pensions 44,219 49:862 GMP equalisation* 1,500 Lump sum retirement benefits 3,293 4,392 Commutations of pensions 2,048 1,337 Lump sum death benefits 621 655 Purchase of annuities 37 46 Taxation where annual allowance exceeded 53 - 50,271 57,792
One off adjustment of GMP to comply with equality legislation. This impacts members who accrued GMPs at some point between 17 May 1990 and 6 April 1997. Members who only accrued GMPs before 17 May 1990 are unaffected. 7. Payments to and on account of leavers Year ended Year ended 31 December 31 December 2019 2018 £‘OOO £‘OOO Individual transfers to other schemes 14,819 62,328 Transfers out (pension sharing) 872 Transfers out (AVCs) 146 139 Refund of contributions* (107) (1) 14,858 63,338
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Insurance policies 1,512,200 - (69,886) 136,186 1,578,500 AVC investments 1,045 (151) 894 1,550,853 25,841 (74,521) 136,881 1,639,054
Other investment balances 134 124 Cash deposits 5,107 3,504 1,556,094 1,642,682
Transaction Costs Indirect costs are incurred through the bid-offer spread on investments within pooled investment vehicles and charges made within those vehicles and are not separately identifiable. Transaction costs are included in the cost of purchases and sale proceeds. Direct transaction costs include costs charged to the Scheme such as fees, commissions and stamp duty. During the year there were no direct transaction costs charged to the Scheme. 11. Concentration of Investments The investments (other than UK Government Securities) at the year-end which are more than 5% of the total value of net assets of the Scheme comprise: 2019 2018 £‘OOO % £000 % PlC Insurance Corporation policy 1,575,300 96 1,512,200 96
12. Investment management expenses Year ended Year ended 31 December 31 December 2019 2018
£‘OOO £‘OOO
Administration, management and custody 427 998
26 is
of
to
84
27
the
(24)
their
take
2019
2018
Total
Asat
and
Asat
settle £‘OOO
£‘OOO 3,995
of
25,278
29,273
of
place
invested
to
and
December
December
portfolio
is in
2004
movements.
part
31
31
put
duration
Act
(LDI)
as
rate
portfolio
the
obligation
portfolio
been
the -
an
Finance
(32) interest
has
2019
extend Asat
£‘OOO
2019
managers to
Investment the Asat level.
within
£‘OOO
4,417
51,290 46,873
of
having
investment Liabilities
that
December
4
December
31
Driven
31
contracts,
year
targeted
Part
whilst
FX
investment sensitivities
of
the investments
the
2
underlying
Liability to of
Scheme.
8
their
84
their
the
the
to
2019
during forward
Asat
the
£‘OOO
of
currencies
by
Assets
of Chapter
tax.
December
using
swaps
relation
31
investments
possible
foreign
under
diversification
in
gains
derivatives:
as
proportion
in
liabilities
rate
derivatives
a
far
of
term
capital
follows: as
overseas
Scheme
programme,
particular
interest following
as
use
investing and
returns,
long
appropriate
in
the
these
match
of
tax
the
the
OTC
of
to
Pension
hedging
had
risk
is
Scheme
into
maintain
liabilities,
match
Statements
income
the investment
the
aim
to
Scheme
vehicles
exposure
for
Scheme
currency term
authorised
registered
fund
from
better
entered
a
contracts order policies
a
the
to
in
is balance long
has
overseas
has
Pension
Trustee’s —
and
strategy
end
GBP, contracts currency of
Financial
To
exempt
managed
the
FX
investment
in
FX
2015 —
the
portfolio
year
equivalents
Scheme
the
Trustee
2016
Trustee
Scheme’s
the
to
Initial
The Taxation Balanced therefore
Pooled Cash
Derivatives
Objectives investment The Swaps
Forward bonds
the The Over-the-counter Forward advantage benefits At overseas. reduce
Total
Notes
Rentokil
13.
14.
15. ______
Rentokil Initial 2015 Pension Scheme Notes to the Financial Statements
15. Derivatives (continued)
A summary of the Scheme’s outstanding derivative contracts at the year end aggregated by key characteristics is set out below:
(I) Forward Foreign Exchange (FX) The Scheme had open FX contracts at the year end relating to its currency hedging strategy as follows:
Fair value Contract Seftlement Currency Currency Aggregate Aggregate date bought sold asset liability £‘OOO £‘OOO
Forward FX 1-2 Months £2,554,172.24 £2,480,828.02 73 -
Forward FX 1-2 Months £932,554.39 £921,357.59 If -
Total 2019 84 -
16. Bonds Asat Asat 31 December 31 December 2019 2018
£‘OOO £‘OOO
Fixed interest securities 8,286 8,359 8,286 8,359
17. Insurance policies The Scheme held insurance policies at the year end valued by the Scheme Actuary as follows: Asat Asat 31 December 31 December 2019 2018
£‘OOO £‘OOO
Pension Insurance Corporation policy 1,575,300 1,512,200 Policies held with other insurance providers* 3,200 1,578,500 1,512,200
*The Trustee also hold insurance policies with certain insurance companies which provide annuity income (note 9) to cover pensions for certain members.
