Chair's Statement for Mettler-Toledo Ltd - METTLER TOLEDO

Chair's Statement for Mettler-Toledo Ltd

METTLER TOLEDO PENSION SCHEME ("THE SCHEME")

CHAIR’S STATEMENT FOR YEAR ENDING 31 DECEMBER 2019

PREPARED IN ACCORDANCE WITH REGULATION 23 OF THE OCCUPATIONAL PENSION SCHEMES ( SCHEME ADMINISTRATION ) REGULATIONS 1996 ( THE "REGULATIONS" )

Regulations require the Trustees to prepare a statement showing how they have met certain minimum governance standards in relation to defined contribution benefits.

As Chair of Trustees, I have provided details of how the Trustees have embedded these standards for the year ending 31 December 2019. This statement covers five key areas:

·       The investment strategy relating to the Scheme’s default arrangement;

·       The processing of core financial transactions;

·       Charges and transaction costs within the Scheme; including the disclosure requirements and the member illustrations;

·       Value for Members assessment; and

·       The Trustees’ compliance with the statutory knowledge and understanding (“TKU”) requirements.

These benefits fall into two categories, namely;

·       The Scheme’s Defined Contribution (“DC”) Section in which all benefits are Money Purchase, where the pension benefits at retirement are determined by agreed levels of contributions paid into the Scheme by the member and employer.

·       Additional Voluntary Contributions (“AVCs”), which are much smaller in size and number of members, which are also Money Purchase benefits in nature.

This statement will be published on a publicly available website and the information with regards to cost disclosures will be signposted in the annual benefit statements

 

1. DEFINED CONTRIBUTION SECTION INVESTMENT ARRANGEMENTS

1.1          The Scheme’s DC investment arrangements are provided by Royal London Life (“RLL”) who deliver both administration and investment management services through their platform.

1.2          The current default investment arrangement for the Scheme is the Mettler Pension Lifestyle Strategy. Under this arrangement, a member’s Retirement Account is invested in the RLP/BlackRock ACS Global Equity (50:50) Fund until 10 years before their Target Retirement Age. From this point, member savings are incrementally transferred to lower-risk funds (the RLP/BlackRock Long Gilt Fund and the RLP Deposit Fund) such that one year before retirement, 75% is invested in the RLP/BlackRock Long Gilt Fund and 25% is invested in the RLP Deposit Fund. Member savings transfers take place on an annual basis on, or as close as possible to, the date on which the member’s birthday falls.

1.3          The structure of the current default investment arrangement is further detailed below:

Mercer Limited is authorised and regulated by the Financial Conduct Authority

Registered in England and Wales No. 984275

Registered Office: 1 Tower Place West, Tower Place, London EC3R 5BU

 

T I M E T O

R E T I R E M E N T ( Y E A R S )

R L P / B L A C K R O C K A C S G L O B A L

E Q U I T Y ( 5 0 : 5 0 )

F U N D

R L P / B L A C K R O C K L O N G G I L T F U N D

R L P

D E P O S I T F U N D

>10

100.0

0.0

0.0

10

90.0

7.5

2.5

9

80.0

15.0

5.0

8

70.0

22.5

7.5

7

60.0

30.0

10.0

6

50.0

37.5

12.5

5

40.0

45.0

15.0

4

30.0

52.5

17.5

3

20.0

60.0

20.0

2

10.0

67.5

22.5

1

0.0

75.0

25.0

0

0.0

75.0

25.0

 

The aims and objectives of the default investment arrangement as set out in the Statement of Investment Principles are:

·       To generate returns in excess of inflation during the accumulation phase of the strategy whilst managing downside risk.

·       To provide a strategy that reduces investment risk for members as they approach retirement.

·       To provide exposure at retirement to investments that are broadly appropriate for an individual planning to use their savings in the Scheme to buy a fixed annuity and to take a 25% tax-free cash lump sum at retirement.

The majority of the Scheme’s members continue to have savings invested in the default investment arrangement. The Trustees therefore regard the design and performance of the default investment arrangement as pivotal to good member outcomes.

The investment strategy was reviewed in detail during 2019, in line with the requirement to review the investment strategy every three years, in collaboration with the Scheme’s advisers. This review took into account various elements including member data, member behaviour, the default retirement destination, and the self select fund range (as the Trustees were considering a change in delegation of management to the Mercer Workplace Savings (“MWS”) proposition. A formal review of the composition of the growth phase of the default lifestyle was not considered at this time, due to the imminent move to the MWS proposition.

The recommendations as a result of this review were to change the objective of the default investment option for those members with DC assets only from targeting annuity to targeting drawdown at retirement, and those members with DB benefits will be invested in a default that targets cash.

As the Trustees are preparing a transition of platform to Aviva and of management to the MWS proposition, these recommendations have not been acted upon within the framework of the Scheme’s current arrangements; however, these recommendations are all being taken into account as the Trustees prepare the new arrangements to be implemented during 2020.

The next strategy review is due during 2022, and the outcome of that review will be documented in this statement the following year.

