Chubb Security Pens Fund Annual Report & Accounts 31.03.2020

Chubb Security Pens Fund Annual Report & Accounts 31.03.2020

Chubb Security Pension Fund

Annual Report for the year ended

31 March 2020

Registered Number: 10094555

Chubb Security Pension Fund

Annual Report and Financial Statements for the year ended 31 March 2020

Contents

Page

Trustee and professional advisers

1

Trustee’s report

3

Statement regarding DC governance

12

Implementation Statement

22

Actuarial certificate

23

Independent auditors’ report

24

Fund account

26

Statement of net assets available for benefits

27

Notes to the financial statements

28

Independent auditors’ statement about contributions

37

Summary of contributions

38

Member information

39

Appendix I – annual report and financial statements for the Chubb Common Investment Fund

41

Appendix II – Statement of Investment Principles

Chubb Security Pension Fund

Trustee and professional advisers for the year ended 31 March 2020

Principal employer

Chubb International Holdings Limited 1 st Floor Ash House Littleton Road Ashford

Middlesex TW15 1TZ

Trustee

Chubb Security (Pensions) Limited Pentagon House Sir Frank Whittle Road Derby DE21 4XA

The Directors of the Trustee Company who served during the year were: B D McGowan - Chairman H Dulay* J Fazzino (Resigned 31 March 2020) I Fixter* W Jones M Konchan (Appointed 31 March 2020. Resigned 11 May 2020)

K Levine (Resigned 31 March 2020) B Nutter (Appointed 31 March 2020) A Rishman* B van der Merwe (Appointed 11 May 2020)

*Member Nominated Director and member of the Chubb Security Pension Fund.

All Member Nominated Directors are members of the Fund.

Secretary

Mrs J Beake

Actuary

N J H Salter, Barnett Waddingham LLP (Resigned 28 November 2019) P Houghton, Barnett Waddingham LLP (Appointed 28 November 2019)

Investment managers and advisers

Investment managers and advisers are appointed by the Chubb Common Investment Fund. (See annual report and financial statements in Appendix I –for details.)

1

Chubb Security Pension Fund

Trustee and professional advisers (continued) for the year ended 31 March 2020

Global investment custodian

Bank of New York Mellon appointed by the Chubb Common Investment Fund.

AVC providers

Scottish Equitable plc Utmost Life and Pensions (Formerly The Equitable Life Assurance Society)

Independent auditors

PricewaterhouseCoopers LLP 1 Hardman Square Manchester M3 3EB

Legal advisers

CMS Cameron McKenna Nabarro Olswang LLP Cannon Place 78 Cannon Street London EC4N 6AF

Bankers

Lloyds Bank plc Bailey Drive Gillingham Business Park Kent ME8 0LS

Fund administrators

Buck Consultants (Administration and Investment) Limited Pentagon House Sir Frank Whittle Road Derby DE21 4XA

Tel: 0330 123 9563

[email protected]

Any enquiries concerning the Fund should be made to the above Fund administrators’ address.

2

Chubb Security Pension Fund

Trustee’s report for the year ended 31 March 2020

Introduction

The Trustee is pleased to present its report on the Chubb Security Pension Fund ("the Fund") for the year ended 31 March 2020. The Fund was established under English law by a Trust Deed and Rules dated 1 May 1980 and is currently governed by a replacement definitive Deed and New Rules (as subsequently amended) which was adopted on 19 May 2000. The Fund is registered in the United Kingdom. The registered office is at Pentagon House, Sir Frank Whittle Road, Derby DE21 4XA. In accordance with HMRC requirements the Fund is registered under Chapter 2, Part 4 of the Finance Act 2004. As a consequence both employee and employer contributions are normally eligible for tax relief and income and capital gains earned by the Fund receive preferential tax treatment.

Closure of the Fund to the accrual of future benefits

Following consultation with active members and in accordance with legislation and after a period of reflection, the Principal employer decided to proceed with its proposals to close the Fund to the future accrual of benefits. The closure became effective on 31 March 2020. Affected members were issued with notices confirming this decision.

Trustee

Details of the Trustee company and the directors thereof are shown on page 1.

