Braemar Pension Scheme Chair Statement, Statement of Investment Principles & Implementation Statement

Braemar Pension Scheme

Chair Statement for Scheme Year Ending 31st December 2022

Introduction

The trustees of defined contribution pension schemes such as this Scheme must produce an annual report, signed by their Chair (the Chair’s Statement). This is that statement and summarises matters relating to investment, administration and charges for the Scheme that impact on the members and their benefits.

This Scheme operates under a Trust Deed and Rules. The latest version of these were signed on 5^th December 2018. The Trustee operates the Scheme in accordance with the Rules and the Statutory Regulations that are in force from time to time.

The Trustee of the Scheme is Braemar Pension Trustees Limited – this is a company specifically set up to be responsible for the management of the Scheme. The directors of the Trustee company include members of the Scheme nominated by members as well as company nominated directors and a professional trustee company. The current directors of the company are specified in the Scheme accounts and can also be found at any time on the Companies House website https://www.gov.uk/get-information-about-a-company. Collaboratively the directors have elected Charles Cundall as their Chair. This statement is signed by the Chair but all directors carry collective responsibility under the Trust Deed and Rules for all matters connected with the Scheme.

The Trustee retains the services of an independent financial adviser from whom they receive advice on both the structure of the investment offering to members of the Scheme and additionally the detail of the individual investment funds offered and the underlying investment managers used by the Trustee. The Trustee has an advice contract in place with Professional Pensions and Investments Ltd. They are a Chartered firm and are regulated and authorised by the Financial Conduct Authority.

The Trustee also has a contract for administration and consultancy services with Winterbourne Trustee Services Ltd (WTS) which provides the Trustee with specialist pension administration services and Consultancy Advice on the legislation and regulation around Trust based Defined Contribution Pension Schemes in the UK. The Trustee considers that each of these retained service providers are persons of appropriate knowledge and experience to assist the Trustee directors in discharging their responsibilities under the Trust for the benefit of the membership.

The Scheme year end is 31^st December 2022 and there is a statutory requirement to include an Annual Governance Statement within the Report and Accounts: The Chair’s Statement.

This is such a statement and as the Chair’s annual governance statement it has been prepared in accordance with the regulation 23 of the Occupational Pension Schemes Regulations 1996.

The Trustee is engaging with the Principal Employer about the future of the Scheme. This includes consideration around the use of a Mastertrust as an alternative means of providing pension benefits for members.

This Chair Statement should be read in conjunction with the Trustee’s Statement of Investment Principles (SIP) and the Value for Members statement. The SIP is dated September 2019.

Investment Arrangements

The Scheme’s latest Statement of Investment Principles (SIP) governs the Trustee decision about investments and the Scheme’s default arrangement. The SIP covers the investment risk, return, aims and how social, environmental and ethical factors are considered.

The Scheme is set up with a Lifestyle Investment Strategy. This is what many members will use and is made available by the Trustee to assist those members who do not wish to make a more specific investment decision themselves. Such an investment strategy is often referred to as the default investment fund.

The Scheme is available for use as a qualifying scheme for automatic enrolment purposes by the Employer. The Trustee considers that the terms offered under the auto enrolment qualifying status would amount to good practice. Those terms include maximum costs that relate to investment funds offered to members. The Scheme makes use of investment funds that are less expensive than the automatic enrolment maxima.

During the 2021-2022 Scheme year the Trustee reviewed the appropriateness of the default arrangement on an ongoing basis and deemed it satisfactory and in the best interests of the members.

Aims, Objectives and Policies to the Lifestyle Investment Strategy

Members who are more than 11 years to their retirement age and have not made an active investment decision are placed in the Braemar Lifestyle Growth Fund. The Lifestyle Investment Strategy involves a ten year investment glide into retirement. Contributions and the fund value are gradually and automatically switched into the Braemar Lifestyle Growth Fund and the Braemar Pre-Retirement Fund. 5 years before retirement the members fund value will consist of an equal amount in both funds. From the 5th year to retirement, contributions and the fund value are gradually and automatically switched to the Braemar Pre-Retirement Fund and the Braemar Cash Fund. At retirement the members fund will consist of 75% in the Braemar Pre-Retirement Fund and 25% in the Braemar Cash Fund. Most members at retirement take 25% of their fund as tax free cash and the Lifestyle Investment Strategy reflects this.

Financial Transactions

The core financial transactions include (but are not limited to):

• Transfer of members’ assets into and out of the Scheme.
• Transfers of members’ assets between different investment options available in the Scheme.
• Payments from the Scheme to, or in respect of, members.

The Trustee ensured that during the year the core financial transactions of the Scheme were processed promptly and accurately by:

• Having an agreement with their administration service provider.
• The Trustee receiving appropriate administration reports from their service provider. This means that the Trustee is aware of activity on the Scheme and provides information to the Trustee on how transactions and member enquiries are dealt with.
• Our delegated administrator WTS, who reports to the Trustee at regular Trustee board meetings. This facilitates a two way understanding of the management of the Scheme and allows the Trustee to exercise its governance function effectively.
• The delegated administrator WTS reporting to the Trustee on their own controls and this assists the Trustee in the confidence that it requires to address their governance If any complaint arises from the membership the Trustee does review the matter. There were no unresolved member complaints recorded within the review period.
• The Trustee board meetings where the Trustee hears from its Investment Adviser, Professional Pensions and Investments The Investment Adviser comments on the market background that relates to the Lifestyle Investment Strategy (the default investment). This facilitates the Trustee’s consideration of the suitability of the investment fund offered to members as the default investment.
• The Trustee board meetings where the directors receive investment reports from their Investment Manager Mobius Life. The Investment Adviser supplies additional information to include, from the underlying managers, information on governance, specifically how the manager exercises the responsibilities associated with shareholders effectively on behalf of the membership, via the mechanism of the pension trust.
• The combination of this level of reporting and discussion at Trustee board meetings enables the Trustee to form a view on the exercise of their governance responsibilities.

Examples of typical turnaround times from the Trustee’s delegated administrator, given that all the required documentation from the member has been provided, would be:

• Payment of DC transfer value to alternative arrangement: 10 days
• Payment of DC cash commuted lump sum on retirement: 10 days
• Payment of DC death lump sum: 5 days
• Payment of fund to annuity provider: 10 days

Considering all of the foregoing the Trustee is of the opinion that core financial transactions were processed promptly and accurately on behalf of members of the Scheme during the year and that elements of the Trustee governance function are exercised with diligence in an appropriate manner.

Charges and Transaction Costs

The following table outlines the annual management charge and transaction costs as a percentage of the fund value as provided to the Trustee for the investment funds used by members. The Braemar Lifestyle Growth Fund is used in the Lifestyle Investment Strategy, along with the Braemar Pre­ Retirement Fund and the Braemar Cash Fund. These are therefore the Default Funds.

 

Fund	Transaction Costs % pa	Management Costs % pa	Total Ongoing Charges % pa
Braemar Lifestyle Growth	0.009	0.465	0.474
Braemar Pre-Retirement	0.008	0.44	0.448
Braemar Cash	0.00	0.35	0.35
Braemar UK Equity Index	0.00	0.35	0.35
Braemar Global Growth	0.001	0.65	0.651
Braemar Global Bond	0.04	0.45	0.49
Braemar Ethical Equity	0.00	0.55	0.55
Braemar Balanced Growth	0.003	0.65	0.653
Braemar Global Equity Index	0.00	0.35	0.35
Braemar Diversified Growth	0.01	0.75	0.76
Braemar Strategic Diversified Growth	0.017	0.45	0.467

 

The total ongoing charge includes all fees and expenses. This covers costs such as custody, fund audit, fund administration charges and similar. These charges are expected to be incurred by members in relation to their investments in the noted fund. Such charges are within the unit price and therefore not explicit.

The transaction cost figure includes an element of implicit cost which is the difference between the mid-market price at the time the trade is sent to the market and the eventual price of the trade. It is possible for such a cost to be negative; for example when buying an asset the value price might be higher than the actual price paid.

These total ongoing charges are slightly different from the annual management charge quoted for each fund. The difference arises on a number of fronts, including, but not limited to such matters as rounding in the calculation. In effect these total ongoing charges give the look through costs to members of investing in the Scheme. If we take the Braemar Lifestyle Growth Fund as an example, the total ongoing charge is 0.474%. This means 0.474% is an annual cost of investing. This is often referred to as 47.4 basis points.

Using the 0.474 % total ongoing charge on the Braemar Lifestyle Growth Fund we can consider that for a member with £10,000 invested in that fund the cost of investment management in one year would be £47.40. Put another way, if there was exactly no investment growth at all, the value of the £10,000 invested would fall to £9,952.60 over a year due to the costs of the fund.

The Braemar Lifestyle Growth Fund is the default growth fund for the Scheme. The Trustee therefore considers very carefully the charging structure of this fund and what it is that the managers are seeking to achieve for the Trustee when they are using this fund. The objective of the fund is broadly to limit volatility and yet provide real returns linked to the equity markets. It is therefore reasonable in the view of the Trustee that this fund has costs at the level shown. In practice the Trustee is advised (by the Investment Adviser) that for a fund of this nature these total ongoing charge costs are both reasonable and competitive and therefore offer good value.

Value for Members Assessment

There is no legal definition of “good value”, good value is subjective.

The Trustee, in conjunction with their advisers, consider value for member assessment at each Trustee meeting. The assessment follows the Pension Regulator Defined Contribution code of practice and guidance. Outcomes are documented with areas of improvement noted in the Trustee remit for the year ahead.

The review concluded that the Scheme’s overall benefits represent very good value for the costs and charges, for the following reasons:

• Charges for the Scheme default investment strategy is below the charge cap of 0.75% per annum. The Trustee continues to monitor the charges.
• Members have access to a range of investment options.
• All Trustee meetings are supported by their advisers.

Members may like to consider that many of the costs of managing the Scheme are met by the Employer. These include, but are not limited to:

• The costs of running the Trustee company.
• The costs of the technical advice to the Trustee, including Pension Consultancy.
• The costs of Investment Advice to the Trustee.

Value for Money Assessment

The transaction costs shown are low. This is as the Trustee expected and had been advised by the Investment Adviser. It is a reflection of the calibre of the overall investment strategy that the Trustee is using and encouraging to note. 

Members may like to consider that many of the costs of managing the Scheme are met by the Employer. These include, but are not limited to: 

• The costs of running the Trustee company 
• The costs of the technical advice to the Trustee, including Pension Consultancy • The costs of Investment Advice to the Trustee 

In the table below we illustrate examples of the impact of charges on a member pot of £10,000 over a calendar year. These examples have been prepared in accordance with the guidance. They are expressed in today’s money terms and the assumptions are shown below the table. 

These costs are those paid by a Scheme member from their member pot. They include total ongoing charges which are paid by the member rather than by the Employer. The Employer meets other running costs of the Scheme.

Net Investment Returns

The Occupational Pension Schemes (Administration, Investment, Charges and Governance Amendment) Regulations 2021 require the Trustee to calculate and state the investment return, net of transaction costs and charges.

Default Lifestyle Investment Strategy Funds

The Trustee calculates the investment return on investments, as far as they are able to. The net investment returns for members within the default Lifestyle Investment Strategy funds are as follows:

Default Strategy	Investment returns %
	1 Year to 31/12/2022	5 Years to 31/12/2022 p.a.
Braemar Lifestyle Growth Fund	-7.7	2.7
Braemar Pre-Retirement Fund	-21.6	-2.2
Braemar Cash Fund	1.0	0.2

 

Self-select Funds

The net investment returns for members within the self-select funds are as follows:

Self-Select Funds	Investment returns %
	1 Year to 31/12/2022	5 Years to 31/12/2022 p.a.
Braemar Global Growth Fund	-6.6	4.9
Braemar Global Equity Index Fund	-3.3	4.8
Braemar UK Equity Fund	0.7	2.6
Braemar Balanced Growth Fund	-8.0	4.2
Braemar Ethical Equity Fund	-0.2	2.5
Braemar Diversified Growth Fund	-8.6	2.1
Braemar Strategic Diversified Growth Fund	-13.7	-0.6
Braemar Global Bond	-0.4	1.6

 

These costs are those paid by a Scheme member from their member pot. They include total ongoing charges which are paid by the member rather than by the Employer. The Employer meets other rum1ing costs of the Scheme. Figures shown are not guaranteed.

