Pension scheme registry number: 12005993 · The People s Pension Scheme Annual report and financial statements for the year ended 31 March 2017 1 At a glance 2 Chair’s review 4

Delivering great value and service for our membership as a whole

The People’s Pension SchemeAnnual report and financial statementsFor the year ended 31 March 2017Pension scheme registry number: 12005993

The People’s Pension Scheme A

nnual report and financial statements for the year ended 31 M

arch 2017

1

At a glance 2

Chair’s review 4

Trustee, Directors and advisers 7

Trustee’s report 9

Statement of Trustee’s responsibilities 16

Governance Statement 17

Independent auditors’ report to the Trustee of The People’s Pension Scheme 20

Fund account 22

Statement of net assets available for benefits 23

Notes to the financial statements 24

Contents



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At the end of the financial year there were 2,749,566 members (2016 – 1,972,337) within the Scheme.

At the end of the financial year, the Scheme had net assets with a total value of £2bn (2016 – £1bn).

Contributions into the Scheme totalled £620m during the financial year (2016 – £435m), while net returns on investments totalled £291m (2016 – £3m).

2,749,566 members(2016 – 1,972,337)

48,551 employer sections(2016 – 17,218)

£2bn net assets total value(2016 – £1bn)

£620m contributions into Scheme(2016 – £435m)

£13m benefits drawn from Scheme(2016 – £6m)



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At a glance

2

During the year members drew benefits from the Scheme totalling £13m (2016 – £6m).

At the end of the financial year there were 48,551 employer sections (2016 – 17,218) within the Scheme.



arch 2017 The People’s Pension Schem

e Annual report and financial statem

ents for the year ended 31 March 2017

Best Overall Customer Service

Winner of Best Mastertrust 2016

P E N S I O N S I N S I G H T

AWA R D S 2 0 1 6

WINNER

Awarded the Defaqto 5 Star Rating for auto-enrolment 2017

Winner of Best Auto-Enrolment Implementation 2017

Winner of Best Master Trust 2017

Award winning This year, both B&CE and The People’s Pension have continued to win awards for providing high-quality service and support, including Best DC Mastertrust, Best Auto-Enrolment Implementation, and Best Master Trust.

B&CE also finished top for Best Overall Customer Service in the Top 50 Call Centres for Customer Service list – beating household names in financial services and beyond…

3



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This is the fifth Annual report and financial statements for The People’s Pension Scheme (the Scheme), covering the year to 31 March 2017, issued by The People’s Pension Trustee Limited (the Trustee).

The Scheme has achieved a great deal of success over the last year, against a dynamic, ever-changing pensions landscape full of both challenges and opportunities. The Scheme has once again played a full part in implementing the key government policy of automatically enrolling eligible workers into workplace pensions throughout the UK.

The membership of the Scheme has grown at an incredible rate. By 31 March 2017 the Scheme had over 2.7 million members and assets under management of £2 billion, making it the UK’s largest private sector automatic enrolment pension scheme. Total membership grew by 800,000 members in the last 12 months, continuing the rapid growth of the Scheme since its launch. As the scale of the Scheme has grown, the governance, investment and service aspects of the Scheme have evolved to meet increased demands. The Scheme is now the selected workplace pension scheme for over 48,000 businesses – an increase of over 31,000 in the last 12 months. Many of these recent new participants were smaller employers reaching their automatic enrolment staging dates. These statistics are beyond expectations and I believe the Scheme is a true national success story.

The Scheme continues to deliver high quality service and support to members and employers. This is driven by B&CE, the Scheme’s Founder and administrator. The Trustee’s monitoring of B&CE has indicated consistently strong service delivery with excellent member, employer and industry feedback. This is evidenced by many industry awards, including Best Mastertrust at the Pensions Insight DC Awards 2016, Best Auto-Enrolment Implementation at the Pensions Age Awards 2017, Best DC Master Trust at the UK Pensions Awards 2017, ‘Master Trust Offering of the Year’ at the European Pensions Awards 2017 and Best Master Trust at the Corporate Adviser Awards 2017.

B&CE also won Best Overall Customer Service at the Top 50 Companies for Customer Service awards, alongside other service awards, and Highly Commended for ‘Best Group Pension Provider’ at the Corporate Adviser Awards 2017. Finally, Alan Pickering, Trustee Director, was recognised at the UK Pensions Awards 2017 for having made the greatest contribution to occupational pensions over the last 20 years. Alan has been on the Trustee Board since the inception of the Scheme. I strongly believe that these range of awards – spanning scheme concept, service delivery and governance – demonstrate the strength and quality of The People’s Pension Scheme.

The Trustee Board and its Committees

The Trustee Board meets on a quarterly basis. This extensive, full day meeting covers all primary elements of scheme governance and representatives of top B&CE management are required to attend to present across relevant service areas. For a scheme of this size, the workload for the Trustee Board is considerable and therefore certain elements of governance are delegated to sub-committees. The Board operates two formal sub-committees. The Investment Committee is responsible for the implementation of investment strategy, investment monitoring and formulating recommendations to the Board on strategy changes. The Risk, Administration and Communications Committee (RAC), which was formed in 2017 to meet the increased governance demands of the growing Scheme, has responsibility for risk assessment and monitoring, oversight and evaluation of administrative services and the effectiveness and accuracy of Scheme communications. In addition, as and when appropriate, the Trustee Board may form ad hoc sub committees or working parties to deal with discrete projects and issues. All sub committees and groups have clear terms of reference or a project brief and must report to the full Board, for (as appropriate) noting, approval and/or ratification of decisions and actions.

Chair’s review

These statistics are beyond expectations and I believe the Scheme is a true national success story.

Steve Delo Chair of the Trustee



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The Trustee Board and its Committees (continued)

The Trustee Board is supported by a dedicated Trustee Pensions Manager, responsible for progressing Trustee business and project control. B&CE also supports the Scheme through its Customer and Market Insights Committee. This acts as a vital source of information for the Trustee Board and B&CE by providing insight into the pensions and financial service marketplace, understanding the Scheme’s customers through research which is then communicated and used by the Trustee and B&CE Boards in their governance and regulatory duties.

The Trustee’s objective is to maintain a standard of governance that befits a scheme of this scale and which exceeds the standards envisaged by The Pensions Regulator’s Code of Practice 13 and The Institute of Chartered Accountants in England and Wales (ICAEW) assurance framework for master trusts.

Scheme management skills

Our Trustee Directors take part in a programme of continuous learning and development to make sure that they maintain the skills and knowledge to run the Scheme. This includes professional development, external training and formal face-to-face training at Trustee meetings. All five Trustee Directors are trained on current regulatory and industry issues, including the recent Pension Schemes Act 2017.

