www.professionalpensions.com HANDBOOK 2017 PP Handbook_Cover 2017.indd 1 5/23/17 11:55 AM A changing landscape KPMG Pensions The past year has seen yet more change in the world of pensions. The pension freedoms, launched in April 2015, are continuing to bed in and the auto-enrolment project is carrying on apace. But the last 12 months have also seen increasing awareness of the challenges of defined benefit scheme funding, as the cases with the BHS and British Steel Trustee Services pension schemes have shown – and we have had reports from the Work and Ad page Pensions Select Committee (WPC) and The Pensions and Lifetime Savings Association’s DB Pensions Task Force as well as a green paper on pensions all trying to deal with this issue. Helping trustees manage all sizes of Yet, at the same time as all this change, schemes, trustees and sponsoring employers continue to face the challenges of ongoing scheme management and pension fund by balancing people, funding – and rely on the support and expertise of their consultants, advisers and service providers to do this. technology, breadth and quality. It is against this backdrop that Professional Pensions strives to play a key role by delivering the latest news, information and analysis through our magazine, website and events. The Professional Pensions Handbook 2017 – updated and expanded – is part of this growing service. We hope you find it useful over the year ahead at such a time of change for the occupational pensions sector. Jonathan Stapleton, editor-in-chief, Professional Pensions Handbooks Advertising Manager: Nita Hulme, [email protected] Editor-in-chief: Jonathan Stapleton Published by Incisive Business Media Ltd © Incisive Business Media (IP) Ltd Editorial & Advertising offices: 28-29 Haymarket, London, SW1Y 4RX, United Kingdom Tel: +44 (0) 7316 9000 Time to change your adviser? Printed by Stephens & George Ltd Call the KPMG Trustee Services team today on 0118 373 1369 or visit www.kpmg.com/uk/trusteeservices All rights reserved. No part of this publication may be reproduced or transmitted in any form by any means including photocopying and recording without the written permission of the publishers. Such written permission must be obtained before any part of the publication is stored in any retrieval system of any nature. © 2017 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. www.professionalpensions.com 2 The KPMG name and logo are registered trademarks or trademarks of KPMG International Cooperative. PP Handbook_Covers.indd 2 6/5/17 10:46 AM CONTENTS 6 Actuaries & Consultants 75 DC Providers Smaller schemes getting improved Designing a gold standard DC value for money on actuarial fees scheme 17 Administration Services 80 Employee Benefits What schemes are looking for How employee benefits for in administration SMEs are changing 28 Alternative Investment 88 Employer Covenant JLT EMPLOYEE BENEFITS LGPS raises exposure to FTSE 350 schemes supported by alternatives weak covenants doubles HERE TO HELP 33 Annuity Providers 92 ESG Manager YOUR WORKFORCE LTA rethink needed in light of Putting ESG at the heart of AND ORGANISATION ‘gloomy’ annuity outlook investment decision making TO THRIVE. 36 Asset Management 98 Fiduciary Management Spotlight shines on active Reinventing the investment managers platform 55 Associations & Official Bodies 102 Hedge Fund Providers PLSA conducts governance Picking winning hedge fund review to ‘reinvent’ itself managers 59 Auditors & Accountants 106 Independent Trustees Pension accounting changes - 21st century trusteeship the what, when, who and how 111 Insurance Companies 63 Auto-Enrolment Consultants Dashboard one step closer to As a trustee, it was reassuring to Should AE rate hikes be in line with launch as ABI unveils prototype know that JLT have people who staging dates? understand and care about what 1 14 Investment Consultancy I wanted to achieve for our scheme 67 Auto-Enrolment Providers ‘Big three’ consultancies set Why are opt-out rates much higher sights on change and our members among older workers? 119 Liability-Driven Investment Go to jltemployeebenefits.com 70 Communications LDI must evolve Learning lessons from the EU referendum 122 Multi-Managers JLT Employee Benefits is a trading name of: JLT Benefit Solutions Limited, registered in England no. 02240496; JLT Investment Management Limited, registered in England no. 04274915; JLT Wealth Management Limited. registered in England no. 03876529. Authorised and regulated by the Financial Conduct Authority. All are Members of the Jardine Lloyd Thompson Group. 74 Custodians Registered Office: The St Botolph Building, 138 Houndsditch, London EC3A 7AW. VAT No. 244 2321 96. © May 2017 273494 3 Professional Pensions Handbook 2017 Untitled-2 1 5/23/17 1:10 PM CONTENTS 1 24 Pensions Master Trusts 1 46 Software & Systems Gap in investment quality Can the dashboard develop with patchy data? 1 30 Performance Measurement Why schemes need to look beyond 1 53 Solicitors & Legal Advisors total returns when measuring Should it be mandatory for success schemes to appoint a lawyer? 