Growth Rates Assumed

Braemar Lifestyle Growth Fund (the default fund)	3% above inflation
Braemar Pre Retirement Fund	inflation
Braemar Cash Fund	1% below inflation
Braemar UK Equity Index Fund	4% above inflation
Braemar Global Growth Fund	4% above inflation
Braemar Global Bond Fund	1% above inflation
Braemar Ethical Equity Fund	4% above inflation
Braemar Balanced Growth Fund	3% above inflation
Braemar Global Equity Index Fund	4% above inflation
Braemar Diversified Growth Fund	3% above inflation
Braemar Strategic Diversified Growth Fund	3% above inflation

Default Lifestyle Investment Strategy

Most members are in the default Lifestyle Investment Strategy. The table below sets out how a member could see their pension pots grow, with and without charges. These are illustration examples only and are not guaranteed.

Costs may change at the point of switching into the Pre-Retirement Fund and Cash Fund during the lifestyle investment phase. It is not possible to know what these costs will be in advance and they may be zero. On this basis and until there is a recognised method of understanding such costs the Trustee presents the costs as shown.

Lifestyle Investment Strategy
Years	Age now: 25 Active Member Starting value £10,000 Monthly contributions £200		Age now: 45 Deferred Member Starting value £136,000 Nil contributions		Age now: 45 Active Member Starting value £136,000 Monthly contributions £500
	Charges £		Charges £		Charges £
	Before	After	Before	After	Before	After
0	10,000	10,000	136,000	136,000	136,000	136,000
1	12,698	12,644	139,980	139,320	145,994	145,319
3	18,333	18,126	148,294	146,205	166,867	164,645
5	24,303	23,880	157,102	153,431	188,980	184,926
10	40,825	39,538	176,318	168,971	245,630	244,458
15	59,911	57,204	195,617	183,049	278,703	271,079
20	81,958	77,134	200,046	183,628	290,192	276,663
25	107,426	99,618
30	136,404	124,578
35	160,584	143,269
40	171,175	151,086

 

Notes

1. Projected pension pot values are shown in today’s terms.
2. Retirement is assumed to be age 65.
3. Inflation assumed to be 5% per annum.
4. Values are estimates and not guaranteed.
5. Contributions escalate by inflation each year.

 

Self-Select Individual Funds

The table below sets out how a member could see their pots grow, with and without charges, investing solely in one of the funds below. These are illustration examples only and are not guaranteed.

In preparing these estimates the Investment Adviser to the Trustee has referenced the DWP Reporting of Costs Charges and other Information: Guidance for Trustees and Managers of Occupational Schemes, October 2022.

Active Member – 25 year old – Pension pot accrued £10,000 Contributions £200 per month, escalating by inflation each year
Years	Lifestyle Growth Fund		Pre- Retirement Fund		Cash Fund (lowest charging)		Diversified Growth Fund (highest charging)
	Charges £		Charges £		Charges £		Charges £
	Before	After	Before	After	Before	After	Before	After
0	10,000	10,000	10,000	10,000	10,000	10,000	10,000	10,000
1	12,698	12,644	12,698	12,644	12,261	12,223	12,698	12,611
3	18,333	18,126	17,112	16,931	16,718	16,581	18,333	18,003
5	24,303	23,880	21,853	21,500	21,089	20,824	24,303	23,630
10	40,825	39,538	33,706	32,747	31,647	30,952	40,825	38,789
15	59,911	57,204	45,559	43,744	41,700	40,428	59,911	55,650
20	81,958	77,134	57,412	54,499	51,272	49,295	81,958	74,404
30	136,846	124,984	81,118	75,300	69,064	65,354	136,846	118,463
40	210,088	185,886	104,824	95,193	85,195	79,413	210,088	172,968

 

Deferred Member – 45 year old – Pension pot accrued £136,000 Nil contribution
Years	Lifestyle Growth Fund		Pre- Retirement Fund		Cash Fund (lowest charging)		Diversified Growth Fund (highest charging)
	Charges £		Charges £		Charges £		Charges £
	Before	After	Before	After	Before	After	Before	After
0	136,000	136,000	136,000	136,000	136,000	136,000	136,000	136,000
1	139,980	139,320	136,000	135,393	134,673	134,203	139,980	138,925
3	148,294	146,205	136,000	134,188	132,058	130,681	148,294	144,964
5	157,102	153,431	136,000	132,994	129,494	127,251	157,102	151,266
10	181,478	173,096	136,000	130,055	123,299	119,066	181,478	168,245
15	209,637	195,282	136,000	127,180	117,401	111,407	209,637	187,131
20	242,165	220,311	136,000	124,369	111,785	104,240	242,165	208,136
25	279,739	248,549	136,000	121,620	106,437	97,535	279,739	231,499

 

Active Member – 45 year old – Pension pot accrued £136,000 Contributions £500 per month, escalating by inflation each year
Years	Lifestyle Growth Fund		Pre- Retirement Fund		Cash Fund (lowest charging)		Diversified Growth Fund (highest charging)
	Charges £		Charges £		Charges £		Charges £
	Before	After	Before	After	Before	After	Before	After
0	136,000	136,000	136,000	136,000	136,000	136,000	136,000	136,000
1	145,994	145,319	141,927	141,307	140,571	140,091	145,994	144,915
3	166,867	164,645	153,780	151,849	149,579	148,110	166,867	163,324
5	188,980	184,926	165,633	162,298	158,412	155,920	188,980	182,534
10	250,181	240,123	195,265	188,014	179,751	174,558	250,181	234,290
15	237,225	302,395	224,898	213,163	200,070	191,997	320,878	291,857
20	402,544	372,648	254,531	237,755	219,416	208,315	402,544	355,885
25	496,882	451,905	284,163	261,804	237,837	223,583	496,882	427,101

 

This approach clearly shows the differing cost implications of investment fund choices in each year of membership, so providing clarity of costs.

Such assumptions as inflation and the implicit charges change over time.

The Trustee will keep this aspect under review and consider inclusion in future years. Members also receive a Statutory Money Purchase Illustration (SMPI) of their own benefit annually.

In considering value for money offered to members the Trustee has conducted an assessment of what it believes constitutes ‘Value for Money’ for members of the Scheme. This assessment addresses the costs and charges including transaction charges that are passed onto members.

