for the year to 31 december 2018 - standard life · 2 trustee’s report and chair’s statement...

Standard Life Master Trust Co. Ltd

Trustee’s Report and Chair’s Statement for the Standard Life DC Master Trust (the “Scheme”) For the year to 31 December 2019

2 Trustee’s Report and Chair’s Statement for Standard Life DC Master Trust

Contents

Dashboard 3Introduction 5Independence of the Board 5Our knowledge, experience and training 5Member representation 6The default investment arrangement 8Core financial transactions 8Charges and transaction costs 11Enhancements to the Scheme during 2018 11Environmental, Socialand Governance (ESG) 12Cyber security 13Good value for members 14Information about the Scheme 14Information to Members 14Employer related investments 15Master Trust Authorisation 15Management of the Scheme 15Changes to the Board in 2020 15What you should do next 15

Appendix 1 – About the Board 19

Appendix 2 – Statement of Investment Principles 38

Appendix 3 – Evaluation of Value for Money – A Practical Framework for IGCs 37

Appendix 4 – Standard Life Master Trust Co. Ltd Standard Life DC Master Trust & Stanplan A 41

Appendix 5 – Default fund Risk Adjusted Performance Analysis 42

Appendix 6 – How we went about reviewing the default investment arrangement 43

Appendix 6a – How we went about reviewing the default investment arrangement 44

Appendix 7 – Illustrations, over time, of the growing effect of the costs and charges on the value of your savings 45

Appendix 8 – Charges during the Scheme year (01/01/2018 to 31/12/2018) calculated as at 31/12/2018 51

Appendix 9 – The Board Member recruitment process 61

3Trustee’s Report and Chair’s Statement for Standard Life DC Master Trust

DashboardThis dashboard gives you a summary of whether we think you are getting good value from the Scheme. Much more information can be found in the pages that follow.

Do the members of the Scheme get good value? Yes

Value for money component Rating

Administration, management and

governance

Is the Scheme well run and does it have timely and accurate

administration?Yes

Investment governance and

performance

Are investment strategies appropriate and reviewed from

time to time?Yes

Are investments performing well?Not as well as

they should but improving

Communication and engagement

Are the information and tools available or sent to members

clear and accessible?Yes

Financial strength, sustainability and security

Is Standard Life able to provide the resources needed to properly run

the Scheme now and in the future? Are members’ assets safe?

Yes

Yes

What you should do next

We recommend that you review your level of pension saving on a regular basis and we recommend you do that today.

This statement is for your information. You do not need to take action however we do recommend that you review your own level of pension saving on a regular basis and we recommend you review it today.


IntroductionThis is a statement produced to comply with regulation 23 of the Occupational Pension Schemes (Scheme Administration) Regulations 1996 (the “Regulations”). It has been prepared by the Board of the Standard Life Master Trust Co. Ltd (SLMTC) which is the trustee of the Scheme. The Scheme is insured and administered by Standard Life Assurance Ltd (Standard Life).

Independence of the BoardSince April 2015, the law has required that the Board of SLMTC has a majority of members who are independent (known technically as “non-affiliated”). The Chair of the Board has to be one of the independent members. I chair the Board which has five members all of whom, including me, are independent. There was one change to the Board during 2019. The members were:• PTL Governance Ltd represented by me• Ruston Smith• Francois Barker• Stella Girvin and• Poisson Management Ltd represented by Rene Poisson –

resigned 30 September 2019• Rene Poisson – appointed 30 September 2019. More information on each of us can be found in appendix 1.There are a number of factors which must be considered when determining whether members of the Board of SLMTC are non-affiliated:1. The Board members should be independent of any

company which provides advisory, administration, investment or other services in respect of the Scheme.

This point requires a number of factors to be considered:

a. are the Board members currently (or during the last five years ending with their appointment) directors, managers or employees of a company which provides advisory, administration, investment or other services in respect of the Scheme (“a service provider”) or a company which is connected to a service provider;

b. do the Board members receive any payment/benefit from a service provider;

c. do the Board members’ obligations to the service provider conflict with their obligations as a Board member and will their obligations as a Board member take priority if there is a conflict.

(Please note there is one exception to this rule, see note 1 in the table at the top of the column opposite.)

2. The appointment process appointing the Board members should be “open and transparent”.

3. The Board members should not be in office for a single period of more than 5 years or for more than 10 years in total (except where more than 5 years have passed since the Board member held office in the Scheme).

The table below shows how these requirements were met.

Other services Current term ends

PTL Governance Ltd Yes (1) 5 April 2020Ruston Smith No 8 May 2020Francois Barker No 8 May 2020Stella Girvin No 8 May 2020Poisson Management Ltd

Yes (1) 5 April 2020

Rene Poisson Yes (1) 31 March 2024Note1: Both PTL Governance Ltd, until 30 April 2019, and Poisson Management Ltd until 25 April 2019, were members of Standard Life’s Independent Governance Committee (IGC). In accordance with the Pensions Regulator’s guidance being on a provider’s independent governance committee does not prevent members from also sitting on the board of a master trust.

Further changes and a reappointment to the Board occurred early in 2020 as the five year terms of the non-affiliated Board members expired. In order to ensure continued compliance with the statutory requirements regarding non-affiliation, the composition of the Board needed to be reviewed. More information on these changes can be found later in the report. The Board has a Conflicts of Interest policy, maintains a Register of Interests and, at each of our meetings the Board members are asked to disclose any conflicts of interests.

Our knowledge, experience and trainingThe Board members were selected to ensure we collectively have the right skills to govern the Scheme effectively as well as an ability to provide robust challenge both to Standard Life and each other. Between us, we (the members of the Board) have over 150 years’ experience of running, managing and, or advising pension schemes – much of that experience in senior positions and we are all professionally qualified. Each of us has significant knowledge and understanding of the law relating to pension trusts, of pension funding and investment. More information on our background, experience and qualifications can be found in appendix 1.Shortly after the Board’s appointment we carried out an audit of our knowledge and skills. Each year, having reviewed the audit (including that our assessment of the knowledge and skills needed is up to date and relevant in the context of the Scheme’s annual calendar) this has been repeated. The output of the audit is used to design the following year’s training for individual members or the Board as a whole. During the course of 2019, we had training on: default strategy membership analysis, the new rules in relation to Environmental, Social and Governance (ESG) factors and investing, direct and indirect costs and various items relating to master trust authorisation including the solvency requirements that apply to regulated insurance companies.


The skills audit process 2019. The Board members self assessed their knowledge across 123 criteria as either “needs training”, “satisfactory”, “good” or “excellent”. The individual and collective output of this process helps us to design the year’s training which may be sourced internally or externally. The assessment in 2019 showed strong knowledge across all areas. A summary of the key results were: The law relating to pensions – ExcellentThe law relating to trusts – ExcellentOccupational Scheme funding - ExcellentOccupational Scheme investment – ExcellentUnderstanding of the systems and processes requirements within the authorisation process – SatisfactoryUnderstand the continuity strategy requirements within the authorisation process –SatisfactoryOur weakest area, relatively, related to the new master trust authorisation framework, which is why we had training on it.

As part of each training session the Board considers how, specifically, it relates to the Scheme in order to ensure the Board’s continued familiarity and understanding of the Scheme and its documentation. In addition to the skills audit, each year the members of the Board certify they have completed at least 15 hours of Continuous Professional Development (CPD) which may be done internally or externally. We have an appropriate induction process in place for new Board members. During the year there was one change to the Board but there was no need to implement these processes in his case as he was not new to the Board (see below). We have appointed a firm of solicitors and some investment consultants, to provide independent advice to us, all of which have experienced teams that specialise in pensions. We have a Board effectiveness policy and carry out an annual Board effectiveness assessment. This involves each of the Board members completing a questionnaire which is reviewed by the scheme secretary (or the company secretary in my case). Throughout the year (as described above) the Board has demonstrated that it has the knowledge and understanding needed to govern and run the Scheme effectively. The Board has further demonstrated this in the following ways: 1. The Trust Deed and Rules of the Scheme The Trust Deed and Rules are stored electronically, are

up to date and available to the Board for reference at all times and are consulted as necessary, including during meetings. The Board in making decisions in line with the Trust Deed and Rules have demonstrated a good working knowledge of those documents.

2. Statement of Investment Principles The Board has a good working knowledge of the

current Statement of Investment Principles as we

review the performance of each fund against the stated performance objective for that fund and receive a monitoring report on a quarterly basis. We have also considered the performance of the default investment arrangements in 2018 and early 2019, against the requirements set out in the Statement of Investment Principles.

3. Documents setting out the Board’s policies The Board applied for and obtained Master Trust

authorisation in 2019 and that process required all governance processes to be appropriately documented. The Board has a good working knowledge of the documents setting out the relevant policies as these are reviewed by the Board on a regular basis to ensure they are still suitable.

By way of example the Board has a Conflicts of Interest policy, maintains a Register of Interests and, at each of the meetings Board members are asked to disclose any conflicts of interest.

4. The law relating to pensions, trusts and the principles relating to the funding and investment of the assets of occupational pension schemes

As noted above the Board undertakes regular training. As part of the skills audit process the Board showed strong knowledge across all areas and on the law relating to pensions, trusts, investment and funding matters the Board achieved an “excellent” result. In addition all members of the Board were required to demonstrate fitness and propriety as part of the Master Trust authorisation process.

Member representation We are always keen to hear from you or your representatives about your experience of the Scheme. In particular we are keen to hear what features of a pension scheme you value the most and least. Having considered the size, nature and demographic of the membership we think the best way for you to let us know your views is through email. This is the approach which we have used in previous years and which we continue to think is the best approach for you to contact us. Anytime, throughout the year we would really value your thoughts and feedback. We encourage you to email us at [email protected] as noted on the Standard Life Master Trust website at https://www.standardlife.co.uk/c1/master-trust-committee.page. As we did last year, we have produced a video summary of this statement which can also be found on our website.Throughout the year Standard Life used two measures of customer satisfaction. In an effort to further understand, and subsequently improve, the experience and outcomes Standard Life deliver for members they have made changes to the way they capture feedback. Instead of asking members to complete a feedback survey over the phone immediately after their call Standard Life now send them a survey via SMS or email/ Website. They have also changed the Personal Satisfaction Score (known as PSAT) point scale and no longer offer a Net Promoter Score (NPS) question to members. NPS has been replaced by Ease (how easy was it for the member to get what they needed).

mailto:[email protected]

https://www.standardlife.co.uk/c1/master-trust-committee.page



For PSAT and Ease the member is asked to rate the call on a scale from 1 to 5, with 1 being poor and 5 being good. For each question the total score (shown as a percentage) is calculated by adding the total number of members who scored a 4 and 5 and dividing by the total number of surveys received. We see the PSAT and Ease scores in the regular governance reports we receive. We have also seen the NPS scores for the year but, due to their being replaced, they were not regularly reported to us. The PSAT scores during 2019 were above the target we agreed with Standard Life. The NPS scores during 2019 were above the target we agreed with Standard Life until August. After August they dropped beneath the target. When we challenged them why this was they responded:“NPS Advocacy has dropped from August 2019. This is because Employers and Advisers are the only entities now being offered NPS and they call repeatedly and don’t commonly leave feedback, and if they do they may not advocate Standard Life due to regulatory reasons. Employers and Advisers continue to be directed to our phone survey and are not sent a survey via SMS or email/ Website. In other words members are not being directed to provide information on NPS Advocacy they have been providing information on Ease since August 2019”.We have not yet agreed a target for Ease scores. I will report further on this in next year’s report. During the course of the year, members of the Board attended the governance meetings of some participating companies. These were an opportunity for the governance committees to ask questions about the Board and its work plan and to provide intelligence about their employees and what’s important to them.

The default investment arrangement The Statement of Investment Principles, which was in place at the end of 2019 which sets out the default investment arrangement, is attached as appendix 2. The Statement of Investment Principles outlines the Board’s policies on:• Choosing investments• Investment objectives• Kinds of investments to be held• The balance between different kinds of investments• Risks• Expected return on investments• Realisation of investments• Environmental, Social and Governance Factors• MonitoringWe review the performance of each fund against the stated performance objective for that fund and receive a monitoring report on a quarterly basis. Standard Life meets the investment managers as frequently as is appropriate in order to review performance. A manager’s overall suitability for each mandate will be monitored as frequently as we

consider appropriate in light of both its performance and other prevailing circumstances. We monitor the suitability of the objectives for each section of the Scheme (as noted in the Statement of Investment Principles appendices) and its performance (net of fees) against these objectives at least every three years and also when there is any significant change in the investment policy, underlying economic conditions or the profile of the members.We ensure that the default investment strategies are regularly reviewed ensuring they remain fit for purpose. Although we monitored investment performance throughout the course of the year, during 2018 and early 2019 we had a strategic review of the default investment arrangements for those sections of the Scheme which do not have employer specific default arrangements. This review resulted in us making some changes to the investments over the course of 2019. Appendix 6 explains the approach we took to the review, the changes we made and the reasons for those changes. As these changes were consistent with our investment aims and objectives as set out in our Statement of Investment Principles we did not have to update it, although changes were made to the statement later in the year to reflect other matters.A table showing the performance of the default investment arrangements, for those sections of the Scheme which do not have employer specific default arrangements, against other similar pension schemes can be found in appendix 5. There are three sections of the Scheme where employers have their own bespoke default investment arrangements, which are also covered by the Statement of Investment Principles. Employer 1 section: during 2019 we had a strategic review of the default investment arrangements for this section of the Scheme. This review resulted in us making no changes to the investments. Appendix 6a explains the approach we took to the review and the reasons why any changes were made. As no changes were made to our investment aims and objectives as set out in our Statement of Investment Principles we did not have to update it.Employer 2 section: a strategic review of the default investment arrangements for this section of the Scheme began in 2019. It is expected to proceed during 2020. This was last reviewed in 2018. The reviews did not result in any changes to the default investment arrangements or Statement of Investment Principles. Employer 3 section: there was no review during the year although work has begun on a review during 2020. It was last reviewed in 2017.

Core financial transactions We are required to make sure that core financial transactions in the Scheme are processed promptly and accurately.


What are core financial transactions?Core financial transactions include (but are not limited to) the investment of contributions, transfers of members’ assets to or from the Scheme, switches between investment funds in the Scheme and payments out of the Scheme to members or their beneficiaries.

We have appointed Standard Life to carry out the administration of the Scheme, including processing core financial transactions, on our behalf. Standard Life administers the Scheme through a dedicated centre in Edinburgh. The administration team is made up of around 1,500 members of staff, many of them with relevant professional qualifications, with an average of close to 13 years’ service each. Standard Life apply flexible working approaches and use trained temporary contractors from time to time to meet the changing demands of members throughout the year. We feel it is important to get close to and fully understand the operations so members of the Board met with the Standard Life team and their managers on several occasions during the year. We have reviewed the governance structure around Standard Life’s administration processes and the way they process core financial transactions. The majority of these are carried out in a fully automated way (known as “Straight Through Processing” or STP) which increases effectiveness and efficiency. During the year, to monitor Standard Life’s performance, we:• Reviewed quarterly governance reports which detail

their performance against agreed service levels (see the box below). These provided information on how promptly transactions and member enquiries were dealt with. The same reports also record the accuracy of the work they complete.

• Considered key processes and controls to make sure their performance should be maintained. We also reviewed their “Pensions Internal Control Statement” which describes the activities they undertake to ensure the administration of their pension business is carried out in accordance with the requirements of the law and has good standards of governance and internal controls.

• Reviewed the complaints received from members and any breaches of the law including the General Data Protection Regulations (GDPR), to identify whether there may be any weaknesses in their processes and controls and to identify opportunities for continuous improvement in member services. Carried out a review of the member data they hold on their systems on our behalf. This review checked that data records were complete, they had been updated in accordance with members’ requests and that the data looked reasonable. A data review exercise is carried out at least annually.

Standard Life performs daily bank reconciliations for all operational bank accounts. The purpose of these reconciliations is to ensure that all transactions processed through the bank accounts (money in and out)

can be accounted for. Any transactions which cannot be accounted for are investigated and corrected if required.Many bank transactions are automated but for those that are manually processed, or generated internally by Standard Life, there is a formal documented authorisation process which involves one or two other people depending on the value of the transaction. The majority of investment transactions are automated but for those that are manually processed the transaction is subject to sample checking to assess both accuracy and that the transaction is carried out within a reasonable timeframe. Each year the Board asks a firm of independent accountants to check that the procedures we have agreed with Standard Life, including those relating to core financial transactions, are properly carried out. Their findings are included in our “Internal controls for Standard Life Master Trust Schemes Report” (also known as the “AAF02/07 Assurance Report”) which can be found on our website https://www.standardlife.co.uk/c1/master-trust-committee.page.We are satisfied that Standard Life has robust systems and the capability to process core financial transactions promptly and accurately in line with the agreed service levels and the requirements of the law. We are satisfied that the vast majority of core financial transactions during the year were processed promptly and accurately. In those few cases where errors or delays occurred and Standard Life were at fault, any material losses to members were made good within a reasonable period of time.

Service levels agreement (SLA)We have SLAs in place with Standard Life which are reported against on a quarterly basis. We’ve agreed with Standard Life that they will complete most non-STP processes within deadlines that are appropriate for each particular task (STP processes are completed almost instantaneously as they need no human intervention). Although they manage this most of the time, they do sometimes miss the deadline. When they do miss the deadline we consider the reason(s) why, agree what, if any, action is needed and check at our next meeting they have completed the actions.In addition, we’ve agreed with Standard Life that they will get all processes “right first time” where they can and a framework for improvement where there is evidence they are missing the target. Where we have concerns we agree what, if any, action is needed and check at our next meeting they have completed the actions. We discuss their performance and monitor their progress at every Board meeting.

During 2019 we concluded a review of the SLAs we had agreed with Standard Life. This resulted in a number of them being changed. Before the review the SLA for all tasks was ten working days. As a result of the review we moved to SLAs that are appropriate for each particular task, taking into account the nature of each task, the expectations of members and the interaction of the task



Trustee’s Report and Chair’s Statement for Stanplan A 10


with other functions. The table below sets out the new SLAs for a number of the tasks.

Function SLA (working days)

Allocation of contributions 3Transfer in 10Provide general information 10Provide retirement quote 5Investment changes 3Settle retirement benefits 5Settle a transfer out 5Settle a death claim 20

Also during 2019, Standard Life told us they plan to change their administration system over the coming years. The Board have and will continue to engage with the Standard Life executive on this matter. They have already responded to our initial set of questions. As you would expect, we are keen to understand more about the quality of the on-going service, the quality of the service through transition, the on-going security of data and what this change will mean for their ability to develop the Scheme. Overall we will be focused on ensuring that through the transition and beyond the change does not reduce our assessment of the value for money you get. I will keep you informed on the progress of this project in future reports.