1.4          In addition to the current default investment arrangement, members who retain benefits in the DB Section of the Scheme are invested in the Mettler Cash Lifestyle Strategy. Under this arrangement, a member’s Retirement Account is invested in the BlackRock Aquila Global Equity (50:50) Fund until 10 years before their Target Retirement Age. From this point, member savings are incrementally transferred to the RLP Deposit Fund so that, one year before retirement, 100% is invested in the RLP Deposit Fund), with member savings transfers taking place on an annual basis on, or as close as possible to, the date on which the member’s birthday falls. The structure of the Mettler Cash Lifestyle Strategy is further detailed below:

 

T I M E T O R E T I R E M E N T ( Y E A R S )

R L P / B L A C K R O C K A C S G L O B A L E Q U I T Y ( 5 0 : 5 0 )

F U N D

R L P

D E P O S I T F U N D

>10

100.0

0

10

90.0

10.0

9

80.0

20.0

8

70.0

30.0

7

60.0

40.0

6

50.0

50.0

5

40.0

60.0

4

30.0

70.0

3

20.0

80.0

2

10.0

90.0

1

0.0

100.0

0

0.0

100.0

 

1.5          A copy of the Scheme’s latest Statement of Investment Principles (“SIP”), prepared in accordance with Regulation 2A of the Occupational Pension Schemes (Investment) Regulations 2005, is included in Appendix B of this statement.

1.6          The Trustees review how the investments within the Scheme’s default and the wider self-select fund options have performed against their targets at each of the Trustees’ meetings during the year (which occur twice a year), taking input from professional investment advisers. The Trustees have been satisfied with the performance of the fund options, and performance of the fund options has had a beneficial impact on member outcomes.

2.         LEGACY ADDITIONAL VOLUNTARY CONTRIBUTIONS ( ‘AVCS ’)

2.1          The Scheme has one member with AVC holdings invested in a bespoke lifestyle arrangement with Clerical Medical and two members with holdings in a With-Profits fund with Scottish Widows. In addition, at 31 December 2019, the Scheme had two members with holdings in both unit-linked funds and With- Profits funds with Equitable Life; upon the closure of Equitable Life these members’ assets were moved to the Utmost Secure Cash Fund in January 2020, and will be moved out of this fund during 2020. The holdings are relatively small in scale relative to the size of the Scheme’s main arrangements held with RLL.

2.2          The Trustees have sought to quantify the charges and transaction costs associated with the holdings in the policies with Clerical Medical and Scottish Widows by requesting the information from the providersin line with the prescribed transaction cost disclosure methodology. The information provided by the two companies is listed in section 4 of this document.

2.3          With respect to the With-Profits policies, payouts on surrender and maturity will reflect all charges incurred, though they are not separately identified. Moreover, the actual performance received by members, net of charges, is only known upon maturity/surrender, after any augmentation for guaranteed terms and after the effect of any ‘smoothing’. This places limitations on what can be shown in the member illustrations.

2.4          The Company currently meets advisory costs for these assets.

3.         CORE FINANCIAL TRANSACTIONS

3.1          The Trustees recognise the importance of processing financial transactions promptly and accurately as failure to do so may have an adverse effect on member outcomes and may result in members disengaging with the Scheme. The Trustees therefore operate measures and controls aimed at ensuring that all financial transactions (such as benefit payments and switches between funds) are processed promptly and accurately.

3.2          The Trustees are required to explain how they ensure that core financial transactions are processed promptly and accurately. Core financial transactions include:

·       Investment of contributions paid to the Scheme;

·       Transfer of members’ assets into and out of the Scheme;

·       Transfers of members’ assets between investment options available in the Scheme; and

·       Payments from the Scheme to or in respect of members.

3.3          The Scheme’s administration is outsourced to RLL. The Trustees have been made aware that RLL no longer provide performance measurement relative to Service Level Agreements. Instead, RLL is measuring their performance in terms of Net Promoter Score and customer experience. RLL have provided the following details for their Net Promoter Score for 2019:

 

Key Performance Indicator

2019 target

2019 achieved

NPS – likelihood to recommend brand

55.2%

61%

Ease – How easy was it to do business today

78%

86%

Resolution – Were we able to resolve your request

82%

89%

RLL have confirmed that the evidence that has been received across their book shows a positive service experience overall.

3.4          The Trustees have challenged RLL further with regards to the processing of core financial transactions. RLL are aware of the statutory deadlines for the processing of all member-related services, including core financial functions such as investment switches and benefit payments, and have confirmed that all core financial transactions over the year for the Scheme were invested on time and within with the statutory deadlines. The Trustees will continue to seek relevant details to support effective monitoring of these processes.

3.5          RLL is invited to attend Trustees’ meetings and reports are received to support their attendance.

3.6          RLL has confirmed that the Scheme’s core financial transactions have been processed promptly and accurately during the period to which this Statement relates. There were no specific issues in relation to core transactions over the year.

