Purpose of this Statement

This SIP has been prepared by the Trustees of the National Communications Union Staff Superannuation Scheme (the “Scheme”). This statement sets out the principles governing the Trustees’ decisions to invest the assets of the Scheme. 

The Scheme’s investment strategy is derived from the Trustees’ investment objectives. The objectives have been taken into account at all stages of planning, implementation and monitoring of the investment strategy.

Details on the Scheme’s investment arrangements are set out in the Investment Implementation Document (“IID”). 

Governance

The Trustees of the Scheme make all major strategic decisions including, but not limited to, the Scheme’s asset allocation and the appointment and termination of investment managers.

When making such decisions, and when appropriate, the Trustees take proper written advice. The Trustees’ investment advisers, KPMG LLP, are qualified by their ability in, and practical experience, of financial matters, and have the appropriate knowledge and experience. The investment advisers’ remuneration may be a fixed fee or based on time worked, as negotiated by the Trustees in the interests of obtaining best value for the Scheme.

Investment objectives

The Trustees invest the assets of the Scheme with the aim of ensuring that all members’ current and future benefits can be paid. The Scheme’s funding position will be reviewed on an ongoing basis to assess the position relative to the funding target and whether the investment arrangements remain appropriate to the Scheme’s circumstances. The Scheme’s funding target is specified in the Statement of Funding Principles.

The majority of the liabilities of the Scheme are in respect of pensions in payment, and are likely to remain so.  In balancing the need to match these liabilities closely  with the need to achieve sufficient returns on the Scheme’s total assets, the Trustees’ present policy is to invest approximately 25% of total assets in return seeking assets and 75% in liability matching investments (including a pensioner buy-in).  This will be reviewed formally following each actuarial valuation. The exact proportions will vary over time in line with market movements and the Trustees’ views on the most appropriate assets to use at that time.  Investment strategy

The Trustees take a holistic approach to considering and managing risks when formulating the Scheme’s investment strategy.

The Scheme’s investment strategy was derived following careful consideration of the factors set out in Appendix A. The considerations include the nature and duration of the Scheme’s liabilities, the risks of investing in the various asset classes, the implications of the strategy (under various scenarios) for the level of employer contributions required to fund the Scheme, and also the strength of the sponsoring company’s covenant. The Trustees considered the merits of a range of asset classes. 

The Trustees recognise that the investment strategy is subject to risks, in particular the risk of a mismatch between the performance of the assets and the calculated value of the liabilities. This risk is monitored by regularly assessing the funding position and the characteristics of the assets and liabilities. This risk is managed by investing in assets which are expected to perform in excess of the liabilities over the long term, and also by investing in a suitably diversified portfolio of assets with the aim of minimising (as far as possible) volatility relative to the liabilities. 

The assets of the Scheme consist predominantly of investments which are traded on regulated markets.

Investment Management Arrangements

The Trustees have appointed several investment managers to manage the assets of the Scheme as listed in the IID. The investment managers are regulated under the Financial Services and Markets Act 2000.

All decisions about the day-to-day management of the assets have been delegated to the investment managers via a written agreement. The delegation includes decisions about:

-        Selection, retention and realisation of investments including taking into account all financially material considerations in making these decisions;

-        The exercise of rights (including voting rights) attaching to the investments;

-        Undertaking engagement activities with investee companies and other stakeholders, where appropriate.

The Trustees take investment managers’ policies into account when selecting and monitoring managers. The Trustees also take into account the performance targets the investment managers are evaluated on. The investment managers are expected to exercise powers of investment delegated to them, with a view to following the principles contained within this statement, so far as is reasonably practicable. 

As the Scheme’s assets are invested in pooled vehicles (aside from the buy-in), the custody of the holdings is arranged by the investment manager. 

Investment Manager Monitoring and Engagement  

The Trustees monitor and engage with the Scheme’s investment managers and other stakeholders on a variety of issues. Below is a summary of the areas covered and how the Trustees seek to engage on these matters with investment managers.

Through the engagement described above, the Trustees will work with the investment managers to improve their alignment with the above policies. Where sufficient improvement is not observed, the Trustees will review the relevant investment manager’s appointment and will consider terminating the arrangement.

Employer-related investments

The policy of the Trustees is not to hold any employer-related investments as defined in the Pensions Act 1995 and the Occupational Pension Schemes (Investment) Regulations 2005 except where the Scheme invests in collective investment schemes that may hold employerrelated investments. In this case, the total exposure to employer-related investments will not exceed 5% of the Scheme’s total asset value. The Trustees will monitor this on an ongoing basis to ensure compliance.

 Direct Investments

Direct investments, as defined by the Pensions Act 1995, are products purchased without delegation to an investment manager through a written contract. When selecting and reviewing any direct investments, the Trustees will obtain appropriate written advice from their investment advisers.

Compliance

This statement has been prepared in compliance with the Pensions Act 1995, the Pensions Act 2004, and the Occupational Pension Schemes (Investment) Regulations 2005. Before preparing or subsequently revising this Statement, the Trustees consulted the sponsoring employer and took appropriate written advice. The Statement is reviewed at least every three years, and without delay after any significant change in the investment arrangements.

 Appendix A – Risks, Financially Material Considerations and Non-Financial matters 

A non-exhaustive list of risks and financially material considerations that the Trustees have considered and sought to manage is shown below. 

The Trustees adopt an integrated risk management approach. The three key risks associated within this framework and how they are managed are stated below:

The Scheme is exposed to a number of underlying risks relating to the Scheme’s investment strategy, these are summarised below:

Appendix B 

The Trustees have the following policies in relation to the investment management arrangements for the Scheme: