1. Empowering Trustees through Technology
Sanjay Gupta and Danielle Avital
22 November 2016
© 2016 Willis Towers Watson. All rights reserved.

2. Introduction
Technology is an effective medium through which Trustees can empower themselves. Technology can enhance:
Trustees’ knowledge and understanding;
Trustees’ ability to remain up-to-date in an ever changing pensions environment;
Trustees’ influence and negotiating strength;
The ease and speed with which decisions are made; and
Connectivity and sharing of knowledge.
This presentation looks at the ways that technology can play a part in the major Trustee roles and responsibilities. In particular this presentation will cover:
The valuation process;
Pension scheme governance; and
Communication and DC schemes.
Throughout this presentation the ‘XYZ Pension Scheme’ with a triennial valuation as at 30 June 2016 will be used as an example.
© 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.

3. The valuation process Prior to the valuation date
Prior to a formal valuation, the Trustees wish to monitor the following on a regular basis:
Market conditions;
Likely Scheme assumptions;
Scheme’s funding level on a range of bases;
Scheme’s deficit on a range of bases; and
Scheme’s position against previous recovery plan.
Without live tracking tool
With live tracking tool
Understanding the Scheme’s funding position can be an irregular and delayed process
Monitoring market conditions can be onerous and time consuming
The Trustees can gain instant access to a number of pre-agreed bases (e.g. Technical Provisions and solvency basis)
Funding levels and movement since the previous valuation can be viewed daily
© 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.

4. The valuation process - Asset and Liability tracking tool
Prior to the valuation date
© 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.

5. The valuation process - Asset and Liability tracking tool
Prior to the valuation date
© 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.

6. The valuation process Following preliminary results
Following the initial stages of the valuation, the preliminary results will be presented to the Trustees. These will form the backbone of the negotiations with the employer, around a suitable basis and, if necessary, contributions.
Without technology
With technology
Results from the valuation seem static and potentially unengaging
Potential difficulty understanding the sensitivity of the results
The need to allow for post valuation experience can take significant time
Trustees can see the impact on liabilities of a change in discount rate, inflation based assumptions or future improvements
Trustees can have a live discussion about the impact on the funding level of a different contribution amount or recovery period
© 2016Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.

7. The valuation process – Funding Illustrator tool
Following preliminary results
© 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.

8. The valuation process Valuation negotiations
Valuation negotiations can be a power struggle between the Trustees and the Employer.
The Trustees first and foremost priority is the security of members’ accrued benefits.
Securing sufficient deficit reduction contributions is key.
Without technology
With technology
Can be difficult to appreciate the impact on the projected funding level due to the change in any one of the following:
Frequency of payments;
Variability in level of payments;
Recovery period length; or
Assumed asset outperformance.
Ability to model a range of recovery plan scenarios with real-time changes in the underlying factors.
Example of such a tool is here
© 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.

9. The valuation process Valuation negotiations
© 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.

10. The valuation process Valuation negotiations
© 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.

11. The valuation process Valuation negotiations
© 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.

12. Scheme governance Integrated Risk Management Without technology
The Pensions Regulator has recently issued guidance on Integrated Risk Management
…there is a need for Trustees to comply with this guidance
An onerous task to dissect the Regulator’s 46 page document
Hard to quantify Trustees level of compliance
With technology
Compact way to understand Trustees current compliance against their target levels
Ease of creating an action plan to ensure compliance
© 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.

13. Scheme governance Integrated Risk Management Governance
Risk management and internal controls
Trustee understanding and appropriate skills
Relations between trustees and sponsor
Relations with service providers
Delegation of powers & responsibilities
Key
Dotted line indicates targeted practice / controls
Segments show current practice or control level
Operational efficiency
Paying benefits in accordance with scheme rules
Complete or accurate member records
Adherence to operational processes
Helping members to understand the scheme
Helping members to make decisions
Covenant, funding & investment
Understanding and quantifying risk appetite and impact
Risk assessment – funding
Risk assessment - investment
Risk assessment - covenant
Risk management – funding
Risk management- investment
Risk management - covenant
Triggers and contingencies
Documentation of risk management framework
Monitoring of scheme financial position – funding and investment
© 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.

14. Scheme governance Scheme management
Trustees need to keep up with the latest regulatory information and prepare for upcoming Trustee meetings. There is the need to:
Store documents and manage meeting papers
Share information
Transfer data files in a secure manner
Without technology
With technology
Delays in access to news and information
Risk of confidential data being leaked
Time consuming process to collate Trustee meeting packs
Increased efficiency of document sharing
Easier to amend Trustee meeting packs
Reduces printing requirements
© 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.

15. Scheme governance Scheme management
© 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.

16. Communication New and existing DC schemes
Trustees have a duty of care to employees joining a Defined Contribution scheme.
Auto-enrolment has encouraged pension scheme membership across the UK but the benefits to be gained stretch far wider than membership alone.
Without technology
With technology
Communication to members can be:
Unengaging;
Unclear;
Inflexible; and
Not personalised.
Through the use of online portals members are in a position to:
Better engage with their pension;
Make investment choices;
Tailor their investments to their risk appetite;
Make decisions on a suitable level of contributions;
Understand their benefits; and
Bring all of their retirement benefits together in one place.
The use of technology significantly helps to achieve the Regulator’s current focus on transparency of information, especially around investment charges
© 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.

17. Communication New and existing DC schemes
© 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.

18. Other Trustee Roles Trustee Knowledge and Understanding
Trustees are required by the Pensions Act 2004 to have a minimum level of knowledge and understanding in relation to scheme funding, the pensions environment and investments.
Trustees can use technology to:
Keep up to date between Trustee meetings;
Understand market movements
Particularly in the context of Brexit and the US election result;
Access online training;
Listen to talks from trained professionals; and
Remain commercially aware, not just in the direct context of pensions.
© 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.

19. Other Trustee Roles Trustee Knowledge and Understanding
Use of social media, such as Twitter or LinkedIn, to follow key individuals or organisations to keep up-to-date, examples include:
Pension Advice
The Pensions Regulator
Department for Work & Pensions
Association of Member Nominated Trustees
Key political figures
Richard Harrington
Ros Altman
Steve Webb
Various news broadcasters
Consulting firms (actuarial, investment)
Online Trustee Toolkit with a range of additional learning
Webinars and live conferences from various organisations
© 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.

20. Other Trustee Roles Trustee Knowledge and Understanding
© 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.

21. Questions?
© 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.