3.7          The Regulations have been met and core financial transactions have been processed promptly and accurately by:

 

·       Reviewing the quality of Scheme membership data held by RLL

·       Appointing a professional firm to undertake an annual audit.

·       The Payment Schedule sets out timescales for the Company to remit monthly contributions to the Scheme. Compliance with the Payment Schedule is monitored via the Trustees’ review of RLL’s quarterly operational governance report.

 

4.         CHARGES AND TRANSACTION COSTS

4.1          As required by regulation 25 of the Administration Regulations, the Trustees are required to report on the charges and transaction costs for the investments used in the default and non-default arrangements and their assessment of the extent to which the charges and costs represent good value for members.

4.2          We note that while transaction costs and charges are an important consideration, they are not the only criteria the Trustees assess. A number of other qualitative and quantitative factors are also considered in a holistic manner when making strategic decisions in relation to investment strategy with good outcomes for members being the ultimate goal for the Scheme.

4.3          In addition to investment management charges and the additional fund expenses included in the Total Expense Ratio (“TER”), investment funds are subject to other implicit costs, such as the investment manager’s expenses associated with trading a fund’s underlying securities, including commissions and stamp duty. These expenses are not explicitly deducted from the fund but are captured by a reduction in investment returns.

The Financial Conduct Authority has provided guidance (PS17/20) to investment managers regarding calculations and disclosures of transaction costs which comply with the updated Regulations. The Trustees have requested information about transaction costs calculated according to the ‘slippage cost’ methodology; information about administration charges and appropriate contextual information from the underlying fund managers, through RLL. The information was provided and is included below and the Trustees have taken the information in good faith and are not aware of any information that they were unable to obtain.

4.4          The following table sets out the headline TER applying to each of the funds available to members and the transactions costs incurred by the funds during the year, including those making up the Scheme default investment arrangement for the DC section.

 

S C H E M E F U N D S

T E R ( % P . A . )

A G G R E G A T E

T R A N S A C T I O N C O S T S ( % P . A . )

F U N D S W I T H I N T H E D E F A U L T

BlackRock Global Equity Index (50:50)

0.49

0.003

BlackRock Long Gilt Index

0.49

0.013

Royal London Deposit

0.49

-0.004

S E L F - S E L E C T F U N D S ( I N C U D I N G T H O S E W I T H I N T H E D E F A U L T )

BlackRock Global Equity Index (50:50)

0.49

0.003

BlackRock Long Gilt Index

0.49

0.013

Royal London Deposit

0.49

-0.004

Royal London Corporate Bond

0.49

-0.041

Royal London Property

0.49

0.523

Royal London Index Linked

0.49

-1.522

Source: RLL, as at 31 December 2019

* Total Expense Ratio - the measure of the total cost of investing in a fund, which may include various fees and other expenses and may vary from time to time.

 

4.5          The Pension Regulator has set a charge cap of 0.75% p.a. for the default options for pension schemes. As shown above, the charges for all underlying funds in the default strategy (as well as those within the self-select fund range) fall well within the charge cap. These charges, for both lifestyle strategies in the Scheme, are shown over time in the below graphs:

 

4.6          Each year RLL reviews its financial strength to determine if a profit share can be awarded to members of applicable schemes (those which are in force on 1st April and have been in force during the previous calendar year). As a result of this, in April 2019 RLL issued a profit share equivalent to 0.14% p.a. back to members who held investments in the Scheme as at 31st December 2018. In April 2020 RLL were able to issue a profit share equivalent to 0.15% p.a. back to members who held investments in the Scheme as at 31st December 2019. These awards are discretionary and are not guaranteed to apply every year.

4.7          There are two members with AVC assets invested in the Scottish Widows With Profit Fund; Scottish Widows have confirmed the transaction costs for the fund (based on 93% of assets reported) for the year to 31 December 2019 were 0.20%.

 

4.8          There is one member with AVC assets invested in a bespoke lifestyle arrangement provided by Clerical Medical. This arrangement initially invests the member in Clerical Medical’s Adventurous Fund during the Growth phase, then as the member approaches retirement the assets are gradually moved so that by 6 months before retirement they are invested 100% in Clerical Medical’s UK Index Linked Fund. As the member is currently more than five years from retirement, the assets are 100% invested in the Adventurous Fund.

Clerical Medical have confirmed that this policy is subject to an Annual Management Charge (“AMC”) of 0.50% p.a., and the Adventurous fund (in which the member is currently invested) had transaction costs (based on 100% of assets reported) of 0.30% for the year to 31 December 2019.

4.9          Using the charges and transaction cost data provided by RLL and in accordance with regulation 23(1)(ca) of the Administration Regulations, the Trustees have prepared an illustration detailing the impact of the costs and charges typically paid by a member of the Scheme on their retirement savings pot. The statutory guidance has been considered when providing these examples.