Charges and transaction costsStandard Life provides a “bundled” product. This means you receive a bundle of services in return for a bundled charge. The bundled charge is normally a single charge taken from your pension savings. There are some members who pay a monthly fee in addition to this charge. The charges that apply to you are set out in the fund guide for your employer’s section of the Scheme. You can find a copy of this guide on your Scheme website. One of the bundled services is that Standard Life will invest your Scheme savings for you. The Scheme has more than one default investment arrangement. The charge applying in any one of these will depend on the price agreed between your employer and Standard Life. The level of charges borne by members, during the year, in each of the default investment arrangements is shown in table 1 of appendix 8.The Scheme has a range of other investment funds available to you, which are not part of the default arrangements. The charge applying to any one of these will also depend on the price agreed between your employer and Standard Life. The level of charges borne by members, during the year, in each of these investment funds is shown in table 2 of appendix 8.In addition to the explicit or direct charges discussed above, funds to which your contributions are paid also incur implicit “transaction costs”. These are costs which fund managers incur when buying, selling, borrowing or lending the assets that make up the investment funds. They may also include the cost of research on different

investment opportunities. These costs are reflected in the net investment returns of the funds. The level of transaction costs borne by members during the year in default investment arrangements and the other investment funds, is shown in appendix 8. We were able to obtain this information in relation to all of the investment funds. Standard Life uses a number of processes and controls to manage the level of transaction costs within funds, a number of which we have reviewed. All portfolio managers are required to assess the costs of a trade against the anticipated return; Standard Life monitors the costs and performance of third party suppliers (custodians, fund accountants, transfer agents etc.) and within Standard Life, a “box system” is used to aggregate and match off customer transactions to minimise unnecessary trading.In appendix 7 you will find a number of illustrative examples of the cumulative effect over time of these costs and charges on the value of your savings. We have taken account of statutory guidance when preparing this section of the statement.

Enhancements to the Scheme during 2019During 2019 Standard Life enhanced the Scheme in a number of ways:• Added new features to the app such as the ability to

update your personal details, added options to help you transfer other pension pots into the scheme and allowed for the introduction of push notification

• Enhancements have been made to the member dashboard by adding secure message attachments, making improvements to how members register for the service and redesigning the home page to improve navigation.

• Member communications have been enhanced, with a refreshed design of the annual benefits statement and the roll out of an annual benefit video.

• Enhanced the Helping Hand initiative in order to further support vulnerable members through online and phone processes.

• A number of enhancements were made to the schemes retirement proposition, these included adjustments to align with the FCA retirement outcome review, based on member feedback enhancements were made to the retirement webinars and a video was launched to explain investments for members considering income drawdown

• Some developments were also made around the schemes investment solutions, these included, the launch of a new additional Passive Investment solutions, changes to the Passive Plus and Active Plus solutions and Standard Life published details regarding their approach to ESG investing

We have taken these changes into account in our value assessment.


Environmental, Social and Governance (ESG) Whenever we invest money on your behalf we think about a number of matters including the growth we want to target, the costs of investing in different types of asset, how easy it is to buy or sell a particular asset and the risks we are taking with your money. ESG describes a set of long term financial risks to companies relating to environmental (including climate change), social and governance factors – for example, whether companies are over-reliant on fossil fuels, whether they use child labour, how they treat their workforce and whether their board of directors is appropriately diverse. Evidence suggests companies which are aware of and manage risks like these are more likely to grow sustainably and so perform better financially over the longer term.In addition, we recognise the increased focus amongst members, employers and legislators on the way money is invested and its impact on the wider world. This led us to conclude that a thoughtful approach to these issues has the potential to improve investment returns and encourage greater engagement by members.During 2019 we:• Determined our policies in relation to financially material

considerations (including ESG factors) and how they are taken into account during the process for the selection, retention and realisation of investments. We set these policies out in our Statement of Investment Principles which can be found in appendix 2.

• Determined our Stewardship policies, including: • How the rights (including voting rights) attaching to

investments are exercised. • How we monitor the scheme’s investments and • How we engage with relevant persons via Standard Life • How we engage on relevant matters, which

include performance, strategy, risks, social and environmental impact and corporate governance

• Determined the extent, if at all, to which members’ views on non-financial matters (including ethical views, views on ESG and the present and future quality of life of members and beneficiaries) are taken into during the process for the selection, retention and realisation of investments

In accordance with our legal obligations, in practice, we effectively delegate full investment discretion to Standard Life. This is because we do not directly invest in any company. Instead we invest in a number of Standard Life’s “pooled” investment funds (in a pooled fund the assets of many pension schemes and other investors are invested collectively so as to be able to properly diversify risk and benefit from economy of scale). When we challenged Standard Life on their approach to ESG they responded:

“ESG is a key priority for Standard Life, part of the Phoenix Group, and having a clear response as a company as a whole, and through our propositions, is essential to our future success. Phoenix launched its Sustainability programme in 2019, which is sponsored by our CEO, Andy Briggs. Our Head of Sustainability, Yvonne Gray, is driving forward Phoenix’s sustainable business strategy which links our long-term business strategy to the way we manage our impact across all environmental, social and governance (ESG) themes. Phoenix published its first Sustainability report in March 2020 which outlines our vision, long term aspirations, planned actions across the group for 2020 and achievements delivered in 2019. Our Sustainability programme is being embedded throughout our Group through key functional representatives across all areas of our business, including investments. The Group has committed to take a pro-active approach to Responsible Investment and in March 2020, we published our Responsible Investment Philosophy. In supporting the Standard Life Master Trust Scheme, we have already made a significant amount of progress. The investment offering has an ESG approach embedded across the actively managed range where ESG factors are integrated into the fund management process. There is also extensive stewardship applied by the fund managers across both the active and passive portfolios.In 2019, we communicated the following:• the Unit Linked ESG Policy • our Websites have dedicated Responsible Investment

pages for workplace and retail customers which: • Document our standard language, policy and

approach (aligned to the UN’s PRI) • Shows how ESG is applied to our key UL investment

solutions • Provides a hub for future developments and

communicationsOther ESG initiatives have delivered benefits in 2019, including:• From an environmental perspective, the continued

extension of digital adoption, in particular paperless statements and the ability to submit documents via secure message

• From a social perspective, our vulnerable customer strategy aims to address vulnerability to the extent that the right outcomes for customers are achieved and we secured the ‘Most Effective Vulnerability Strategy’ award at the 2019 CCA Excellence Awards.

• From a governance perspective, a strong policy framework surrounding propositional development, in addition to external scrutiny from our Independent Governance Committee and Master Trust Board ensure we are well positioned.

While we already have significant capability deployed around ESG, we will take insight from the Scheme, our customer base (including employers and advisers), as well as other key industry stakeholders to help shape our developments in this area.


We will continue to develop our propositions and a number of key steps are in progress for 2020: • Review and extend the responsible investment fund

choices offered through our propositions to ensure they reflect the changing requirements of our customers

• Continue to review our range of default strategies to determine what further steps we can take to embed ESG principles

• Continue to enhance how we communicate our responsible investment proposition and drive better customer engagement in this area

We are committed to having an effective ESG proposition that meets the needs of our customers, and are excited about the enhancements to our proposition that will come out of the steps we are taking this year and beyond”.The Board is comfortable that Standard Life are taking ESG factors into account where possible within the applicable guidelines and restrictions as defined in the governing literature of each underlying fund. The Board will be doing more work on ESG during 2020, including reviewing our policies and continuing to challenge Standard Life. I will report further on this in next year’s statement.

Cyber securityWe are very conscious of the impact that cyber-crime can have on society and business – and how this can affect members.Standard Life’s cyber security policy and standards are aligned with industry good practice and the UK Government’s ‘Cyber Essentials’ scheme.Given the rapidly evolving nature of cyber risk, and as part of their good governance processes, Standard Life continuously reviews and improves their controls. They monitor the effectiveness of their approach from several sources:• Daily responses to live activity within the Standard Life

environment and threat intelligence received through commercial sources and government agencies.

• Reviews of significant external cyber related events to identify lessons learned about the control environment within Standard Life.

• Participation in annual benchmarking of Standard Life controls against industry peers. The bench marking output is used to inform continuous improvement plans.

• Participation in regulatory thematic control reviews.• External expert testing of security controls and

observation of response capabilities.• Annual external audit reviews and regular internal

audit reviews of key risk areas.• Feedback from Workplace client due diligence

reviews of Standard Life’s security controls. Over the past year, Standard Life has successfully concluded over 100 assessments by Workplace pensions and/or benefits clients.

• Development of the Standard Life team to ensure they maintain continuous professional education and participate in knowledge sharing forums.

In 2019, the Standard Life team focussed significantly on the Standard Life Aberdeen-led programme of work to separate the complex IT and data operations that were previously shared between those two companies. Progress in this work continues to be made, but this area will remain a focus as this complex programme of work is not due to complete until the fourth quarter of 2021.Standard Life recognises that it is vital that they maintain the operational effectiveness of their existing security tools and processes. Technologies such as firewalls, email security and data leakage prevention tools all require constant tuning to remain effective in line with a rapidly changing threat profile. In 2019, a total of 1,285 changes were made in order to maintain the cyber risk control environment across the business.Standard Life assesses email-led attack (“phishing”) as the main cyber threat they face. Having assessed that almost all the successful cyber-attacks they observe externally are email-led, in 2019, they improved their technical controls, reducing unwanted email delivery to colleagues across their business by 95%. This resulted in 13.6m emails, around one quarter of all email sent to the organisation, being blocked.While the team continue to see a risk in external vulnerability scanning of their IT infrastructure, mainly from nation states, they continue to view this risk as low due to the tiered defence mechanism they achieve through operating a layered security control model. For context, Standard Life advised that over 4.7m scans of this type were prevented in 2019.Related to this, the education and awareness of Cyber risk topics by all staff in Standard Life is viewed as a key control. Accordingly, the Information Security team have a dedicated Education and Awareness manager to support and maintain their competency and focus. Standard Life undertake targeted training for high risk groups such as customer facing staff, executives and IT privileged users. They also undertake group wide simulation exercises on key topics such as phishing alongside Cyber response simulations up to and including Group Executive level.In response to our challenge about Standard Life plans to achieve an industry recognised certification of their Information Security control environment, we are aware that plans to look at attaining ISO27001 within Standard Life were delayed in 2019. This delay related to a detailed review of their internal IT systems and the subsequent announcement, in November 2019, of a transformation programme that will result in the legacy Standard Life product administration, customer operations and digital applications migrating to an outsourced provider, Tata Consultancy Services (“TCS”) over an approximately three-year programme. This programme is now underway and TCS has committed to managing all Standard Life systems to ISO27001 certified standards following that migration.


Recognising the long lead-in time to complete this programme of work, the Standard Life team have now engaged an external consulting firm to assess and make a recommendation on the feasibility and timeline to attain ISO27001 for the current IT environment used by Workplace clients. The Standard Life Information Security team will keep us appraised with the recommendations of this review.

Good value for membersWe are required to assess the extent to which the charges and transaction costs taken from your savings represent good value for members. We have carried out this assessment in relation to the charges set out above. Good value means different things to different people at different times. What is clear, however, is that it is a balance of costs against benefits (including the features, quality of service etc.) you receive as a member. To help us assess good value we used a framework developed and adopted by a number of Independent Governance Committees (IGCs) who have a similar requirement to perform in Workplace Personal Pension plans. A copy of this framework is attached as appendix 3. As good value is a subjective matter and in the absence of sufficiently comprehensive reliable and consistent publicly available data to compare the value of the Scheme to those provided elsewhere, we have relied on our own knowledge and experience in this assessment. We reached our conclusion following a process where we:• Understood the features of the Scheme, the quality of

the service and the benefits on offer to different groups of members.

• Independently and collectively assessed these benefits bearing in mind your interests.

• Looked at the costs paid by you and compared them to the benefits.

The features we considered in our assessment are listed in appendix 4. In last year’s report I wrote about our concerns on the performance of the default investment arrangement. I also wrote about how we had challenged Standard Life on this performance and about the later review of and changes made as a result of our concerns. A summary of that process and the changes can be found in appendix 6. The Board was pleased to see a gradual improvement in short and medium term relative performance towards the end of 2019. We will continue to monitor this.One reason Standard Life’s performance worsened during 2018 was their fund manager’s “stock selection”. Stock selection is a process that helps a fund manager decide which assets to buy, hold or sell. Historically Standard Life’s fund manager had a good record on stock selection although, as noted above, this worsened during 2018. The early evidence is that it is improving.

A different way of reducing the risk that stock selection creates, is not to have any. This is the approach adopted by passive, or tracker funds and, although this increases market (or “absolute”) risk, passive fund investors are compensated for this as such funds can cost significantly less. As well as making the changes to the default investment arrangement mentioned above, Standard Life have launched a “Pure Passive” default investment arrangement which is available as an alternative to the other default arrangements (see Enhancements to the Scheme above). This can be selected where there is a preference to reduce the risk of poor stock selection. The addition of this further default investment arrangement should improve the value of the overall proposition. The Pure Passive strategy was launched in the closing days of 2019 and as at the date of this report no members were invested in it. For this reason we did not assess it for value this year. We will do so in time for our 2020 report. The Board were also pleased to see Standard Life intend to launch “In Scheme Drawdown” (see Enhancements to the Scheme above). The Board’s view is that the inclusion of this feature will improve the relative value of the Scheme. In assessing whether the charges applied were good value for members, we based our conclusion on our knowledge of the market. In assessing the transaction costs experience, as there are currently no publicly available comparison tables, we based our conclusion on the existence of the processes and controls used to manage them. Overall we concluded that the charges represented good value for members and that this value has improved slightly as a result of a number of factors including administration performance, master trust authorisation and actions relating to ESG. While the costs you pay are not the lowest available on the market, our assessment is that they are competitive particularly when all the benefits provided to you are considered.

Information about the SchemeThe Scheme is a centralised scheme for many participating employers. The total number of participating members as at 31 December 2019 was 174,998 of which 94,791 were active members and 80,207 were deferred members across all of the employers. Details of the membership applicable to each participating employer are supplied to each of them on request.

Information to MembersAny enquiries about the Scheme generally, or about an individual’s entitlement, should be sent to the appropriate participating employer in the first instance. If the employer cannot deal with them, they should be referred to:Standard Life Assurance LimitedStandard Life House30 Lothian RoadEdinburghEHI [email protected]

mailto:Corppen_service%40standardlife.com?subject=


Employer Related InvestmentsThe Trustee is required to disclose any employer related investments, as defined in Section 40(2) of the Pensions Act 1995, and to disclose whether the Scheme’s investments comply with the restrictions set out in the Occupational Pension Schemes (Investment) Regulations 2005.Other than any contributions which are late and outstanding at the year end, there were no employer related investments.

Master Trust AuthorisationDuring 2018 the Government introduced new law requiring all “master trust” schemes like this one to become authorised by the Pensions Regulator. It also set out a framework of requirements for master trusts to satisfy for authorisation covering:• The systems and processes being used.• Whether the trustees were fit and proper trustees.• The “business plan” for the master trust (including its

financial viability and the resources available to it); and • What would happen if the master trust were wound up

– and, in particular, how members benefits would be protected (the “Continuity Plan”).

Master trusts were given until 31 March 2019 to apply for authorisation (although in exceptional circumstances or for new master trusts this could be extended) and the Pensions Regulator was given six months to consider each application. Standard Life Assurance Ltd submitted an application for this scheme in February 2019 and received confirmation of authorisation in June 2019.

Management of the SchemeThe Trustee of the Scheme is the Standard Life Master Trust Co. Ltd (SLMTC). The power to appoint a new trustee is currently vested in Standard Life but written notice of any appointment must be given to all participating employers. The Pensions Act 2004 provides for the appointment of Member Nominated Directors (MND), however since the Scheme meets the criteria of a relevant centralised scheme in the applicable MND regulations, the Scheme is exempt from this requirement.SLMTC is a wholly owned subsidiary of Standard Life which acts as administrator and insurer.

Changes to the Board in 2020As set out earlier in this statement one Board member resigned in 2019 and the five year terms of the other Board members also ended during 2020.

Standard Life has a clear, open and transparent Board recruitment process and used this over 2019 and 2020 in order to appoint a new Board. Full details on this process

can be found in appendix 9. The members of the Board from 2020 are: • PTL Governance Ltd represented by me, having been

reappointed from April 2020;• Rene Poisson;• Catherine McKenna;• Andrew Davies; and• Caroline Escott.

More information on each of us can be found in appendix 1. Each of the Board members are independent to and non-affiliated with Standard Life, each has been appointed in an open and transparent way and each has commenced a new 5 year term (with no member having served on the Board for more than 10 years in total).The table below shows how the current Board members meet the non-affiliation requirements.

Other services Current term ends

PTL Governance Ltd Yes (1) 5 April 2025Rene Poisson Yes (1) 31 March 2024Catherine McKenna No 1 January 2025Andrew Davies No 1 January 2025Caroline Escott No 1 March 2025Note1: Both PTL Governance Ltd, until 30 April 2019, and Poisson Management Ltd until 25 April 2019, were members of Standard Life’s Independent Governance Committee (IGC). In accordance with the Pensions Regulator’s guidance being on a provider’s independent governance committee does not prevent members from also sitting on the board of a master trust.

What you should do nextIn the good value section above, I explained that we assessed the features of the Scheme before concluding the charges are good value. What we have not assessed is your and your employer’s level of pension saving – despite this being one of the factors that will have the greatest influence on the level of retirement benefit you receive. This statement is for your information. You do not need to take action however we do recommend that you review your own level of pension saving on a regular basis and we recommend you review it today.Signed:

Richard Butcher on behalf of PTL, Chair of Standard Life Master Trust Co. Ltd Trustee of the Standard Life DC Master TrustSigned on: 20th of July 2020


Appendix 1About the BoardRichard Butcher for PTL Governance Ltd, Chair of the board

Richard is Managing Director of PTL a market leading and award winning professional independent pension trustee company. Richard joined PTL in 2008 and became Managing Director in 2010. Richard has been involved in

pension scheme governance since 1985. He is a Fellow of the Pensions Management Institute (PMI). Richard is Chair of the Pension and Lifetime Savings Association (PLSA), the industry association for pension schemes. He was a member of the FCA’s Institutional Disclosure Working Group (IDWG), a body established to create a template for the disclosure of investment costs and charges, until it completed its work. He has also sat on the Investment Associations Cost Disclosure Working Group, the Council of the PMI, the PLSA DC Council (which he chaired for two years), the Pension Regulators DC Practitioners Panel and the Department of Work and Pensions Trustee Panel. He is a regular contributor to the trade press and has won a number of awards and accolades. Richard is qualified to be a member of the Board by merit of his significant experience in and knowledge of the pensions industry, his expertise in assessing the value for money of arrangements such as this (gathered from his role on similar boards) and his knowledge of underlying investment costs and charges. He is qualified to chair the Board by merit of his significant experience of and positive track record in chairing similar arrangements as well as other boards and committees.