We also declare in writing that we meet the standards required by the Trustee ‘fitness and propriety’ policy. As Chair of the Trustee, I carry out detailed assessments of the Trustee Board’s effectiveness. Each of the Trustee’s advisers is subject to periodic performance reviews.

Risk assessment and oversight are a vital part of our role. That’s one of the main reasons we formed the RAC. As part of its role, this committee has responsibility for maintaining and monitoring the Scheme’s risk register. Key risks to the Scheme are evaluated and re-evaluated, and mitigating actions are identified and monitored as a result.

Administration

The Pensions Regulator (TPR) states that ‘good administration is the bedrock of a well-run scheme’. That’s why it’s so important that the Scheme has the right people and processes in place to ensure high-quality administration.

Making sure we have good quality member data (including personal email address, home address and date of birth) is key to the smooth running of the Scheme too. Employers and employees have an important part to play here.

Investment governance

A large amount of Trustee time is spent setting investment strategy and tightly governing the Scheme’s investments. This is to try to ensure good outcomes for members.

To this end, in September 2016, the Trustee made some changes to the way members’ pension savings are invested as they approach retirement. These changes took into account the additional flexibilities members now have at retirement, and followed detailed research findings into member preferences and behaviour.

Value for members

Offering great value for members is important to us. The Trustee has built up a detailed understanding of the costs and charges of running the Scheme. We balance these against the benefits of the Scheme for members. These benefits span governance and management, investment, administration, and communications.

The Trustee monitors our members’ retirement journey, and the appropriateness of the options offered at retirement. We do this in light of legal and regulatory changes – so it’s definitely an ongoing process given the ever-changing landscape.

Allowing bulk transfers into the Scheme means employers can simplify their company defined contribution pension arrangements. And it means members can put their existing pension pots in one place. We believe members are likely to benefit from lower costs and better service as a result. And the regulatory direction of travel is towards consolidation of smaller schemes into larger schemes that can access greater economies, service efficiencies and better governance.

The current regulatory structure for carrying out bulk transfers is cumbersome. The Trustee is currently working on a streamlined transfer process that we hope will benefit everyone involved.

The Trustee is confident that the Scheme offers value for money for its members. Indeed, we believe it represents excellent value. We’ve identified a number of challenges, as we always want to improve what we do, and we are already discussing ways to address these over the next Scheme year.

Chair’s review (continued)



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Communicating and reporting

The Trustee is committed to understanding members’ views and needs. We aim to communicate with members at the right time – in the right way – to help them make good decisions.

To make sure that we do this, we’ve got a robust process in place. Any changes to core communications can’t happen without our approval. When signing something off, we put ourselves in the shoes of members. We make sure the message is clear, that communications are legally watertight, and that they meet industry standards. In short, that they will deliver for our customers.

The timing of our communications is also important. We ensure members hear from us and can engage with us at key stages of their retirement journey to help them make the right decisions.

It has been another busy year in policy terms. We have seen the delivery of a prototype pensions dashboard supported by the industry. This could help revolutionise member engagement at all stages of the savings journey. We have seen a new Pension Act become law, designed to create greater protection for the millions of savers who are relying on master trusts to save for later life.

And the government has brought together a selection of the best and brightest in the industry (including another co-director, Ruston Smith) to carry out an in-depth review of automatic enrolment five years after it was launched. This is looking at coverage (how to bring currently excluded groups such as the self-employed and part-time workers into automatic enrolment), contributions (how phasing might affect the programme) and how to build greater employee engagement with pensions. It’s an important review, and one which we’ve responded to on behalf of our members.

As I’ve already said, we’ve seen the Scheme build much greater scale over the last 12 months on all fronts. B&CE has increased its operational capacity to tackle the logistical and administrative challenges that serving such an increase in customers brings.

B&CE has strong values (Creating Simplicity, Showing Compassion and Keeping Promises) and a robust business model. It has planned well, resourced in advance and used technology in innovative ways. On behalf of the Trustee, I would like to thank all at B&CE for their excellent work, enthusiasm and dedication to providing a first-class customer experience for everyone they work with.

Finally, I’d like to thank my fellow Trustee Directors for all that they do. Alan Pickering, Andrew Cheeseman, Sue Lewis and Ruston Smith are all highly motivated people with genuine enthusiasm for the Scheme. Between them, a blend of hard work, wisdom, and encyclopaedic knowledge of pensions means our governance is strong, fair and rigorous. They are entirely focused on how to make the Scheme as good as possible for members and employers.

On behalf of the Trustee Board, I commend The People’s Pension Scheme to all members and employers.

Steve Delo Chair The People’s Pension Trustee Limited 29 August 2017

Chair’s review (continued)



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Trustee, Directors and advisers

Trustee

The People’s Pension Trustee Limited acts as corporate trustee of the Scheme.

Directors of The People’s Pension Trustee Limited

The Directors of the Trustee who served during the year and up to the date of signing are listed below.

Steve Delo Chair of the Trustee

Steve is Managing Director of PAN Governance LLP, and a former President of the Pensions Management Institute (PMI). He sits on the trustee boards of a number of UK pension schemes with total assets of more than £15bn. He has won individual professional awards, including Business Presenter of the Year, Pensions Personality of the Year and Independent Trustee of the Year.

Andrew Cheeseman Trustee Director

Andrew is a prominent industry figure, described by the media as ‘a hugely effective, no-nonsense independent trustee’. He has previously held senior management and consulting roles in various major pensions businesses. He is one of the few trustees in the UK who is regulated for the conduct of investment business by the Financial Conduct Authority (FCA).

Alan Pickering CBE Trustee Director

Alan is Chairman of BESTrustees and is a Trustee of a number of pension schemes including The Plumbing Industry Pension Scheme.

He has over 40 years’ experience across a wide variety of roles in the pensions industry. He has sat on the board of a number of important industry bodies, including serving as Chair of the former National Association of Pension Funds (now the Pensions and Lifetime Savings Association).

Sue Lewis Trustee Director (appointed 1 April 2016)

Sue chairs the Financial Services Consumer Panel. She is a Trustee of leading debt charity StepChange, and also sits on the Professional Standards Board of both the Chartered Insurance Institute and Chartered Banker Institute. Sue works with international bodies on financial education, financial inclusion and consumer protection regulation. She was previously a senior civil servant, most recently responsible for savings and investments policy in HM Treasury.

Ruston Smith Trustee Director (appointed 1 April 2016)

Ruston is the former Group Director – People, Pensions and Insurable Risk at Tesco PLC and currently chairs its main defined benefit and defined contribution pension arrangements. He is also Non-Executive Chair of Tesco Pension Investments Limited.

Ruston is co-Chair of the DWP’s Auto Enrolment Review Advisory Board, a Non-Executive Director of JP Morgan Asset Management International, Chairman of PTL Limited, former Chairman and now Non-Executive Director of the Pensions and Lifetime Savings Association, Governor of the Pensions Policy Institute, Chairman of GroceryAid and a Trustee of the National Council for Palliative Care.