1 33 Property Services 159 SSASs What did we learn from real estate markets in 2016? 161 Tracing Companies Independent providers 1 38 Risk Reduction Providers 164 Training Provider Guide The next de-risking innovation? of innovative actuarial, 165 Transition Management Ad page 142 SIPPs administration and Concerns over interest skimming 1 66 Trustee Liability Insurance ‘overstated’ consultancy services 169 Trustee Training How trustees can improve record- keeping ahead of TPR’s new rules for over 25 years CONSULTING ACROSS: www.professionalpensions.com HANDBOOK 2017www.professionalpensions.com HANDBOOK 2017 RISK | PENSIONS | INVESTMENT | INSURANCE www.professionalpensions.com HANDBOOK The 2017 Professional www.barnett-waddingham.co.uk [email protected] Pensions 0333 11 11 222 Handbook 2017 To ensure your inclusion in the 2018 Handbook contact Nita Hulme NOW on +44 (0)20 7316 9309 or [email protected] 5 Professional Pensions Handbook 2017 Untitled-2 1 5/24/17 11:36 AM ACTUARIES & CONSULTANTS ALLENBRIDGE – BARNETT WADDINGHAM ALLENBRIDGE INVESTMENT Smaller schemes getting improved SOLUTIONS LLP 26th Floor value for money on actuarial fees 125 Old Broad Street London he money smaller schemes pay in actuarial fees is going further on a like-for-like EC2N 1AR BARNETT WADDINGHAM LLP basis, research from KGC Associates revealed. Tel: 020 7079 1000 Cheapside House The consulting firm’s 7th annual actuarial fees survey looked at the actuarial Website: www.allenbridgeis.com 138 Cheapside fees schemes pay for core tasks such as triennial evaluations alongside those London Tadditional services charged at an hourly rate. ALLIANCE TRUST EC2V 6BW While there has not been much movement in how much schemes pay in actuarial PO Box 164 Tel: 0333 11 11 222 Actuaries & Consultants Email: [email protected] fees, this year’s report found the fees small schemes pay for core services went further 8 Westmarket Gait Dundee Website: www.barnett-waddingham.co.uk compared to last year’s survey. DD1 9YP KGC said this showed actuaries have responded to the needs of trustees when it comes to Tel: 01382 321000 costs of services. Website: www.alliancetrust.co.uk Contact: Paul Houghton Director Kim Gubler said: “One of the good things in our report is that smaller schemes are better year on year. Actuarial firms are responding to trustees needs across the piece.” AON HEWITT Founded in 1989, Barnett Waddingham She said, similarly positive, the analysis of meeting costs, included in the report for the first 10 Devonshire Square has grown to become the UK’s largest time this year, found small schemes not disadvantaged by their size. London independent provider of actuarial, Therefore small schemes pay lower average cost per meeting than large schemes. EC2M 4YP administration and consultancy services. So a 200 member scheme which has two meetings a year paid an average cost of Tel: 0800 279 5588 From small beginnings with just 20 people, our total headcount is now over 850 £1,537 per meeting. Website: www.aonhewitt.co.uk (including 64 partners and 97 associates) Meanwhile a 20,000 member scheme that has four meetings a year paid an average cost ATKIN & CO – with offices in seven locations around the of £2,306 per meeting. UK. We act for a wide range of clients, large Cornwall House Gubler added: “We don’t know what the explanation for this is. It could be that the and small, in both the private and public Blythe Gate meetings are of a shorter duration contrasted with larger schemes or the trustees of small sectors including 15% of FTSE350 firms Blythe Valley Park schemes could be meeting the actuaries at their offices. This could reduce the cost of the with a DB scheme. Solihull We continue to grow through referrals from meeting when it occurs.” West Midlands professional contacts and our existing The report also revealed that fees paid in terms of the unit cost per member (UCM) were B90 8AF clients. Our primary focus is to continue very different for large and small schemes. Tel: 0121 506 8200 to provide the personal, quality, tailored The UCM is derived by dividing the total cost by the total number of members and shows Website: www.atkin.uk.com approach that has made us successful the highest, average and lowest fees for all scheme sizes. and has led to our high level of client So a plan with 200 members had the highest UCM (maximum fee that could be paid in a retention. We seek to build stable and year) of £213.50 while the equivalent for a 20,000 member scheme was £6.43. long-term working relationships with clients, Similarly the lowest UCM (smallest fee that could be paid in a year) was £66.17 for a 200 supported by our low staff turnover.