The Board of 91热爆 Pension Trust Ltd (the Board) has established an Investment Committee with delegated authority to implement and keep under review the Board's strategic asset allocation and investment management arrangements. It is the intention that the Committee will have reasonable freedom of action to implement investment strategies that are consistent with delivering the funding objective agreed by the Board, subject to explicit risk parameters.
Responsibilities
The principal responsibilities of the Committee are:
Investment Principles, Policy and Strategy
- research investment policy options consistent with the Scheme's funding objective and risk tolerance, and make recommendations to the Board in respect of the Journey Plan, Strategic Asset Allocation, Statement of Investment Principles (SIP), Investment Beliefs, Financial Management Plan and Responsible Investment Policy, updating the relevant documentation as necessary; and
- recommend to the Board proposals consistent with the Scheme's funding objective on the initial investment assumptions underpinning any asset liability modelling (ALM) study.
Investment Approach
- research investment strategies expected to be the most likely to achieve the Board's investment policy objective;
- select and implement those investment strategies which fall within the Board's agreed investment policy. For those outside the agreed investment policy make recommendations to the Board;
- determine and review rebalancing policy across asset classes;
- manage and monitor performance of the Fund;
- ensure that investment risks, including ESG and climate risks, are identified and adequately controlled to best practice levels;
- monitor the Scheme's longevity hedge, ensuring sufficient collateral is available, and review developments in the longevity market, with a view to making recommendations to the Board as to whether further action is warranted; and
- ensure that operational risks are identified and adequately controlled in partnership with the Finance and General Purposes Committee.
Investment Managers
- appoint and remove investment managers;
- set benchmarks, performance targets and risk tolerances;
- determine management fees;
- monitor performance against agreed parameters and take appropriate action within a reasonable timeframe;
- determine and review manager rebalancing policy within asset classes; and
- monitor AVC fund performance and review investment options, taking advice from the AVC investment consultant.(1)
Professional Advisers
- recommend to the Board the appointment and removal of the strategic investment consultant;
- set objectives for the strategic investment consultant and other specialist investment advisers, and conduct an annual review of performance against these objectives;
- at least once every five years conduct an in depth review of the strategic investment consultant and recommend to the Board whether they are retained or changed;
- appoint and remove other specialist investment advisers;
- approve terms of appointment and fees; and
- appoint and remove property lawyers, the property valuers and engagement manager, conducting at least once every five years an in-depth review of their suitability.
Scheme Documentation
- oversee the documentation of its decisions;
- ensure policies and procedures are adequately documented and are fit for purpose; and
- approve the draft Investment Report for inclusion in the Scheme's Annual Report & Accounts and the Summary Report to members.
Expenditure
- monitor all investment-related expenditure against the agreed budget and hold Scheme officers to account for any significant variances; and
- authorise expenditure to support the role and responsibilities of the Committee, for work not captured by the planned budget, of up to £500k per project. This limit does not apply to Scheme investments, investment management fees and transaction costs.In-house Investment Services
In-house Investment Services
- monitor the delivery of investment services provided by the 91热爆 and assess its performance against the standards agreed in the investment section of the Services Schedule;
- review the resources provided by the 91热爆 to ensure there is the right set of skills and sufficient in-house capacity to oversee the management of the Scheme's assets and recommend to the Board any changes considered necessary; and
- agree and monitor the services provided by 91热爆 Pension Investment Ltd, the in-house regulated investment manager.
Compliance
- work with the Scheme's lawyers to monitor the Scheme's compliance with the investment provisions of the Trust Deed and Rules, pensions investment legislation and regulation and the SIP, and initiate any remedial action considered necessary.
Performance
- review annually the Committee's performance and its terms of reference, report the outcome to the Board and seek approval for any changes considered necessary.
Business Plan
- maintain an annual business plan.
Composition
- The Committee consists of five members. Three are Trustees of the Board, appointed to the Committee by the Board. One is a 91热爆 Trustee, one is a Member Trustee or Pensioner Trustee and the third is an Independent Trustee. The remaining two are independent members selected for their expert knowledge and experience, and appointed by the Board.