The Trustee considers that based on the information available to them from their Investment Adviser, the charges and transaction costs overall that the members meet are comparable with those applied to similar quality defined contribution pension schemes and based on comments from their appointed Investment Adviser, are better than many. The Scheme therefore represents good overall value for the benefit provided to members. This is confirmed by the Trustee’s Investment Adviser and is the view of the Trustee. The view is formed taking account of the Investment Adviser’s experience of other arrangements and how the Scheme compares in terms of size, quality, cost and services.

When assessing good value it is not just the direct and indirect costs that are reviewed but all the factors which make up each members experience. Currently, there is no legislation setting out how ‘good value’ should be assessed and what criteria should be reviewed as part of the assessment. The Trustee has undertaken a ‘value for members’ assessment focusing on member charges and the features of the Scheme.

The main categories that the Trustee considered and their views are:

Member costs and charges	Good	Other costs and charges	Good
Performance of Investments	Good	Member Communications	Good
Administration	Good	Trustee overall Governance	Good

Knowledge and Understanding of the Trustee Directors

The Scheme is administered by the Trustee and the Scheme year end, 31st December 2022 is noted above.

There are requirements for Trustee knowledge and understanding and these requirements apply to each and every Trustee and to directors of a Trustee company alike. These requirements exist under sections 247-248 of the Pensions Act 2004 (requirements for knowledge and understanding) and have been met during the year by the Trustee in dealing with the Scheme.

The Trustee company board of directors includes Winterbourne Trustee Services Ltd. As an Independent Professional Trustee appointed to the Board of the Trustee company, Winterbourne provide an experienced representative to attend Trustee director meetings. The Team at Winterbourne includes experienced professionals who are well versed in the operation and practices of occupational pension schemes. The wider team hold qualifications and have professional experience appropriate to all aspects of managing an occupational pension scheme. Each member of that team undertakes continuous professional development appropriate to their specific discipline. The team expertise extends to Scheme Administration, Scheme Governance (both DC and DB aspects), Legal Documentation and Regulation, Investment and Actuarial matters. Each of their team maintains adequate professional knowledge by undertaking more than 25 hours of professional training annually in their chosen speciality and has undertaken the Pensions Regulator Trustee toolkit training.

On the appointment of a new Trustee company director, that director receives a copy of the Trust Deed, the Scheme Rules, the Scheme Accounts, the current SIP, copies of the recent Trustee Minutes and all other relevant Scheme documentation. This initial process includes time discussing the Scheme with the Scheme administrator and with the Investment Adviser at Professional Pensions and Investments Ltd, thereby ensuring a level of appropriate knowledge at outset as to the specifics of the Scheme and matters that are in hand at the time. This is in effect an appropriate induction session. This enables a new Trustee company director to be conversant with wider Scheme documentation relating to matters of the Scheme generally.

All Trustee company directors have recommended to them the Pension Regulator Trustee Knowledge and Understanding training material. This is an on-line interactive information service that can impart basic information on the management of trust based pension Schemes such as this one.

This has been recommended to all directors and each Trustee director understands the importance of this in improving their knowledge. All Trustee directors are aware of this.

Directors are able to discuss with the Scheme administrator and with the Investment Adviser at Professional Pensions and Investments Ltd, any particular areas of their knowledge and understanding, including areas of TPR’s Trustee Toolkit that they consider they may have insufficient knowledge and understanding of. This may happen at any time, not just at Trustee meetings.

During the year the specific areas of training that the Trustee focussed on included:

• Trustee meeting in March 2022 at which the Investment Report was This includes market information, matters relating to Pension Freedoms, Lifestyle Investments, the Competition Markets Authority and Governance.
• Trustee meeting in October 2022 at which the Trustee considered the value of the funds invested and key market background information. At this same Trustee meeting a legislation and regulation update was provided.

It is the view of the Chair and the Trustee company board generally that sufficient time and resources are made available throughout the year in order to manage and operate the Scheme effectively. In making this statement the Trustee directors and in particular, myself as Chair, consider and take the view that the assistance of our professional advisers is essential. It is our role to manage the relationship with our advisers and we consider that we have done so, in the interests of the membership and good governance of their pension savings assets and done so appropriately.

The Trustee maintains a watch on compliance and overall risk and the Trustee company board minutes provide, where appropriate, an action plan, with follow up points considered at the next appropriate Trustee director meeting. In this way the Governance function of the Scheme is executed on a rolling, iterative basis thereby ensuring that matters are maintained in an up to date condition, relevant to the needs of the membership and yet proportionate to the size of the overall Scheme, the value of its assets and above all the interests of the members. The Trustee does this bearing in mind the importance of the member’s pension savings to each individual member.

The Purpose of this Chair Statement

This Statement is for your information only and you do not need to take any action.

It is shared with and agreed by all Trustee company directors. It will be considered by them and where appropriate updated each year in accordance with the regulations.

If a member should have any questions on the operation of the Scheme, or their benefits they should in the first instance contact the administrator who may be able to assist. The contact information is at the front of this Trustee Report and Accounts.

As Chair of the Trustee Board I am always pleased to hear from any member of the Scheme and will assist in answering any matters that may arise.

This Chair Statement is signed by the Chair on behalf of the Trustee Board. The Trustee is Braemar Pension Trustees Limited.

Charles Cundall
Chair

 

Statement of Investment Principles

September 2019

1. Introduction

This is the Statement of Investment Principles, as at September 2019, which has been considered and adopted by the Trustee of the Braemar Pension Scheme (“the Trustee”) in accordance with section 35 of the Pensions Act 1995, section 244 of the Pensions Act 2004 and the Occupational Pension Schemes (Investment) Regulations 2005 and subsequent regulations. 

In preparing this statement the Trustee has obtained and considered advice from their investment advisers, Professional Pensions and Investments Ltd. The Trustee will act in accordance with this advice until such time as it receives alternative advice. 

The Trustee has consulted with the sponsoring employer. There are no restrictions (however expressed) on any power to make investments by reference to the consent of the employer. 

2. Funding Objectives

The primary objective of the Braemar Pension Scheme (“the Scheme”) is to provide pension and lump sum benefits for members on their retirement or for their dependants on death before retirement, on a defined contribution basis as set out in the Trust Deed and Rules. 

