Better Governance = Better Outcomes Peter Griffin Director Allied - - PowerPoint PPT Presentation

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Better Governance = Better Outcomes Peter Griffin Director Allied - - PowerPoint PPT Presentation

Aug 30, 2022 238 likes •551 views

Better Governance = Better Outcomes Peter Griffin Director Allied Pension Trustees IAPF Annual Governance Conference www.iapf.ie Higher levels of governance will not necessarily guarantee more favourable outcomes, but should promote an

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Better Governance = Better Outcomes

Peter Griffin Director Allied Pension Trustees

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Higher levels of governance will not necessarily guarantee more favourable outcomes, but should promote an environment for better decision making and understanding of risk iapf

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Embracing Governance Should Produce Better Outcomes

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Increasing Regulatory Environment

  • Pensions Authority – 11 DC Governance Codes
  • IORP II

& Pension Reform Consultation 2016

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Pensions Authority DC Codes of Governance 2016

Pension Authority expects Trustees to establish a Governance “Plan of Action” “Help (Trustees) to develop and apply consistent policies, processes and controls in the management of their scheme”

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Governance Plan Of Action

Staff

Trustee Meetings Conflicts of Interest 2017 Work Schedule Scheme Records Investment

Trustee Governance Plan

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Trustee Investment Responsibilities – Trust Law

  • Invest in accordance with the powers vested in them

under the trust deed

  • Subject to a duty of care (prudent person) to members

and to sponsoring employer

  • Requirement to obtain expert input
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DC Code 5 – Investing Scheme Assets

  • Actions

– SLA with Investment Managers – Develop & Adopt appropriate investment strategy – Produce SIPP – Provide SRP annually – Review performance against objectives – Provide a Default Investment Strategy that reflects the profile and needs of the scheme membership – Meet, monitor and review…..

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Probably the area that is causing trustees most concern

Appropriate Default Investment Strategy

  • Reflects profile and needs of the scheme membership
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Default Investment Strategy – Where are we now

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Majority of lifestyle strategies target Annuity

  • ption – ARF option available since 2011

Does Annuity strategy reflect the profile and needs of the scheme membership?

Default Investment Strategy – What is the solution?

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Does “reflecting the profile and needs of the scheme membership” mean the majority or the individual?

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If majority then requirement to take into account the demographics of the scheme membership & analyse how members are likely to draw benefits. Default to suit majority – but what of the minority!

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Default Investment Strategy – What is the ideal solution?

Target Optimal Member Outcome

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“Trustee responsibility to satisfy themselves that the communication is relevant and understandable” (Pensions Authority)

DC Code 10 – Communication

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DC Code 10 – Member Communication Information is

  • Accurate
  • Clear
  • Simply Expressed
  • Helps members make informed decisions

about:-

  • Investments
  • Benefit options
  • Contribution levels
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DC Code 10 – Member Communication

User friendly Disclosure information & meeting legal requirement “not mutually exclusive”

(Pensions Authority)

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Member Booklets - Old Version

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Member Booklets - New Version

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Member Communication Create a year-round pensions engagement strategy

  • Can help maintain and increase interest over the longer term
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Ongoing Pension Awareness Campaign

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Ongoing Pension Awareness Campaign

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Consider the role of technology in promoting member engagement

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Member Communication

  • Use multiple channels of communication
  • Target specific member cohorts
  • Use personal events and messages to highlight relevant

pension issues

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IORP II

Communications – dealt with by PA Disclosure Regs Risk Management –

  • risk management function
  • an internal audit function - including the oversight of outsourced functions
  • an actuarial function (where appropriate)
  • effective internal controls and contingency plans.
  • a risk evaluation report
  • a remuneration policy

Fit & Proper Test – “Professional qualifications, knowledge and experience” A requirement for DC plans to appoint a depository

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Actions for Trustees

  • Implement a Governance Plan of Action
  • Ensure Default Strategy is “Fit For Purpose”
  • Review communications strategy
  • Plain language
  • Simple messages
  • Multiple channels
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Sponsored by

Governa nance nce C Confe nference nce 2 2016