Rene PoissonRene retired in September 2012 after a 30 year career with JP Morgan, latterly as Managing Director and Senior Credit Officer for EMEA. He has extensive experience of pension fund governance of both UK DB and DC pension

schemes. He currently holds a number of non- executive appointments including as an Independent Director and Chair of the Remuneration Committee of the Universities Superannuation Scheme (USS), Chair of the JP Morgan UK Pension Plan and its Investment Committee, Director of the Standard Life Master Trust and Chair of the Advisory Committees of Five Arrows Credit Solutions and Five Arrows Direct Lending.

Catherine McKenna (appointed 02/01/2020)Catherine is a partner at Squire Patton Boggs (UK) LLP, a global law firm. She has over 30 years’ experience in the pensions industry as a qualified solicitor, providing advice to companies, trustees and product providers on a wide range

of pension issues and as a trustee and board member. She was the head of Squire Patton Boggs’ award winning pension team for a number of years, leading its approach

to client service and responsible for its strategic direction. Catherine is actively involved in the development of pensions policy and regulation. She has been a member of the CBI’s Pension Panel and is an author of and contributor to pension books, numerous publications and responses to the Government’s consultations on pension change. She is a director of Squire Patton Boggs’ independent trustee company and an Associate of the Pensions Management Institute.

Andrew Davies (appointed 02/01/2020)Andrew is an experienced strategist, marketeer and business development professional. His career of over 30 years spans the breadth of Financial Services covering pensions, wealth management, life, healthcare and general insurance.

Andrew has held a wide range of senior management positions. Most recently he was Director of Marketing Strategy & Customer Insight for AXA UK & Ireland during which he established their first customer centricity strategy. Whilst Head of Strategic Development for AXA Life, Andrew created the initial strategy, and was one of the founder members of the Elevate investment platform (now Standard Life Elevate).

Andrew currently runs his own management consultancy business specialising in strategic change and business transformation. He is also an ambassador and adviser to a number of start-up businesses.

Andrew has qualified as a Chartered Insurer and Financial Planner in addition to holding separate professional Project, Process and Proposal Management qualifications.

Caroline Escott (appointed 02/03/2020)Caroline has 15 years’ experience of investment, stewardship and both retail and institutional pensions policy issues. She currently leads on a number of investment and stewardship issues at the Pensions and Lifetime Savings

Association (PLSA) and previous roles include Head of Public Policy at the UK Sustainable Investment and Finance Association (UKSIF).

She has sat on HM Treasury’s Patient Capital – Pensions Investment Taskforce, led the asset owner work-stream of the government-appointed Growing a Culture of Social Impact Investing Taskforce and also contributes to a number of other industry groups including the Law Commission Intermediated Securities Steering Group, the Pensions Climate Risk Industry Group (PCRIG) and the Pension Scams Industry Group (PSIG).


She speaks and contributes press pieces regularly on pensions and investment issues and was recently awarded Investment Week’s “Investment Woman of the Year 2019” for small and medium firms. She holds the CFA UK accredited Investment Management Certificate (IMC) and the PMI’s Certificate in DC Governance.

She is passionate about working towards a more diverse pensions industry to better reflect diverse savers’ needs. She sits on the steering boards of both The Diversity Project and NextGen, which aim to promote and encourage greater diversity and inclusiveness across every aspect of the pensions and investment sectors.

Francois Barker (resigned 01/01/2020)Francois is a partner and Head of Pensions at Eversheds Sutherland LLP, where he leads pension advisory client work and the strategic development of the pensions practice. He has been involved in the pensions industry

since 1997, working with trustees and employers on the full range of pensions issues. He is actively involved in the development of pensions law, policy and strategy. Francois has been a member of the CBI’s Pensions Panel since 2000 and is an elected member of the PLSA’s DC Council.

Stella Girvin (resigned 01/01/2020)Stella has worked in the pensions industry since 1982, covering a range of DB and DC schemes, both at a consultancy and in-house at Travis Perkins plc until January 2015. She is also a Chartered Company Secretary,

with a particular focus on corporate governance and compliance matters. Stella is Chair of the two Travis Perkins Group DB schemes and a Client Director for Capital Cranfield Trustees through which she holds a number of other DB and DC Trustee appointments.

Ruston Smith (resigned 01/03/2020)Ruston has over 30 years’ experience in the pension and investment industry. He is the former Group Pensions and Insurable Risk Director for Tesco where, as CEO, he had responsibility for Tesco Pension Investment, the FCA approved

in house investment company that manages the £13bn of UK assets. He is the non-executive Chairman of Tesco Pension Investment, Tesco’s DB Trustee Board, Tesco’s DC Governance Committee and holds other Trustee positions. He’s the Chair of PTL Ltd, a Trustee Director of The People’s Pension, a NED of JP Morgan Asset Management International Limited and JP Morgan Funds Limited, a Governor of the Pensions Policy Institute, Chairman of GroceryAid and a Trustee of the National Council for Palliative Care. He was a co-chair of the DWP’s Automatic Enrolment Review Advisory Board and is a past Chairman of the Pensions and Lifetime Savings Association. He is also a former company secretary of a FTSE 250, has an MBA, is a Fellow of the Pensions Management Institute and the Institute of Management.


Standard Life DC Master Trust

Statement of Investment Principles Date signed: December 2019

Appendix 2

20 Trustee’s Report and Chair’s Statement for Standard Life DC Master Trust20 Standard Life DC Master Trust – Statement of Investment Principles

Contents

1. Introduction 22

2. Choosing investments 22

3. Investment objectives 22

4. Kinds of investments to be held 22

5. The balance between different kinds of investments 22

6. Risks 23

7. Expected return on investments 23

8. Realisation of investments 24

9. Socially Responsible Investment, Corporate Governance and Voting Rights 24

10. Monitoring 25

11. Agreement 25


Appendix 2.1 – Note on investment policy for the default section in relation to the current Statement of Investment Principles 26

1. The balance between different kinds of investments 262. Default options 263. Range of default strategies 264. Choosing investments 275. Fee agreements 276. Risks specific to this section 27

Appendix 2.2 – Note on investment policy for the * Pension Plan Section in relation to the current Statement of Investment Principles 28

1. Investment objectives 282. Investment options 283. Choosing investments 294. Fee agreements 305. Legacy transfer 30

Appendix 2.3 – Note on investment policy for the * Master Trust 2016 in relation to the current Statement of Investment Principles 33

1. Investment objectives 332. Default option 333. Choosing investments 334. Fee agreements 345. Risks specific to this section 34

Appendix 2.4 – Note on investment policy for the * Section in relation to the current Statement of Investment Principles dated 1 June 2016 35

1. Investment objectives 352. Default option 353. Choosing investments 364. Fee agreements 365. Risks specific to this section 36


1. Introduction1.1. This Statement of Investment Principles (the

Statement) has been prepared by Standard Life Master Trust Company Limited (the Trustee) and relates to the defined contribution (DC) benefits provided through the Standard Life DC Master Trust (the Trust). The Statement sets down the principles which govern the decisions about the investments that enable the Trust to meet the requirements of:

• The Pensions Act 1995, as amended by the Pensions Act 2004; and

• The Occupational Pension Schemes (Investment) Regulations 2005 as amended by the Occupational Pension Schemes (Investment) (Amendment) Regulations 2010, the Occupational Pension Schemes (Charges and Governance) Regulations 2015 and the Occupational Pension Schemes (Investment and Disclosure) Regulations 2018.

1.2. In preparing this statement the Trustee has obtained advice from Barnett Waddingham LLP, the Trustee’s investment consultants. Barnett Waddingham is authorised and regulated by the Financial Conduct Authority and licensed by the Institute and Faculty of Actuaries for a range of investment business activities.

1.3. The Trust has been set up to service multiple employers. The Trustee has consulted with the employers in the preparation of this statement.

1.4. This statement has been prepared with regard to the 2001 Myners review of institutional investment (including subsequent updates).

1.5. The Trustee will review this Statement at least every three years or if there is a significant change in any of the areas covered by the Statement or the profile of members.

1.6. The investment powers of the Trustee are set out in Clause 9 of the Trust Deed and General Rules, the current terms of which are dated April 2015. This statement is consistent with those powers.

2. Choosing investments2.1. The Trustee carefully considers its Investment

Objectives, shown in the appendix, when designing the range of investment options to offer to its members. The Trustee also acknowledges that members will have different attitudes to risk and different aims for accessing their retirement savings – and therefore, whilst seeking good member outcomes net of fees, it also considers the level of risk that is appropriate based on the anticipated needs of the membership profile across the Trust as a whole.

2.2. The Trustee’s policy is to offer a range of “off-the-shelf” default investment arrangements suitable for the Trust’s membership profile into which members can choose to invest their contributions and those contributions made by the employer. Details of these are given in the appendices. In doing so, the Trustee

considers the advice of their professional advisers, whom they consider to be suitably qualified and experienced for this role.

2.3. There are some groups of members to whom different fund options are made available. Details of these groups of members and their fund options are given in the appendices to this statement. The Trustee has in each case obtained professional advice on the suitability of the options for that group of members.

2.4. As the Trust is currently a wholly-insured scheme, the insurer is responsible for the management of the investment arrangements. The insurer may invest in underlying funds run by other fund managers, who are responsible for the management of the underlying fund(s). The Trust’s investment arrangements are detailed in the appendices to this statement. The investment managers will either be authorised and regulated by the FCA, or if non-UK domiciled will be recognised by the FCA. The investment managers are responsible for stock selection and the exercise of voting rights.

3. Investment objectives3.1. The Trustee has discussed and agreed the key

investment objectives for the Trust, suitable for the membership profile as well as the constraints the Trustee faces in achieving these objectives. These are set out in the appendices.

4. Kinds of investments to be held4.1. The Trust is permitted to invest in a wide range of

assets including equities, bonds, cash, property and alternatives. The Trustee currently invests via policies of insurance and, in deciding the types of assets to include, considers investment returns, net of fees, and an appropriate level of risk based on the anticipated needs of the membership profile across the Trust as a whole.

5. The balance between different kinds of investments

5.1. The Trustee has made available a range of funds to suit the individual needs of the Trust’s members – taking into account the Investment Objectives set out in the appendices. For example, a range of equity funds is available for those members willing to accept a greater level of volatility in pursuit of higher expected retirement savings. Bond and deposit and treasury funds are also offered for those members who are less comfortable with the likely greater volatility of the equity funds.

5.2. Alternatively, the Trustee has made available a range of lifestyle arrangements, whereby a member’s assets are automatically invested in line with a pre-determined strategy that changes as the member gets closer to accessing their retirement savings. Emphasis is placed on medium to higher risk funds (i.e. investment largely in growth assets) in search of long-term, inflation-protected growth


whilst the member is a long way off accessing their retirement savings, switching progressively to “protection” assets over the years preceding the member’s target retirement date so as to protect the retirement savings of the member relative to the way in which they are expected to access these savings.

5.3. Members can choose to invest in a range of funds or can elect to invest in a lifestyle strategy. Where members do not choose where their contributions, and those made on their behalf by their employer, are invested, the Trustee will invest these contributions according to one of the default investment strategies set out in the appendices.

5.4. The Trustee is aware that the appropriate balance between different kinds of investments will vary over time and the asset allocation may change as the membership profile evolves.

6. Risks6.1. Risk in a defined contribution scheme lies with the

members themselves. The Trustee has considered a number of risks when designing and providing suitable investment choices to members. A comprehensive list of risks is set out in the Trustee risk register, however, the main investment risks affecting all members are:

Inflation riskThe risk that the investments do not provide a return at least in line with inflation, thus eroding the purchasing power of the retirement savings. The Trustee makes available investment options that are expected to provide a long-term real rate of return.

Conversion riskThe risk that fluctuations in the assets held, particularly in the period before retirement savings are accessed, lead to uncertainty over the benefit amount likely to be received. In the lifestyle arrangements made available to members, the Trustee changes the proportion and type of investments so that in the run up to retirement the investments gradually start to more closely match how the Trustee expects members to access their retirement savings.

Retirement income riskThe risk that a member’s retirement income falls short of the amount expected, whether this is due to lower investment returns than expected or insufficient contributions being paid. The Trustee reviews the appropriateness of the investment options offered, seeking to ensure member outcomes can be maximized.Communications to members will seek to encourage them to regularly review the level of their contributions, but ultimately this is a risk which lies with each member. It is not part of the Trustee’s role to ensure that the retirement income for any member is adequate for his or her needs.

Investment manager riskThe Trustee receives reports on performance from the insurer and reviews the performance of the funds used.The insurer monitors the performance of each of the investment managers on a regular basis in addition to having meetings with each manager from time to time as necessary, and reports to the Trustee on a regular basis. The insurer has a written agreement with each investment manager, which sets out the terms and conditions on which the insurer invests on behalf of the Trustee in the investment manager’s fund(s).In the event that the Trustee is unhappy with the performance of one of the funds, the Trustee may choose to replace that fund with another fund within the range offered by the insurer.

Concentration/ Market riskEach investment manager is expected to manage properly diversified portfolios and to spread assets across a number of individual shares and securities.

Currency risk The Trust may gain exposure to overseas currencies by investing in assets that are denominated in a foreign currency or via currency management.

Loss of investmentThe risk of loss of investment by the insurer and custodian is assessed by the Trustee. This includes losses beyond those caused by market movements (e.g. default risk, operational errors or fraud).The insurer will also undertake a review of the internal controls and processes of each of the investment managers where necessary. The insurer will provide regular reports to the Trustee and advise of any material concerns arising from its due diligence.The Trustee also has a discontinuance plan in place and is considering the role of the Financial Services Compensation Scheme as part of this.Some of these risks will be more relevant to particular cohorts of members. Some risks specific to individual sections are detailed in the relevant appendices.

7. Expected return on investments7.1. The Trustee has regard to the relative investment

return, net of fees, and risk that each asset class is expected to provide. The Trustee is advised by their professional advisors on these matters, whom it has deemed to be appropriately qualified. However, the day-to-day selection of investments is delegated to the investment managers.

7.2. The Trustee recognises the need to distinguish between nominal and real returns and to make appropriate allowance for inflation when making decisions and comparisons.


8. Realisation of investments8.1. The investment managers have responsibility for

buying and selling investments. The Trustee has considered the risk of liquidity as referred to in the appendices.

9. Environmental, Social and Governance (“ESG”) and Stewardship policy

9.1 The Trustee believes that if it manages the long-term financial risks, including those relating to Environmental, Social and Governance factors, including climate change (referred to together as “ESG factors”), inherent in the investments it holds it is expected to produce better member outcomes. In addition, the Trustee believes that if it exercises good stewardship of those investments it is expected to also improve member outcomes.

9.2 Without prejudice to the Trustee’s legal obligations, the Trustee delegates full discretion to the insurer and in turn its investment managers around the evaluation of ESG factors within the investment process as well as direct engagement and exercise of shareholder rights.

9.3 The Trustee believes that ESG factors within an investment context can be financially material, however, the Trustee appreciates that taking ESG into account within an investment strategy and process will yield different returns and/or risks for different asset classes across different investment timeframes. The Trustee is also cognisant of the limits of its ability to influence the behaviour of an investment manager given the nature of an insured master trust. Through meetings with the insurer and the Scheme’s advisers, the Trustee has considered the financial materiality of ESG factors within the Scheme’s default and investment options.

9.4 The Trustee accepts that when investing totally passively in equity index tracker funds, the manager cannot use ESG factors to inform the selection of stocks within the investment process. However, the Trustee believes that positive engagement on ESG factors can lead to improved risk-adjusted returns alongside better environmental, social or governance outcomes more generally. Therefore, the Trustee looks to the insurer to consider, as part of its wider due-diligence process, how the passive equity manager positively engages with companies where there is scope to improve the way ESG factors are taken into account when running a company.

9.5 Where assets are actively-managed, the Trustee looks to the insurer to consider how the investment process for active managers takes ESG into account in the selection, retention and realisation of investments where possible in addition to how the manager positively engages with companies where there is scope to improve the way ESG factors are taken into account when running a company.

9.6 The Trustee also recognises the time horizons over which members’ retirement savings are invested. As part of this, the Trustee believes that ESG factors, and particularly climate change factors, are more likely to influence the risk adjusted returns of those members who are further from retirement, as the financial materiality of such factors will have a greater impact over a longer timeframe.

9.7 Based on information from the insurer, the Trustee is comfortable that the current investment managers are taking ESG factors into account where possible within the applicable guidelines and restrictions as defined in the governing literature of each underlying fund.

9.8 Before considering any new mandate, the Trustee will require the insurer to ensure that all investment managers under consideration are signatories to the United Nations Principles for Responsible Investment (UN PRI). At present, all of the Scheme’s investment managers are UN PRI signatories.

9.9 With the help of its investment advisors and the insurer, the Trustee will prepare an implementation report setting out how it has acted on its ESG principles. This will include information from the Scheme’s investment managers on how ESG factors have been taken into account over the year.

Stewardship9.10 Stewardship encompasses the exercise of rights

(including voting rights) attached to the Scheme’s investments, and the engagement by and with investment managers.

9.11 Without prejudice to the Trustee’s legal obligations, the Trustee delegates to the insurer the responsibility for the stewardship activities that apply to the Scheme’s investments. In turn, the insurer expects the investment managers to exercise their voting powers with the objective of preserving and enhancing long-term shareholder value. As part of its wider due-diligence of investment managers, the insurer will request managers to produce information that demonstrates that the investment manager is exercising their voting rights. The investment managers are also expected to engage with key stakeholders relating to their investments (which may include how engagement factors fit into a buy/sell/hold weighting decision for an asset within a portfolio) aimed at mitigating financial risks, but also to improve corporate behaviours and governance, improve performance and social and environmental impact. The Trustee also has a conflicts of interest policy to ensure that any actual or potential conflicts of interest are identified and appropriately managed.