In order to represent the range of funds available to members we are required to show the effect on a member’s savings of investment in the following (with the Scheme’s relevant funds/strategies listed in brackets). As With-Profits funds do not have transparent charging structures, we have illustrated the Scottish Widows fund separately; this illustration can be found in the Appendix. Additionally, as the Equitable Life funds which held assets at 31 December 2019 are no longer active, and the assets from these funds are to be mapped into other funds during 2020, we will not be representing these funds in the illustrations.

The funds we are required to illustrate to represent the fund range (with the specific fund within the Scheme in brackets) are:

-  The fund or strategy with the most members invested (Mettler Pension Lifestyle)

-  The most expensive fund (Property)

-  The least expensive fund (Index Linked)

-  The fund with the highest expected return (Global Equity 50:50 and Property)

-  The fund with the lowest expected return (Deposit)

As Global Equity (50:50) and Property funds have similar expected returns, we have elected to include both; Property will already be illustrated as the most expensive fund in the range, and Global Equity (50:50) is an important component of the Default lifestyle strategy.

The illustrations that follow take into account the following elements:

·       Initial savings pot size;

·       Contributions, where applicable;

·       Real terms investment return gross of costs and charges;

·       Adjustment for the effect of costs and charges; and

·       Time.

To illustrate the impact of charges on a typical active member’s pension pot, we have provided examples below and in the Appendices. The illustrations account for all estimated member costs, including the TER, transaction costs and inflation.

Illustration 1

A typical active member’s pot as it changes over time

 

 

Default Arrangement: Mettler Pension Lifestyle Strategy

Most expensive fund:

Royal London Property

Cheapest fund: Royal London Index Linked

Highest expected return: BlackRock Global Equity Index (50:50)

Lowest expected return:

Royal London Deposit

Age

Pot Size with no

Charges Incurred

Pot Size with

Charges Incurred

Pot Size with no

Charges Incurred

Pot Size with

Charges Incurred

Pot Size with no

Charges Incurred

Pot Size with

Charges Incurred

Pot Size with no

Charges Incurred

Pot Size with

Charges Incurred

Pot Size with no

Charges Incurred

Pot Size with

Charges Incurred

41

£20,000

£20,000

£20,000

£20,000

£20,000

£20,000

£20,000

£20,000

£20,000

£20,000

42

£23,756

£23,619

£23,867

£23,610

£22,985

£22,873

£23,756

£23,619

£22,878

£22,766

43

£27,690

£27,390

£27,936

£27,372

£26,020

£25,782

£27,690

£27,390

£25,792

£25,556

44

£31,809

£31,319

£32,215

£31,292

£29,107

£28,729

£31,809

£31,319

£28,744

£28,372

45

£36,120

£35,412

£36,712

£35,374

£32,246

£31,716

£36,120

£35,412

£31,735

£31,215

: : :

 

 

 

 

 

 

 

 

 

 

50

£60,809

£58,513

£62,796

£58,418

£48,790

£47,295

£60,809

£58,513

£47,332

£45,893

: : :

 

 

 

 

 

 

 

 

 

 

55

£91,171

£86,301

£95,827

£86,403

£66,904

£64,100

£91,462

£86,567

£64,147

£61,492

: : :

 

 

 

 

 

 

 

 

 

 

60

£121,345

£113,329

£137,299

£120,177

£86,826

£82,349

£129,235

£120,425

£82,401

£78,230

61

£126,766

£118,123

£146,758

£127,710

£91,050

£86,193

£137,759

£127,977

£86,245

£81,734

62

£131,895

£122,643

£156,641

£135,521

£95,359

£90,107

£146,634

£135,809

£90,159

£85,295

63

£136,701

£126,861

£166,964

£143,621

£99,755

£94,092

£155,872

£143,928

£94,144

£88,916

64

£141,154

£130,756

£177,745

£152,017

£104,241

£98,152

£165,484

£152,346

£98,203

£92,597

65

£145,711

£134,739

£189,001

£160,719

£108,820

£102,288

£175,486

£161,070

£102,338

£96,342

Notes

1.    Values shown are estimates at end of each year and are not guaranteed.

2.    Projected pension pot values are shown in today’s terms.

3.    Age, salary, fund size and contribution rate assumptions are based on full membership data as at 31 December 2019.

4.    The starting fund size is assumed to be £20,000, starting salary is assumed be £32,000 per annum and this person is 41 years old. This member is assumed to retire at 65.

5.    This member’s contribution rate is assumed to be 10% per annum, and their salary increases by 2.5% per annum.

6.    Charges assumed for each individual fund are as provided by Royal London as at 31 December 2019, shown earlier in this Statement.

