How we keep your money safe
You work hard to build up your pension savings, so it’s important to make sure your money is safe. It is also important to note that the value of your account can go up or down over time depending on how your investments perform.
We want to make sure that we minimise other risks to the security of your money. Find out how the following areas can help you if and when you need it.
Our pension scheme uses Legal & General Assurance (Pensions Management) Limited (PMC) to manage, buy and sell our investment assets. PMC is authorised by the Prudential Regulatory Authority (PRA) and regulated by the Financial Conduct Authority (FCA). We refer to them as our current platform manager.
The Financial Services Compensation Scheme
The Financial Services Compensation Scheme (FSCS) is an independent government body that is in place to offer you protection in the event of a failure of a regulated financial services firm.
Contracts of long-term insurance, such as the ones the trustee have with our platform manager, should be covered by the FSCS for 100% of the claim with no upper limit. However, FSCS claims are considered on an individual basis and no large master trusts have yet claimed. The PRA may also take other actions to protect your funds, including transferring the policy to another insurance firm so that a claim is not required.
Other investment managers
For investment managers who are not our current platform manager (for example, the Sharia Fund is a HSBC fund), the platform manager would not be eligible to claim on the FSCS in the event of their insolvency.
In the event of the manager becoming insolvent and ceasing to operate, the platform manager would seek to exercise their right of recovery to protect the value of your funds. The trustee on your behalf would then seek to reclaim those funds from the platform manager.
A custodian is a third party that holds the assets of a pension scheme, including ours. This is one of the steps we have in place to keep our assets safe. These custodians are independent of us and our platform manager.
We also have a bank account that we use to manage the pension scheme’s cash flow. The level of funds in the bank account is kept relatively low as we keep members' assets invested wherever possible.
The bank account is a high street name (subject to capital requirements and regulatory oversight) and there are agreed authorised signatories and limits in place to make sure due process is followed when money leaves the account.
Your invested contributions are separate to your employer and they have no access to those funds. If your employer goes insolvent, the contributions received will remain invested. Under the Trust, the assets are independent of any debt the employer may have due to creditors and would not be made available to them.
Our trustees take all reasonable steps to make sure members' assets are safe and secure.
That includes a number of oversight responsibilities:
Any new funds must meet a minimum standard, as confirmed by their investment adviser.
An annual security of assets review is undertaken, with the support of legal advice.
Regular monitoring of assets, with the support of the Investment Sub Committee.
Regular meetings with asset managers.
Annual supplier review of the platform manager.
Additional reporting from the platform manager, including assessments of the controls in place and the capital they hold.
We have a robust business plan and continuity strategy in place, including reserving (holding ring-fenced money aside in case it is needed) that we share and discuss with The Pensions Regulator. This means that the pension scheme is clear on their direction, and if something does go wrong, there is a robust plan and funds available to support the pension scheme and protect members' money.
Even if Smart Pension were to cease operations, the continuity strategy would be enacted to transfer members' funds to another master trust (with a new group of trustees) and Smart Pension as a pension provider would not have any legal basis to access those funds.