9.12 The Trustee receives annual reporting from the insurer, which summarises engagement activities of the underlying investment managers on relevant matters including (but not limited to) company performance, strategy, capital structure, management of actual or potential conflicts of


interests, risks and ESG impact. The Trustee may also request at other times (and in particular in the event of there being any material change or circumstance that might impact on its ESG and stewardship policy) reporting from the insurer that summarises such engagement activities of the underlying investment managers; the insurer’s response to such requests will be dependent on the availability of information from the underlying investment managers. Based on this information the Trustee will engage with the insurer, who will then engage with the underlying investment managers, to ensure the Trustee’s policies outlined in this statement are being met.

9.13 The Trustee will also prepare an annual implementation report (referred to above) using the information provided by the insurer on the activity sourced from the investment managers.

9.14 The Trustee is supportive of the UK Stewardship Code published by the Financial Reporting Council. The Trustee expects the Scheme’s investment managers to have corporate governance policies in place which comply with these principles set out in this Code. The Trustee will ask the insurer to review the signatory status of all of its managers on a yearly basis.

Non-financial matters9.15 The Trustee does not explicitly take account of

non-financial matters (such as member ethical views) within the default investment strategy. The Trustee may however consider the views of members if those views can be shown to be representative of a significant proportion of the membership.

9.16 The Trustee considers that it is important to ensure that a suitable range of funds is offered for members who wish to express an ethical preference in their pension saving.

10. Monitoring10.1. Investment Performance: The Trustee reviews the

performance of each fund in which the Trust invests against the stated performance objective for that fund and, in doing this, the Trustee receives a performance monitoring report on a quarterly basis. This monitoring takes into account both short-term and long-term performance. The insurer meets the investment managers as frequently as is appropriate in order to review performance. A manager’s overall suitability for each mandate will be monitored as frequently as the Trustee considers appropriate in light of both its performance and other prevailing circumstances.

10.2. Objectives: The Trustee monitors the suitability of the objectives for each section of the Trust (as detailed in the appendices) and its performance (net of fees) against these objectives at least every three years and also when there is any significant change in the investment policy, underlying economic conditions or the profile of the members.

10.3. Investment Choices: The Trustee monitors the ongoing appropriateness of the investment choices offered on a periodic basis.

10.4. Charges: The Trustee monitors the overall level of costs periodically to ensure members are receiving good value

11. Agreement11.1. This Statement was agreed by the Trustee, and

replaces any previous statements. Copies of this Statement and any subsequent amendments will be made available to the employer, the investment manager, the actuary and the Trust’s auditor upon request.

Signed:

Richard Butcher on behalf of PTL, Chair of Standard Life Master Trust Co. Ltd Trustee of the Standard Life DC Master TrustSigned on: 11 December 2019


Appendix 2.1

Note on investment policy for the default section in relation to the current Statement of Investment Principles dated February 2020

1. The balance between different kinds of investments

The Trustee’s main investment objectives are: • To provide a default investment option that is

likely to be suitable for members within the section who do not make an active choice;

• To offer an appropriate range of alternative investment options so that members who wish to make their own investment choices have the freedom to do so, recognising that members may have different needs and objectives;

• Achieve good member outcomes net of fees and subject to acceptable levels of risk;

• That the expected volatility of the returns achieved is managed through appropriate diversification of the use of asset types in order to control the level of volatility and risk in the value of members’ pension pots;

• To help manage Conversion risk as explained in the main body of this statement.

The Trustee is responsible for the design of the default investment option and for choosing which funds to make available to members. Members are responsible for their own choice of investment options (including where the default investment option is selected for them because they have not selected other funds).

2. Default options The Trustee acknowledges that members will have

different attitudes to risk and different aims for accessing their retirement savings, and so it is not possible to offer a default investment option that will be suitable for each individual member. However, the Trustee has decided that the lifestyle arrangement set out below represents a suitable default investment option for members who do not make a choice about how their contributions (and those made on their behalf by their employer) are invested, taking into account:

• The kinds of investments to be held • The balance between different kinds of

investments • Investment risks • The expected return on investments,

net of fees • The realisation of investments • Socially Responsible Investment, Corporate

Governance and Voting Rights

Further information on the Trustee’s policies in regard to the above is detailed in the main body of this statement. These aspects have also been considered in the

choice of self-select funds and solutions that the Trust has made available to members that wish to choose their own investment strategy

The Trustee acknowledges the uncertainty in choosing at outset the strategy that will deliver the best solution for a particular group of members. Taking into account the objectives and policies mentioned in this statement, the Trustee is comfortable that there is a range of possible appropriate “default” options and is willing to be guided by an employer as to which option within the range is most appropriate for a particular cohort.

3. Range of default strategies The default strategies are part of Standard Life’s

range of Strategic Lifestyle Profiles (“SLP”) and are split into three main sections.

• Active Plus • Passive Plus • Passive Core The Active Plus suite of strategies are predominantly

actively managed whereas the Passive Plus suite and Passive Core strategy predominantly make use of funds that aim to track an index.

Both the Active Plus and Passive Plus strategies invest in a range of asset classes including equities, bonds, and property. The Active Plus suite of strategies also seeks to enhance risk adjusted returns by tactically managing the allocation between asset classes. There are a range of risk levels within the Active Plus and Passive Plus strategies; the lower the number, the lower the expected risk. For example, Passive Plus III Universal SLP is expected to invest in a way that is more risky than Passive Plus II Universal SLP.

The Passive Core strategy is a simple, lower cost solution that invests in a diverse, but narrower, range of asset classes and does not tactically manage the asset allocation.

The Universal SLPs are specifically designed to be an appropriate arrangement for the membership profile across the Trust as a whole where members have yet to make a decision regarding how they will access their pension benefits, rather than targeting a specific method of accessing pension savings.


The current range of defaults is shown in the table below:

Passive Core Passive Plus Active PlusPassive Core Universal SLP

Passive Plus II Universal

SLP

Active Plus II Universal

SLPPassive Plus III Universal

SLP

Active Plus III Universal

SLPPassive Plus IV Universal

SLP

Active Plus IV Universal

SLP

4. Choosing investments The Trustee is responsible for the selection of the

range of default strategies, and for deciding which other lifestyle profiles and funds are made available to the members. The investment choices available are structured into a passive range, an active range, and a hybrid range comprising both passive and active choices. The insurer is responsible for the management of the investment arrangements. The insurer may invest in underlying funds run by other fund managers, who are responsible for the management of the underlying fund(s). In terms of the Strategic Lifestyle Profiles and core fund range, as at the date of this statement, the main underlying managers were:

• Aberdeen Standard Investments; • Vanguard; • BlackRock; • HSBC The investment managers are either authorised, or

recognised by the FCA. The full list of lifestyle strategies that members are

able to choose from is shown below. Passive Plus and Active Plus offer a choice or risk levels ranging from I (being the least risky) to V (representing the option with the highest expected risk).

SLP

Passive Core

Passive Plus

Active Plus

Universal Passive Core

II - V II - V

Annuity n/a I - V I - VLump Sum n/a I - V I - VActive Retirement

n/a II - V II - V

A list of the core self-select funds is shown below:

• Standard Life Active UK Equity (MT) Pension Fund • Standard Life Active Overseas Equity (MT) Pension

Fund • Standard Life Active Gilt (MT) Pension Fund

• Standard Life Active Emerging Markets Equity (MT) Pension Fund

• Standard Life Active Corporate Bond (MT) Pension Fund

• Standard Life Active Global Equity 50:50 (MT) Pension Fund

• Standard Life Shariah Global Equity (MT) Pension Fund

• Standard Life Property (MT) Pension Fund • Standard Life Passive UK Equity (MT)

Pension Fund • Standard Life Passive Overseas Equity (MT)

Pension Fund • Standard Life Passive Gilt (MT) Pension Fund • Standard Life Passive Emerging Markets Equity

(MT) Pension Fund • Standard Life Passive Corporate Bond (MT)

Pension Fund • Standard Life Passive Global Equity 50:50 (MT)

Pension Fund • Standard Life Deposit & Treasury (MT) Pension

Fund • Standard Life Global Absolute Return Strategies

(MT) Pension Fund • Standard Life Ethical (MT) Pension Fund • Standard Life Annuity Purchase (MT)

Pension Fund

5. Fee agreements The insurer has negotiated fee arrangements with

the investment managers for the management of the Trust’s investments.

As well as the annual management charges, additional fund expenses will apply (and vary from quarter to quarter) taking account of custodian, legal, accounting and auditing fees for each fund.

6. Risks specific to this section The Trustee has considered the risk of liquidity in the

default SLPs and looks to mitigate this. The Trustee notes Standard Life’s ability to suspend redemptions in certain circumstances.

The Trustee notes that the risks associated with with-profits are monitored by Standard Life, and that Standard Life’s with-profits Committee provides independent advice to the Board of Standard Life on the fair management of its with-profits business.


Appendix 2.2Note on investment policy for the *Pension Plan Section in relation to the current Statement of Investment Principles This appendix is for the * Pension Plan Section of the Trust. The Trustee has taken advice from *on the suitability of the investment strategy for this group of members.

1. Investment objectivesThe Trustee’s main investment objectives are:• to provide a suitable default investment option that is

likely to be suitable for members within the section who do not make an active choice;

• to offer an appropriate range of alternative investment options so that members who wish to make their own investment choices have the freedom to do so, recognising that members may have different needs and objectives;

• to achieve good member outcomes net of fees and subject to acceptable levels of risk;

• that the expected volatility of the returns achieved is managed through appropriate diversification of the use of asset types in order to control the level of volatility and risk in the value of members’ pension pots;

• to help manage Conversion risk as explained in the main body of this Statement.


2. Investment optionsThe Trustee acknowledges that members will have different attitudes to risk and different aims for accessing their retirement savings, and so it is not possible to offer a default investment option that will be suitable for all. However, the Trustee decided that the lifestyle arrangement set out below represents a suitable default investment option for members who do not make a choice about how their contributions (and those made on their behalf by their employer) are invested, taking into account:• Kinds of investments to be held• Balance between different kinds of investments• Investment risks• Expected return on investments, net of fees• Realisation of investments• Socially Responsible Investment, Corporate

Governance and Voting Rights.The Trustee is responsible for the design of the default investment option and for choosing which funds to make available to members.

Members are responsible for their own choice of investment options (including where the default investment option is selected for them because they have not selected other funds).Default Option Following the introduction of greater retirement flexibility in April 2015, the * Pension Plan Section’s internal Governance Committee commissioned a survey of all * staff and partners who would be eligible to retire within the next 10 years (those aged 45 years and over). This survey asked members to choose the most important thing for them in retirement, from a number of options related to different retirement choices. DTRB’s analysis of the responses revealed that the most important factor for the Section’s less financially sophisticated members (those at lower grades who were less inclined to use independent financial advice) was to receive a guaranteed income for the rest of their lives. As a result of this analysis, it was decided to retain the existing annuity-targeting lifestyle strategy as the default investment option, but to also introduce a second lifestyle investment strategy as an alternative option for members seeking greater flexibility in how they take their retirement income.The default and alternative lifestyle strategies are described below. The underlying funds used in both of these strategies are also self-select funds. More details on these are given in the following sections.The Section’s * investment strategy is the * Pension Plan Regular Income Lifestyle Strategy, which is designed for members who are expected to take 25% of the pension pot as a tax free lump sum, and use the remainder to purchase an annuity on retirement. The switching matrix for this strategy is shown below:

The * Pension Plan Regular Income Lifestyle Strategy is an age-based investment strategy where members’ assets are invested in passive equities when members are younger, and are progressively switched into bonds and cash as members near their chosen retirement age.

SL * Passive 50/50 Global Equity Pension Fund (LLKP)

SL * Mixed Bond Pension Fund (LPGK)

SL * Money Market Pension Fund (GGKE)

% o

f inv

estm

ents

100908070605040302010

0>10 9 8 7 6 5 4 3 2 1 3

Years from retirement Months

75%

25%


Alternative Lifestyle StrategyThe * Pension Plan Flexible Income Lifestyle Strategy was added to the Section’s investment options during the fourth quarter of 2015. This strategy is designed for members who are seeking additional flexibility around how they will take their retirement income (those who are not planning on purchasing an annuity). The chart below shows the switching strategy for the * Pension Plan Flexible Income Lifestyle Strategy.

The DPP Flexible Income Lifestyle Strategy automatically switches members’ savings out of pure equities and into a range of different asset classes as members near their chosen retirement age, in order to reduce overall volatility whilst maintaining some return potential.

3. Choosing investments The Trustee is responsible for the selection of the default strategy, and for deciding which other lifestyle profiles and funds are made available to the members. The insurer is responsible for the management of the investment arrangements. The insurer may invest in underlying funds run by other fund managers, who are responsible for the management of the underlying fund(s).For this section, in terms of the default and core fund range, as at the date of this statement, the underlying managers were:• Standard Life Investments• Vanguard Asset Management• Baillie Gifford• Newton Investment Management• HSBC Global Asset Management

All of the investment managers are authorised by the FCA

SL * Passive 50/50 Global Equity Pension Fund (LLKP)

SL * Absolute Return Pension Fund (LLMP)

SL * UK Corporate Bond Pension Fund (BBBE)

SL * Property Pension Fund (JJFC)

SL * Money Market Pension Fund (GGKE)

% o

f inv

estm

ents

100908070605040302010

0>10 9 8 7 6 5 4 3 2 1 3


35%

15%

15%

25%

10%

A list of the self-select funds available to contributing members is shown below:

* Pension Plan Section Fund Name Underlying Fund NameEquity based fundsSL * Passive UK Equity Pension Fund SL Vanguard FTSE UK All Share Index Pension FundSL * Passive Overseas Equity Pension Fund SL Vanguard FTSE Developed World ex UK Pension FundSL * Passive 50/50 Global Equity Pension Fund 50% SL Vanguard FTSE UK All Share Index Pension Fund,

50% SL Vanguard FTSE Developed World ex UK Pension Fund

SL * Active UK Equity Pension Fund SL Baillie Gifford UK Equity Core Pension FundSL * Active Global Equity Pension Fund SL Newton Global Equity Pension FundSL * Ethical Pension Fund SL Vanguard SRI Global Stock Pension FundSL * Shariah Pension Fund SL HSBC Amanah Global Equity Index Pension FundBond based fundsSL * Long Dated Gilt Pension Fund SL Vanguard UK Long Duration Gilt Index

Pension FundSL * Index Linked Gilt Pension Fund SL Vanguard UK Inflation Linked Gilt Index

Pension FundSL * UK Corporate Bond Pension Fund SL Vanguard UK Investment Grade Bond Index Pension

FundSL * Mixed Bond Pension Fund 34% SL Vanguard UK Investment Grade Corporate Bond

Index Pension Fund, 33% SL Vanguard UK Long Duration Gilt Index Pension Fund and 33% SL Vanguard UK Inflation Linked Gilt Index Pension Fund

Other asset classesSL * Property Pension Fund Standard Life Property Pension FundSL * Money Market Pension Fund Standard Life Deposit and Treasury Pension FundSL * Absolute Return Pension Fund SL SLI Global Absolute Return Strategies

Pension Fund


4. Fee agreements The insurer has negotiated fee arrangements with the investment managers for the management of the Trust’s investments. The Annual Management Charges shown in the table below also reflect the Scheme discounts available to members of the * Pension Plan Section.

Fund Name Annual Management Charge (AMC) (% p.a.)Equity based fundsSL * Passive UK Equity Pension Fund 0.23SL * Passive Overseas Equity Pension Fund 0.23SL * Passive 50/50 Global Equity Pension Fund 0.23SL * Active UK Equity Pension Fund 0.56SL * Active Global Equity Pension Fund 0.56SL * Ethical Pension Fund 0.23SL * Shariah Pension Fund 0.56Bond based fundsSL * Long Dated Gilt Pension Fund 0.23SL * Index Linked Gilt Pension Fund 0.23SL * UK Corporate Bond Pension Fund 0.23SL * Mixed Bond Pension Fund 0.23Other asset classesSL * Property Pension Fund 0.26SL * Money Market Pension Fund 0.26SL * Absolute Return Pension Fund 0.76

As well as the annual management charges, additional fund expenses will apply (and vary from quarter to quarter) taking account of custodian, legal, accounting and auditing fees for each fund.

5. Legacy Transfer Section The Legacy Transfer Section has no contributing members.There is an historic lifestyle investment option, albeit no new contributions are invested. This lifestyle strategy gradually transitions investments from global equities to bonds and cash. The switching matrix is shown below:

SL * Passive 60/40 Global Equity Pension Fund

SL * Passive 50/50 Gilt Pension Fund

SL * Money Market Pension Fund

% o

f inv

estm

ents

100908070605040302010

0>10 9 8 7 6 5 4 3 2 1 3


75%

25%


For this section, the underlying managers were:• Standard Life Investments• Vanguard Asset Management• Baillie Gifford• Newton Investment Management• HSBC Global Asset Management• Aberdeen Asset Management

All of the investment managers are authorised by the FCA.

