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Turnbull for pension schemes

Turnbull for pension schemes. The team. Angela Crum-Ewing David Jones Julie Long Rob Boddye Steve Balmont Terry Raby. Pension schemes - a risk management problem. Substantial importance £700 billion NAPF member’s funds £1,600 billion UK equity market capitalisation Complexity

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Turnbull for pension schemes

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  1. Turnbull for pension schemes

  2. The team • Angela Crum-Ewing • David Jones • Julie Long • Rob Boddye • Steve Balmont • Terry Raby

  3. Pension schemes - a risk management problem • Substantial importance • £700 billion NAPF member’s funds • £1,600 billion UK equity market capitalisation • Complexity • Interests of both sponsors and employees that funds are well managed

  4. Combined Code/ Turnbull solution • Familiarity • Big picture • Flexible • Common-sense requirements of the code • Maintain a sound system of internal control • Review its effectiveness • Motivated by losses from corporate failures

  5. Method • How to manage risk • Areas of Risk • Trusteeship • Perceived Value of Benefits • Administration • Investments • Corporate Change • Disclosure • Trustees statement on internal control

  6. How to manage risk • Roles of trustees and their delegates • Maintain a sound system of internal control • Risk identification • Likelihood • Risk management (controls) • Residual

  7. How to manage risk • Review the effectiveness of internal control • Review reports received during the year • Annual assessment of changes in significant risks • Scope & quality of ongoing monitoring • Significant control weaknesses • Independent assurance - Internal Audit • Use of sponsor’s internal auditors • Assurance re system of internal control

  8. Areas of Risk - Trusteeship • Appointment • Competence – knowing the scheme • Competence - understanding powers & duties • Advice • Delegates

  9. Areas of Risk - Perceived Value of Benefits • Adequate understanding , adequate information • Benefits relevant to patterns of employment & life • Socially responsible investment

  10. Areas of Risk - Administration • Record keeping • Benefit payments • Contributions • Systems infrastructure • AVC assets

  11. Areas of Risk - Investments • Matching assets & liabilities • Investment performance • Manager appointment & ongoing monitoring • Manager internal control & regulatory environment • Investment restrictions, manager activism • Security of Assets • Custodian internal control & regulatory environment • Taking assets out of custody

  12. Areas of Risk - Corporate Change • Mergers, acquisitions etc

  13. Disclosure • ‘- the trustees... use the annual report to demonstrate how they have discharged their duties and as a means of satisfying themselves that they have properly met theirresponsibilities’ SORP para 1.4 • Combined Code requirements are to • maintain a sound system of internal control and review its effectiveness • So the Turnbull reporting requires • Acknowledgement of responsibility for maintaining and reviewing • Disclosing that there is an ongoing risk management process • Summarising the process involved in reviewing

  14. Summary • Pension schemes are important & complex • Require risk management methods • Combined Code Turnbull solution • familiar, big picture , flexible • Generic risks • About three months away

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