7.    From Royal London’s figures, the default strategy has an assumed TER of 0.49% p.a. throughout the lifestyle.

8.    The Regulations require that, where possible, the transaction costs used in these illustrations are based on an average of those for the five years to Scheme Year End. Royal London have been able to provide historic transaction costs for these funds for inconsistent years; consequently we have taken averages of the transaction costs for the years we have been provided information for, as follows:

 

Fund

Transaction Costs

Based on years

Current Default Arrangement:

Mettler Pension Lifestyle Strategy

Average transaction cost of 0.06% p.a. before inflation

2015, 2018,2019 for Global Equity Fund 2018,2019 for Long Gilt Fund 2017,2018,2019 for Deposit Fund

Most expensive fund::

Royal London Property

 

0.59% p.a. before inflation

 

2015,2016,2017,2018,2019

Cheapest fund:

Royal London Index Linked

 

0.00% p.a. before inflation

 

2016, 2017,2018,2019

Greatest expected investment return: BlackRock Aquila Global Equity Index (50:50) Fund

 

0.09% p.a. before inflation

 

2015,2018,2019

Lowest expected investment return: Royal London Deposit

 

0.00% p.a. before inflation

 

2017,2018,2019

Where funds have negative transaction costs over the period of this Statement, we have assumed these costs to be nil, as negative costs are not expected to continue consistently over time.

9.    Inflation is assumed to be 2.5% per annum.

10.  The projected gross growth rates for each fund are based on Assumed Mid Growth Rates and transaction costs provided by Royal London, as follows:

 

Current Default Arrangement:

Mettler Pension Lifestyle Strategy

5.0% p.a. before inflation for members further than 10 years from retirement

1.8% p.a. before inflation for members less than 1 year from

retirement

Most expensive fund::

Royal London Property

5.0% p.a. before inflation

Cheapest fund:

Royal London Index Linked

1.5% p.a. before inflation

Greatest expected investment return:

BlackRock Aquila Global Equity Index (50:50) Fund

5.0% p.a. before inflation

Lowest expected investment return: Royal London Deposit

1.0% p.a. before inflation

In Appendix A we have also provided:

-          An illustration demonstrating the impact of charges on the pension pot of a typical member starting at age 22, to demonstrate the effect on the Scheme’s youngest member throughout the course of their working life;

-          An illustration demonstrating the impact of charges on the pension pot of a typical deferred member of the Scheme; and

-          An illustration demonstrating the impact of charges on the pension pot of a deferred member of the Scheme invested in the Scottish Widows With-Profits fund.

5.            VALUE FOR MEMBERS

5.1          The Trustees are committed to ensuring that members receive good value from the Scheme. In conjunction with professional advisors, the Trustees have undertaken a formal value for members’ assessment, as has been the case in previous years.

5.2          Overall analysis of value was underpinned in the assessment which covered the following aspects:

·       Investment charges for the default and self-select options

·       Transaction costs

·       Member services

·       Net performance (for active funds)

·       Scheme governance

·       Investment design and range

·       Investment manager

·       Administration efficiency

5.3          The Trustees have assessed the extent to which the charges and transaction costs set out above represent good value for members, taking into account the points above and have concluded that the Scheme offers good value for members.

 

5.4          Additionally, the Company pays for all advisory costs associated with operating the Scheme, which further enhances the value that members receive.

5.5          The Scheme’s assets also include a small amount held in legacy policies with Utmost (previously held by Equitable Life), Clerical Medical and Scottish Widows. The Trustees have taken a proportionate approach to a market review of price and performance, given the number of members using the policies and the level of member savings invested. The assets invested with Utmost (following the closure of Equitable Life) are to be moved when the Scheme transitions to its new platform during 2020. The size of the assets invested with Clerical Medical and Scottish Widows are very small in relation to overall benefits for the members and attract very little in new contributions. Given the size of the arrangements, and the limited flow of new contributions, our adviser has stated that it is unlikely that the Trustees will be able to secure better terms from another provider for these assets; hence, provide good value given the limited alternatives available.

5.6          The Trustees are committed to continue to communicate to members invested as and when appropriate.

6.         TRUSTEE KNOWLEDGE AND UNDERSTANDING

6.1          In accordance with sections 247 and 248 of the Pensions Act 2004, the Trustees are required to maintain an appropriate level of knowledge and understanding which, together with the professional advice available to them, enables them to properly exercise their functions and duties in relation to the Scheme.

Trustee training is of high importance to the good running of the Scheme and it is vital that the Trustees maintain their knowledge of pension law, trust law, investment principles and are conversant with the Scheme formal documentation including the Trustee Deed and Rules, SIP and Scheme policies.

During the year, the Trustees have continued to undertake bi-annual training in the following areas:

o    Current legislative issues

o    Investment updates/assets

o    Employer Covenant – ‘MediKit’

o    Conflicts of Interest

o    Risk Register

Additional training undertaken by the Trustees during the Scheme year includes:

o    GMP Equalisation (November 2019);

o    ESG considerations (April 2019);

o    DC Current Issues (April 2019) that included economic and market outlook, DWP investment regulation, the Single Financial Guidance Body (SFGB), Financial Conduct Authority Sector views, and changes at AVC providers.

The Trustees assess their training needs in light of the business plan priorities and with regard to the statutory requirements to have knowledge and understanding of pensions law. Further training will be considered depending on Trustees’ needs. All Trustee training is recorded in a training log.