A list of the core self-select funds is shown below:

* Pension Plan Section Fund Name Underlying Fund NameEquity based fundsSL * Passive UK Equity Pension Fund SL Vanguard FTSE UK All Share Index Pension FundSL * Passive Overseas Equity Pension Fund SL Vanguard FTSE Developed World ex UK

Pension FundSL * Passive 60/40 Global Equity Pension Fund

60% Vanguard FTSE UK All Share Index Pension Fund, 40% SL Vanguard FTSE Developed World ex UK Pension Fund

SL * Passive 40/60 Global Equity Pension Fund

40% Vanguard FTSE UK All Share Index Pension Fund, 60% SL Vanguard FTSE Developed World ex UK Pension Fund

SL * Active UK Equity Pension Fund SL Baillie Gifford UK Equity Core Pension FundSL * Active Global Equity Pension Fund SL Newton Global Equity Pension Fund

SL * Active 70/30 Global Equity Pension Fund

40% SL Baillie Gifford UK Equity Core Pension Fund, 60% SL Baillie Gifford 50:50 Worldwide Equity Pension Fund

SL * Ethical Pension Fund SL Vanguard SRI Global Stock Pension FundSL * Shariah Pension Fund SL HSBC Amanah Global Equity Index Pension FundBond based fundsSL * Passive 50/50 Gilt Pension Fund 50% SL Vanguard UK Inflation Linked Gilt Index Pension

Fund, 50% SL Vanguard UK Long Duration Gilt Index Pension Fund

SL * Index Linked Gilt Pension Fund SL Vanguard UK Inflation Linked Gilt Index Pension Fund

SL * UK Corporate Bond Pension Fund SL Vanguard UK Investment Grade Bond Index Pension Fund

Other asset classesSL * Property Pension Fund Standard Life Property Pension FundSL * Money Market Pension Fund Standard Life Deposit and Treasury Pension FundSL Aberdeen Life Multi Asset ex Property Pension Fund

SL Aberdeen Life Multi Asset ex Property Pension Fund

SL * Passive 80% Equity/20% Bond Pension Fund

SL Vanguard LifeStrategy 80% Equity Pension Fund

SL Baillie Gifford Life Managed Pension Fund SL Baillie Gifford Life Managed Pension Fund


The investment management fees that are applicable to members in this section are shown in the table below:

Fund Name Annual Management Charge (AMC) (% p.a.)Equity based fundsSL * Passive UK Equity Pension Fund 0.05SL * Passive Overseas Equity Pension Fund 0.23SL * Passive 60/40 Global Equity Pension Fund 0.12SL * 40/60 Global Equity Pension Fund 0.08SL * Active UK Equity Pension Fund 0.55SL * Active Global Equity Pension Fund 0.45SL * Active 70/30 Global Equity Pension Fund 0.55SL * Ethical Pension Fund 0.30SL * Shariah Pension Fund 0.30Bond based fundsSL * Passive 50/50 Gilt Pension Fund 0.11SL * Index Linked Gilt Pension Fund 0.06SL * UK Corporate Bond Pension Fund 0.15Other asset classesSL * Property Pension Fund 0.55SL * Money Market Pension Fund 0.07SL Aberdeen Life Multi Asset ex Property Pension Fund 0.60SL * Passive 80% Equity/20% Bond Pension Fund 0.15SL * Baillie Gifford Life Managed Pension Fund 0.45

As well as the annual management charges, additional fund expenses will apply (and vary from quarter to quarter) taking account of custodian, legal, accounting and auditing fees for each fund.Members in the Legacy Transfer Section also pay a separate administration change of £33p.a. per member.The * used above represents one of the schemes participating employers and this appendix is only relevant for employees of that employer. It is therefore not appropriate to disclose their name in a publically available document. An unredacted version of this document is available on the employer’s own dedicated pension site.


1. Investment objectivesThe Trustee’s main investment objectives are:• to provide a suitable default investment option that

is likely to be suitable for members within the section who do not make an active choice;



• that the expected volatility of the returns achieved is managed through appropriate diversification of the use of asset types in order to control the level of volatility and risk in the value of members’ pension pots;

• to help manage Conversion risk as explained in the main body of this Statement.


2. Default option The Trustee acknowledges that members will have different attitudes to risk and different aims for accessing their retirement savings, and so it is not possible to offer a default investment option that will be suitable for all. However, the Trustee decided that the lifestyle arrangement set out below represents a suitable default investment option for members who do not make a choice about how their contributions (and those made on their behalf by their employer) are invested, taking into account:• Kinds of investments to be held• Balance between different kinds of investments• Investment risks• Expected return on investments, net of fees• Realisation of investments• Socially Responsible Investment, Corporate

Governance and Voting RightsFurther information on the Trustee’s policies in regard to the above is detailed in the main body of this statement.These aspects have also been considered in the choice of self-select funds that the Trust has made available to members that wish to choose their own investment strategy.

The default strategy makes up part of Standard Life’s range of Strategic Lifestyle Profiles (“SLP”), where the Universal SLPs are specifically designed to be an appropriate arrangement for members who have yet to make a decision regarding how they will access their pension benefits, rather than targeting a specific method of accessing pension savings. All the SLPs gradually move a member’s assets over time from growth-seeking funds to funds that aim to better protect against fluctuations in the level of a member’s retirement savings relative to the way in which that member expects to access their savings. There are two types of SLPs: the Active Plus suite of investment profiles that are predominantly actively managed, and the Passive Plus suite that predominantly makes use of funds which aim to track an index. Both suites invest in a range of asset classes including equities, bonds, and absolute return funds. Each suite has a range of risk levels that can be chosen; the lower the number, the lower the expected risk. For example, Passive Plus III Universal SLP is expected to invest in a way that is more risky than Passive Plus II Universal SLP. The full collection of SLPs is set out in the table below.The Trustees were guided by the employer as to the most suitable default SLP strategy for the *Master Trust 2016 members – it was decided that this is the Active Plus IV Universal SLP. The Member Guide provides further information on the underlying fund building blocks that make up this SLP.

3. Choosing investments The Trustee is responsible for the selection of the default strategy, and for deciding which other lifestyle profiles and funds are made available to the members. The insurer is responsible for the management of the investment arrangements. The insurer may invest in underlying funds run by other fund managers, who are responsible for the management of the underlying fund. For the *Master Trust 2016, the underlying managers responsible for managing the default strategy and core fund range are (as at the date of this statement):• Standard Life;• Vanguard;• HSBC;• BlackRock.The investment managers are either authorised or recognised by the FCA.

Appendix 2.3Note on investment policy for the * Master Trust 2016 in relation to the current Statement of Investment PrinciplesThis appendix is for the * Master Trust 2016 section of the Standard Life DC Master Trust. The Trustee has taken advice from Barnett Waddingham LLP on the suitability of the investment strategy for this group of members.


The full list of off-the-shelf lifestyle strategies that members are able to choose from is shown below, with the range of risk levels ranging from I (being the least risky) to V (representing the option with the highest expected risk):

SLP Passive Plus Active PlusUniversal II – V II – V

Annuity I – V I – V

Lump Sum I – V I – V

Active Retirement II – V II – V

A list of the core self-select funds is shown below:• Standard Life Active UK Equity (MT) Pension Fund• Standard Life Active Overseas Equity (MT)

Pension Fund• Standard Life Active Gilt (MT) Pension Fund• Standard Life Active Emerging Markets Equity (MT)

Pension Fund• Standard Life Active Corporate Bond (MT)

Pension Fund• Standard Life Active Global Equity 50:50 (MT)

Pension Fund• Standard Life Shariah Global Equity (MT)

Pension Fund• Standard Life Property (MT) Pension Fund• Standard Life Passive UK Equity (MT) Pension Fund• Standard Life Passive Overseas Equity (MT)

Pension Fund• Standard Life Passive Gilt (MT) Pension Fund• Standard Life Passive Emerging Markets Equity (MT)

Pension Fund• Standard Life Passive Global Equity 50:50 (MT)

Pension Fund• Standard Life Deposit & Treasury (MT) Pension Fund• Standard Life Global Absolute Return Strategies (MT)

Pension Fund• Standard Life Ethical (MT) Pension Fund• Standard Life Annuity Purchase (MT) Pension Fund• Standard Life Passive 80% Equity/20% Bond (Intel)

Pension Fund• Standard Life Active Global Equity 70:30 (Intel)

Pension Fund • Standard Life Passive Global Bond (Intel) Pension Fund• Standard Life Passive Inflation Linked Gilt (Intel)

Pension Fund• Standard Life Consensus 85 (Intel) Pension Fund• Standard Life Active Global Corporate Bond (Intel)

Pension Fund

4. Fee agreements The insurer has negotiated fee arrangements with the investment managers for the management of the Trust’s investments. As well as the annual management charges, additional fund expenses will apply (varying from quarter to quarter) taking account of custodian, legal, accounting and auditing fees for each fund.

5. Risks specific to this section The Trustee has considered the risk of liquidity and is looking into how this risk might be mitigated.The Trustee notes Standard Life’s ability to suspend redemptions in certain circumstances


1. Investment objectivesThe Trustee’s main investment objectives are:• to provide a suitable default investment option that

is likely to be suitable for members within the section who do not make an active choice;



• that the expected volatility of the returns achieved is managed through appropriate diversification of the use of asset types in order to control the level of volatility and risk in the value of members’ pension pots; and

• to reduce the risk of the assets failing to meet projected retirement income levels.

The Trustee is responsible for the design of the default investment option and for choosing which funds to make available to members. Members are responsible for their own choice of investment options.The Trustee will review how returns of the default arrangements (net of fees) compare to the objectives set by the Trustee.

2. Default optionThe Trustee acknowledges that members will have different attitudes to risk and different aims for accessing their retirement savings, and so it is not possible to offer a default investment option that will be suitable for each individual member. However, the Trustee decided that the lifestyle arrangement set out below represents a suitable default investment option for members who do not make a choice about how their contributions (and those made on their behalf by their employer) are invested, taking into account:• Kinds of investments to be held• Balance between different kinds of investments• Investment risks• Expected return on investments, net of fees• Realisation of investments• Socially Responsible Investment, Corporate

Governance and Voting RightsFurther information on the Trustee’s policies in regard to the above is detailed in the main body of this statement.These aspects have also been considered in the choice of self-select funds that the Trustee has made available to members that wish to choose their own investment strategy.The default strategy is detailed below:

Appendix 2.4Note on investment policy for the * Section in relation to the current Statement of Investment Principles dated 1 June 2016This appendix is for the * Section of the Trust. The Trustee has taken advice from Conduent HR Services on the suitability of the investment strategy for this group of members.

MyPension Medium Risk Lifestyle Accumulation Fund

MyPension Flexible Retirement Fund

MyPension Cash

% o

f inv

estm

ents

100

90

80

70

60

50

40

30

20

10

0>10 9 8 7 6 5 4 3 2 1 3


75%

25%


3. Choosing investments The Trustee is responsible for the selection of the default strategy, and for deciding which other lifestyle profiles and funds are made available to the members. The insurer(s) is(are) responsible for management of the investment arrangements. The insurer(s) may invest in underlying funds run by other fund managers, who are responsible for the management of the underlying fund(s).For this section, in terms of the default and core fund range, as at the date of this statement, the underlying managers were:• BlackRock• HSBC• M&G• Schroder• Standard Life • Vanguard

The investment managers are either authorised, or recognised by the FCA.

A list of the core self-select funds is shown below:• MyPension Commercial Property• MyPension Shariah-compliant• MyPension Transfer-option UK equity• MyPension Cash• MyPension Ethical• MyPension Higher Risk Lifestyle Accumulation Fund• MyPension Index-Linked Gilts• MyPension Medium Risk Lifestyle Accumulation Fund• MyPension UK equity• MyPension Mixed• MyPension Actively selected global shares• MyPension Diversified• MyPension Flexible Retirement Fund• MyPension Global company bonds• MyPension Bond (50:50 Gilts / Corporate Bonds) Fund• MyPension Global Equity Fund• MyPension Transfer-option Lifestyle Accumulation Fund• MyPension Transfer-option Global Equity Fund

4. Fee agreementsThe insurer(s) has(have) negotiated fee arrangements with the investment managers for the management of the Trust’s investments. As well as the annual management charges, additional fund expenses will (and vary from quarter to quarter) taking account of custodian, legal, accounting and auditing fees for each fund.

5. Risks specific to this sectionN/a


Appendix 3 Evaluation of Value for Money – A Practical Framework for IGCs

IntroductionThis paper has been produced by the Chairs of seven Independent Governance Committees (IGCs) to assist IGCs and their equivalent as they seek to assess Value for Money (VfM). While not intended to be prescriptive, the authors believe that some degree of consistency across IGCs is desirable. To this end, and recognizing that IGCs will encounter fact-specific circumstances when engaging with individual providers, the paper proposes a high level framework whose elements could be used to frame the detailed VfM assessment that a provider’s governance group is required to carry out.The authors have taken input from a number of other IGC Chairs and interested parties. They have also been mindful of what the IPB said in their report of December 2014, the FCA rules in COBS 19.5.5 R (2) and the six key elements identified by The Pensions Regulator. The paper has been discussed with colleagues at the FCA who are considering what additional commentary they might supply to IGCs and their equivalent in due course.

IPB Report – preamble to Recommendations:“There is no simple, ‘one size fits all’ charge structure that will ensure that all savers get value or money all of the time... value for money will depend on savers’ decisions and behaviours, and also the important qualitative factors set out by the OFT, including governance, investment performance and transaction costs, and communication with savers. That is why governance arrangements are being strengthened via IGCs and increased requirements for trustees, to ensure that savers’ interests can be appropriately safeguarded by people best placed to make these qualitative judgements.”

COBS 19.5.5 R (2):“The IGC will assess the ongoing value for money for relevant policyholders delivered by relevant schemes particularly, though not exclusively, through assessing:(a) Whether the firm’s default investment strategies are

designed in the interests of relevant policyholders with a clear statement of aims, objective and structure appropriate for those relevant policyholders;

(b) Whether the characteristics and net performance of investment strategies are regularly reviewed by the firm to ensure alignment with the interests of relevant policyholders and action taken to make any necessary changes;

(c) Whether core scheme financial transactions are processed promptly and accurately;

(d) The level of charges borne by relevant policyholders;And(e) The direct and indirect costs incurred in relation

to transactions and other activities in managing and investing the pension savings of relevant policyholders.”

TPR six key elements:The Pensions Regulator lists the following six key elements which affect the outcomes experience by members:• Appropriate contribution decisions• Appropriate investment decisions• Appropriate decumulation decisions• Protection of Assets• Efficient and Effective administration• Value for Money

1. Value is more than just cost• VfM has been defined (by the National Audit Office)

as “The optimum combination of whole-life costs and quality”

• However, the identification of “optimum” is theoretical given the lack of perfect information about what is available and at what price, and because the qualitative elements of the proposition are not amenable to mathematical optimization

• Nevertheless, an assessment of VfM must take account of the quality of the particular pension proposition as well as its cost and consider how that compares to what is available for equivalent schemes from providers in the marketplace (including, where appropriate, what the IGC’s provider might be offering to other equivalent schemes)


• IGCs should test VfM against (i) Quality – all benefits and services delivered, including range of investment options available and any default options in place; (ii) Risk – both investment and service risk; (iii) Relevance – whether the benefits and services delivered are in the member’s interests (in increasing the probability of a good outcome whether or not explicitly valued by the member); and, (iv) Cost – both explicit and implicit, recognising the impact of scale (and expected scale) on market prices

2. Assessing quality needs to consider all elements of the proposition that can materially impact member outcomes

• In assessing whether a product can deliver good outcomes the IGC should consider all of the elements which can impact member outcomes and give priority to those elements most significantly impacting those outcomes

• Providers will bring different propositions to market offering different levels of service and flexibility. Such elements may include inter alia investment elements such as varying default structures, other investment options, investing styles and targeted levels of investment performance; premium flexibility and size and frequency of payment; service functionality and customer contact options provided, whether web enabled or via a customer service centre; the provision of guidance and/or advice; service standards targeted and performance against these; quality of communications, education and engagement materials; availability of in person presentations; and ease of access to understandable and sufficient information

• While some of these elements are capable of tangible measurement and numerical analysis, some are not and, particularly for the latter, informed qualitative judgement will play an important role in the VfM assessment

• That judgement may be informed by customer feedback and, where available, measurement of the effectiveness of those elements the provider wishes to assert as relevant to the VfM assessment

3. Assessing relevance needs to consider the needs of the member base and the extent to which these are reflected in the member feedback the IGC receives

• The rules relating to IGCs reflect the importance of customer views being represented directly to the appropriate IGC. These may prove particularly helpful to IGCs in the VfM assessment of proposition features whose provision gives rise to significant costs to members

• While customer views will be influential, they should not necessarily be considered to be conclusive as to VfM. There may well be elements of a proposition

which can contribute significantly to good outcomes for customers, the value of which may not be fully appreciated by such customers

• Some of the features of a particular proposition may be of more relevance to some groups or cohorts of members than others (e.g. retirement roadshows; more sophisticated investment choices). In considering the VfM of the whole proposition, the lack of customer comments about a particular proposition feature need not imply that it is not relevant

4. Assessing cost is primarily a relative assessment, with research and judgement required to assess what are equivalent comparators to use

• VfM should be viewed primarily in the light of what price is available in the market for schemes of equivalent type (i.e. size, scale, premium flows) offering an equivalent proposition

• Perfect information about what is available in the market will rarely be available and it is likely that VfM can exist at a range of prices for a given proposition

• Consequently, in considering the VfM of a particular provider’s proposition, the IGC needs to form a view on the extent to which the charges borne by a member fall within the reasonable range of pricing for the outcomes that can be reasonably expected from that proposition

• (the VfM Range)• In particular, while in the future it is expected that

IGCs will have access to consistent, cross-market, data on Transaction Costs, until such time as that is available, IGCs can review, relative to appropriate benchmarks, the net investment returns provided to members after all costs have been allowed for

• In assessing VfM, the amount of charges deducted from a member’s pension fund is more important than how the charges might be, or might have been, presented for historic marketing purposes

5. VFM is forward-looking and can change over time

• At any point in time, in assessing whether or not a particular proposition continues to provide VfM, the IGC needs to form a view on the extent to which the ongoing charges to be borne by a member continue to fall within the reasonable range of pricing (as now reflected in the market) for the outcomes that can, at that point in time, be reasonably expected to be experienced

• Thus, IGCs will need to decide whether the price of entry to equivalent schemes is relevant to the assessment of ongoing VfM for existing members


6. VFM is primarily concerned with anticipated outcomes at retirement

• The ultimate objective of a pension savings arrangement is to provide financial security in retirement

• As a consequence, it is the likely ultimate outcome, rather than intermediate results, that should be the most significant component of the VfM assessment of a particular pension scheme

• Nevertheless, a VfM pension scheme may still not provide financial security in retirement for every member. Outcomes can only be tested against what is contributed, rather than what should have been contributed by the member to give a reasonable chance of meeting their expectations of wealth in retirement

• Thus, in assessing the VfM of any proposition, the primary aspect for IGCs is whether the proposition has the capacity to provide an outcome that meets the objective in whole or in part

7. Cross-subsidies inevitably exist both within and between schemes

• The existence of an element of cross-subsidy does not of itself raise concerns as to VfM so long as the particular scheme remains VfM within Framework Element 4

• In a flat basis point charging design, for example, those with larger investment values (typically long stay members) subsidise those in the early years of membership and who leave early, but may well have benefited from such cross-subsidy in the early years of their pension scheme membership

• Notwithstanding significant scheme discounts which may be available to larger schemes with stronger cash flows, such schemes can make access to a specific plan design possible for smaller schemes for whom such provision would otherwise not be economically attractive for providers

• Contract designs that involve less cross-subsidy (for example, historic designs that levied upfront charges such as reduced investment allocation or other variants) can also lead to poorer intermediate outcomes for those who do not remain active members of the scheme until retirement

8. Different contract designs can lead to different intermediate consequences, not all of which are within scope for IGCS

• Where contract designs incorporate “front end loaded” charges (through, for example, zero allocation periods or some forms of initial units), members who leave the scheme within a relatively short period are likely to receive poorer VfM than those remaining until retirement

• IGCs are not required to review the appropriateness nor seek to have remediated the historic charges borne by members prior to 6th April 2015. They are, however, required to consider the impact of charges on VfM for the member for post 6th April 2015 periods

• Thus, for existing members, the VfM assessment should take as its starting point the economic value of members’ investments as at 6th April 2015 and consider whether the charges to be taken thereafter (including in respect of further contributions) fall within the VfM range

• For the avoidance of doubt, the economic value should reflect the member’s realisable value and contract conditions, in other words the amount due to the member after all deductions and charges which would be suffered if the member sought to transfer their investments to another provider

9. Members’ interests include the stability and ongoing existence of providers

• Good outcomes require members to make sufficient contributions over their entire working life. A member’s propensity to save will be enhanced by their engagement with and confidence in their provider and its future ability to provide a good service across the entirety of the components of a scheme

• The members’ interests are also served by providers’ being able to make sufficient returns to attract capital into the provision of pension schemes and the ongoing development of attractive innovative saver proposition

10. The profitability (or lack thereof) of a provider’s workplace pension proposition is not a primary indicator as to whether that proposition represents VFM

• If profitability is created by the provider’s efficiency in delivering the proposition and the cost to the member is within the VfM Range, it is not for the IGC to advocate an even better VfM for the member at the cost of a lower return on capital for the provider

• However, to the extent that the level of profitability reflects historic charging practices which result in a proposition the pricing of which (going forward from now) no longer falls within the VfM Range, the IGC should recommend changes notwithstanding the impact on provider profitability

• The lack of sufficient profitability, if caused by provider inefficiencies, is not a basis for accepting that the proposition constitutes VfM

20 August 2015


Appendix 4Standard Life Master Trust Co. LtdStandard Life DC Master Trust & Stanplan A

Good Value Assessment FeaturesListed below are the Good Value assessment criteria that the Standard Life Master Trust Co. Ltd Board used to assess the value of the Standard Life DC Master Trust and Stanplan A.