Ruston has won a number of awards including Trustee of the Year and an industry achievement award.



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Secretary Lydia Harratt (appointed 27 February 2017) Paul Forster (resigned 30 April 2016)

Registered office The People’s Pension Trustee Limited Manor Royal, Crawley, West Sussex, RH10 9QP

Scheme administrator B&CE Financial Services Limited

Bankers HSBC Bank plc

Independent auditors PricewaterhouseCoopers LLP

Investment managers State Street Global Advisers Limited HSBC Investment Funds (Luxembourg) S.A.

Investment adviser Barnett Waddingham LLP

Legal adviser Eversheds Sutherland (International) LLP

Contact us

Further information is available at www.thepeoplespension.co.uk.

You can also contact us in the following ways:

Telephone: Existing employer customers and advisers: 01293 586666 or 01293 586637 New employer customers and advisers: 0800 612 8080 or 01293 586637 Members: 0300 2000 555 or 0300 2000 444

Email: [email protected]

Post: The People’s Pension Trustee Limited Manor Royal, Crawley, West Sussex, RH10 9QP

Trustee, Directors and advisers (continued)



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Trustee’s report

The Trustee of the Scheme presents its annual report for the year ended 31 March 2017.

Scheme constitution and management

The Scheme was established in 2012 by B&CE Holdings Limited (the Founder) as an occupational defined contribution master trust to provide retirement benefits. It is currently governed by the Rules of the Scheme dated 25 October 2013 and an amending deed dated 17 November 2015. The Founder changed its name from Building and Civil Engineering Holidays Scheme Management Limited on 1 April 2016.

The Trustee has responsibility for setting the strategy and overseeing the operation of the Scheme. During the year the Trustee had five Directors, as described on page 7. The Directors of the Trustee are appointed and can be removed by the Founder. The Directors are paid a fee and reimbursed by the Founder for expenses incurred in the performance of their duties as Directors of the Trustee.

The Trustee has set up an Investment Committee comprising three of the Directors to oversee the Scheme’s investments in line with the Trustee’s agreed strategies and the Scheme’s Statement of Investment Principles (SIP). The Investment Committee either agree or make recommendations to the Trustee Board on all investment matters such as investment manager selection, and investment vehicles. All its decisions are reported to the Trustee. The Investment Committee receives investment performance reports from the investment adviser at each meeting.

During 2016, the Trustee set up a Risk, Administration and Communications Committee (RAC) to ensure that the members’ needs are properly considered and that the requirements for processing core financial transactions are met.

The Trustee appointed administrator, B&CE Financial Services Limited (the Administrator), is a subsidiary of the Founder. The Administrator carries out the day-to-day operation of the Scheme including communication with members and processing contributions and allocations to members’ pension funds on behalf of the Trustee. A Service Level Agreement (SLA) is in place with the Administrator and quarterly service reports are provided to the Trustee, which include details of whether these levels have been attained. The Administrator has agreed to pay all fees and expenses payable by the Scheme (excluding investment management fees) and receives an administration fee from the Scheme in respect of the services that it provides.

The Trustee has appointed professional advisers and other organisations to support it in delivering the Scheme’s objectives. These individuals and organisations are listed on page 8. The Trustee has written agreements in place with each of them.

Details of the number of meetings and the Directors’ attendance at Trustee Board and Committee meetings is in the table below:

Trustee Board Investment Committee Risk, Administration and Communication Committee

Steve Delo 4 5 n/a

Andrew Cheeseman 4 5 1

Alan Pickering 4 4 n/a

Sue Lewis 4 n/a n/a

Ruston Smith 4 n/a 1

Financial developments and financial statements

The financial statements included in this annual report are the accounts required by the Pensions Act 1995. They have been prepared and audited in compliance with regulations made under sections 41(1) and (6) of that Act.

for the year ended 31 March 2017



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Membership and benefits

The change in membership during the year is as follows:

MembersAt the start of the year 1,972,337

New members joining 842,301

Members opting out (42,518)

Cancellation of duplicate accounts (4,540) 1

Net members before leavers 2,767,580

Members leaving with short service refunds (983)

Members retired (11,261)

Members transferred out (4,375)

Members deceased / terminal illness (1,395)

At the end of the year 2,749,566

Active members 1,495,577

Deferred members 1,253,989

At the end of the year 2,749,566

1 Duplicate accounts arise when a member is enrolled in the Scheme by more than one employer or when an employer enrols a member in error.

In total 2,943,454 individuals have been enrolled into the Scheme since October 2012. Of the individuals who have been enrolled, 6.6% have chosen to opt out of the Scheme. At the end of the year there were 48,551 employer sections in the Scheme (2016 – 17,218).

Where an active member has an employer, both the employer and member are required to pay contributions for that member at a rate in accordance with the appropriate participation agreement. A payment schedule is prepared for each employer’s section of the Scheme and contributions must be paid by the employer in accordance with the participation agreement and by the due date specified in that schedule. The employer remits their contributions by submitting a contributions schedule to the Administrator. If the Scheme is not in receipt of a contributions schedule and payment by the due date then the Trustee is required to consider reporting the breach to The Pensions Regulator (TPR). Members may make additional voluntary contributions to the Scheme if they so wish.

Trustee’s report (continued)



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Membership and benefits (continued)

A member’s pension can currently be taken out of the Scheme in the following ways:

Retirement Members aged 55 or over can generally choose from the following options (some are available earlier than age 55 where retiring on ill health grounds):

• Keep their pension where it is. Members who don’t need to access their pension pot yet, can leave it invested.

• Take it all in one go. Members with £10,000 or less can withdraw the entire fund as one lump sum. 25% is tax-free and the remainder will be taxed at the member’s marginal rate.

• Take it a bit at a time as flexible lump sums. There are two ways for members to do this depending on how they want to take their 25% tax-free cash. With the first option, members take their tax-free cash gradually. The technical name for this option is an ‘uncrystallised funds pension lump sum’ (or UFPLS). With the second option, members take their tax-free cash up front as flexi-access drawdown through a pension provider or insurer. To start, members need to have £10,000 or more in their pension pot.

• Buy a guaranteed income (annuity). Up to 25% of the fund can be paid out as tax-free cash while the remainder is used to purchase an annuity with an insurer to provide a guaranteed level of income for life.

Transfer The Scheme can pay transfers out to other HM Revenue & Customs (HMRC) registered schemes that are able to accept a transfer in.

Death The Trustee will pay the member’s pension to one or more persons in the event that a member dies before taking their money out of the Scheme. The Trustee can pay the pension to a number of persons including relatives, dependants and member nominated beneficiaries.