3. Investment Strategy

The Trustee policy is to seek professional advice on investment strategy. In developing their strategy, the Trustee has recognised the need to balance aversion to risk with the attainment of a satisfactory investment return. In particular they have taken into consideration that: 

• members pension benefits are maximised by achieving maximum investment returns; and 
• individual members financial profiles and attitudes to risk may vary. 

The Trustee has adopted an investment strategy that allows adequate diversification and for members to select an investment vehicle for their contributions from a range of pooled unitised managed funds selected by the Trustee. The Trustee also recognises that some members may not want to take an active part in managing their pension investments. With this in mind, a programme of investment is offered that seeks to achieve real returns on members’ assets while controlling the risks arising from the potential volatility of such investments. This is described as ‘The Lifestyle Investment Strategy’ and will be utilised as a default structure unless members instruct the Trustee to the contrary. 

The range currently available consists of the funds that have their fund specification appended. This range may be added to at any time by the Trustee. Funds may be withdrawn at any time by the Trustee and the underlying specification of the funds may be changed at any time by the Trustee or the underlying investment management firms. The benchmark for each fund gives an indication of the expected level of return for each fund although it is stressed that no guarantees on performance or absolute values are offered with any of the funds available. 

Fund Information

The information in the fund specification documents attached is that provided by the fund manager and in agreement with the investment adviser to the Trustee. The Trustee draws attention to comments made by the fund managers: 

▪ the value of investments and the income from them can fluctuate and is not guaranteed 

▪ past performance is not necessarily a guide to the future performance of a fund. 

The Trustee accepts no responsibility for the results of a member’s investment decisions or those of the fund managers. If members are in any doubt they should consult with an independent financial adviser and seek advice in writing on the suitability of a fund or investment to their circumstances. 

The Lifestyle Investment Strategy

This is the investment strategy which will apply where no other more specific instruction is notified to the Trustee by a Scheme member. 

4. Investment Choice

The Trustee, at the date of this statement, invests the Scheme’s assets in long term policies of insurance in the unit-linked funds operated by Mobius Life. There is also a policy held with Equitable Life. 

No investment is permitted in any form of securities issued by or loans to Braemar Shipping Services Plc or any associated company, other than is commensurate with the investment strategy and coincidental to the operation of a fund by the manager concerned. Within the individual pooled funds selected, the Investment Managers have been given complete discretion to invest monies received from the Scheme in the manner they deem appropriate. 

The Trustee has obtained confirmation that the current overall investment profile adopted and offered is suitable given the general liability profile and nature of the Scheme. The Trustee provides access to a suitable range of different asset classes and low cost reliable investment management. The overall cost of investments is important to member outcomes and therefore to the Trustee. 

The Trustee has invested in the following unitised funds: 

Fund	Total ongoing charges % per annum
Braemar Lifestyle Growth – Default Fund	0.427
Braemar Pre-Retirement – Default Fund	0.466
Braemar Cash – Default Fund	0.353
Braemar UK Equity Index	0.371
Braemar Global Growth	0.349
Braemar Global Bond	0.969
Braemar Ethical Equity	0.558
Braemar Balanced Growth	0.383
Braemar Global Equity Index	0.316
Braemar Diversified Growth	0.920
Braemar Strategic Diversified Growth	0.506

 

The Total ongoing charges covers costs such as custody, fund audit, fund administration charges and similar. These charges are expected to be incurred by members in relation to their investments in the noted fund. Such charges are within the unit price and therefore not explicit. In some instances the published annual management charge may be higher. This arises from negative transaction costs on the fund investments. 

5. The Braemar Lifestyle Investment Strategy

The Braemar Lifestyle Investment Strategy is the default investment and comprises of the following three funds: 

• The Braemar Lifestyle Growth Fund 

This fund will hold exposure to UK and international equities. The investments of the fund may also include diversified assets designed to reduce the extremes of price volatility. 

• The Braemar Pre-retirement Fund

This fund invests in a combination of diversified assets, long dated UK government bonds and long dated UK corporate bonds, together with occasional cash positions. 

• The Braemar Cash Fund

This fund invests in financial institutions using available money market instruments. 

6. Custody of Assets

The assets of the Scheme are completely separate from the Employer. Each manager or insurance company appoints their own custodian and sub custodian to assist with the operation of the investment funds concerned. 

The Trustee also maintains working bank accounts under the Scheme to assist in the day to day management and cash-flow both into and out of the Scheme 

7. Monitoring

The Investment Strategy and this Statement will be reviewed periodically. 

It is the practice of the Trustee to meet periodically to review investment. At these meetings the Trustee considers the reports of the Investment Manager and suitability of the investments in an overall context. 

8. AVCs

The Scheme enables members to pay Additional Voluntary Contributions (AVCS) to enhance the benefits at retirement. Members have the option of paying additional contributions to any of the range of investment funds described above although the Trustee notes that if the Lifestyle Investment Strategy is applied to a member then the member AVC asset must also be invested in that same strategy. AVCs paid are pooled with the other assets of the Scheme for investment purposes. 

9. Expected Rates of Return

The default option is expected to provide an appropriate return on members investments, taking into consideration the Trustee understanding of the Scheme membership and the risk considerations. The Trustee believes that equity investments may provide above inflation returns and this may assist in maintaining the real value of the members savings over the long term. 

The Trustee believes that diversified investments provide a real return that is likely to be both lower and more stable than equities over time. The Trustee considers that these investments may provide a broad match to pension outcome requirements and offer a diverse correlation in relation to the equity risk. Diversified investments may lower the return but smooth the journey to retirement for members using the Lifestyle Investment Strategy. 

The Trustee believes that fixed interest investments may provide a return that is likely to be both lower and more stable than the other assets classes. Although a lower return is expected, fixed interest holding may reduce the level of overall volatility. 

The expected rate of return for each fund is listed below. The unit price is not guaranteed and may fall as well as rise. 

