Member Protection Statement
- A trustee holds the assets of the trust for the benefit of the members and their beneficiaries in accordance with the trust’s Trust Deed and Rules.
- A trust structure is intended to deliver a level of member security by keeping the trust’s assets separate from those of the employer.
- It is the trustees’ duty to act in the best interests of the scheme members and other beneficiaries. This includes monitoring the suitability of all investments.
In broad terms, the floating charge together with the law on the winding-up of long-term insurers gives all pooled fund policyholders priority over the pooled assets for the value of their units.
Financial Services Compensation Scheme
In the event of PMC insolvency, if there is any shortfall after the operation of the floating charge, PMC clients who are eligible claimants under Financial Services Compensation Scheme (FSCS) criteria may be able to make recoveries of the shortfall (if any) from the FSCS up to 100% of any eligible claim, although we believe this position has yet to be tested. It should be noted that an insolvency event of this kind that ultimately resulted in a detrimental impact on members’ pension pots would be an extreme event.
- If a participating employer were to become insolvent, as the trust assets are held under trust they are legally separated from the assets of the employer and would not therefore be available to creditors of the insolvent employer.
- If XPS Pensions Consulting Limited (‘XPS PCL’) (the Founder) were to become insolvent, as the Trust’s assets are held under trust, they are held outside of this company and, therefore, they would not be available to creditors of XPS PCL.
- If the Trust terminated on the insolvency of the Founder, there is a risk that Trust assets would be required to meet the costs of administering the wind up of the Trust. One of the key features of The Pension Schemes Act 2017 is the obligation for the Trust to be able to demonstrate that they have access to sufficient financial resources to continue to operate. As part of the ongoing supervisory requirements the Trust has to provide evidence on an annual basis that sufficient financial reserves exist in the event of the failure of the Founder.
- If XPS Administration (a trading name within XPS PCL) were to become insolvent, new administrators would be appointed by the Trustee.
- If PMC (Investment Manager) were to become insolvent, new investment managers would be appointed. It is possible that the legal investment vehicle held by the Trustee with the Investment Manager could, in extreme situations, be impacted upon by the insolvency but the regulatory structure provides considerable protections.
The contributions made to the Trust buy units in investment funds for the benefit of trust members. The value of these units can go down or up depending on the way the investments perform and will affect the value of members’ pension accounts. Any investment losses caused by movements in unit prices are not covered by the FSCS.
The trust structure affords protection for members’ interests as the separation of services and legal ownership of trust assets, which are independently controlled by the Trustee, means that timely, proactive changes can be made to any elements of the service, such as the investment provider.