6.2          There is an induction process in place for new Trustees, which includes an induction pack of relevant documents, training on an overview of the Scheme, and details of the tPR Toolkit. No new Trustees were inducted during the period covered by this statement. A new Trustee has since joined in early 2020, and this Trustee successfully completed their induction training in February 2020.

·         In addition, the Trustees will be receiving training in relation to the implementation process to change provider in 2020 as it is expected that RLL will be replaced. This training will ensure that the Trustees can achieve an effective implementation.

·         The Trustees will also receive training in relation to further requirements for the Scheme Statement of Investment Principles.

6.3          The Trustee undertook a number of activities over the past year that demonstrate how they have a working knowledge of pension and trust law and funding and investment principles. These activities include:

o    Review of the Scheme’s default strategy.

o    Review of AVCs requirements.

o    Regularly reviewing the effectiveness of the Trustees against the Scheme’s Business Plan.

o    Reviewing the Risk Register regularly, and updated the Risk Register at least annually.

o    Reviewing the Trustees’ compliance with the requirements of the Pension Regulator’s DC Code of Practice on a regular basis.

The Trustees maintain a good working knowledge of the Trust Deed & Rules, Statement of Investment Principles and other policy documents (as shown in their regular reviewing of the Risk Register and other Scheme documentation). An example of this is that the Risk Register is reviewed annually; this demonstrates that the Trustees hold relevant knowledge on DC specific internal controls and the regulatory requirements.

The DC Code assessment is also reviewed and updated annually, with each item given a rating and any actions taken forward. This demonstrates that the Trustees have the required knowledge of the Pensions Regulator’s DC Code.

6.4          The Trustees believe that the best run schemes utilise the combined skill and knowledge of both the Trustees and their professional advisors. The relevant skills and experience of those advisors are key criteria when evaluating advisor performance and selecting new advisors.

Additionally, the following measures have applied during the period:

·       The Trustees’ professional advisors attend their formal meetings;

·       The Trustees receive briefings from their advisors on relevant legislative and regulatory developments and DC topics at each meeting.

6.5               Trustees meetings typically occur at least twice a year, with additional meetings as needed and minutes are taken and approved at the next meeting. Advisers are invited to all meetings and the administrator as required.

6.6               Taking into account actions taken individually and as a trustee group and the professional advice available to it, The Trustees consider that they are able to exercise their function as Trustees appropriately.

I confirm that the above statement has been produced by the Trustees to the best of their knowledge.

Signed for and on behalf of the Trustees of the Mettler-Toledo Pension Scheme

 

 

Date     ………………………...

 

 

By        ………………………………………………………………

Chair of Trustees

 

 

Appendix A – Further illustrations depicting charges and costs over timeIllustration 2: The youngest active member’s pot as it changes over time

 

 

Default Arrangement: Mettler Pension Lifestyle Strategy

Most expensive fund:

Royal London Property

Cheapest fund: Royal London Index Linked

Highest expected return: BlackRock Global Equity Index (50:50)

Lowest expected return:

Royal London Deposit

Age

Pot Size with no

Charges Incurred

Pot Size with

Charges Incurred

Pot Size with no

Charges Incurred

Pot Size with

Charges Incurred

Pot Size with no

Charges Incurred

Pot Size with

Charges Incurred

Pot Size with no

Charges Incurred

Pot Size with

Charges Incurred

Pot Size with no

Charges Incurred

Pot Size with

Charges Incurred

21

£0

£0

£0

£0

£0

£0

£0

£0

£0

£0

22

£2,024

£2,012

£2,028

£2,006

£1,991

£1,981

£2,024

£2,012

£1,986

£1,976

23

£4,150

£4,114

£4,171

£4,103

£4,011

£3,982

£4,150

£4,114

£3,992

£3,963

24

£6,384

£6,310

£6,431

£6,293

£6,063

£6,004

£6,384

£6,310

£6,019

£5,961

25

£8,729

£8,603

£8,816

£8,580

£8,146

£8,049

£8,729

£8,603

£8,068

£7,971

: : :

 

 

 

 

 

 

 

 

 

 

30

£22,269

£21,635

£22,780

£21,576

£19,075

£18,634

£22,269

£21,635

£18,672

£18,245

: : :

 

 

 

 

 

 

 

 

 

 

35

£39,281

£37,616

£40,698

£37,514

£30,956

£29,925

£39,281

£37,616

£29,976

£28,989

: : :

 

 

 

 

 

 

 

 

 

 

40

£60,449

£57,063

£63,441

£56,908

£43,939

£42,061

£60,449

£57,063

£42,121

£40,349

: : :

 

 

 

 

 

 

 

 

 

 

45

£86,583

£80,574

£92,053

£80,354

£58,191

£55,201

£86,583

£80,574

£55,264

£52,483

: : :

 

 

 

 

 

 

 

 

 

 

50

£118,633

£108,838

£127,779

£108,542

£73,901

£69,519

£118,633

£108,838

£69,581

£65,561

: : :

 

 

 

 

 

 

 

 

 

 