Fund	Assumed Growth Rates
Braemar Lifestyle Growth – Default Fund	2.5% above inflation
Braemar Pre-Retirement – Default Fund	inflation
Braemar Cash – Default Fund	Inflation or lower
Braemar UK Equity Index	2.5% above inflation
Braemar Global Growth	2.5% above inflation
Braemar Global Bond	1.0% above inflation
Braemar Ethical Equity	2.5% above inflation
Braemar Balanced Growth	2.5% above inflation
Braemar Global Equity Index	2.5% above inflation
Braemar Diversified Growth	2.5% above inflation
Braemar Strategic Diversified Growth	2.5% above inflation

 

10. Investment Risk

The Trustee has considered investment risk from a number of perspectives. The risks are that: 

• investment returns during the members lifetime may not keep pace with inflation and may not therefore provide a good outcome 
• market movements in the period leading up to retirement may lead to a significant reduction in the anticipated pension benefits 
• member borne costs and charges reduce the investment return achieved
• the default option may not be suitable for all members 

To reduce the associated risks the Trustee reviews the default option and the full fund range offered at least every three years or immediately after a significant change in the Scheme investment policy. 

11. Realisation of Investments

The Scheme investments are held in unitised funds with leading institutional investment managers. Accordingly, the Trustee is comfortable that due to the liquidity of these funds and their underlying investments, the units can be realised when required. 

12. Ethical Investment

The Trustee has considered how social, environmental and ethical factors should be taken into account in the investment process. The Trustee considers that they should act in the financial interests of the beneficiaries and consider that this is achieved by investing in a range of pooled unitised managed funds. Against this background the Trustee considers that managers should be permitted to invest within each pooled fund as they deem appropriate. 

The Trustee believes that companies with good stewardship and governance could help to build sustainable business models and are beneficial to society. The Trustee also appreciates sustainable investing extends to “inclusion and diversity”. The Trustee and their adviser will seek pooled fund managers that hold an ethical, social and governance culture without creating a prejudicial financial impact to the Scheme. The Trustee does review and will continue to review from time to time the policies operated by each fund manager in respect of corporate governance, environmental, social governance, ethical and diversity issues. 

With specific regard to climate change impact the Trustee is monitoring the actions of their Investment Managers and may consider the suitability of their market capitalisation approach. 

13. Corporate Governance

As the Trustee invests in unitised pooled funds the voting rights as such do not pass to the Trustee. The policy of the Trustee on the exercise of rights attaching to investments, including voting rights, is that these rights should be exercised by the Investment Managers on the behalf of the Trustee having regard to the financial interests of the beneficiaries. Where this consideration is not prejudiced, the Investment Managers should take account, where the Investment Managers believe appropriate, of social environmental and ethical factors in the exercise of such rights. The Trustee does not however seek to interfere with the Investment Manager decisions on selection of assets for any of the pooled funds. 

14. Basis of Adoption

This Statement of Investment Principles is commended to the Trustee by Professional Pensions and Investments Ltd as the appointed Investment Adviser and being of suitable standing, experience and expertise. 

The Statement is subject to periodic review and update at Trustee meetings or when circumstances suggest that to be appropriate.

 

Implementation Statement 

December 2022

 

1. Introduction

This is the Implementation Statement for the Braemar Pension Scheme (‘the Scheme’) and reflects the position as of 31st December 2022. This Implementation Statement should be read in conjunction with the Statement of Investment Principles (SIP) and is an integral part of the SIP. 

The SIP was last reviewed and updated in September 2019 and reflects the Trustee policies relating to responsible investment, including both financial and non financial matters that the Trustee considered. This included Environmental, Social and Governance (ESG) considerations. Stewardship was also considered, i.e. voting and engagement, together with the ability of the Trustee to influence the actions of their investment managers. 

The selection of investment managers is considered, including their objectives, fees and their basis of charging and how that aligns with the interests of the Scheme, ensuring there are no conflicts of interest. The duration of each manager appointment is also considered, together with the ability to terminate their appointment, and any conditions of that termination, should this prove necessary. 

As a part of the investment review the sponsoring Employer was consulted on the content of the 2019 SIP and the strategy. 

2. Investment Objective

This is effectively outlined in the SIP and remains as stated with specifically the achievement for the default Lifestyle Investment Fund a rate of return that is slightly smoothed, thereby avoiding the worst of market volatility and that is appropriate for most members accessing benefit at retirement under the flexible pension arrangements. Additionally, the Trustee seeks to provide a limited range of alternate funds for those members who wish to self-select and make their own investment decisions. 

3. Investment Strategy

The Trustee continues to implement the strategy as outlined in the SIP and as updated from time to time. 

4. Setting the Investment Arrangements

In Managing the assets of the Scheme, the Trustee owns policies of assurance. As the Grantee of the policy the Trustee has the benefit of the protection offered under the Financial Services Compensation Scheme (FSCS) and the terms of the specific policy of assurance.

Mobius Life

The Trustee holds a long-term insurance policy with Mobius Life as a part of the Mobius Life long term business fund. As Grantee under the policy the Trustee may pay premium to Mobius Life who will allocate units to the policy. The allocation of units is notional and references to both units and funds are solely for the purpose of calculating benefits under the policy. Neither the Grantee (which is the Trustee) nor any other person has any right or interest in the Units, the funds or any other specific assets or income of Mobius Life by virtue of the policy. 

Utmost Life and Pensions

The Trustee owns a broadly similar policy to that outlined above (under the Mobius Life heading). 

The wide range of asset classes available to the Trustee is considered as is the ease of access to institutional style investment management funds at an acceptable annual management charge. The Trustee has received information and advice on how to achieve their objectives and how to access appropriate investment funds in a secure way. 

5. Implementation of the Investment Arrangements

The arrangements are assessed on an ongoing basis at Trustee meetings and by the Investment Adviser. This may in part be by face to face meetings where it is practical to do so. 

The Trustee is aware of the need to consider the impact of costs and value for money on the long-term performance of the investments in the pooled funds. To reduce cost and the risks associated with ‘active’ fund management, the Trustee has invested some of the Scheme’s assets in passive or index funds. 

In the main the funds are accessed via the Mobius Life investment platform using a Trustee Investment Plan which is technically a policy of assurance. This route of access avoids de-minimis fees and can benefit from aggregation discounts on annual management charges. Reporting is co-ordinated and this represents a significant benefit to the Scheme. 

6. Realisation of Investments

Investments are reviewed on a regular basis in the light of cash flow requirements. The pooled funds may be accessed daily and the Trustee believes that this supplies adequate liquidity for the Scheme. 

7. Investment Governance and Financially Material Considerations

The matter of investment and investment governance in a widest sense is taken seriously by those who manage the Scheme (The Trustee). To this end the Scheme has a Statement of Investment Principles (SIP), which is considered and reviewed periodically as appropriate.