Scheme management and governance In relation to the trustee board, with particular reference to the appointment of the chair and MNTs (if appropriate). In relation to scheme management, with particular reference to risk management, TKU, the appointment and management of service providers, monitoring employer processes and managing conflicts of interest.• Management of operational risk and controls• Security of IT systems and controls• Independent assurance of controls

AdministrationWith particular reference to the timely and accurate processing of core financial transactions. • Responsiveness to customer demand• Relevant experience and expertise of staff• Efficiency and scalability of operational capability• Level of automation / straight through processing• Ease of transfer by an individual to another provider• Ability to contribute / transact on-line

Investment GovernanceWith particular reference to the documentation of investment matters, setting objectives and strategies, monitoring strategies and performance, the security and liquidity of assets, default arrangements, appropriate range of non-default funds and the long term financial sustainability of investments. • Default Investment strategies are designed and

executed in the interests of members• Performance of default funds (net of charges) -

risk adjusted• Performance of funds (net of charges) - to stated

goals (FAR)• Clarity of description of default funds• Suitability of default funds• Regularity and quality of default fund reviews• Adaptability of default funds to changing

circumstances• Range and suitability of additional fund choices• Ease of access to additional fund options• Fund governance

CommunicationsWith particular reference to clarity (e.g. plain English), the use of technology and technological improvement, at retirement communications and in relation to scams. • Easy access to phone support• Easy access to online support (webchat etc.)• Ease with which customers can contact via

different channels• Quality of retirement roadshows• Availability of Workplace seminars• Quality, access and relevance of digital experience• Clarity of yearly statements• Quality of education and support materials• Ability to view pension plan on-line• Access to guidance

Additional factors• Member satisfaction• Complaints Handling• Availability of choices at retirement• Ease of access to retirement freedoms

Financial strength, sustainability and stability• Facility to organise an orderly wind up of the plan

without explicit negative impact on member funds• Ability of provider to invest in proposition

enhancement• Reassurance given to members enabling higher levels

of contributions


Appendix 5Default fund Risk Adjusted Performance AnalysisThe following chart shows how much fund performance has been produced taking into account the volatility (i.e. the level and frequency of price movements) that the fund has experienced over a rolling 3 year period. The figures shown are gross performance (i.e. performance before charges are taken) divided by the volatility experienced by the fund at each month shown.Investors in scheme default funds are exposed to risk (volatility) and this chart helps us to understand how efficiently a fund is delivering returns for the risk it takes

on. The risk efficiency of a fund is an important way for us to measure performance as it demonstrates if the risk you are exposed to as an investor is being suitably rewarded through a fund’s returns. Funds which are more risk efficient are highlighted in green – these funds are delivering greater returns for the level of risk taken, while funds in red are delivering less return for the level of risk taken. It is important to note that the colouring isn’t an indication of the riskiness of each fund, for example, green and red funds can both be higher risk funds.

Jun-1

8Jul

-18

Aug-

18Se

p-18

Oct-1

8No

v-18

Dec-1

8Jan

-19

Feb-

19Ma

r-19

Apr-1

9Ma

y-19

Jun-1

9Jul

-19

Aug-

19Se

p-19

Oct-1

9No

v-19

Dec-1

9Jan

-20

Feb-

20Ma

r-20

Apr-2

0Ma

y-20

Activ

e Plus

III

4.03%

4.13%

5.11%

5.70%

3.72%

3.50%

2.81%

4.02%

3.98%

4.05%

4.29%

3.81%

4.20%

4.11%

3.57%

3.61%

3.15%

3.65%

3.52%

3.34%

1.86%

-0.07

%0.6

2%0.7

2%

Pass

ive Pl

us III

4.62%

4.73%

5.84%

6.42%

4.57%

4.36%

3.59%

4.73%

4.73%

4.78%

5.01%

4.58%

4.66%

4.59%

4.08%

4.08%

3.58%

4.06%

3.82%

3.76%

2.15%

0.06%

0.64%

0.83%

Peer

14.8

9%5.0

2%6.3

6%6.6

4%4.5

7%4.4

7%3.6

0%4.6

5%4.3

8%4.4

2%4.8

2%4.1

3%4.1

2%3.9

9%3.1

9%3.3

0%3.1

5%3.7

7%3.6

9%3.6

1%1.8

6%0.3

6%0.7

0%0.6

1%

Peer

24.1

8%4.2

3%5.4

2%6.1

6%4.4

7%4.4

3%3.6

4%5.1

6%4.9

9%4.9

2%5.3

3%5.0

1%4.9

8%4.8

7%4.3

4%4.4

6%3.8

9%4.5

8%4.3

3%4.3

6%2.9

7%0.6

1%1.3

4%1.4

6%

Peer

34.6

2%4.7

2%5.9

4%6.5

0%4.6

2%4.2

7%3.8

0%4.7

5%4.8

4%4.8

3%5.0

5%4.6

4%4.5

4%4.3

7%3.7

0%3.8

5%3.6

0%4.3

7%3.9

5%3.9

6%2.1

9%0.1

9%0.9

4%1.0

4%

Peer

43.6

6%3.7

4%4.9

5%5.0

9%3.3

1%3.4

9%2.9

1%4.2

3%4.0

7%3.9

2%4.0

9%3.6

8%3.6

3%3.6

1%2.9

9%2.9

8%2.4

2%2.9

2%2.7

9%2.6

3%1.3

8%-0.20

%0.6

8%0.8

3%

Peer

54.3

6%4.5

9%5.7

9%6.2

5%4.3

4%4.3

9%3.6

1%4.8

5%4.8

1%4.7

7%5.1

3%4.8

0%4.6

4%4.6

0%3.5

1%3.6

6%2.9

3%3.5

3%3.2

3%3.2

3%2.2

1%0.4

2%1.1

4%1.2

0%

Peer

64.8

1%4.9

7%5.8

4%6.3

2%4.8

0%4.8

3%4.2

4%5.1

0%4.8

5%4.6

9%4.8

7%4.9

0%4.7

9%4.6

9%4.2

2%4.1

3%3.5

5%4.3

7%4.1

8%4.1

1%2.6

5%0.4

2%1.1

1%1.2

5%

Peer

74.7

1%4.6

3%5.9

3%6.6

3%4.6

3%4.3

6%3.2

9%4.6

8%4.5

2%4.5

2%4.9

3%4.3

1%4.4

7%4.3

7%3.6

3%3.7

1%3.0

5%3.5

2%3.3

2%2.9

9%1.4

0%0.0

0%0.6

7%0.6

8%

Peer

83.9

0%4.1

7%5.1

2%5.8

6%3.7

6%3.8

6%3.1

3%4.5

1%4.2

7%4.0

9%4.4

1%4.1

9%4.1

2%3.9

0%2.9

4%3.0

4%2.5

2%3.2

7%3.0

2%2.7

6%1.7

1%-0.18

%0.5

8%0.6

6%

Peer

93.4

9%3.5

1%5.7

0%5.8

8%4.2

3%4.7

1%4.4

6%6.4

0%6.2

6%6.1

9%6.2

6%5.7

4%5.7

8%5.5

8%5.3

2%5.3

8%5.2

7%5.5

5%5.4

9%5.2

2%3.0

2%0.5

6%0.8

7%0.8

2%

Peer

104.0

8%4.1

9%5.2

9%5.7

9%3.8

3%3.7

1%3.0

0%4.3

3%4.1

9%4.1

6%4.5

2%4.1

7%4.2

2%4.0

7%3.3

0%3.4

2%2.9

2%3.6

7%3.4

4%3.3

7%2.0

2%0.0

9%0.8

3%0.9

2%

FTSE

All S

hare

3.40%

3.26%

3.84%

4.51%

2.84%

2.50%

2.10%

3.06%

3.25%

3.34%

3.52%

2.91%

3.00%

2.81%

2.04%

2.17%

1.92%

2.40%

2.25%

1.84%

0.41%

-0.85

%-0.52

%-0.58

%


Appendix 6How we went about reviewing the default investment arrangementThe Board monitors all of the investment funds, including the default investment arrangement, each quarter. This process includes, amongst other things, a comparison of performance against the published performance objective and the extent to which performance is still consistent with the aims and objectives of the default arrangement Statement of Investment Principles.

Early in 2018 the Board expressed concerns around the performance of the default investment arrangement, for those sections of the Scheme which do not have employer specific default arrangements, relative to its performance objective and specifically in relation to one of the component funds (GARS). The Board’s view was that shorter term under performance was becoming longer term and possibly systematic under performance inconsistent with the investment aims and objectives as set out in our Statement of Investment Principles.

In mid-2018 we met with a senior fund manager from Aberdeen Standard Life, the company that provides investment management services to Standard Life.

Following this meeting we constructed a letter, with the support of our independent investment consultant, setting out a number of questions for and challenges to Standard Life.

We challenged them in relation to the performance of the default investment arrangement but, despite being content with the objective of the arrangement, we also challenged them on methodology they used to construct that objective. The letter was sent in late July.

The response was considered by the Board and our investment consultant in early September and, subsequently, discussed with Standard Life.

Following this process, revisions to the default investment arrangement were designed by Standard Life and, over three reports to the Board, challenged, refined and planned for.

The resultant revisions were agreed and announced in March 2019.

They included the removal of Aberdeen Standard Life’s GARS fund.

A full explanation of the changes madeThe review undertaken by Standard Life delivered changes to the funds within their current aims and objectives – these aren’t changing. Instead, the changes focused on the funds’ asset allocations and their approach to some asset classes to continue to support customers achieving a good outcome in retirement. The review considered the latest insight and thinking on the goals people need to target and the level of risk they will need to take in order to achieve a good outcome in the future. In order to identify what a good outcome looks like, Standard Life considered the amount that a member would need to accumulate over a 40 year savings period to fund the gap between the state pension and a level of income required to provide a reasonable standard of living in retirement. They determined that a good outcome for the majority of members could be described in terms of an income replacement rate in the range of 60% to 75% (using industry sources such as the Department of Work and Pensions and the Office of National Statistics).The return requirement to support this has been taken into account within the portfolio construction process, which will result in risk level III and IV funds seeing a modest increase in risk, but importantly still within their current risk budget. Exposure to some growth assets, such as equities, local currency emerging market debt and property, and to some defensive asset classes, such as corporate bonds, has increased. Meanwhile, exposure to some defensive bond asset classes, such as UK gilts, have been reduced or removed. While Standard Life’s view is that alternative growth assets can help deliver returns with reduced levels of volatility and so have benefits for customers in the long term, they recognise that recent performance of absolute returns had been below expectations. So they took the opportunity to remove this exposure as part of this review.The changes were implemented over the second half of 2019 and we’ll continue to consult with Standard Life as part of our quarterly governance on and the impact of the changes as they start to come through. As these changes were consistent with the investment aims and objectives as set out in our Statement of Investment Principles we did not have to update it, although changes were made to the statement later in the year to reflect other matters.

Source: Financial Express, three year gross cumulative performance to end of the month shown divided by three year volatility. Volatility was calculated using monthly data points.


Appendix 6aHow we went about reviewing the default investment arrangement for Employer 1The Board monitors all of the investment funds, including the default investment arrangement, each quarter. This process includes, amongst other things, a comparison of performance against the published performance objective and the extent to which performance is still consistent with the aims and objectives of the default arrangement Statement of Investment Principles. The default strategy in the Employer 1 section is a Lifestyle arrangement, whereby members’ funds are invested in a diverse portfolio of assets in the “growth” phase, with the aim of balancing expected risk and return over the long-term and targeting a moderate level of risk overall. As members get closer to their retirement age, the strategy reduces the level of risk by switching to a fund which holds a higher proportion of defensive assets. Overall, the strategy is designed to suit members wanting to take advantage of the flexibilities they have in how they will take their account at retirement.The review considered the default strategy in the context of the demographic profile of the membership, as well as members’ expected retirement outcomes, and the performance of the funds used in the default strategy. Key highlights from the review were:• The profile of the membership pointed to a moderate

risk tolerance on average.• Analysis of expected account values at retirement

indicated that members may take their benefits in a number of ways, but that the majority are expected to consider drawdown, although this is less likely for members currently closer to retirement.

• The funds used in the default strategy were only launched in 2018, and therefore it was not possible to assess long-term performance. At an underlying fund level, however, performance was consistent with expectations for the asset classes in which the funds invest.

Based on the conclusions from the review the Trustee was comfortable that the current default strategy remained appropriate from an expected risk/return perspective and in terms of its overall design, and therefore no changes have been made. As no changes were made to the investment aims and objectives as set out in our Statement of Investment Principles we did not have to update it.


Appendix 7Illustrations over time, of the growing effect of costs and charges on the value of your pension savings

Illustration 1

The typical scheme member for this illustration is based on:• Current age of 30• Starting pension pot of £12,150• Retirement age of 63• Total ongoing contribution of £4,550• Is invested 100% in Passive Plus III Universal SLP

Year Before Charges After Charges1 £16,900 £16,9003 £27,100 £26,8005 £37,900 £37,300NRD £283,000 £262,000

Transaction Costs:Standard Life Passive Plus III Pension Fund (CCHD) : Passive Plus III Universal SLP : 0.0330%

Standard Life At Ret (Passive Plus Universal) Pn (JJHA) : Passive Plus III Universal SLP : -0.0035%

Standard Life Pre Ret (Passive Plus Universal) (KKFF) : Passive Plus III Universal SLP : 0.0110%

Growth Rate:Standard Life Passive Plus III Pension Fund (CCHD) : Passive Plus III Universal SLP : 4.5000%

Standard Life At Ret (Passive Plus Universal) Pn (JJHA) : Passive Plus III Universal SLP : 3.0000%


Illustration 2

The typical scheme member for this illustration is based on:• Current age of 30• Starting pension pot of £12,150• Retirement age of 63• Total ongoing contribution of £4,550• Is invested 100% in Active Plus III Universal SLP


Transaction Costs:Standard Life At Ret (Active Plus Universal) Pn (BDAD) : Active Plus III Universal SLP : 0.1367%

Standard Life Pre Ret (Active Plus Universal) Pn (BDAE) : Active Plus III Universal SLP : 0.2018%

Standard Life Active Plus III Pension Fund (DDNA) : Active Plus III Universal SLP : 0.2057%

Growth Rate:Standard Life At Ret (Active Plus Universal) Pn (BDAD) : Active Plus III Universal SLP : 2.0000%




Illustration 3

The typical scheme member for this illustration is based on:• Current age of 30• Starting pension pot of £12,150• Retirement age of 63• Total ongoing contribution of £4,550• Is invested 100% in Active Plus IV Universal SLP


Transaction Costs:Standard Life At Ret (Active Plus Universal) Pn (BDAD) : Active Plus IV Universal SLP : 0.1367%

Standard Life Pre Ret (Active Plus Universal) Pn (BDAE) : Active Plus IV Universal SLP : 0.2018%

Standard Life Active Plus IV Pension Fund (FFND) : Active Plus IV Universal SLP : 0.1005%

Growth Rate:Standard Life At Ret (Active Plus Universal) Pn (BDAD) : Active Plus IV Universal SLP : 2.0000%



Illustration 4

The typical scheme member for this illustration is based on:• Current age of 50• Starting pension pot of £23,000• Retirement age of 63• Total ongoing contribution of £4,095• Is invested 100% in Passive Plus III Universal SLP









Illustration 5

The typical scheme member for this illustration is based on:• Current age of 50• Starting pension pot of £23,000• Retirement age of 63• Total ongoing contribution of £4,095• Is invested 100% in Active Plus III Universal SLP








Illustration 6

The typical scheme member for this illustration is based on:• Current age of 50• Starting pension pot of £23,000• Retirement age of 63• Total ongoing contribution of £4,095• Is invested 100% in Active Plus IV Universal SLP









Illustration 7

The typical scheme member for this illustration is based on:• Current age of 30• Starting pension pot of £4,800• Retirement age of 63• No ongoing payments• Is invested 100% in Passive Plus III Universal SLP








Illustration 8

The typical scheme member for this illustration is based on:• Current age of 30• Starting pension pot of £4,800• Retirement age of 63• No ongoing payments• Is invested 100% in Active Plus III Universal SLP









Illustration 9

The typical scheme member for this illustration is based on:• Current age of 30• Starting pension pot of £4,800• Retirement age of 63• No ongoing payments• Is invested 100% in Active Plus IV Universal SLP








Illustration 10

The typical scheme member for this illustration is based on:• Current age of 50• Starting pension pot of £25,444• Retirement age of 63• No ongoing payments• Is invested 100% in Passive Plus III Universal SLP









Illustration 11

The typical scheme member for this illustration is based on:• Current age of 50• Starting pension pot of £25,444• Retirement age of 63• No ongoing payments• Is invested 100% in Active Plus III Universal SLP








Illustration 12

The typical scheme member for this illustration is based on:• Current age of 50• Starting pension pot of £25,444• Retirement age of 63• No ongoing payments• Is invested 100% in Active Plus IV Universal SLP








For all the above illustrations

• Values are not guaranteed • Projected values are shown in today’s terms and do not need to be reduced further for the effect of inflation• Inflation is assumed to be 2.00% each year • Any contributions are assumed to increase by 3.50% each year• Negative transaction costs are assumed to be zero• Where Standard Life have not received Transaction Cost Data a value of 0 is used• Please note that these include all charges and typical scheme discount.