55

£157,208

£142,211

£172,112

£142,267

£91,280

£85,209

£157,715

£142,655

£85,265

£79,769

: : :

 

 

 

 

 

 

 

 

 

 

60

£192,202

£171,812

£226,828

£182,446

£110,567

£102,488

£205,138

£182,944

£102,535

£95,310

61

£197,921

£176,575

£239,197

£191,347

£114,676

£106,156

£215,754

£191,869

£106,200

£98,598

62

£203,114

£180,876

£252,084

£200,557

£118,875

£109,898

£226,778

£201,104

£109,940

£101,950

63

£207,747

£184,692

£265,508

£210,086

£123,165

£113,719

£238,223

£210,659

£113,757

£105,368

64

£211,794

£188,003

£279,489

£219,943

£127,550

£117,618

£250,104

£220,543

£117,654

£108,855

65

£215,951

£191,414

£294,048

£230,139

£132,031

£121,600

£262,436

£230,767

£121,632

£112,412

Notes

1.    Values shown are estimates at end of each year and are not guaranteed.

2.    Projected pension pot values are shown in today’s terms.

3.    Age, salary, fund size and contribution rate assumptions are based on full membership data as at 31 December 2019. This illustration is based on generalised data relating to the youngest members of the scheme.

4.    The starting fund size is assumed to be zero, starting salary is assumed be £20,000 per annum and this person is 21 years old. This member is assumed to retire at 65.

5.    This member’s contribution rate is assumed to be 10% per annum, and their salary increases by 2.5% per annum.

6.    Charges assumed for each individual fund are as provided by Royal London as at 31 December 2019, shown earlier in this Statement.

7.    From Royal London’s figures, the default strategy has an assumed TER of 0.49% p.a. throughout the lifestyle.

8.    The Regulations require that, where possible, the transaction costs used in these illustrations are based on an average of those for the five years to Scheme Year End. Royal London have been able to provide historic transaction costs for these funds for inconsistent years; consequently we have taken averages of the transaction costs for the years we have been provided information for, as follows:

 

Fund

Transaction Costs

Based on years

Current Default Arrangement:

Mettler Pension Lifestyle Strategy

Average transaction cost of 0.07% p.a. before inflation

2015, 2018,2019 for Global Equity Fund 2018,2019 for Long Gilt Fund

2017,2018,2019 for Deposit Fund

Most expensive fund::

Royal London Property

 

0.59% p.a. before inflation

 

2015,2016,2017,2018,2019

Cheapest fund:

Royal London Index Linked

 

0.00% p.a. before inflation

 

2016, 2017,2018,2019

Greatest expected investment return: BlackRock Aquila Global Equity

Index (50:50) Fund

 

0.09% p.a. before inflation

 

2015,2018,2019

Lowest expected investment return: Royal London Deposit

 

0.00% p.a. before inflation

 

2017,2018,2019

Where funds have negative transaction costs over the period of this Statement, we have assumed these costs to be nil, as negative costs are not expected to continue consistently over time.

9.    Inflation is assumed to be 2.5% per annum.

10.  The projected gross growth rates for each fund are based on Assumed Mid Growth Rates and transaction costs provided by Royal London, as follows:

 

Current Default Arrangement:

Mettler Pension Lifestyle Strategy

5.0% p.a. before inflation for members further than 10 years from retirement

1.8% p.a. before inflation for members less than 1 year from

retirement

Most expensive fund::

Royal London Property

5.0% p.a. before inflation

Cheapest fund:

Royal London Index Linked

1.5% p.a. before inflation

Greatest expected investment return:

BlackRock Aquila Global Equity Index (50:50) Fund

5.0% p.a. before inflation

Lowest expected investment return: Royal London Deposit

1.0% p.a. before inflation

 

Illustration 3: The typical deferred member’s pot as it changes over time

 

 

Default Arrangement: Mettler Pension Lifestyle Strategy

Most expensive fund:

Royal London Property

Cheapest fund: Royal London Index Linked

Highest expected return: BlackRock Global Equity Index (50:50)

Lowest expected return:

Royal London Deposit

Age

Pot Size with no Charges

Incurred

Pot Size with Charges

Incurred

Pot Size with no Charges

Incurred

Pot Size with Charges

Incurred

Pot Size with no Charges

Incurred

Pot Size with Charges

Incurred

Pot Size with no Charges

Incurred

Pot Size with Charges

Incurred

Pot Size with no Charges

Incurred

Pot Size with Charges

Incurred

44

£20,000

£20,000

£20,000

£20,000

£20,000

£20,000

£20,000

£20,000

£20,000

£20,000

45

£20,518

£20,400

£20,622

£20,400

£19,800

£19,703

£20,518

£20,400

£19,700

£19,603

: : :

 

 

 

 

 

 

 

 

 

 

50

£23,318

£22,520

£24,035

£22,520

£18,830

£18,283

£23,318

£22,520

£18,266

£17,736

: : :

 

 

 

 

 

 

 

 

 

 