The current SIP was agreed in 2019 and that followed in-depth consideration of the environmental, social and governance requirements, considering both financial and non-financial aspects, in respect to the asset types as required in the long term for the Scheme as it matures. The Scheme is investing appropriately against this background and there has not been a need to make further amendments although the Trustee has kept this position under review. 

Those that manage the Scheme collectively have the necessary qualifications and experience appropriate to a Scheme of this size. They meet regularly as required by the business of the Scheme, including investment business. Investment matters are on the agenda for all Trustee regular meetings. The Scheme has access to professional advisers including, but not limited, to Investment Adviser, Actuary, and Lawyer. 

8. Approach to Non-Financial Matters

The Scheme invests in pooled pension funds. This is appropriate to a Scheme of this size and brings added security in that the assets are covered by the Financial Services Compensation Scheme (FSCS). 

The Scheme will always prefer an investment that is beneficial to society and the environment over one that is not. In making such a statement the managers of the Scheme are noting that by using pooled investment vehicles they are not the direct owners of the underlying assets. They do however have access (sometimes limited by availability of information) to a copy of the content of the underlying portfolios of the pooled investment managers. 

9. Strategic Asset Allocation

During the past 12 months the Scheme has followed the allocation as outlined in the SIP and where there has been any variation this has been intentional. Those that manage the Scheme continue to consider that the asset allocation is appropriate and have considered this at their meetings in the year. 

10. Mandate Parameters

The Scheme has selected pooled pension funds with specific objectives. Each of the pooled funds that the Scheme is invested in has its own specific objective and in selecting these funds the managers of the Scheme received investment advice from a financial adviser of appropriate standing and experience and working for an organisation registered with the Financial Conduct Authority. 

When reviewing the investments during the year it was noted that the pooled funds were being managed to their objectives and that the results were as the Scheme expected, taking into consideration the impact of Covid-19. Further the financial standing of the managers of the pooled funds has been considered and noted that it continues to be appropriate. The managers of the pooled funds that the Scheme participates in are required to report to the Prudential Regulatory Authority (PRA) who in turn supervise the solvency of these managers on behalf of the Bank of England. 

The Scheme has considered this position during the year and remains comfortable with the approach in place, including the capital structure and financial standing of the investment managers that the Scheme invests with. Specifically, the Trustee takes considerable comfort at investing via a policy of assurance and the protections that brings. 

11. Voting Rights and Description of Voting Behaviour During the Year

Participants in pooled investment funds do not generally acquire rights over the underlying holdings of the pool. There is no direct relationship between the Scheme and the companies whose shares are held within the pooled investment funds that we are using. In effect this means that the manager of the pool exercises voting rights on our behalf (as a participant in the pool) but without any obligation to consult with us. The Scheme does not use a proxy voting service, in practice it does not have the right to exercise votes at the general meetings of companies held within the pooled investment funds. Generally, other than for matters of financial reconstruction, holders of gilts, bonds, physical property and other alternative investments may not have voting rights. 

Where the Scheme holds units of investment in pooled equity funds the Scheme can see how the manager has voted in the summary stewardship reports that the manager may produce for information. These matters are currently only reported at overall manager level and not in a specific way in respect to the funds that we invest in. This may change in the future and the Scheme is aware that there are many initiatives in the investment markets generally to improve access information and reporting in this area. 

Other than via our investment consultant it is challenging for the Scheme to influence the manager of a pooled fund on matters of voting for individual companies. The Scheme does however take its responsibilities seriously in this area and notes that it always has the option to divest from the manager if, in the view of the Scheme, expressed by those who manage it, this was deemed appropriate. Set against this is an overall fiduciary responsibility of the Trustee to manage the Scheme assets. 

In future years we are expecting managers to provide us with further summary stewardship reports that highlight key voting issues, particularly around matters of diversity and the environment as regards the underlying holdings in the relevant pooled fund portfolio. Such reports are available for example from Legal and General and Blackrock at a high level by accessing https://www.lgim.com/landg-assets/lgim/_document-library/capabilities/lgim-uk-corporate-governance-and-responsible-investment-policy.pdf https://www.blackrock.com/uk/individual/about-us/sustainability-resilience-research?siteEntryPassthrough=true&cid=ppc:apollo20:Google:brand:uk&gclid=EAIaIQobCh

Other managers that we may access have similar information published on the world wide web. The Trustee considers such information in making their decisions under the policy of assurance that they own.

12. The Trustee

At each of their meetings where their Investment Adviser is present, the Trustee has received an investment presentation on the strategy that they are pursuing and the pooled funds that they participate in. This has included some comment on ESG and where available the wider voting record of their investment manager. 

The Trustee group includes experienced individuals with relevant qualifications and practical working experience of investment matters and governance. This method of operation facilitates an excellent understanding at Scheme level of the requirements when exercising ‘good governance’. 

13. Trustee Knowledge and Understanding

The Trustee Directors undertake Trustee Knowledge and Understanding training including at Trustee meetings. In addition, Winterbourne Trustee Services is a specialist professional Independent Trustee, and is the professional trustee appointed to the Scheme. As a firm of professional trustees, Winterbourne brings its long experience and specialist pensions and investment knowledge to what is now a very complex and increasingly legislated area. 

14. Processes around Managing Scheme Investments

Having set a strategic parameter for the Lifestyle investment programme this process has revolved mainly around managing cash flow during the year. In this respect, where funds have been required for additional cashflow, retirements or member transfers, the Trustee has taken appropriate advice and sold investments to provide the necessary liquidity. This is achieved by amending the unit holding for each member in an appropriate way. 

15. Holding Advisers and Managers to Account

The Scheme is managed by the Trustee and in turn advice is taken where required. Those that act as advisers to the Scheme have objectives to deliver service as required and the Trustee group consider the success of this on an ongoing basis. The Investment Adviser has objectives in place that were reviewed in 2021. 

No action has been necessary during this year in respect of shortcomings of advisers or service providers to the Scheme. The Trustee notes that the management of a Scheme such as this can be a challenging matter, and that budgets must be appropriate. These matters are regularly considered with assistance from the principal employer and the Trustee considers that overall, the Scheme functions well, achieving good value from its service providers and good value for its members. 

