Case Study: Corporate Sole Trustee for a large new single-employer DC scheme (Pensions and Pegasus)
Background
In 2018 EY designed a new Defined Contribution (DC) auto-enrolment arrangement for current staff.
This is relatively uncommon given the trend towards consolidation in the DC space. EY was innovative in their thinking in setting up this single employer trust-based DC arrangement which allowed more flexibility in managing audit firm independence requirements.
Why Corporate Sole Trusteeship?
EY was focused on implementing an effective and efficient governance process and concluded that collaborating with professionals appointed as Corporate Sole Trustee (CST) was the way to ensure this.
LawDeb’s team-based approach to CST was attractive to EY. We provide a completely integrated trustee and governance service with our Pegasus team performing the secretarial and pensions management work for the trust.
EY value the support provided by other LawDeb Trustee Directors with specialist expertise engaging in discussion and decision-making such as Anna Eagles supporting on DC communications and Samantha Pitt on certain investment matters.
Adding value
LawDeb became involved during the design stage. As lead trustee director Robert Thomas was able to add value during design and implementation by:
- Bringing knowledge of the adviser market
- Together with EY, overseeing the work done by the providers
- L&G providing the platform and administration
- Aon acting as DC consultants and Investment Consultants
- Inputting into member communications using experience of similar successful communications strategies
- Bringing experience of previous bulk transfer processes, e.g. in relation to controls and critical decision points
As CST LawDeb focuses on making sure the trust is run in a way that meets the sponsor’s business requirements while ensuring we meet our governance and fiduciary responsibilities.
Quarterly stewardship meetings involving EY, L&G and Aon have some of the feel of a trustee meeting, bringing welcome challenge and a diversity of perspectives. This strong collaborative approach has undoubtedly helped deliver great solutions for EY’s workforce.
Key areas of ongoing CST focus are:
Member engagement
Member engagement is at the heart of this arrangement. EY was highly focused on making the trust an attractive option for members, and LawDeb collaborated to deliver this, harnessing the benefits of L&G’s offerings as platform provider.
As well as being the home of new retirement savings contributions, members were invited to participate in a bulk transfer from the predecessor contract based scheme. We focused on making the messaging as tailored as possible and the uptake was strong.
We frequently discuss the profile of members with EY and look to make sure communications are tailored . For example:
- A high proportion are relatively early in their careers
- They tend to be open to ESG considerations
- They embrace use of technology – in fact paper is only used for anything as a last resort
Sustainability and ESG
Sustainability is high on the agenda at EY so not surprisingly the plan is ahead of many others we see, in incorporating ESG into the default option. As ESG investment propositions develop and reporting improves we expect to see further developments.
Regulatory expectations are also a driver, for example we will be getting ahead of requirements around climate reporting. LawDeb’s work across 190+ schemes helps us anticipate trends and work with stakeholders to apply solutions swiftly.
Where we are and what’s next?
The remit for EY’s pension team is extensive and LawDeb’s team structure has given them confidence to leave the running of the trust to LawDeb, whilst of course maintain thorough oversight and input.
The trust has now been live for over 2 years with pleasing uptake from existing employees. Member communications, ESG and Investment Strategies are ever-evolving with LawDeb and EY driving this innovation.