The Trustee is responsible for setting the strategy and for managing the Fund and the directors meet four times a year for this purpose. All occupational pension schemes must implement arrangements that provide for at least one-third of the trustee directors to be member-nominated. The arrangements for the nomination and selection must be proportionate, fair and transparent. Four directors of the Trustee company are appointed and removed by the Principal Employer and three directors are member nominated and are deferred or pensioner members of the Fund.

Trustee fees are shown in note 7 to the financial statements

The Trustee periodically reviews registers of risks and conflicts to ensure that appropriate internal controls are in place and remain effective and has appointed professional advisers to support it in delivering the Fund objectives. These professionals are detailed on page 2. During the year, N J H Salter resigned his position as Fund Actuary due to his impending retirement from Messrs Barnett Waddingham. In his statement on leaving office, he noted no circumstances connected with his resignation which, in his opinion, significantly affected the interests of the members or the prospective members of, or beneficiaries under, the Fund. P Houghton, also of Barnett Waddingham, was appointed as Fund Actuary in his place.

Financial development of the Fund

The financial statements have been prepared and audited in compliance with regulations made under sections 41 (1) and (6) of Pensions Act 1995.

3

Chubb Security Pension Fund

Trustee’s report (continued) for the year ended 31 March 2020

During the year, the fund account decreased by £23.5 million, as follows:

£millions

Net withdrawals from dealing with members

(30.9)

Net returns on investments

7.4

Net decrease in the fund

(23.5)

Membership

Details of the Fund membership at the end of the Fund year were as follows:

2019

2020

Number

Number

Active members

151

-

Deferred members

2,277

2,194

Pensioners

4,475

4,255

6,903

6,449

Due to the closure of the Fund to future accrual of benefits on 31 March 2020, all Active members were reclassified as Deferred members from that date.

Pensioners include 1,096 (2019: 1,112) individuals receiving a pension following the death of their spouse.

The above membership details include 170 (2019: 175) members for whom the Fund is in receipt of annuity payments.

The Fund was closed to new entrants from 1 November 1997.

Trivial commutation exercise

During 2019 an exercise was carried out to invite eligible pensioner members of the Fund to exchange their pension in payment for a small lump sum (where the value of their pension benefits in the Fund alone was less than £10,000) or trivial commutation payment (where the combined value of their pension benefits across all their pension arrangements, including the Fund, was less than £30,000). As a result of this exercise 140 members accepted the offer and a total of £1.55m was paid from the Fund in November 2019. Payment of the small lump sum and trivial commutation monies extinguished all further liability for the Fund to pay pension benefits to, or in respect of, the 140 individuals.

Transfer values

Cash equivalents paid during the year with respect to transfers have been calculated and verified in the manner prescribed by the Pensions Schemes Act 1993 and do not include any allowance for discretionary benefits.

Pension Increases

Pensions were subject to increases as at 1 April 2019.

4

Chubb Security Pension Fund

Trustee’s report (continued) for the year ended 31 March 2020

For those members who joined the Fund after 1 December 1995, pensions increase by the lower of 5% or the increase in the Retail Prices Index (RPI). This is referred to as Limited Price Indexation (LPI). RPI measured as at September 2018 was 3.3% and the Fund has to provide this level of increase on all pensions earned on or after 6 April 1997. Members who joined prior to 1 December 1995 will continue to receive a minimum increase of 4% per annum (new basis) or 3% per annum (old basis). Such members will only receive increases above these minimum rates where the cumulative LPI increase exceeds their cumulative rate of increases over any two- year consecutive period, as provided by legislation.

Deferred pensions were increased in accordance with statutory requirements.

There were no discretionary pensions increases awarded during the year.

Increases to pensions in payment made in respect of members who joined the Fund before 1 December 1995 over the last ten years have been 4% per annum on total pension in payment except for; - members who retained entitlement to old basis terms received 3% on the excess above the Guaranteed Minimum Pension from 1 April 2005 to 1 April 2015. - members who have mixed benefits receive a combination of the increases applicable to old/new basis members.