The decision on who receives the fund is at the Trustee’s discretion but members are encouraged to complete an expression of wishes nomination.

Short service refund Where an employer’s Deed of Participation allows it, a member who joined the Scheme before 1 October 2015 can choose to take a refund of their own contributions if they leave the Scheme with less than two years of qualifying service.



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Investment management

Investment strategy and principles

The Trustee is responsible for determining the Scheme’s investment strategy. In accordance with Section 35 of the Pensions Act 1995, the Trustee has prepared a Statement of Investment Principles (SIP). A copy of the current SIP, agreed on 26 May 2017, may be obtained from the contact for enquires on page 8 and is available at www.thepeoplespension.co.uk.

The Trustee monitors compliance with the SIP annually. During the year, and at the year end, all investments were in accordance with the SIP. The Trustee will review the SIP at least every three years and immediately following any significant change in investment policy.

Funds and investment risk

The Trustee’s key objective is to enable members to provide adequately for their retirement via an appropriate investment of their accumulated pension contributions.

There are currently three investment profiles for members to choose from in the Scheme:

Balanced • Medium to high risk• Potential for long-term growth with some security• Moves to lower risk investments approaching retirement• For members who prefer to take some risk but would also like some of their investments to be secure.

Cautious • Lower risk and volatility• Moderate growth over the long-term• Moves to lower risk investments approaching retirement• For members who are prepared to accept some degree of risk, but who look for investments

with lower volatility.

Adventurous • Higher risk and increased volatility• Aims to maximise growth in the long term• Moves to lower risk investments approaching retirement• For members who are prepared to take on more risk for the potential for increased growth.

New members are automatically placed into the ‘balanced’ investment profile unless they choose otherwise.

There are two main stages in the investment profiles. When joining the Scheme, members with more than 15 years to go before their selected retirement age enter a growth phase. This sees contributions invested in an equity based fund, which helps to maximise potential investment return with an appropriate level of risk. Then 15 years before their State Pension age (or the date they told us they’d like to retire) their pension savings are gradually moved into lower risk investments, the Pre-Retirement Fund.


How the glidepath works

Equity Fund

Pre-Retirement Fund

100%90%80%70%60%50%40%30%20%10%0%

49 57 6553 6151 5955 6350 5854 6252Age

% o

f fun

d

6056 6448474645



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Investment management (continued)

Funds and investment risk (continued)

Alternatively, members can decide for themselves what funds their money is invested in (self-select). They can choose from the Scheme’s range of funds. However, their money will not automatically move into lower risk investments as they approach retirement but can only be moved between the investment funds at the member’s request.

The Scheme has a range of passive investment funds for members to choose from. These are shown in the table below with the asset allocations as at 31 March 2017.

B&CE Global Investments (up to 60% shares) Fund

• Used in the cautious investment profile

• 30% UK equity, 30% global equity, 27% corporate bonds, 13% gilts


• Used in the balanced investment profile

• 40% UK equity, 40% global equity, 13% corporate bonds, 7% gilts


• Used in the adventurous investment profile

• 50% UK equity, 50% global equity

B&CE Ethical Fund • A higher risk fund available in the self-select option

• This fund’s investment process applies responsible investment criteria by excluding companies from investment who are non-compliant with the UN Global Compact principles and who are involved in the production of cluster munitions

• 100% global equity

B&CE Shariah Fund • A higher risk fund available in the self-select option

• Has an investment approach based on Islamic Shariah principles

• 100% global equity

B&CE Pre-Retirement Fund • Used in the 15 year glidepath

• 30% corporate bonds, 30% gilts, 20% money market, 20% global equity

B&CE Cash Fund • Invests in short-term money markets such as bank deposits and treasury bills

B&CE Annuity Fund • A medium/low risk fund available in the self-select option

• 70% corporate bonds, 30% gilts

Management and custody of investments

The Trustee has delegated management of the investments to professional investment managers, which are listed on page 8. The funds the Scheme invests in are built from pooled investment vehicles offered by leading investment managers.

The Trustee invests the assets of the Scheme with two investment managers: State Street Global Advisors Limited (SSGA) and HSBC Investment Funds (Luxembourg) S.A. (HSBC) via an investment only platform with SSGA. SSGA, which is regulated by the FCA in the United Kingdom, manages the investments within the restrictions set out in the investment management agreement which is designed to ensure that the objectives and policies set out in the SIP are followed.

The mandates put in place by the Trustee specify how rights (such as active voting participation and a requirement to consider social, ethical and environmental factors when making investment decisions) attaching to the Scheme’s investments are acted upon. These rights include active voting participation and a requirement to consider social, ethical and environmental factors when making investment decisions. While the Trustee has less influence over the underlying investments within the pooled investment vehicles, it still reviews the managers’ policies and statements of compliance in relation to these matters, and challenges the managers where it disagrees with their policies.

The Trustee has considered the nature, disposition, marketability, security and valuation of the Scheme’s investments and considers them to be appropriate relative to the reasons for holding each class of investment. More details about investments are given in the notes to the financial statements.

Custody of the underlying investments is carried out by State Street Bank and Trust Company.



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Fund performance

The performance of the funds (net of the 0.5% annual management charge (AMC)) is shown in the table below.

Despite the high levels of political uncertainty following the Brexit vote and the election of Donald Trump in the USA, investment performance has been very strong over the past 12 months. The equity markets in all major regions produced a positive return, with overseas equity regions being further bolstered by the fall in sterling. Fixed interest markets also posted strong gains.

The funds track a variety of indices as described below. The Trustee monitored the tracking error of the funds throughout the year and were satisfied with the performance against benchmarks.

Fund Fund performance

Benchmark performance

Benchmark


20.81% 1 Year11.91% 3 Year

22.47% 1 Year12.43% 3 Year

30% FTSE All-Share Index11% FTSE All-World Developed North America Index11% FTSE All-World Developed Europe ex UK Index5% FTSE All-World Japan Index3% FTSE All-World Developed Asia Pacific ex Japan Index27% Barclays Sterling Corporate 15 Year+ Index13% FTSE A Government (Over 15 Year) Index


24.07% 1 Year11.38% 3 Year

24.76% 1 Year11.85% 3 Year

40% FTSE All-Share Index

14.5% FTSE All-World Developed North America Index

14.5% FTSE All-World Developed Europe ex UK Index

7% FTSE All-World Japan Index

4% FTSE All-World Developed Asia Pacific ex Japan Index

13% Barclays Sterling Corporate 15 Year+ Index

7% FTSE A Government (Over 15 Year) Index


26.36% 1 Year10.83% 3 Year

27.09% 1 Year11.48% 3 Year

50% FTSE All-Share Index

18% FTSE All-World Developed North America Index

18% FTSE All-World Developed Europe ex UK Index

9% FTSE All-World Japan Index

5% FTSE All-World Developed Asia Pacific ex Japan Index

B&CE Ethical Fund 30.31% 1 Year15.74% 3 Year

31.92% 1 Year16.47% 3 Year

MSCI World Index

B&CE Shariah Fund 27.84% 1 Year16.70% 3 Year

29.77% 1 Year17.67% 3 Year

Dow Jones Islamic Titans 100 Index



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Fund Fund performance

Benchmark performance

Benchmark

B&CE Pre-Retirement Fund

17.54% 1 Year12.13% 3 Year

18.38% 1 Year12.73% 3 Year

From 5th September 2016:

5.0% FTSE All-Share Index

5.0% FTSE All-World Developed North America Index

5.0 FTSE All-World Developed Europe ex UK Index

2.5% FTSE All-World Japan Index

2.5% FTSE All-World Developed Asia Pacific ex Japan Index

30.0% FTSE Actuaries British Government All Stocks Index

30.0% Barclays Sterling Corporate Index

20.0 GBP 7-Day LIBID

Until 5th September 2016:

10% FTSE Actuaries British Government All Stocks Index

25.5% FTSE Actuaries British Government Over 15 Years Index

37.4% Barclays Sterling Corporate Index

27.1% Barclays Sterling Corporate 15 Year+ Index

B&CE Cash Fund -0.06% 1 Year -0.03% 3 Year

0.20% 1 Year0.33% 3 Year

7 Day LIBID

B&CE Annuity Fund *1 Year*3 Year

*1 Year*3 Year

70% Barclays Sterling Aggregate 100 mm Non Gilts Over 15 Years Index

15% FTSE Actuaries British Government Over 15 Years Index

10% Barclays UK 4.25% Dec 55 TRI

5% Barclays UK 4.00% Jan 60 TRI

3 year returns are annualised* Figures unavailable as fund launched on 5 September 2016.The performance figures shown are after the deduction of 0.5% AMC.The Scheme uses single priced funds so investment performance figures include any anti-dilution levies applied.1 Year figures include the impact of a small number of pricing discrepancies that were corrected in 2016. When the fund performance figures are adjusted for the above factors the returns are within the agreed tracking tolerances.

Employer-related investments

Details of employer-related investments are given in note 13 to the financial statements.


Fund performance (continued)



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Statement of Trustee’s responsibilities

Trustee’s responsibilities in respect of the financial statements

The financial statements, which are prepared in accordance with UK Generally Accepted Accounting Practice, including the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102), are the responsibility of the Trustee. Pension scheme regulations require the Trustee to make available to Scheme members, beneficiaries and certain other parties, audited financial statements for each Scheme year which:

• show a true and fair view of the financial transactions of the Scheme during the Scheme year and of the amount and disposition at the end of the Scheme year of its assets and liabilities, other than liabilities to pay pensions and benefits after the end of the Scheme year

• state whether applicable United Kingdom Accounting Standards, including FRS 102, have been followed, subject to any material departures disclosed and explained in the financial statements and

• contain the information specified in Regulations 3 and 3A of the Occupational Pension Schemes (Requirement to obtain Audited Accounts and a Statement from the Auditor) Regulations 1996.

The Trustee is responsible for supervising the preparation of the financial statements and for agreeing suitable accounting policies, to be applied consistently, making any estimates and judgements on a prudent and reasonable basis.

The Trustee is also responsible for making available certain other information about the Scheme in the form of an annual report.

The Trustee also has a general responsibility for ensuring that adequate accounting records are kept and for taking such steps as are reasonably open to it to safeguard the assets of the Scheme and to prevent and detect fraud and other irregularities, including the maintenance of an appropriate system of internal control.

The Trustee is also responsible for the maintenance and integrity of The People’s Pension Scheme’s website (thepeoplespension.co.uk). Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Further information

Requests for additional information about the Scheme generally, or queries relating to members’ own benefits, should be made to the contact listed on page 8.

Approval

The Trustee’s report was approved by the Trustee and signed on its behalf by:

Steve Delo Chair of The People’s Pension Trustee Limited29 August 2017



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Governance Statement for the year ended 31 March 2017

Statement objective

This is an annual statement from the Trustee regarding the governance of the Scheme. This statement is included in the Scheme’s annual report in accordance with Regulation 23 of the Occupational Pension Schemes (Scheme Administration) Regulations 1996 (the Administration Regulations).

Default arrangement

Within the range of investment options available to members, the Scheme offers three investment profiles. Fifteen years before members reach their State Pension age, or the date they’ve told us they’d like to retire, each profile starts moving a member’s pension savings into lower risk investments (also known as a ‘glidepath’). This means members’ pension savings are less likely to suffer a large fall in value just when they want to access them.

Members of the Scheme can choose from three investment profiles (‘balanced’, ‘cautious’ and ‘adventurous’). If no selection is made, members’ pension savings go into the ‘balanced’ investment profile (the default arrangement). Members who have more confidence making their own investment decisions, or those with specific funds in mind, can also choose (self-select) their own funds.

Under the ‘balanced’ investment profile, a member’s pension savings are moved gradually from the B&CE Global Investments (up to 85% shares) Fund into lower risk funds as the member nears retirement. The B&CE Global Investments (up to 85% shares) Fund is viewed as a medium to high risk fund and is made up of a series of individual passive funds, each closely tracking a pre-determined index.

The funds are managed passively. They expect to deliver, with a high degree of consistency, a return within a 0.2% tracking error of the relevant benchmark indices for each asset class, except for the Cash, Shariah and Ethical funds which have a wider tolerance.

By investing in this way, the Trustee expects to deliver capital growth over the member’s lifetime within the Scheme, without excessive cost or taking additional risk. There’s an increased focus in the later years on reducing the volatility of returns, and the potential for substantial falls in the value of investments – to enable members approaching retirement to plan with confidence. The Trustee considers this approach to be in the best interests of relevant members and their beneficiaries.

The Trustee has its own investment sub-committee which looks at core investment-related matters, including the following:

• Maintaining an up-to-date SIP – this sets out the principles governing how decisions about investments must be made and was last updated in April 2017 (a copy is available at www.thepeoplespension.co.uk)

• Considering the needs and demographic profile of the Scheme’s membership when designing and reviewing all investment options, including the ‘default’ investment profile

• Considering and setting appropriate investment strategies for all investment options, including the ‘default’ investment profile

• Regularly reviewing the investment strategy and performance of all investment options, including the ‘default’ investment profile, and making recommendations on investment strategy changes to the full Trustee Board.

In September 2016, the Trustee changed the objective of the Pre-Retirement Fund used in the final 15 years of the default investment profile. The fund objective was updated following the introduction of ‘Freedom and Choice’ legislation in 2015. It was amended so the focus is on improving the overall return achieved by the Pre-Retirement Fund to CPI plus 1% over the medium term instead of a return that is aimed at protecting the purchasing power of annuities.