During the 2020-2021 period member presentations and discussions were held. This included canvassing member views on retirement provision generally and an explanation of the investment structure of the Scheme. Feedback overall on this member interaction was positive.

16. Manager Selection, Review and Monitoring

The Scheme has made no change in its holding of pooled funds during the year. This is intentional. Change can be relatively expensive due to implicit dealing costs in the underlying assets and although not fully transparent such costs are apparent in wholesale rearrangement of assets. The Trustee seeks to avoid such costs. 

17. Transparency

The assets held by the Scheme are transparent and it is anticipated that in future years all transaction costs on the underlying assets of the pooled funds that the Scheme owns assets in will be available for general publication. For monetary instruments such as gilts and fixed interest holdings such costs are implicit in the purchase price of the underlying asset and so are unlikely to be available. More information on this subject is covered in the Chair of Trustee Governance report – ‘the Chairs Statement’. 

18. Conclusion

The Scheme has managed its assets successfully throughout the period under review. This Implementation Statement should be read in conjunction with the SIP and is supported by ESG and voting information as supplied to the Investment Adviser for the Scheme by the managers of the pooled funds that the Scheme participates in. 

19. Further Information

Some examples of key investment manager decisions are attached as an appendix to this document. If further information is required on any of the matters covered, please contact the Trustee, Braemar Pension Scheme, care of Winterbourne Trustee Services, or the Principal Employer. 

December 2022

 

Appendix

Examples of significant votes

BHP Group Limited
ISIN	AU000000BHP4
Market cap	£128 billion (source: Salesforce, as of 23 December 2022)
Sector	Metals and mining
Issue identified	Climate-policy advocacy and climate disclosure, both of which LGIM considers to be material to the net zero transition. LGIM considers shareholder proposals on an individual basis.
Summary of the resolution	Resolution 14: Approve Policy AdvocacyResolution 15: Approve Climate Accounting and Audit AGM date: 10 November 2022
How LGIM voted	These were both shareholder-proposed resolutions and LGIM voted in favour of both (i.e. against management).
Rationale for the vote decision	Resolution 14 was a request that the company proactively advocate for Australian policy settings that are consistent with the Paris Agreement’s objective of limiting global warming to 1.5°C. A vote in favour of this proposal was applied as LGIM believes positive climate-related advocacy is in the best interest of the company and its shareholders. We also note that nothing in this resolution was designed to limit the board’s discretion to take decisions in the best interest of the company. Resolution 15 requested that, from 2023, the notes to the company’s audited financial statements include a climate sensitivity analysis which includes a scenario aligned with limiting global warming to 1.5°C, presents the quantitative estimates and judgements for all scenarios used, and covers all commodities. While we consider the company to be a leader with respect to its climate- related disclosure, a vote for this proposal was applied as LGIM believes that further quantitative disclosure in the company’s financial statements around the impact of climate change scenarios on BHP’s material commodity portfolio is important.
Outcome	These resolutions received 12.7% and 18.7% support, respectively, from shareholders. We continue to engage with BHP and, more broadly, to support proposals that are aligned with LGIM’s net zero aims and beliefs.
Why is this vote ‘significant’?	These votes were significant because of their importance within our climate change engagement.

 

Microsoft Corporation
ISIN	US5949181045
Market cap	£1,528 billion (source: Salesforce, 22 December 2022)
Sector	Technology
Issue identified	In 2021, without seeking prior shareholder approval, Microsoft took the decision to recombine the roles of chair and CEO, which had previously been separate for many years.
Summary of the resolution	Resolution 1.4: Elect Director Satya Nadella AGM date: 13 December 2022
How LGIM voted	We voted against the resolution (against management recommendation).
Rationale for the vote decision	LGIM expects companies to have a separate chair and CEO on account of risk management and oversight considerations, and also because the roles are substantially different and require different skills. Previously, in Microsoft’s 2021 AGM, we voted against both the re-election of the chair and of the board nomination committee chair/lead independent director, and we have conveyed our disappointment at this change.
Outcome	94.8% shareholders voted for the resolution (for the re-election of Satya Nadella). Nevertheless, we maintain our belief in the importance of the separation of the chair and CEO roles, on account of the different skillsets and different responsibilities of these roles. We were disappointed that Microsoft took the decision to recombine these roles and will continue to engage with them on this and other topics.
Why is this vote ‘significant’?	LGIM believes that, within the broader topic of board effectiveness, the roles of chair and CEO should be separate.

 

AVEVA Group PLC
ISIN	GB00BBG9VN75
Market cap	£10 billion (Source: Salesforce, 14 December 2022)
Sector	Technology
Issue identified	The UK-listed software company, AVEVA Group plc, is 59% owned by Schneider Electric. In September, the AVEVA board recommended a takeover by Schneider Electric. LGIM and several other shareholders were not satisfied with the bid, as we believed it to significantly undervalue the company, particularly given that the AVEVA business was in a period of transition. The initial EGM (Extraordinary General Meeting) was set for 17 November; however, following shareholder concerns about the deal and a raised offer from Schneider Electric, the meeting was adjourned to 25 November.
Summary of the resolution	Resolution 1 – Approve matters relating to the recommended cash acquisition of AVEVA Group plc by Ascot Acquisition Holdings Limited. EGM date: 25 November 2022.
How LGIM voted	Against the proposal (and against management recommendation)
Rationale for the vote decision	LGIM joined the collaborative engagement established and led by the investor forum. Our Stewardship team also engaged internally with LGIM’s investment teams regarding this proposed deal. LGIM voted against the resolution as we considered the proposed acquisition to significantly undervalue the company.
Outcome	The bidder was forced to increase its offer by 4% in order to gain sufficient support, despite an AVEVA board recommendation. This case illustrates that potential takeover deals are not a foregone conclusion and that target boards are prepared to recommend a bid and then hand the decision over to their shareholders. It also illustrates the power of collaborative shareholder engagement, where the bidder increased their offer due to shareholder dissatisfaction. Given the acquirer, Schneider Electric, already controlled 60% of the AVEVA share capital, there was little chance of the deal not being approved. The deal was approved and the acquisition is expected to close in the first quarter of 2023.
Why is this vote ‘significant’?	Mergers and acquisitions – this vote demonstrates the power of collaborative shareholder engagement in a takeover situation where we believed the original offer undervalued the company significantly.