Report on actuarial liabilities

As required by Financial Reporting Standard 102, ‘The Financial Reporting Standard applicable in the United Kingdom and Republic of Ireland’ (FRS 102), the financial statements do not include liabilities in respect of promised retirement benefits. Under section 222 of the Pensions Act 2004, every scheme is subject to the Statutory Funding Objective, which is to have sufficient and appropriate assets to cover its technical provisions, which represent the present value of benefits to which members are entitled based on pensionable service to the valuation date. This is assessed at least every three years using assumptions agreed between the Trustee and the employers and set out in the Statement of Funding Principles. The last full actuarial valuation of the Fund was undertaken as at 31 March 2018. Details of the financial and actuarial assumptions used are included in the Actuarial Valuation Report as at 31 March 2018. Copies of the Statement of Funding Principles and/or the Actuarial Valuation Report as at 31 March 2018 are available by writing to the Secretary to the Trustee, Chubb Security Pension Fund, Pentagon House, Sir Frank Whittle Road, Derby, DE21 4XA. A summary of the funding position, in accordance with the Statutory Funding Objective, at the valuation date, was as follows:

Value of assets available to meet technical provisions

£894.1m £857.6m £36.5m

Value of technical provisions

Past service surplus

Funding ratio

104%

Additionally the Fund Actuary provides annual estimated funding updates and the latest estimate at 31 March 2020, was as follows:

Value of assets available to meet technical provisions

£879.0m £943.2m (£64.2m)

Value of technical provisions

Past service (deficit)

Funding ratio

93%

5

Chubb Security Pension Fund

Trustee’s report (continued) for the year ended 31 March 2020

The value of technical provisions is based on Pensionable Service to the valuation date and assumptions about various factors that will influence the Fund in the future. The following significant actuarial assumptions have been used in the calculations; • Discount interest rate: Determined by taking into account market indicators of the returns available at the date of the valuation and the long-term strategic allocation of assets agreed by the Trustee after taking professional advice.

The return on Government bonds will be taken as a suitable market index yield.

As a proportion of the Fund assets are invested in assets such as equities which would be expected to outperform Government bonds over the long term, an allowance will be made for this in the discount rate. The allowance is determined by the Trustee based on information provided by their professional advisers.

The pre and post-retirement discount rate is equal to the yield on long dated gilts plus 0.8%.

• Future Retail Price Inflation (RPI): By looking at the cost of investing in Government bonds with payments linked to inflation compared to the cost of investing in Government bonds not linked to inflation, it is possible to arrive at a figure for the average market view of future price inflation. This will then be compared to the latest Treasury targets for inflation in the UK, when deriving the assumption to use. A deduction may be made for the inflation risk premium implicit within Government bonds.

The RPI rate is 0.17% below Bank of England implied inflation curve.

• Future Consumer Price Inflation (CPI): The CPI inflation assumption will be based on the RPI inflation assumption less a deduction of 0.8% to reflect the expected difference between RPI and CPI inflation over the long-term. • Pension increases: Derived from the term dependent rates for future retail prices and consumer price inflation allowing for the caps and floors on pension increases according to the provisions in the Fund rules. • Pay increases: Salaries will normally be assumed to increase by 1.75% more than the RPI inflation assumption. This assumption may be adjusted following discussion with the Employer as to likely future salary increases. • Mortality: The rates of mortality assumed will reflect the latest reports published by the Continuous Mortality Investigation Bureau most relevant to the membership of the Fund, with allowance for expected future improvements in longevity. This assumption may be adjusted on the advice of the Actuary or in the light of evidence relating to the actual mortality experience of the Fund, the industry in which the members work, or the distribution of pension payment amounts. For the period pre and post retirement, standard tables S2PXA with a scaling factor of 110% were used. If the Fund had no shortfall or surplus and its assets were exactly equal to the technical provisions, contributions would still be required to cover the cost of benefits expected to accrue to members in the future. The Projected Unit Method has been used to calculate this future service contribution rate. The Participating employers are required to pay contributions to the Fund in accordance with the Schedule of Contributions signed on 29 May 2019 which was backdated to 1 April 2018. As shown above the actuarial valuation at 31 March 2018 revealed a funding surplus of £36.5m. The Trustee agreed with the Principal employer that contributions of £7.5m pa plus amounts due under salary sacrifice arrangements would be paid until 31 March 2021.

6

Chubb Security Pension Fund

Trustee’s report (continued) for the year ended 31 March 2020

From 1 April 2021 the Employer will pay all expenses and the Pension Protection Fund levy payable in respect of the Fund. Members’ contributions ceased on the closure of the Fund to the future accrual of benefits on 31 March 2020.

The next full actuarial valuation of the Fund is due as at 31 March 2021.

Equalisation of GMP liabilities

The Fund is required to equalise GMP liabilities which will result in an increase in liabilities to provide benefits and the funding deficit. This is pursuant to a High Court judgement dated 26 October 2018 involving Lloyds Banking Group defined benefit pension schemes and which has implications for many other defined benefit pension schemes. The judgement concluded that pension schemes should be amended to equalise pension benefits for men and women in relation to guaranteed minimum pension benefits. Under the ruling pension schemes are required to backdate benefit adjustments in relation to GMP equalisation and provide interest on the backdated amounts. A detailed estimate of the past service element, which would be applicable for the Fund financial statements, has yet to be estimated and the Trustee considers that it is likely to be immaterial to the financial statements.

Investments - Chubb Common Investment Fund

After receiving appropriate professional advice the Trustees of the Chubb Pension Plan and Chubb Security Pension Fund agreed to participate in the Chubb Common Investment Fund (‘the CCIF’) from 1 July 1998 on the following basis: • the Trustees of the CCIF be representative of the existing Chubb Pension Plan and Chubb Security Pension Fund Trustee structures; • an external custodian be appointed to provide additional security by separating the custody of assets from the investment managers responsible for the day to day investment decisions; • the external custodian be responsible for the accounting and calculation of the value of the CCIF and the Fund’s share of that Fund; and

• the Trustee of the Fund reserves the right to withdraw from the CCIF at any time.

Details of the Trustees, the external custodian and investment managers of the CCIF are provided in the financial statements of the CCIF which are attached as Appendix I to this Annual Report. Participation in the CCIF provides the Trustee of the Fund with the benefits of economies of scale and access to more specialised investment services together with the additional security of an external custodian of the assets of the Fund. Although the Trustees of the CCIF are directly responsible for the monitoring and management of the investment managers and strategy, the Trustee of the Fund reviews the investment performance and strategy on a quarterly basis. The investment managers are remunerated on a fee basis, based on the value of investments under their management. Investment manager fees are reviewed on a periodic basis by the CCIF Trustees. The CCIF operates as a unitised arrangement to which both the Chubb Pension Plan and Chubb Security Pension Fund participate. The unit prices are calculated monthly by the external custodian. During the year two new categories of unit were created within CCIF for the purpose of ring-fencing assets held specifically for each of the two Participating Schemes. All other assets are aggregated and underpin the valuation of units now referred to as comingled asset units.

7

Chubb Security Pension Fund

Trustee’s report (continued) for the year ended 31 March 2020

Investment policy

The Fund investments are made in accordance with the Occupational Pension Schemes (Investment) Regulations 2005. From 1 July 1998, the assets of the Fund have been invested in the CCIF as detailed above and in Appendix I to this Annual Report. The Trustee has produced a Statement of Investment Principles as required by Section 35 of the Pensions Act 1995 and a copy is available on request from the Secretary to the Trustee. The Trustee’s investment objective is to aim to ensure that the assets are sufficient to meet the liabilities over the long term. In so far as the risk is at an acceptable level the Trustee will aim to minimise the long term costs of the Fund by maximising the return on the assets. The investments are diversified between available investment categories and between geographic areas in order to limit the risk to the Fund. During the year the Trustee of the Fund agreed to implement liability driven investment (LDI) in order to de-risk the Fund’s investment portfolio by reducing the sensitivity of the Fund’s liabilities to changes in inflation and interest rates. The Trustee agreed that LDI should be phased in gradually over a 10 month period to smooth the implementation process. Implementation therefore commenced in February 2020 and is expected to complete in November 2020. The Trustee is targeting a hedge ratio of 70% of the ‘self- sufficiency’ liabilities initially with a long term objective of hedging 90%, 70% being midway between the hedge ratio immediately prior to implementation and 90%.