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Processing scheme transactions

The Trustee has a specific duty to ensure that core financial transactions relating to the Scheme are processed on time and accurately. Core financial transactions include the following:

• investment of contributions

• transfer of member assets into and out of the Scheme

• transfers between different investments within the Scheme

• payments to and in respect of members.

These transactions are carried out on the Trustee’s behalf by the Administrator and its core investment manager, SSGA.

During the year, the Trustee established its Risk, Administration and Communications Committee. Amongst other things this Committee has:

• reviewed the processes and controls operated and considers them to be suitably designed to ensure that core financial transactions are processed promptly and accurately

• received regular management information and has reviewed in detail the information provided

• agreed service levels and reporting of performance against those service levels

• commissioned B&CE’s internal audit function to perform additional testing to support their assessment of whether the controls are operating effectively

• considered whether the Scheme’s administration processes and controls minimise the risk of errors or delays in processing contributions and financial transactions

• monitored the completeness and accuracy of member data at each quarterly Trustee meeting.

In light of the above, the Trustee makes sure that members’ needs are properly considered, as well as ensuring the requirements for processing core financial transactions specified in the Administration Regulations have been met.

Charges and transaction costs

Following the introduction of the Occupational Pension Schemes (Charges and Governance) Regulations 2015, the Scheme’s ‘balanced’ investment profile (default arrangement) is subject to a statutory cap of 0.75% of funds under management.

The Scheme operates an annual management charge of 0.5% across all funds, including the ‘balanced’ investment profile. The Trustee believes the Scheme is compliant with the cap and operates well within it.

The Trustee has reviewed the charges and transactions costs that members pay, and the extent to which those charges and costs represent value for money. In light of the Scheme’s core service elements (investment, administration, communications, governance), the Trustee is satisfied that the costs are appropriate for the Scheme as a whole, and when compared to other options in the market. The Trustee is of the view of that the Scheme represents good value for members.

The value of ongoing transaction costs incurred by the Scheme varies. However, on average, the explicit costs were less than 0.02% of assets under management during this period.

Trustee’s knowledge and understanding

In accordance with section 248 of the Pensions Act 2004 and TPR’s Code of Practice 07, the Trustee has, and will maintain, relevant knowledge and understanding.

As well as being conversant with both the Scheme’s Trust Deed and Rules and the SIP, the Trustee has an extensive knowledge and understanding of:

• the law relating to pensions and trusts

• the principles relating to the investment of the Scheme assets.

Governance Statement (continued) for the year ended 31 March 2017



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Trustee’s knowledge and understanding (continued)

The Trustee Board is made up entirely of independent directors. Each has extensive defined contribution, trusteeship or consumer service experience. The Board is supported on technical matters by its Trustee Pensions Manager, and by professional advisers. The Trustee has in place a policy for evaluating adviser performance and selecting new advisers. Relevant skills and experience are a key criteria.

The Chair reviews the effectiveness of the Trustee Board annually. This review looks into individual knowledge and understanding, the expertise that appointed advisers provide, and steps taken to address any training gaps.

The Trustee maintains and periodically reviews its policy on obtaining and improving Trustee knowledge, understanding and skills. All Trustee Directors maintain their training log and which are periodically reviewed. Training is delivered throughout the year and future training needs are discussed at each Trustee meeting. The Chair also conducts individual one-to-one reviews with Trustee Directors.

All Trustee Directors have completed TPR’s Trustee Toolkit – an online learning programme for trustees. New Trustee Directors must complete the Toolkit within their first six months (plus a detailed induction programme).

Trustee structure

The Trustee Board is made up of five Trustee Directors, with no affiliations to B&CE. That includes the Chair, Steve Delo plus Andrew Cheeseman, Alan Pickering, Sue Lewis and Ruston Smith. The Trustee continues to safeguard effective and leading standards of governance, taking into account the size and complexity of the Scheme.

Trustee appointment process

Appointments to the Trustee Board are open and transparent, which includes public advertising of new roles and a thorough interview process managed by B&CE in conjunction with the Trustee and with final interviews with the Chair of the Trustee.

Member views

The Trustee encourages members of the Scheme and/or their representatives to share their views on matters that affect them. It has a number of channels for doing this. The Trustee is also currently actively involved in an initiative to improve engagement with members and better understand their needs.

Research focus groups were held during the year to explore members’ general understanding of pensions, and their level of engagement in planning for retirement. Communications were tested at each stage in the retirement process. Strengths and weaknesses were identified, and improvements were made, where appropriate.

The Trustee receives detailed information each quarter from the Administrator regarding the profile of the Scheme’s membership, and about any complaints or disputes. The Trustee takes time to periodically sit with employees at The People’s Pension contact centre, which includes listening to calls from members. It also regularly attends internal management/team meetings of the Administrator.

The Trustee commissioned a report to consider member behaviour at retirement. Trustee Directors periodically attend meetings of the Administrator’s Insight Group. This provides key insight into member opinions, which in turn helps determine key areas for future development.

The Statement regarding governance was approved by the Trustee and signed on its behalf by:

Steve Delo Chair of The People’s Pension Trustee Limited29 August 2017

Governance Statement (continued) for the year ended 31 March 2017



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Independent auditors’ report to the Trustee of The People’s Pension Scheme

Report on the financial statements

Our opinion

In our opinion, The People’s Pension Scheme’s financial statements:

• show a true and fair view of the financial transactions of the Scheme during the year ended 31 March 2017, and of the amount and disposition at that date of its assets and liabilities, other than liabilities to pay pensions and benefits after the end of the year;

• have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

• contain the information specified in Regulations 3 and 3A of the Occupational Pension Schemes (Requirement to obtain Audited Accounts and a Statement from the Auditor) Regulations 1996, made under the Pensions Act 1995.

What we have audited

The People’s Pension Scheme’s financial statements comprise:

• the statement of net assets available for benefits as at 31 March 2017;

• the fund account for the year then ended; and

• the notes to the financial statements, which include a summary of significant accounting policies and other explanatory information.

The financial reporting framework that has been applied in the preparation of the financial statements is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including FRS 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland’.

In applying the financial reporting framework, the Trustee has made a number of subjective judgements, for example in respect of significant accounting estimates. In making such estimates, it has made assumptions and considered future events.

Responsibilities for the financial statements and the audit

Our responsibilities and those of the Trustee

As explained more fully in the statement of Trustee’s responsibilities, the Trustee is responsible for the preparation of the financial statements and being satisfied that they show a true and fair view.

Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland) (‘ISAs (UK & Ireland)’). Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.

This report, including the opinion, has been prepared for and only for the Trustee as a body in accordance with section 41 of the Pensions Act 1995 and for no other purpose. We do not, in giving this opinion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.