Annuity policies are valued by the Scheme Actuary at the amount of the related obligation, determined using the most recent Scheme Fundingvaluation assumptions updated for market conditions at the reporting date.
28 9
12
40
29
0.2% 807 177 rolled
134
2018
(based Asat
2018
£‘OOO
1,045
Asat
£‘OOO
inflation
described
PlC. then
minus
is
December
by
December
future
£29.Om.
31
premium,
31
of
.9m.
value
curve)
risk
£61
provided
assumptions
This
estimate
2019
England
inflation
approximately
below.
of
9
best
by no
12 40
out
177 656
894
124
approximately 2019
Bank
demographic Asat
2019
£‘OOO
Asat
£‘OOO set with
December
Aon’s by
on
the
31
increase
December
for
December
curve
to
with
31
31
(based
increase
would
year
line
2019.
assumptions
allowing in
forward
the
curve
the
would
and
been
over valuation
December
using inflation
has
forward
31
valuation out
RPI
annuity
to
yield
payments
the
assumptions
2019.
year
carried
annuity
bond
experience implied”
then
the
benefit
curve). the
were
1.1%.
p.a.
inflation
over
then
November
“market
known
2018
less
with
England
27
p.a.
0.25%
government
Gilt
and
of
demographic
by
for:
conditions
dated
Aon
Aon
linked inflation
that 0.25%
Bank
linked
December
by
Description
p.a The on The RPI
uncertainty. Consistent
increases
31
market unit
index
allowing
increased
Statements
at
Principles
assumes
Scheme
reduce
as
(continued) was rate
to
pension
profits,
profits, balances
financial
in
Funding
profits
were
implicitly
2019
with
with
of
discount
Pension — —
pension
policies
rate
December2019
calculations
with assumption
Financial
inflation
inflation —
31
Life
Life
Known
Changes
income
2015
to
linked
RPI
investment
CPI
the
investments
Statement
discount retirement inflation
actuarial
methodology
•
•
the
to
Initial
the the
Insurance
forward The
Post
Future Assumption Future
Inflation increases
in If Equitable If Standard ReAssure This Prudential
Phoenix AVC
Accrued Other
17.
18.
19.
Rentokil Notes Rentokil Initial 2015 Pension Scheme Notes to the Financia’ Statements
20. Fair value determination The fair value of financial instruments has been disclosed the following fair value hierarchy:
Level I The unadjusted quoted price in an active market for identical assets or liabilities that the entity can access at the assessment dates.
Level 2 Inputs other than quoted prices included within Level 1 which are observable (i.e. developed) for the asset or liability, either directly or indirectly.
Level 3 Inputs are unobservable (i.e. for which market data is unavailable) for the asset or liability.
A fair value measurement is categorised in its entirety on the basis of the lowest level input which is significant to the fair value measurement in its entirety. The Schemes investment assets and liabilities fall within the above hierarchy levels as follows:
As at 31 December 2019 Level I Level 2 Level 3 Total £‘OOO £‘OOO £‘OOO £‘OOO
Pooled investment vehicles - 51,290 - 51,290
Derivatives - 84 - 84
Bonds - 8,286 - 8,286
AVC investments - 52 842 894
Insurance policies - - 1,578,500 1,578,500
Other investment balances 124 - - 124
Cash 3,504 - - 3,504 3,628 59,712 1,579,342 1,642,682
As at 31 December 2018 Level I Level 2 Level 3 Total £‘OOO £‘OOO £‘OOO £‘OOO
Pooled investment vehicles - 29,273 - 29,273
Derivatives - (24) - (24)
Bonds - 8,359 - 8,359 AVC investments - 52 993 1,045
Insurance policies - - 1512,200 1,512,200
Other investment balances 134 - - 134
Cash 5,107 - - 5,107 5,241 37,660 1,513,193 1,556.094
30 in
or
to
is
the
will by
will 31
end
other
risk
pooled interest
held
fluctuate follows: fluctuate financial
the
year asset it
in asset
following which
growth
members
(PlC).
objectives.
investment rate liabilities as
for
risk, decision
will will
to
to market.
the
102
asset
detail
the at
The
loss
the
asset
risks
in
financial
individual
financial
in
as
interest
that
Scheme
FRS a
a
currency
investments
investments
time;
promised investment
Corporation
the
instrument
of
by all
of
from
following
financial
Trustee.
traded
to
the risk:
of any
noting
financial
a
out
reviewed
a
at
of of
flows
the
flows
eliminated investment
through
Principles.