Voting rights and social, environmental and ethical considerations

The Trustee believe that environmental, social and governance (ESG) factors, including management of climate related risks, are potentially financially material and therefore have a policy to take these into account, alongside other factors, in the selection, retention and realisation of investments. However, these factors do not take precedence over other financial and non-financial factors, including but not limited to historical performance or fees. The Trustee may consider both financial and non-financial factors when selecting or reviewing the Fund’s investments.

The Trustee does not apply any specific ethical criteria to their investments.

As the Fund’s investments (except the Insight Bonds) are held in pooled funds, ESG considerations are set by each of the investment managers. The Fund’s investment managers will ultimately act in the best interests of the Fund’s assets to maximise returns for a given level of risk. The Trustee does not currently impose any specific ESG-related restrictions or requirements on the segregated bonds mandate with Insight, so ESG considerations are determined at their discretion. The Trustee is aware of the approach that each of their investment managers take in relation to ESG considerations. The Trustee believes that good stewardship and positive engagement can lead to improved governance and better risk-adjusted investor returns. The Trustee delegates the exercise of rights (including voting rights) attached to the Fund’s investments to the investment managers. The managers are all signatories to the UN Principles of Responsible Investment and all except First Eagle are signatories to the UK Stewardship Code. In selecting, monitoring and reviewing their investment managers, where appropriate, the Trustee will consider investment managers’ policies on engagement and how these policies have been implemented. The Trustee has not considered it appropriate to take into account individual members’ views when establishing the policy on environmental, social and governance factors, engagement and voting rights.

Custody

The global custodian of the CCIF is Bank of New York Mellon.

8

Chubb Security Pension Fund

Trustee’s report (continued) for the year ended 31 March 2020

Valuation

The movements in investments by category are set out in Note 9 of the financial statements. Units within the CCIF are valued using the bid market value of assets held as at 31 March 2020. The Fund holds 157,698 (2019: 246,514) comingled asset units of the CCIF valued at £549.4 million (2019: £899.2 million) and 313,530 (2019: None) Fund specific units valued at £326.7 million (2019: £nil). The overall valuation of units held by the Fund amounting to £876.1 million (2019: £899.2 million) representing 53.63% (2019: 53.43%) of the total assets under management of the CCIF.

Performance

The Trustee compares the return of the Fund with a customised benchmark return that assumes that the Fund’s assets are invested exactly in accordance with the Fund’s targeted long-term asset allocation amongst the various asset classes and that index returns are achieved for each asset class. The returns of the Fund, compared with the returns of the customised benchmark, were as follows:

Chubb Security Pension Fund

Customised benchmark

% per annum

% per annum

1 year to 31 March 2020

0.8

1.9

3 years to 31 March 2020

2.5

3.5

5 years to 31 March 2020

4.0

5.2

Detailed commentary on the investment performance of the CCIF is available within the CCIF financial statements in Appendix I.

Marketability of investments

Commentary on the marketability of the assets held within the CCIF is available within the CCIF financial statements in Appendix I.

Additional Voluntary Contributions

The Trustee is responsible for the investment of AVCs. The Fund’s AVC providers in the year have been Scottish Equitable plc and Utmost Life and Pensions (formerly Equitable Life Assurance Society).

Employer related investment

It is the policy of the Trustee not to directly invest in the following:

(1) United Technologies Corporation, the previous ultimate holding company of the Principal employer. The Trustee is in the process of amending this restriction to cover Carrier Global Corporation, the ultimate holding company following the break-up of United Technologies Corporation group of companies on 3 April 2020.