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Responsibilities for the financial statements and the audit (continued)

What an audit of financial statements involves

We conducted our audit in accordance with ISAs (UK & Ireland). An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of:

• whether the accounting policies are appropriate to the Scheme’s circumstances and have been consistently applied and adequately disclosed;

• the reasonableness of significant accounting estimates made by the Trustee; and

• the overall presentation of the financial statements.

We primarily focus our work in these areas by assessing the Trustee’s judgements against available evidence, forming our own judgements, and evaluating the disclosures in the financial statements.

We test and examine information, using sampling and other auditing techniques, to the extent we consider necessary to provide a reasonable basis for us to draw conclusions. We obtain audit evidence through testing the effectiveness of controls, substantive procedures or a combination of both.

In addition, we read all the financial and non-financial information in the annual report and financial statements to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

PricewaterhouseCoopers LLP Chartered Accountants and Statutory Auditors London 30 August 2017

Independent auditors’ report to the Trustee of The People’s Pension Scheme (continued)



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Note 2017 2016 £000 £000

Employer contributions 344,223 241,943

Employee contributions 275,870 193,291

Total contributions 4 620,093 435,234

Transfers from other plans 118,229 69,953

738,322 505,187

Benefits 5 (12,617) (5,741)

Payments to and on account of leavers 6 (2,449) (2,441)

Transfers to other plans (11,323) (3,720)

Administrative expenses 7 (6,518) (2,799)

(32,907) (14,701)

Net additions from dealings with members 705,415 490,486

Net returns on investments

Change in market values of investments 8 291,090 3,273

Investment management expenses (528) (304)

290,562 2,969

Net increase in the fund 995,977 493,455

Opening net assets 958,338 464,883

Closing net assets 1,954,315 958,338

The notes on pages 24 to 31 form part of these financial statements.


Fund account



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Note 2017 2016 £000 £000

Investment assets

Pooled investment vehicles 8 1,954,186 949,373

Total net investments 8 1,954,186 949,373

Current assets 14 28,684 28,797

Current liabilities 15 (28,555) (19,832)

Net assets available for benefits 1,954,315 958,338

The financial statements summarise the transactions of the Scheme and deal with the net assets available for benefits at the disposal of the Trustee. They do not take account of obligations to pay pensions and benefits which fall due after the end of the Scheme year.

The notes on pages 24 to 31 form part of these financial statements.

These financial statements were approved by the Trustee on 29 August 2017 and signed on its behalf by:

Steve Delo

Ruston Smith

Statement of net assets available for benefits as at 31 March 2017



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Notes to the financial statements

1. General information

The People’s Pension Scheme (Scheme) is a defined contribution occupational pension scheme established under trust.

The Scheme was established to provide an automatic enrolment pension scheme for employers. The address of the Scheme’s registered office is Manor Royal, Crawley, West Sussex RH10 9QP.

The Scheme is a registered pension scheme under Chapter 2, Part 4 of the Finance Act 2004. This means that contributions by employers and employees are normally eligible for tax relief, and income and capital gains earned by the Scheme receive preferential tax treatment.

2. Statement of compliance

The individual financial statements of The People’s Pension Scheme have been prepared in accordance with the Occupational Pension Schemes (Requirement to obtain Audited Accounts and a Statement from the Auditor) Regulations 1996, Financial Reporting Standard (FRS) 102 – The Financial Reporting Standard applicable in the UK and Republic of Ireland issued by the Financial Reporting Council (FRS 102) and the guidance set out in the Statement of Recommended Practice ‘Financial Reports of Pension Schemes’ (Revised November 2014) (SORP). The Trustee has adopted the provisions of ‘Amendments to FRS 102, The Financial Reporting Standard applicable in the UK and Republic of Ireland – Fair value hierarchy disclosures (March 2016)’ early.

3. Summary of significant accounting policies

The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

(a) Currency

The Scheme’s functional currency and presentational currency is pounds sterling (GBP).

Assets and liabilities in foreign currencies are expressed in sterling at the rates of exchange ruling at the year end. Foreign currency transactions are translated into sterling at the spot exchange rate at the date of transaction.

Gains and losses arising on conversion or translation are dealt with as part of the change in market value of investments.

(b) Contributions

Normal and additional voluntary contributions, both from members and employers, when submitted by the employers are accounted for on an accruals basis based on the pay period to which they relate. Contributions made directly by members are accounted for when received from the members.

All contributions payable under salary sacrifice arrangements are classified as employer contributions.

Where contributions are received under ‘relief at source’ arrangements, the Administrator currently advances any income tax credits at the time the contributions are received and subsequently reclaims them from HMRC. Any tax relief in respect of members’ contributions is shown in the financial statements as member contributions.

(c) Transfers from and to other plans

Transfer values represent the capital sums either receivable in respect of members from other pension plans of previous employers, or payable to the pension plans of new employers for members who have left the Scheme. Transfers out will comply with the cash equivalent legislation of the Pension Schemes Act 1993. Transfers are accounted for on an accruals basis on the date the trustees of the receiving plan accept the liability. In the case of individual transfers, this is normally when the payment of the transfer value is made.




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Notes to the financial statements (continued)

3. Summary of significant accounting policies (continued)

(d) Benefits and payments to and on account of leavers

Benefits payable to members are accounted for on an accruals basis from the date the Trustee is notified.

Refunds and opt-outs are accounted for when the Trustee is notified of the member’s decision to leave the Scheme.

Where the Trustee agrees or is required to settle tax liabilities on behalf of a member (such as where lifetime or annual allowances are exceeded) with a consequent reduction in that member’s benefits receivable from the Scheme, any taxation due is accounted for on the same basis as the event giving rise to the tax liability and shown separately within Benefits.

(e) Administrative expenses

An AMC is levied against members’ funds which is accounted for on an accruals basis and is calculated daily on the value of the investments at 0.5% per annum. The charge is reflected through a reduction in the unit price of the fund that the member is invested in and is received monthly in arrears from the investment manager.

The AMC is the only administration cost borne by the Scheme. All direct costs of administration, including fees payable to the Trustee Directors, are met by B&CE. The AMC, less any investment management fees payable, is payable to the Administrator.

Some members will not be charged for up to 12 months if they work for a participating employer which was an existing B&CE customer prior to 31 January 2012 and remains a customer of B&CE up to their staging date.

(f) Investment income and expenditure

The change in market value of investments during the year comprises all increases and decreases in the market value of investments held at any time during the year, including profits and losses realised on sales of investments and unrealised changes in market value. In the case of pooled investment vehicles which are accumulation funds, where income is reinvested within the fund without issue of further units, the change in market value also includes such income.