2018
set benefits
of
to:
strategic
financial
arising
term,
and Insurance
by
buy-in
cause
a
specific
are
the
cash
types
cash
strategy.
of
flows need
portfolio long
will largely the
instruments
certain
because
contributions.
those basis
that
risks
the
to three the
the
December
future
Investment
cash factors Scheme’s future
flows
Pensions
of
been
implemented
risks
in
than
monitored
of
or
future
or
by
over
the
These financial regular
ensure
following investment
are with
cash
had
instrument
future are
a
any
relation to
(other mindful
above
value
or
value
risk agreed
rates.
comprises
risk
positioning on in
is
and setting
that: similar plus
caused
of
period.
future
the fair
liabilities
Statement
fair
liabilities was
risk
all
or
value
1owever,
financial Scheme’s
prices
to
price
rates. are
when
the the the level
a prudently
interest
the
when
Trustee fair
ensure
returns
Trustee the
in
to
value
reporting to
that
other Market
that
information
the meet
the
the Scheme
risks managers,
market
affecting
is
allocation
overall
fair
strategy. market
to the party
of
changes
exposure
all
risk in by
invested
and exchange
risk
conditions
that
in
of
detailed
the
of
the
prices.
one
obligation.
the are
had
investment
risk
risk factors the
determining
failing
current Trustee
end
those
and
is
an that of
or is
foreign objectives,
that
market
the for
investment
further
buy-in
investment
changes rate
the
the
up
in
changes The
investment
disclosure
risk.
is a
market is
risk this
Statements
considered its
this risk
at
of
assets
of for
Scheme
in
Scheme Scheme
these
with
is
issuer,
to
the the
this
whether
current
the
price made
the
risk:
the
objectives
is discharge
its
risk: interest disclosures
the
is
of
of
changes
be
of
to Scheme
previous
or
risk:
responsible
valuation.
risk),
undertake
this
because
of because rate
to other
risk considers objective
Pension
this achieve
changes is
risk strategy
vehióles
the exposed
year,
price
to the
requires provided. 2018,
Finanbial
allocation
to
of
is
of
failing and
account
assets
risk:
the
be
risk:
the
2015
investment
102
by
the
actuarial
risk
Trustee because
Currency Interest
Other
fluctuate currency instrument
fluctuate principal asset
Trustee
can
limit The expected
take
Trustee
seeking
to
Initial
FRS Investment
Scheme party Credit
because Market
rate
• •
•
During implement December
date. investment Investment • The
These objective
In
The The •
•
each
The
the
21.
Notes
Rentokil Rentokil Initial2015 Pension Scheme Notes to the FnanciaI Statements
21. Investment risk disclosures (continued)
A summary of the Scheme’s risk exposures is as follows: Risk Categorisation Market Risk Credit Interest Fund Risk Currency Rate Other Price Risk Aberdeen Standard Investments — Corporate Bonds
Insight Sterling LiquidityFund Clerical Medical Balanced Fund Pension InsuranceCorporationpolicy V Credit risk
Direct credit risk arises through the Scheme’s holdings in the buy-in policy, pooled investment vehicles, segregated investments anI the Trustee bank account. Alldirect investments are with institutions that are rated investment grade. AVC’sand derivatives are not included as they are immaterial. The Scheme is subject to one main type of credit risk:
1. Direct credit risk arises through the Scheme’s holdings in the buy-in policy, pooled investment vehicles and segregated investments. Direct credit risk
Direct credit risk arising from pooled investment vehicles is mitigated by the underlying assets of the pooled arrangements being ring-fenced from the pooled manager, the regulatory environments in which the pooled managers operate and diversification of investments amongst a number of pooled arrangements. The Trustees carry out due diligence checks on the appointment of new pooled investment managers and on an ongoing basis monitor any changes to the operating environment of the pooled manager. The buy-in policy with Pension Insurance Corporation valued at £1.5bn at the year end date (2018: £1.5bn) represents a source of credit risk for the Scheme. This is mitigated through including suitable protections for the Trustee in the contract with the insurer, the due diligence undertaken on the insurer prior to entering into the contract and the robustness of the UKinsurance regime.
The segregated Standard Life UK corporate bond mandate, the total value of which was £11 .9m as at 31 December2019 (2018: £13.5m), represents a source of credit risk.
Credit risk is managed by the diversification of the portfolio across a range of high quality securities. Direct credit risk also arises from the Scheme’s holding in the pooled Sterling LiquidityFund managed by Insight valued at £46.9m (2018: £25.3m).