9

Chubb Security Pension Fund

Trustee’s report (continued) for the year ended 31 March 2020

(2) Companies where any of the Trustees of the CCIF or the directors of the Trustee company to the Fund have a material interest or are a director, with the exception of CCIF Venture Limited as detailed in the financial statements of CCIF in Appendix I. The Trustee’s decision to enforce this policy is based on the belief that, without such a policy, conflicts of interest would inevitably arise. This policy has been adopted by the CCIF. In addition, no member of the United Technologies Corporation group (or Carrier Global Corporation) is a tenant in respect of any of the CCIF development sites. At 31 March 2020, 0.01% of the underlying assets of the CCIF attributable to units held by the Fund were indirectly invested in the employer through pooled investment vehicles with Legal & General.

Trustee fees

In the year Trustee fees were paid to B D McGowan and W Jones. The aggregate amount paid was £20,000 (2019: £19,000).

COVID - 19

The outbreak of the Novel Coronavirus (COVID-19), declared by the World Health Organisation as a global health emergency on the 30th January 2020, has caused disruption to businesses and economic activity which has been reflected in recent fluctuations in global stock markets. The Trustee is monitoring developments relating to COVID-19 and is coordinating its operational response based on existing business continuity plans and on guidance from global health organisations, UK government and general pandemic response best practice. The pandemic initially caused certain assets to reduce substantially in value but these reductions have largely recovered.

The Trustee is not aware of any restrictions being placed on any funds or investments as a consequence of the pandemic.

Statement of Trustee’s responsibilities

Trustee’s responsibilities in respect of the Financial Statements

The financial statements, which are prepared in accordance with United Kingdom Generally Accepted Accounting Practice, including the Financial Reporting Standard applicable in the UK and Republic of Ireland (“FRS 102”), are the responsibility of the Trustee. Pension scheme regulations require, and the Trustee is responsible for ensuring, that those financial statements: • show a true and fair view of the financial transactions of the Fund during the Fund year and of the amount and disposition at the end of the Fund year of its assets and liabilities, other than liabilities to pay pensions and benefits after the end of the Fund year; and • contain the information specified in Regulation 3A of the Occupational Pension Schemes (Requirement to obtain Audited Accounts and a Statement from the Auditor) Regulations 1996, including making a statement whether the financial statements have been prepared in accordance with the relevant financial reporting framework applicable to occupational pension schemes. In discharging these responsibilities, the Trustee is responsible for selecting suitable accounting policies, to be applied consistently, making any estimates and judgements on a prudent and reasonable basis, and for ensuring that the financial statements are prepared on a going concern basis unless it is inappropriate to presume that the Fund will continue as a going concern.

10

Chubb Security Pension Fund Statement regarding DC governance for the year ended 31 March 2020

1.

Introduction

1.1. This statement has been prepared by the Trustee of the Chubb Security Pension Fund (“the Trustee”) and reports on how the Trustee complies with the governance standards introduced under The Occupational Pension Schemes (Charges and Governance) Regulations 2015 (“the Regulations”), and subsequently amended by The Occupational Pension Schemes (Administration and Disclosure) (Amendment) Regulations 2018. 1.2. The governance standards apply to defined contribution (DC) arrangements and are designed to help members achieve good outcomes from their pension savings. 1.3. This statement covers the Fund year 1 April 2019 to 31 March 2020. It may not, therefore, include any subsequent changes to the Fund since 31 March 2020. 1.4. As required by the Regulations, the Trustee will publish this Statement on a publicly accessible website. The web address for the website will be https://online.flippingbook.com/view/197162/.

2.

The Fund’s DC benefits

2.1.

The Fund’s DC benefits comprise of the following: 2.1.1. Some members retain a DC account in the Fund holding only legacy Protected Rights rebates. These members would normally have chosen to receive a refund of contributions on leaving the Fund. However, at the time of choosing to receive a refund of contributions, legislation required that any Protected Rights rebates a member had accrued remained invested in the Fund. These “Protected Rights funds” were DC in nature during the Fund year and during the Fund year, Protected Rights funds were in respect of three members. 2.1.2. Some members of the Fund have a DC underpin, under which the value of the member’s defined benefit (DB) is compared to the value of the member’s DC underpin account. The Fund will pay the higher of these benefits. If the benefit to be paid is the DC underpin, the benefit will be DC in nature. The Trustee has been informed by the Fund’s administrator, Buck, that during the Fund year, the DC underpin was not expected to bite and benefits for these members would all be defined benefit in nature. The treatment of these benefits is not therefore covered by this Statement. 2.1.3. The Fund also has a number of Additional Voluntary Contribution (AVC) policies with two providers. As the Protected Rights funds are determined to have been DC in nature during this Fund year, these AVC policies are subject to extra reporting which we have included in this Statement. The Trustee has taken a proportionate approach to reporting details of the AVC policies and will undertake an exercise to review all AVC policies in the forthcoming Fund year.