55

£26,499

£24,861

£28,014

£24,861

£17,907

£16,965

£26,499

£24,861

£16,937

£16,046

: : :

 

 

 

 

 

 

 

 

 

 

60

£28,667

£26,165

£32,650

£27,446

£17,029

£15,742

£30,115

£27,446

£15,704

£14,517

61

£28,834

£26,180

£33,666

£27,994

£16,859

£15,508

£30,895

£27,994

£15,468

£14,229

62

£28,905

£26,110

£34,713

£28,554

£16,690

£15,278

£31,695

£28,554

£15,236

£13,947

63

£28,879

£25,957

£35,793

£29,124

£16,523

£15,051

£32,516

£29,124

£15,008

£13,671

64

£28,757

£25,720

£36,906

£29,706

£16,358

£14,828

£33,359

£29,706

£14,783

£13,400

65

£28,539

£25,402

£38,054

£30,299

£16,195

£14,607

£34,223

£30,299

£14,561

£13,134

Notes

1.    Values shown are estimates at end of each year and are not guaranteed.

2.    Projected pension pot values are shown in today’s terms.

3.    Age, salary, fund size and contribution rate assumptions are based on full membership data as at 31 December 2019.

4.    The starting fund size is assumed to be £20,000, and this person is 44 years old. This member is assumed to retire at 65.

5.    This member is assumed to be deferred, and as such is making no further contributions to the Scheme.

6.    Charges assumed for each individual fund are as provided by Royal London as at 31 December 2019, shown earlier in this Statement..

7.    From Royal London’s figures, the default strategy has an assumed TER of 0.49% p.a. throughout the lifestyle.

8.    The Regulations require that, where possible, t        he transaction costs used in these illustrations are based on an average of those for the five years to Scheme Year End. Royal London have been able to provide historic transaction costs for these funds for inconsistent years; consequently we have taken averages of the transaction costs for the years we have been provided information for, as follows:

 

Fund

Transaction Costs

Based on years

Current Default Arrangement:

Mettler Pension Lifestyle Strategy

Average transaction cost of 0.06% p.a. before inflation

2015, 2018,2019 for Global Equity Fund 2018,2019 for Long Gilt Fund

2017,2018,2019 for Deposit Fund

Most expensive fund:: Royal London Property

 

0.59% p.a. before inflation

 

2015,2016,2017,2018,2019

Cheapest fund:

Royal London Index Linked

 

0.00% p.a. before inflation

 

2016, 2017,2018,2019

Greatest expected investment return: BlackRock Aquila Global Equity Index (50:50) Fund

 

0.09% p.a. before inflation

 

2015,2018,2019

Lowest expected investment return: Royal London Deposit

 

0.00% p.a. before inflation

 

2017,2018,2019

Where funds have negative transaction costs over the period of this Statement, we have assumed these costs to be nil, as negative costs are not expected to continue consistently over time

9.    Inflation is assumed to be 2.5% per annum.

10.  The projected gross growth rates for each fund are based on Assumed Mid Growth Rates and transaction costs provided by Royal London, as follows:

 

Current Default Arrangement:

Mettler Pension Lifestyle Strategy

5.0% p.a. before inflation for members further than 10 years from retirement

1.8% p.a. before inflation for members less than 1 year from

retirement

Most expensive fund::

Royal London Property

5.0% p.a. before inflation

Cheapest fund:

Royal London Index Linked

1.5% p.a. before inflation

Greatest expected investment return:

BlackRock Aquila Global Equity Index (50:50) Fund

5.0% p.a. before inflation

Lowest expected investment return: Royal London Deposit

1.0% p.a. before inflation

Illustration 4
A typical deferred member’s pot within the Scottish Widows With Profits Fund

By the nature of With-Profits funds the charging structure of these policies are not transparent, and so comparisons to other funds (to ascertain the greatest/lowest return or most/least expensive fund) cannot be drawn. Consequently we have elected to illustrate the Scottish Widows With Profits fund based on the information we have been provided by Scottish Widows.

We have illustrated investment in the fund based on the limited information provided by Scottish Widows in their member illustrations. The assumption of growth is based on their intermediate growth estimate of 3.5% p.a. before inflation; the illustration then uses Mercer’s estimate of inflation at 2.5% p.a.. As no charge information has been provided we have been unable to illustrate asset growth without charges.

As the membership of this policy is very small we have based the ‘member’ represented on the typical deferred member of the DC section, as outlined in Illustration 3 (above).

 

Notes

1.    Values shown are estimates at end of each year and are not guaranteed.

2.    Projected pension pot values are shown in today’s terms.

3.    Age and fund size assumptions are based on membership data relating to the DC section of the Scheme, as at 31 December 2019.

4.    The starting fund size is assumed to be £20,000, and this person is 44 years old. This member is assumed to retire at 65.

5.    This member is assumed to be making no further contributions

6.    Growth rate assumption based on data provided by Scottish Widows, as at 7 May 2020.

7.    Inflation is assumed to be 2.5% per annum.

Appendix B

Statement of Investment Principle