32 22
33
are
the
2018
Asat
£‘OOO 2018 3,995
Asat
2,806 £‘OOO 2,848
of
25278 29,273
22,406
28,082
they
December
December
price
31
31
because
purchase
risk
the
on
rate -
2019
Asat
31
£‘OOO
4,417
51,290 46,873
2019
Asat
2,861
2,600 £‘OOO
5,492
liabilities.
December
interest
December
31
to
Corporation
31
risk:
m)
Scheme’s
subject rate
Insurance
the
£13.5
are
ol
interest
Pension
(2018:
to
excess
m
in
from
investments
subject
£11.9
2018
are: return
in
are
these
of
Life)
risk
that
rate
(continued)
rate
received
bonds,
term
assets
(Standard
Statements
refund
company
interest
Scheme due
long
contract
a
some
to
corporate
bonds
disclosures
£22.3m
UK
risk
a
holds
risk Pension
investment deliver
of
subject
insurance Financial
to
rate
assets
corporate
pension
transit*
2015
Nature
reimbursements
case
ended
includes
in deposits
the
uity.
linked
Scheme
assets
UK
the
to
ann
Initial
This
Legal Unit
Open Investment
Interest In
expected
The • Cash Prepaid The Payroll
Cash
Current *
21.
22.
Notes
Rentokil Rentokil Initial 2015 Pension Scheme Notes to the Financial Statements
23; Current liabilities Asat Asat 31 December 31 December 2019 2018
£‘OOO £‘OOO
Benefits payable* 905 5967 Tax payable 775 791 Accrued expenses 780 1865 Suspense 22
2,482 . 8,623
* 2018 Includes £1.5m relating to a one off adjustment of GMP to comply with equality legislation and £4m for other benefit related corrections. 24. Employer Related Investments
There were no employer related investments during the year ended 31 December 2019 (2018: none). 25. Related party disclosures Related party transactions and balances comprise: Key management personnel
Related parties are referred to in the Trustee’s Report as follows:
Page 2 - Trustee Rentokil InitialPension Trustees Limited
Page 3 - Principal Employer Rentokil Initialplc
The followingTrustee Directors were in receipt of a pension from the Scheme during the year:
C Pearce
G Brown
R Carlisle
W Goldsmith
Pension payments to Trustee Directors are in accordance with Scheme deed and rules. The Trustee directors’ remuneration is borne by the Employer, fees for 2019 totalled £42,500 (2018: £46,250)
34 a
on
out
the
35 not
The
as
been
result
respect
a
between
Scheme secures
backdate
amounts.
does
in has
economic based
as
it
to
government
the
determine ages
contracted
and
as
which
UK
to
determined.
liability
Trustee
Organisation
had
a
response Scheme
required
backdated
ate
event
pension
pensions,
The
who
the
are
the
ongoing
Health
businesses
on
is
sheet
state
on
Corporation
to
future
amounts
statements.
of
recognised
organisations,
operational
markets.
World
pay members
schemes
impact
the
its
to to
balance
interest
the
health
stock
disruption
Trustee
financial
Insurance
December2019. year
assessment
by
ruling,
post
the the
equalisation
liability
the
the
provide
significant
global
provided at3l global
to
in
caused
the
the
in
coordinating
as
updated
Pension
any
and declared
for
is from
Under
has
and
An scheme,
the
benefits
material
reflect
date.
and
non-adjusting
the
to
be
2020,
a
that
above
with
end
anticipate
for
to
women.
fluctuations
is
guidance
accounted
commitments
equalisation
the
(COVID-19),
not
out
commitments
year
on
and
statements. be
policy
January practice.
COVID-19
liability
recent
than the
will GMP
does
and
men
to
recalculated
in
at determined
it
carried
best
30th
to
COVID-19
be
this
buy-in
financial
other
contractual
both
of
plans
the
a
Coronavirus
contractual
or
court
additional
assets
and relating for
year must
on
reflected
Statements relation
therefore
and
the
response
this
High
Scheme novel
spread
in Trustee,
1997
calculations
prior of
and
been secured
liability
liabilities
continuity
the
the the
scheme
and
the
April expect
of
initial
of
the
has
in
has
Events emergency
liabilities Pension
pandemic
2018,
not of
developments
9.
and
valuation
Financial the
liabilities
business do
pension
adjustments
which
on contingent
2015
matter
the
opinion
health
1990
value the
outbreak Trustee
emergence
no
general
October
their
the
this
COVID-1
to
Initial
In
Contingent
May Based of benefit In
of
final has Trustee
Subsequent global The monitoring activity
existing and
impact The members’
of
The
26.
27.
Rentokil Notes