Appendix 8Charges during the Scheme year (01/01/2019 to 31/12/2019) calculated as at 01/01/2020

Table 1: Default investment arrangements Arrangement (fund) code

Arrangement Name Net Annual Management Charge ^

Transaction Charges (%)

BDAD Standard Life At Ret (Active Plus Univ) 0.38% 0.137%







BDAE Standard Life Pre Ret (Active Plus Universal) Pn 0.41% 0.202%







CCHD Standard Life Passive Plus III Pension Fund 0.42% 0.033%





DDNA Standard Life Active Plus III Pension Fund 0.46% 0.206%





FFND Standard Life Active Plus IV Pension Fund 0.49% 0.101%

FFND Standard Life Active Plus IV Pension Fund 0.46% 0.101%

GGKE SL * Money Market Pension Fund 0.20% 0.100%

JJHA Standard Life At Ret (Passive Plus Universal) Pn 0.33% -0.004%









JJJA Standard Life Passive Plus IV Pension Fund 0.37% 0.032%


Arrangement (fund) code






KKFF Standard Life Pre Ret (Passive Plus Universal) 0.34% 0.011%









KNDB MyPension Medium Risk Lifestyle Accumulation Fund 0.54% 0.165%

KNPF MyPension Flexible Retirement Fund 0.58% 0.320%

LLKP SL * Passive 50/50 Global Equity Pension Fd 0.18% 0.025%

LPGK SL * Mixed Bond Pension Fund 0.18% 0.080%

NAPJ MyPension Cash 0.17% 0.100%


Table 2: Other investment funds. Arrangement (fund) code



AACC SL * Ethical Pension Fund 0.18% 0.020%

AACC SL * Ethical Pension Fund + 0.32% 0.020%

AACG Standard Life 60:40 Gbl Equity Trk (Vanguard) Pn 0.28% 0.095%

AADB Standard Life Multi Asset (*) Pension Fund 0.54% 0.192%

AAKK Standard Life Shariah Global Equity (MT) Pension 1.02% 0.053%












AAKN MyPension Index-Linked Gilts 0.13% 0.258%

AANH SL * Passive 60/40 Global Equity Pension Fd + 0.14% 0.025%

AAPE Standard Life Passive Global Bond (*) Pn Fd 0.20% 0.178%

ADMC Stan Life At Ret (Passive Plus Active Retirement) 0.53% 0.210%

BBBE SL * UK Corporate Bond Pension Fund + 0.17% -0.090%

BBBE SL * UK Corporate Bond Pension Fund 0.18% -0.090%

BBDE Standard Life Passive Corporate Bond (MT) Pension 0.42% -0.090%








BBMK Standard Life Gbl Absolute Return Strategies (MT) 1.09% 0.189%








BBMK Standard Life Gbl Absolute Return Strategies (MT) 1.06% 0.189%BBPK MyPension UK Equity 0.11% 0.105%BDAD Standard Life At Ret (Active Plus Univ) 0.42% 0.137%BDAD Standard Life At Ret (Active Plus Univ) 0.56% 0.137%BDAD Standard Life At Ret (Active Plus Univ) 0.65% 0.137%BDAE Standard Life Pre Ret (Active Plus Universal) Pn 0.40% 0.202%BDAE Standard Life Pre Ret (Active Plus Universal) Pn 0.45% 0.202%





BDAE Standard Life Pre Ret (Active Plus Universal) Pn 0.59% 0.202%BDAE Standard Life Pre Ret (Active Plus Universal) Pn 0.68% 0.202%BEDK Standard Life Active Gilt (MT) Pension Fund 0.47% 0.105%BEDK Standard Life Active Gilt (MT) Pension Fund 0.59% 0.105%BEDK Standard Life Active Gilt (MT) Pension Fund 0.28% 0.105%BEDK Standard Life Active Gilt (MT) Pension Fund 0.29% 0.105%BEDK Standard Life Active Gilt (MT) Pension Fund 0.33% 0.105%BEDK Standard Life Active Gilt (MT) Pension Fund 0.35% 0.105%BEDK Standard Life Active Gilt (MT) Pension Fund 0.41% 0.105%BEDK Standard Life Active Gilt (MT) Pension Fund 0.44% 0.105%BEDK Standard Life Active Gilt (MT) Pension Fund 0.46% 0.105%BEMA Standard Life Pre Ret (Passive Plus Lump Sum) Pn 0.40% 0.048%BEMA Standard Life Pre Ret (Passive Plus Lump Sum) Pn 0.45% 0.048%BFAE SL Vanguard UK Investment Grade Bond Index Pension 0.29% -0.090%BFCK SL Vanguard FTSE UK All Share Index Pension Fund 0.29% 0.025%CCCF SL * Passive UK Equity Pension Fund + 0.07% 0.025%CCCF SL * Passive UK Equity Pension Fund 0.18% 0.025%CCFE Standard Life Passive UK Equity (MT) Pension Fund 0.12% 0.025%CCFE Standard Life Passive UK Equity (MT) Pension Fund 0.29% 0.025%CCFE Standard Life Passive UK Equity (MT) Pension Fund 0.36% 0.025%CCFE Standard Life Passive UK Equity (MT) Pension Fund 0.34% 0.025%CCFE Standard Life Passive UK Equity (MT) Pension Fund 0.42% 0.025%CCFE Standard Life Passive UK Equity (MT) Pension Fund 0.44% 0.025%CCFE Standard Life Passive UK Equity (MT) Pension Fund 0.47% 0.025%CCFE Standard Life Passive UK Equity (MT) Pension Fund 0.57% 0.025%CCFE Standard Life Passive UK Equity (MT) Pension Fund 0.60% 0.025%CCFE Standard Life Passive UK Equity (MT) Pension Fund 0.48% 0.025%CCHD Standard Life Passive Plus III Pension Fund 0.42% 0.033%CCHD Standard Life Passive Plus III Pension Fund 0.47% 0.033%CCHD Standard Life Passive Plus III Pension Fund 0.60% 0.033%CCHD Standard Life Passive Plus III Pension Fund 0.57% 0.033%CCIB Standard Life Active Emerging Markets Equity (MT) 1.00% 0.263%CCIB Standard Life Active Emerging Markets Equity (MT) 1.06% 0.263%CCIB Standard Life Active Emerging Markets Equity (MT) 1.07% 0.263%CCIB Standard Life Active Emerging Markets Equity (MT) 1.11% 0.263%CCIB Standard Life Active Emerging Markets Equity (MT) 1.13% 0.263%CCIB Standard Life Active Emerging Markets Equity (MT) 1.19% 0.263%CCIB Standard Life Active Emerging Markets Equity (MT) 1.24% 0.263%CCIB Standard Life Active Emerging Markets Equity (MT) 1.25% 0.263%CCIB Standard Life Active Emerging Markets Equity (MT) 1.34% 0.263%CCIB Standard Life Active Emerging Markets Equity (MT) 1.37% 0.263%CCKN Standard Life Active Overseas Equity (MT) Pension 0.28% 0.222%CCKN Standard Life Active Overseas Equity (MT) Pension 0.29% 0.222%CCKN Standard Life Active Overseas Equity (MT) Pension 0.33% 0.222%CCKN Standard Life Active Overseas Equity (MT) Pension 0.35% 0.222%





CCKN Standard Life Active Overseas Equity (MT) Pension 0.41% 0.222%CCKN Standard Life Active Overseas Equity (MT) Pension 0.44% 0.222%CCKN Standard Life Active Overseas Equity (MT) Pension 0.46% 0.222%CCKN Standard Life Active Overseas Equity (MT) Pension 0.47% 0.222%CCKN Standard Life Active Overseas Equity (MT) Pension 0.56% 0.222%CCKN Standard Life Active Overseas Equity (MT) Pension 0.59% 0.222%CCML SL * Shariah Pension Fund + 0.30% 0.053%CCML SL * Shariah Pension Fund 0.49% 0.053%CCNK SL * Active 70/30 Global Equity Pension Fd + 0.57% 0.010%CFJI MyPension Diversified 0.95% 0.106%DDBK Standard Life Active Global Equity 50:50 (MT) Pn 0.41% 0.162%DDBK Standard Life Active Global Equity 50:50 (MT) Pn 0.35% 0.162%DDBK Standard Life Active Global Equity 50:50 (MT) Pn 0.44% 0.162%DDBK Standard Life Active Global Equity 50:50 (MT) Pn 0.46% 0.162%DDBK Standard Life Active Global Equity 50:50 (MT) Pn 0.47% 0.162%DDBK Standard Life Active Global Equity 50:50 (MT) Pn 0.51% 0.162%DDBK Standard Life Active Global Equity 50:50 (MT) Pn 0.56% 0.162%DDBK Standard Life Active Global Equity 50:50 (MT) Pn 0.59% 0.162%DDBK Standard Life Active Global Equity 50:50 (MT) Pn 0.28% 0.162%DDBK Standard Life Active Global Equity 50:50 (MT) Pn 0.29% 0.162%DDBK Standard Life Active Global Equity 50:50 (MT) Pn 0.33% 0.162%DDIF MyPension Actively Selected Global Shares 0.71% 0.073%DDNA Standard Life Active Plus III Pension Fund 0.40% 0.206%DDNA Standard Life Active Plus III Pension Fund 0.44% 0.206%DDNA Standard Life Active Plus III Pension Fund 0.45% 0.206%DDNA Standard Life Active Plus III Pension Fund 0.47% 0.206%DDNA Standard Life Active Plus III Pension Fund 0.55% 0.206%DDNA Standard Life Active Plus III Pension Fund 0.59% 0.206%DDNA Standard Life Active Plus III Pension Fund 0.68% 0.206%DDNA Standard Life Active Plus III Pension Fund 0.71% 0.206%DDPK SL Schroder Recovery Pension Fund 1.29% 0.053%DGFK Standard Life Balanced Growth (*) Pension Fund 0.41% 0.126%DGGK SL * Passive 40/60 Global Equity Pension Fd + 0.10% 0.025%EEMC Standard Life Passive Gilt (MT) Pension Fund 0.11% -0.006%EEMC Standard Life Passive Gilt (MT) Pension Fund 0.29% -0.006%EEMC Standard Life Passive Gilt (MT) Pension Fund 0.30% -0.006%EEMC Standard Life Passive Gilt (MT) Pension Fund 0.34% -0.006%EEMC Standard Life Passive Gilt (MT) Pension Fund 0.36% -0.006%EEMC Standard Life Passive Gilt (MT) Pension Fund 0.42% -0.006%EEMC Standard Life Passive Gilt (MT) Pension Fund 0.44% -0.006%EEMC Standard Life Passive Gilt (MT) Pension Fund 0.47% -0.006%EEMC Standard Life Passive Gilt (MT) Pension Fund 0.48% -0.006%EEMC Standard Life Passive Gilt (MT) Pension Fund 0.57% -0.006%EEMC Standard Life Passive Gilt (MT) Pension Fund 0.60% -0.006%EEMP SL * Active UK Equity Pension Fund + 0.51% -0.051%





EEMP SL * Active UK Equity Pension Fund 0.57% -0.051%EEPN Standard Life Property (MT) Pension Fund 0.30% 0.325%EEPN Standard Life Property (MT) Pension Fund 0.35% 0.325%EEPN Standard Life Property (MT) Pension Fund 0.37% 0.325%EEPN Standard Life Property (MT) Pension Fund 0.43% 0.325%EEPN Standard Life Property (MT) Pension Fund 0.46% 0.325%EEPN Standard Life Property (MT) Pension Fund 0.48% 0.325%EEPN Standard Life Property (MT) Pension Fund 0.49% 0.325%EEPN Standard Life Property (MT) Pension Fund 0.58% 0.325%EEPN Standard Life Property (MT) Pension Fund 0.61% 0.325%EGJI Standard Life Active Global Corporate Bond (*) 0.50% 0.179%FFBA Standard Life Active Plus V Pension Fund 0.46% 0.137%FFBA Standard Life Active Plus V Pension Fund 0.48% 0.137%FFBA Standard Life Active Plus V Pension Fund 0.49% 0.137%FFBA Standard Life Active Plus V Pension Fund 0.50% 0.137%FFBA Standard Life Active Plus V Pension Fund 0.52% 0.137%FFBA Standard Life Active Plus V Pension Fund 0.63% 0.137%FFBA Standard Life Active Plus V Pension Fund 0.64% 0.137%FFBA Standard Life Active Plus V Pension Fund 0.73% 0.137%FFBA Standard Life Active Plus V Pension Fund 0.76% 0.137%FFJE SL * Passive 80% Equity/20% Bond Pension Fd + 0.18% 0.090%FFKG Standard Life Passive Plus V Pension Fund 0.30% 0.012%FFKG Standard Life Passive Plus V Pension Fund 0.31% 0.012%FFKG Standard Life Passive Plus V Pension Fund 0.35% 0.012%FFKG Standard Life Passive Plus V Pension Fund 0.37% 0.012%FFKG Standard Life Passive Plus V Pension Fund 0.43% 0.012%FFKG Standard Life Passive Plus V Pension Fund 0.46% 0.012%FFKG Standard Life Passive Plus V Pension Fund 0.48% 0.012%FFKG Standard Life Passive Plus V Pension Fund 0.49% 0.012%FFKG Standard Life Passive Plus V Pension Fund 0.58% 0.012%FFKG Standard Life Passive Plus V Pension Fund 0.61% 0.012%FFND Standard Life Active Plus IV Pension Fund 0.60% 0.101%FFND Standard Life Active Plus IV Pension Fund 0.63% 0.101%FFND Standard Life Active Plus IV Pension Fund 0.64% 0.101%FFND Standard Life Active Plus IV Pension Fund 0.73% 0.101%FFND Standard Life Active Plus IV Pension Fund 0.76% 0.101%FFND Standard Life Active Plus IV Pension Fund 0.52% 0.101%FFND Standard Life Active Plus IV Pension Fund 0.48% 0.101%FFND Standard Life Active Plus IV Pension Fund 0.50% 0.101%G4 Standard Life Deposit and Treasury Pension Fund 0.28% 0.100%GGAB Standard Life Passive Inflation Lkd Glt (*) Pn 0.13% 0.258%GGAE MyPension Transfer-Option Global Equity Fund 0.13% 0.130%GGBF Stan Life Pre Ret (Passive Plus Active Retirement) 0.67% 0.247%GGBF Stan Life Pre Ret (Passive Plus Active Retirement) 0.85% 0.247%GGBF Stan Life Pre Ret (Passive Plus Active Retirement) 0.80% 0.247%





GGGA SL VANGUARD UK INFLAT LINKED GILT IDX PN 0.29% 0.258%GGKE SL * Money Market Pension Fund + 0.08% 0.100%GGLF SL * Passive Overseas Equity Pension Fund 0.25% 0.025%GGLF SL * Passive Overseas Equity Pension Fund + 0.18% 0.025%HKHE MyPension Mixed 0.80% 0.454%HKIE MyPension Ethical 0.21% -0.077%HT Standard Life Global Equity 50:50 Pension Fund 0.43% 0.199%JJFC SL * Property Pension Fund + 0.58% 0.303%JJFC SL * Property Pension Fund 0.22% 0.303%JJGB Standard Life Annuity Purchase (MT) Pension Fund 0.29% 0.087%JJGB Standard Life Annuity Purchase (MT) Pension Fund 0.35% 0.087%JJGB Standard Life Annuity Purchase (MT) Pension Fund 0.43% 0.087%JJGB Standard Life Annuity Purchase (MT) Pension Fund 0.33% 0.087%JJGB Standard Life Annuity Purchase (MT) Pension Fund 0.47% 0.087%JJGB Standard Life Annuity Purchase (MT) Pension Fund 0.41% 0.087%JJGB Standard Life Annuity Purchase (MT) Pension Fund 0.46% 0.087%JJGB Standard Life Annuity Purchase (MT) Pension Fund 0.17% 0.087%JJGB Standard Life Annuity Purchase (MT) Pension Fund 0.56% 0.087%JJGB Standard Life Annuity Purchase (MT) Pension Fund 0.59% 0.087%JJHA Standard Life At Ret (Passive Plus Universal) Pn 0.44% -0.004%JJHA Standard Life At Ret (Passive Plus Universal) Pn 0.46% -0.004%JJHA Standard Life At Ret (Passive Plus Universal) Pn 0.56% -0.004%JJHA Standard Life At Ret (Passive Plus Universal) Pn 0.73% -0.004%JJIC MyPension Commercial Property 0.23% 0.783%JJJA Standard Life Passive Plus IV Pension Fund 0.30% 0.032%JJJA Standard Life Passive Plus IV Pension Fund 0.31% 0.032%JJJA Standard Life Passive Plus IV Pension Fund 0.43% 0.032%JJJA Standard Life Passive Plus IV Pension Fund 0.35% 0.032%JJJA Standard Life Passive Plus IV Pension Fund 0.46% 0.032%JJJA Standard Life Passive Plus IV Pension Fund 0.49% 0.032%JJJA Standard Life Passive Plus IV Pension Fund 0.48% 0.032%JJJA Standard Life Passive Plus IV Pension Fund 0.58% 0.032%JJJP Standard Life Pre Ret (Passive Plus Annuity) Pn 0.42% -0.008%JJKB MyPension Bond (50:50 Gilts/Corporate Bond) Fund 0.34% 0.042%JJKM Standard Life Passive Plus II Pension Fund 0.47% -0.007%JJKM Standard Life Passive Plus II Pension Fund 0.48% -0.007%JJKM Standard Life Passive Plus II Pension Fund 0.57% -0.007%JJKM Standard Life Passive Plus II Pension Fund 0.74% -0.007%JJKM Standard Life Passive Plus II Pension Fund 0.29% -0.007%JJKM Standard Life Passive Plus II Pension Fund 0.34% -0.007%JJKM Standard Life Passive Plus II Pension Fund 0.36% -0.007%JJKM Standard Life Passive Plus II Pension Fund 0.42% -0.007%JJKM Standard Life Passive Plus II Pension Fund 0.45% -0.007%JMNP Standard Life Passive 80% Equity/20% Bond (*) 0.18% 0.090%KA SL ASI Life Multi-Asset Pension Fund + 0.60% 0.192%