3.

The Fund’s investment arrangements

3.1. The Fund is not used as a qualifying scheme by any sponsoring employer to meet its auto-enrolment duties on a DC basis. 3.2. The Fund has no default investment arrangements for the purposes of the Occupational Pension Schemes (Scheme Administration) Regulations 1996 (the “Scheme Administration Regulations”). As there is no default arrangement, the requirement for a Statement of Investment Principles (SIP) prepared in accordance with regulation 2A of the Occupational Pension Scheme (Investment) Regulations 2005 does not apply.

12

Chubb Security Pension Fund Statement regarding DC governance (continued) for the year ended 31 March 2020

Overview of the Fund’s investment arrangements

3.3. Protected Rights funds are invested in the Chubb Common Investment Fund (“the CCIF”) in line with the Fund’s DB investment strategy. The CCIF operates as a unitised arrangement. Units within the CCIF are valued using the bid market value of assets on a monthly basis.

4.

Core financial transactions

4.1. The governance standard requires the Trustee to ensure that ‘core financial transactions’ are processed promptly and accurately. For the Fund, these comprise:

4.1.1. Transfer payments out of the Fund

4.1.2. Retirement benefit payments out of the Fund

4.2. As Protected Rights funds are invested in the CCIF in line with the Fund’s DB investments, there are no investment switches available to members outside those made by the Trustee of the CCIF. Therefore, only transfers/payments out of the Fund are relevant in terms of core financial transactions. 4.3. Transactions in respect of the Protected Rights funds are undertaken on the Trustee’s behalf by the administrator of the Fund, Buck Consultants (Administration & Investment) Limited (“Buck”), and the Trustee of the CCIF.

Controls and monitoring arrangements

4.4. The controls in place in relation to ensuring the promptness and accuracy of core financial transactions are:

4.4.1. The Trustee has a Service Level Agreement (SLA) in place with Buck, both in terms of timeliness and accuracy, and reporting of performance against those service levels. 4.4.2. The SLA sets out the timeline standards expected for each step of the Fund’s main administration tasks, including core financial transactions. Buck aims to process at least 95% of core financial transactions within the SLAs set out below:

Core financial transaction

Service Level Agreement (days)

Transfers out of the Fund

10

Retirement benefit payments

7

4.5. In order to monitor Buck’s performance against agreed SLAs, the Trustee receives quarterly administration reports from Buck. These reports include cash flow monitoring, summaries of member transactions, reporting of service performance against the SLAs and identify any issues arising regarding administration timeliness and/or accuracy. Reports are considered at each Trustee Meeting.

4.6. The controls in place in relation to the accuracy of core financial transactions are:

4.6.1. Internal checking procedures are applied to all processes.

13

Chubb Security Pension Fund Statement regarding DC governance (continued) for the year ended 31 March 2020

4.6.2. Monitoring of accuracy is undertaken via the auditing of the Fund’s annual report and accounts and periodic auditing of the Fund’s membership >Page 1 Page 2 Page 3 Page 4 Page 5 Page 6 Page 7 Page 8 Page 9 Page 10 Page 11 Page 12 Page 13 Page 14 Page 15 Page 16 Page 17 Page 18 Page 19 Page 20 Page 21 Page 22 Page 23 Page 24 Page 25 Page 26 Page 27 Page 28 Page 29 Page 30 Page 31 Page 32 Page 33 Page 34 Page 35 Page 36 Page 37 Page 38 Page 39 Page 40 Page 41 Page 42 Page 43

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