- The Board nominates one Trustee member of the Committee to be the Chair of the Committee. If the Chair of the Committee is absent from a meeting, and unless a Committee member has been nominated in advance for this purpose, members of the Committee present choose a Chair from amongst themselves for that meeting.
- A member of the Committee is required to be the non-executive Chair of 91热爆 Pension Investment Ltd, the in-house regulated investment manager. The Chair of the Committee is excluded from this requirement. The non-executive Chair of 91热爆 Pension Investment Ltd is a FCA authorised position.
- The Secretary of the Board is the secretary of the Committee unless the Chair of the Committee determines otherwise.
Authorities and Restrictions
In pursuit of its responsibilities, the Committee is authorised to exercise any and all of the Board's investment powers with the following exceptions:
- appointment and removal of the strategic investment consultant;
- decisions that would be expected to move the assets outside of the Board's strategic asset allocation and risk tolerance;
- decisions inconsistent with the Board's Investment policy, SIP and Investment Beliefs;
- borrow money other than for efficient portfolio management;
- investment decisions that carry a material reputational risk to the Scheme or to the 91热爆; and
- authorise investment managers to undertake employer-related investments without the prior approval of the Board.
- The Committee is expected to take advice as required and is authorised to commit the Scheme to expenditure with professional advisers as is justified by the execution of its responsibilities.
Meetings
Frequency: The Committee meets at least quarterly and at such other times as the Chair decides is necessary. Wherever possible, at least seven days' notice will be given of any non-scheduled meeting.
Format: Meetings can be conducted in person, over the telephone, by e-mail or via a video link, as decided by the Chair.
Quorum: A minimum of three Committee members is required to be present. Members unable to attend in person can join a meeting by telephone or video link and be counted as present.
Attendance: The Chair of the Board has a standing invitation to attend any meeting of the Investment Committee as an observer. By prior agreement of the Chair, through the Scheme Secretary, all other Trustees of the Board can attend any meeting of the Investment Committee. To facilitate this the Investment Committee agenda will be circulated in advance to all Trustees.
Decisions: The Committee can only reach decisions by the unanimous vote of those present and eligible to vote. Failing this the issue must be referred to the Board.
Papers: Papers are distributed to Committee members at least one week in advance of any meeting (unless a shorter period is agreed by the Chair) and made available to all Trustees on request, unless the Chair determines this would be inappropriate, e.g. where a conflict of interest arises.
Minutes: Draft minutes are forwarded to the Chair for agreement within ten working days, thereafter circulated to Committee members and made available to all Trustees on request. Minutes are put to the Committee (where practicable, at the next meeting) for approval. Approved minutes are signed by the Chair of the Committee and kept as a permanent record.
Accelerated Decisions
An issue that, for reasons of urgency, cannot be considered at a meeting of the Committee can be decided by the Chair and two other members of the Committee. When a decision is made in this way a report will be submitted to the next meeting of the Committee explaining the circumstances and the decision.
REPORTING
The Chair presents to the next available Board following each investment committee a report, one of which is an annual report. These reports cover but are not restricted to:
- the financial environment in the period
- disposition and value of the Scheme's assets
- estimate of Scheme's current funding position and progress against the journey plan;
- high level investment performance and manager changes;
- compliance failures;
- notifiable events;
- issues reviewed and discussed by the Committee;
- rolling reviews and annual events;
as part of the annual report:
- assessment of the Committee's performance and any recommended changes to the terms of reference;
- the range and standard of in-house investment services required and any changes needed; and
- the Committee's priorities for the next twelve months.
Additional Investment Meetings and Board Training
The Committee schedules additional investment meetings where no decisions are taken. Their purpose is to give the Committee the opportunity to develop its thoughts on issues such as strategy, resourcing and new investment ideas, and to conduct 'deep-dives' on specific topics. These additional meetings may take the form of an awayday or shorter meetings.
The Committee also schedules Board training sessions to offer all Trustees engagement with and understanding of the Scheme's investment policy and strategies.
(1) The Finance and General Purposes Committee is responsible for monitoring the overall appropriateness and suitability of AVC arrangements and approving any changes to them. The results of the Investment Committee’s monitoring and review of investment options are provided to the Finance and General Purposes Committee to support their work.