KC SL Baillie Gifford Managed Pension Fund + 0.46% -0.044%KKFF Standard Life Pre Ret (Passive Plus Universal) 0.29% 0.011%KKFF Standard Life Pre Ret (Passive Plus Universal) 0.45% 0.011%KKFF Standard Life Pre Ret (Passive Plus Universal) 0.47% 0.011%KKFF Standard Life Pre Ret (Passive Plus Universal) 0.57% 0.011%KKFF Standard Life Pre Ret (Passive Plus Universal) 0.74% 0.011%KKFK SL VANGUARD FTSE DEV WLD EX UK EQ IDX PN 0.29% 0.025%KKGD Standard Life Passive Plus I Pension Fund 0.32% 0.002%KKGD Standard Life Passive Plus I Pension Fund 0.40% 0.002%KKGD Standard Life Passive Plus I Pension Fund 0.55% 0.002%KKGE Standard Life Active UK Equity (MT) Pension Fund 0.28% 0.082%KKGE Standard Life Active UK Equity (MT) Pension Fund 0.33% 0.082%KKGE Standard Life Active UK Equity (MT) Pension Fund 0.35% 0.082%KKGE Standard Life Active UK Equity (MT) Pension Fund 0.46% 0.082%KKGE Standard Life Active UK Equity (MT) Pension Fund 0.47% 0.082%KKGE Standard Life Active UK Equity (MT) Pension Fund 0.44% 0.082%KKGE Standard Life Active UK Equity (MT) Pension Fund 0.56% 0.082%KKGE Standard Life Active UK Equity (MT) Pension Fund 0.59% 0.082%KKGE Standard Life Active UK Equity (MT) Pension Fund 0.73% 0.082%KKHF Standard Life 70:30 Gbl Equity Trk (Vanguard) Pn 0.28% 0.078%KMBB MyPension Shariah-Compliant 0.50% 0.053%KNAB Standard Life Pre Ret (Active Plus Lump Sum) Pn 0.44% 0.166%KNAB Standard Life Pre Ret (Active Plus Lump Sum) Pn 0.59% 0.166%KQ SL Fidelity Asia Pension Fund 1.65% 0.082%LLAK Standard Life Active Global Equity 70:30 (*) 0.40% 0.210%LLJB SL * Index Linked Gilt Pension Fund + 0.08% 0.258%LLJB SL * Index Linked Gilt Pension Fund 0.18% 0.258%LLLP SL * Active Global Equity Pension Fund + 0.57% 0.082%LLLP SL * Active Global Equity Pension Fund 0.61% 0.082%LLMP SL * Absolute Return Pension Fund 0.70% 0.165%LLNA Standard Life Active Plus I Pension Fund 0.44% 0.163%LLNA Standard Life Active Plus I Pension Fund 0.45% 0.163%LLNA Standard Life Active Plus I Pension Fund 0.55% 0.163%LLNA Standard Life Active Plus I Pension Fund 0.58% 0.163%LLNA Standard Life Active Plus I Pension Fund 0.59% 0.163%LLPA Standard Life Active Plus II Pension Fund 0.44% 0.206%LLPA Standard Life Active Plus II Pension Fund 0.45% 0.206%LLPA Standard Life Active Plus II Pension Fund 0.55% 0.206%LLPA Standard Life Active Plus II Pension Fund 0.58% 0.206%LLPA Standard Life Active Plus II Pension Fund 0.59% 0.206%LLPA Standard Life Active Plus II Pension Fund 0.71% 0.206%LNGK Standard Life Passive Global Equity 50:50 (MT) Pn 0.46% 0.068%LNGK Standard Life Passive Global Equity 50:50 (MT) Pn 0.47% 0.068%LNGK Standard Life Passive Global Equity 50:50 (MT) Pn 0.56% 0.068%LNGK Standard Life Passive Global Equity 50:50 (MT) Pn 0.59% 0.068%





LNGK Standard Life Passive Global Equity 50:50 (MT) Pn 0.28% 0.068%LNGK Standard Life Passive Global Equity 50:50 (MT) Pn 0.29% 0.068%LNGK Standard Life Passive Global Equity 50:50 (MT) Pn 0.33% 0.068%LNGK Standard Life Passive Global Equity 50:50 (MT) Pn 0.35% 0.068%LNGK Standard Life Passive Global Equity 50:50 (MT) Pn 0.41% 0.068%LNGK Standard Life Passive Global Equity 50:50 (MT) Pn 0.43% 0.068%LNGK Standard Life Passive Global Equity 50:50 (MT) Pn 0.44% 0.068%LPNI Stan Life Pre Ret (Active Plus Active Retirement) 0.71% 0.326%LPNI Stan Life Pre Ret (Active Plus Active Retirement) 0.82% 0.326%LPNI Stan Life Pre Ret (Active Plus Active Retirement) 0.86% 0.326%MADB Standard Life At Ret (Passive Plus Lump Sum) Pn 0.40% 0.038%MADB Standard Life At Ret (Passive Plus Lump Sum) Pn 0.45% 0.038%MADB Standard Life At Ret (Passive Plus Lump Sum) Pn 0.55% 0.038%MAKN MyPension Global Equity Fund 0.13% 0.151%MAMI Standard Life Pre Ret (Active Plus Annuity) Pn 0.45% 0.375%MMHG SL * Passive Global Equity (GBP Hdgd) Pn Fd + 0.19% -0.048%MMNB Standard Life Passive Emerging Markets Equity (MT) 0.49% -0.023%MMNB Standard Life Passive Emerging Markets Equity (MT) 0.54% -0.023%MMNB Standard Life Passive Emerging Markets Equity (MT) 0.56% -0.023%MMNB Standard Life Passive Emerging Markets Equity (MT) 0.62% -0.023%MMNB Standard Life Passive Emerging Markets Equity (MT) 0.64% -0.023%MMNB Standard Life Passive Emerging Markets Equity (MT) 0.65% -0.023%MMNB Standard Life Passive Emerging Markets Equity (MT) 0.67% -0.023%MMNB Standard Life Passive Emerging Markets Equity (MT) 0.68% -0.023%MMNB Standard Life Passive Emerging Markets Equity (MT) 0.77% -0.023%MMNB Standard Life Passive Emerging Markets Equity (MT) 0.80% -0.023%MPEC MyPension Transfer-Option Lifestyle Acc Fund 0.49% 0.292%NADC SL * Long Dated Gilt Pension Fund 0.18% 0.080%NBEF MyPension Global Company Bonds 0.63% 0.005%NBMM MyPension Transfer-Option UK Equity 0.12% 0.025%NBNI Standard Life Passive Overseas Equity (MT) Pension 0.28% 0.199%NBNI Standard Life Passive Overseas Equity (MT) Pension 0.29% 0.199%NBNI Standard Life Passive Overseas Equity (MT) Pension 0.33% 0.199%NBNI Standard Life Passive Overseas Equity (MT) Pension 0.22% 0.199%NBNI Standard Life Passive Overseas Equity (MT) Pension 0.35% 0.199%NBNI Standard Life Passive Overseas Equity (MT) Pension 0.41% 0.199%NBNI Standard Life Passive Overseas Equity (MT) Pension 0.43% 0.199%NBNI Standard Life Passive Overseas Equity (MT) Pension 0.46% 0.199%NBNI Standard Life Passive Overseas Equity (MT) Pension 0.47% 0.199%NBNI Standard Life Passive Overseas Equity (MT) Pension 0.56% 0.199%NBNI Standard Life Passive Overseas Equity (MT) Pension 0.59% 0.199%NBNI Standard Life Passive Overseas Equity (MT) Pension 0.73% 0.199%NNAB Standard Life Ethical (MT) Pension Fund 0.28% -0.057%NNAB Standard Life Ethical (MT) Pension Fund 0.29% -0.057%NNAB Standard Life Ethical (MT) Pension Fund 0.33% -0.057%





NNAB Standard Life Ethical (MT) Pension Fund 0.35% -0.057%NNAB Standard Life Ethical (MT) Pension Fund 0.41% -0.057%NNAB Standard Life Ethical (MT) Pension Fund 0.43% -0.057%NNAB Standard Life Ethical (MT) Pension Fund 0.44% -0.057%NNAB Standard Life Ethical (MT) Pension Fund 0.46% -0.057%NNAB Standard Life Ethical (MT) Pension Fund 0.47% -0.057%NNAB Standard Life Ethical (MT) Pension Fund 0.56% -0.057%NNJH Standard Life Deposit & Treasury (MT) Pension Fund 0.28% 0.100%NNJH Standard Life Deposit & Treasury (MT) Pension Fund 0.33% 0.100%NNJH Standard Life Deposit & Treasury (MT) Pension Fund 0.35% 0.100%NNJH Standard Life Deposit & Treasury (MT) Pension Fund 0.16% 0.100%NNJH Standard Life Deposit & Treasury (MT) Pension Fund 0.41% 0.100%NNJH Standard Life Deposit & Treasury (MT) Pension Fund 0.43% 0.100%NNJH Standard Life Deposit & Treasury (MT) Pension Fund 0.47% 0.100%NNJH Standard Life Deposit & Treasury (MT) Pension Fund 0.50% 0.100%NNJH Standard Life Deposit & Treasury (MT) Pension Fund 0.56% 0.100%NNJH Standard Life Deposit & Treasury (MT) Pension Fund 0.59% 0.100%NNMF SL * Passive 50/50 Gilt Pension Fund + 0.13% 0.169%NNNB Standard Life Consensus 85 (*) Pension Fund 0.39% 0.056%NNPB Standard Life Active Corporate Bond (MT) Pension 0.56% -0.138%NNPB Standard Life Active Corporate Bond (MT) Pension 0.59% -0.138%NNPB Standard Life Active Corporate Bond (MT) Pension 0.33% -0.138%NNPB Standard Life Active Corporate Bond (MT) Pension 0.35% -0.138%NNPB Standard Life Active Corporate Bond (MT) Pension 0.44% -0.138%NNPB Standard Life Active Corporate Bond (MT) Pension 0.29% -0.138%NNPB Standard Life Active Corporate Bond (MT) Pension 0.41% -0.138%NNPB Standard Life Active Corporate Bond (MT) Pension 0.47% -0.138%NNPB Standard Life Active Corporate Bond (MT) Pension 0.46% -0.138%NNPB Standard Life Active Corporate Bond (MT) Pension 0.28% -0.138%PBNM MyPension Higher Risk Lifestyle Accumulation Fund 0.13% 0.202%

Notes:1. (^) The Net Annual Management Charge is the Annual Management Charge plus any additional expenses less any scheme

discount. 2. Members using the funds marked with a + pay an additional charge of £33 a year. This charge is deducted from the members plan

via the cancellation of units on a monthly basis. This applies in addition to the costs and charges set out above. 3. The fund names marked with an * are redacted as they are for the sole use of employees of specific participating employers in the

scheme and it is not appropriate to disclose their name in a publically available document. If you are an employee of one of these employers the full fund names are available to you via your employers dedicated pension scheme micro site and relevant pension scheme documentation.

4. A brief explanation of the transaction costs data.In addition to explicit or direct charges, funds to which your contributions are paid also incur implicit transaction costs. These are costs which fund managers incur when buying, selling, borrowing or lending the assets that make up the investment funds. They may also include the cost of research on different investment opportunities. These costs are reflected in the net investment returns of the funds. The transaction costs data shown above has been calculated using a methodology set by the Financial Conduct Authority (FCA). Because this methodology takes into account market movements during the dealing process, the results often appear as negative numbers (for example, -0.457%).


Appendix 9The Board Member recruitment processAs a regulated financial services institution, and in line with legislative, regulatory and good corporate governance requirements, Standard Life operates an open and transparent recruitment process for its Board Members. In keeping with that approach, the new Master Trust regime also actively requires an ‘open and transparent’ recruitment process in order for any new directors to count as ‘non-affiliated’. ‘Non-affiliated’ is a status which is crucial to maintaining the SLMTC Board’s independence. This also aligns with the SLAL policies regarding directors’ recruitment, remuneration, conflicts of interest, succession and resignation.

Trigger for new director appointmentsDuring 2019, it became apparent that in order to ensure the non-affiliated status of the SLMTC’s directors, and to comply with the succession policy, the composition of the existing SLMTC board should be reviewed. Standard Life chose to review the four director appointments (Francois Barker, Stella Girvin, Rene Poisson Management and Ruston Smith), in addition to the Chair’s role. It was decided to replace three of the four directors and to reappoint Poisson Management Limited in order to provide some continuity for the Board.

How did Standard Life carry out this appointment process?Standard Life applied the relevant regulatory requirements for appointing non-affiliated directors as set out in Regulations 27 and 28 of the Regulations. Summarised below are the requirements for an open and transparent process and the actions Standard Life took in relation to those requirements.

Requirement ActionTo advertise the vacancies in at least one appropriate national publication

Advertisements were placed in two national newspapers.

To engage the services of a recruitment agency An independent recruitment agency, FWB Park Brown was engaged to run the recruitment process.

To meet the statutory requirements for member-nominated directors of corporate trustees

The two Standard Life Master Trusts are exempt from this as they meet the criteria of a relevant centralised scheme in the regulations.

To take into account whether a candidate is in any way involved with a service provider used by the schemes, or has been involved with a service provider in the past five years

This was assessed in the case of PTL Limited and Poisson Management Limited which had both been appointed in 2015 as Chair and directors of SLMTC respectively.

To take into account whether a candidate receives any payment or benefit from a service provider

This was assessed in light of the roles undertaken by PTL and Poisson Management Limited.

To take into account whether a candidate’s obligations to a service provider would conflict with their prospective trustee duties

This was assessed in light of the roles undertaken by PTL and Poisson Management Limited.

To assess whether a candidate would meet the term limit criteria

This was assessed in light of the roles undertaken by PTL Limited and Poisson Management Limited.

Crucially, the Regulations specify that an open and transparent process ‘is not limited to’ the above. Therefore, Standard Life looked deeper when assessing its compliance with the Regulations and good governance considerations. Indeed, when facing appointment decisions for three new directors, for the Chair role and in relation to Poisson Management Limited’s role, Standard Life engaged in three separate appointment processes. The processes followed, which are set out in detail below, reflected the unique considerations for each of the appointments.


1. Appointments of Andrew Davies, Caroline Escott and Catherine McKenna

In addition to the requirements in the Regulations, detailed appointment considerations contained in the Standard Life Master Trust Recruitment policy were followed for these appointments. A summary of the process followed is set out below:

1. The recruitment policy for SLMTC allows for an orderly recruitment and replacement of directors, and under the policy and in terms of the SLMTC Articles of Association and the relevant Trust Deeds the overall power of appointment (and removal) of SLMTC directors lies with the Standard Life Board. The policy states that under the direction of the Standard Life Board, the Standard Life company secretary should appoint a suitable individual (the “Lead Person”) to liaise with the Standard Life secretary, Chair of SLMTC and other advisers, departments etc. with regard to the recruitment process, including input into the selection of an appropriate interview panel.

2. Jenny Holt, one of the Scheme Strategists and Standard Life’s Proposition Director, was approved by the Standard Life Board as the Lead Person.

3. A review of the skillsets required by the SLMTC Board was undertaken. The review took into account both potential gaps created by the outgoing directors and Chair, and emerging requirements as a result of regulatory change, the current and expected operating environment and planned proposition developments. Two examples were the increasing focus on ESG matters and the proposed addition of in-scheme drawdown to the Master Trust proposition. This analysis was used to create a detailed brief to support the recruitment process.

4. A specialist recruitment agency, FWB Park Brown, used the brief to identify a long list of potential candidates. This list was reviewed by the Lead Person and Chair of the SLMTC Board to create a short list.

5. The short listed candidates were then approached by FWB Park Brown resulting in seven high-quality candidates being taking forward to interview by the Lead Person and Chair.

6. On completion of the interviews, the Lead Person and Chair first independently scored candidates and then conferred to reach a consistent view on the three strongest candidates.

7. A diversity and skills overlay based on the initially agreed brief was then applied and it was agreed that collectively, the three strongest candidates provided the diversity and broad skills required.

8. The three candidates were verbally offered the roles, which were then, subject to both approval by the Standard Life Nomination Committee and successful completion of enhanced disclosure and criminal record checks and the robust checks required by The Pension Regulator’s Fit & Proper regime.

2. Appointment of PTL as Chair In addition to the requirements in the Regulations, a full request for tender process was carried out to eventually re-appoint PTL to the Chair position on the Board. Standard Life assessed the market for specialist companies offering services for Chairs. It also applied a formal set of criteria to evaluate proposals which were agreed upon by the key business stakeholders. Criteria against which the tenders were evaluated involved considerations such as how much experience the tenderer had from projects and clients of a similar nature, the experience and ability of the proposed team and feedback from referees.

Four companies were asked to tender for the positions. The tenders received were then assessed by key stakeholders within Standard Life and a decision was taken to re-appoint PTL to the Chair position.

3. Appointment of Rene Poisson as a DirectorStandard Life, having: (a) reviewed all four non-Chair directors, (b) identified new candidates and (c) satisfied itself that Poisson Management Limited, represented by Rene Poisson, was able to be re-appointed for a further period of 5 years under the Regulations. This would enable some continuity on the Board with the three new director appointments (in addition to a possible Chair change). Standard Life ensured it was still satisfied of Rene Poisson’s skill sets and competency to complement the new Board composition.

During Q2 of 2019, in light of the new IR35 requirements, Poisson Management Limited resigned its appointment as a director and Rene Poisson, its sole director, became a new director of SLMTC from 30 September 2019.

4. Notification to The Pensions RegulatorAs all of these appointments and resignations were considered to be Significant Events under the Master Trust regime, these were all notified to the Pensions Regulator within the requisite timescales.

Standard Life Assurance Limited and Standard Life Master Trust Co. Limited are owned by the Phoenix Group and use the Standard Life brand under licence from the Standard Life Aberdeen Group. You can find more information about Standard Life Aberdeen plc’s strategic partnership with Phoenix at www.standardlife.com/partnershipStandard Life Assurance Limited is the provider of the Standard Life DC Master Trust.Standard Life Assurance Limited is registered in Scotland (SC286833) at Standard Life House, 30 Lothian Road, Edinburgh, EH1 2DH. Standard Life Assurance Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. www.standardlife.co.ukStandard Life Master Trust Co. Limited is trustee and scheme administrator of the DC Master Trust. Standard Life Master Trust Co. Limited is registered in England (09497864) at 1 Wythall Green Way, Wythall, Birmingham, B47 6WG.

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