Transaction costs are included in the cost of purchases and sale proceeds. Transaction costs include costs charged directly to the Scheme such as fees, commissions, stamp duty and other fees. Other investment management expenses are accounted for on an accruals basis and shown separately within investment returns.

(g) Valuation and classification of investments

Investment assets and liabilities are included in the financial statements at fair value. Where separate bid and offer prices are available, the bid price is used for investment assets and the offer price for investment liabilities. Otherwise, the closing single price, single dealing price or most recent transaction price is used.

The fair value for the unitised pooled investment vehicles which are not traded on an active market but are priced daily, weekly or at each month end, and which are traded on substantially all pricing days, are included at the last price provided by the manager at or before the year end.



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4. Contributions

2017 2016 £000 £000

Employers – normal 344,223 241,943

Employees

Normal 268,008 189,263

Additional voluntary contributions 7,862 4,028

275,870 193,291

620,093 435,234

5. Benefits

2017 2016 £000 £000

Lump sum retirement benefits 11,686 5,249

Lump sum death benefits 931 492

12,617 5,741

6. Payments to and on account of leavers

2017 2016 £000 £000

Refund of contributions in respect of:

Short service refunds 409 1,114

Opt-outs 2,040 1,327

2,449 2,441

7. Administrative expenses

2017 2016 £000 £000

Administrative expenses 6,518 2,799

The AMC deducted from members’ funds during the year totalled £7,048k (2016 – £3,103k). The administration fee paid to the Administrator is calculated by taking the AMC and deducting any investment management fees paid directly by the Scheme. The administrative expenses have increased due to higher fund values throughout the year following the rise in the number of employers and members joining the Scheme.




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8. Reconciliation of net investments

Opening Purchases Sales Change in AMC Closing value proceeds market value value £000 £000 £000 £000 £000 £000

Pooled investment vehicles 949,373 838,919 (118,148) 291,090 (7,048) 1,954,186

Represented by:

Allocated to members 949,373 1,954,186

The investments purchased by the Scheme are allocated to provide benefits to the individuals on whose behalf corresponding contributions are paid. The investment managers hold the investment units on a pooled basis for the Trustee. The Administrator allocates investment units to members. The Trustee may hold investment units representing the value of employer contributions that have been retained by the Scheme that relate to members leaving the Scheme prior to vesting.

9. Pooled investment vehicles

The underlying assets of the pooled investment vehicles are: 2017 2016 £000 £000

Equity 1,411,436 667,694

Bond 481,137 273,925

Cash 61,613 7,754

1,954,186 949,373

10. Fair value of investments

The fair value of investments has been determined using the following hierarchy:

• Level 1: Unadjusted quoted price in an active market for identical instruments that the entity can access at the measurement date.

• Level 2: Inputs (other than quoted prices) that are observable for the instrument, either directly or indirectly.

• Level 3: Inputs are unobservable, i.e. for which market data is unavailable.

The Scheme’s investment assets and liabilities have been included at fair value and all fall into Level 2 in this and the prior period.



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11. Investment risks

FRS 102 requires the disclosure of information in relation to certain investment risks.

Credit risk: this is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation.

Market risk: this comprises currency risk, interest rate risk and other price risk.

• Currency risk: this is the risk that the fair value or future cash flows of a financial asset will fluctuate because of changes in foreign exchange rates.

• Interest rate risk: this is the risk that the fair value or future cash flows of a financial asset will fluctuate because of changes in market interest rates.

• Other price risk: this is the risk that the fair value or future cash flows of a financial asset will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting all similar financial instruments traded in the market.

The Trustee determines the investment strategy after taking advice from a professional investment adviser. The Scheme has exposure to these risks because of the investments it makes in following the investment strategy set out in the Trustee’s report. The Trustee manages investment risks, including credit risk and market risk, within agreed risk limits which are set taking into account the Scheme’s strategic investment objectives. These investment objectives and risk limits are implemented through the investment management agreements in place with the Scheme’s investment managers. They are monitored by the Trustee which involves carrying out regular reviews of the investment portfolio.

The following table summarises the extent to which the underlying investments held in pooled investment vehicles are affected by financial risks:

Credit risk Market risk 2017 2016

Currency Interest rate Other price £000 £000

B&CE Global Investments (up to 60%) Yes Yes Yes Yes 5,266 2,129

B&CE Global Investments (up to 85%) Yes Yes Yes Yes 1,659,240 811,877

B&CE Global Investments (up to 100%) Yes Yes No Yes 37,808 14,603

B&CE Ethical Fund Yes Yes No Yes 5,289 1,579

B&CE Shariah Fund Yes Yes No Yes 2,008 489

B&CE Pre-Retirement Fund Yes Yes Yes Yes 242,856 110,942

B&CE Cash Fund Yes No Yes No 1,710 7,754

B&CE Annuity Fund Yes Yes Yes Yes 9 -

1,954,186 949,373

Further information on the Trustee’s approach to risk management, credit and market risk is set out below.

Investment strategy

The Trustee’s objective is to make investment profiles available to members of the Scheme that provide age related investments and ultimately lead to a retirement amount which the member can utilise as a pension. The SIP outlines the investment objectives and strategy for the assets of the Scheme.

The investment funds offered to members are all built from pooled investment funds provided by SSGA and HSBC.




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11. Investment risks (continued)

Investment strategy (continued)

The Trustee has investment management agreements in place with SSGA and HSBC that set out guidelines for the underlying investments held by the funds. The day-to-day management of the underlying investments of the funds is the responsibility of SSGA and HSBC, including the direct management of credit and market risks.

The Trustee monitors the underlying risks and receives quarterly investment monitoring reports from its investment adviser which covers SSGA and HSBC.

The risks disclosed here relate to the Scheme’s investments as a whole. Members are able to choose their own investments from the range of funds offered by the Trustee and so may face a different profile of risks from their individual choices compared with the Scheme as a whole.

Credit risk

The Scheme is subject to direct credit risk in relation to SSGA and HSBC through their holding in unit linked insurance funds provided by SSGA and HSBC. SSGA is regulated by the Prudential Regulation Authority (PRA) and maintains separate funds for its policy holders. The Trustee monitors the creditworthiness of SSGA and HSBC by reviewing published credit ratings and regulatory solvency positions. SSGA and HSBC invest all the Scheme’s funds in their own unit linked investment funds and do not use other investment funds or reinsurance arrangements. In the event of default by SSGA or HSBC, members may be entitled to limited compensation from the Financial Services Compensation Scheme (FSCS) or other regulatory body in the country in which the fund is domiciled.

The Scheme is also subject to indirect credit and market risk arising from the underlying investments held in the pooled investment vehicles. Member level risk exposures will be dependent on the funds invested in by members.

The Trustee only invests in funds where the financial instruments and all counterparties are at least investment grade.

Market risk

The Scheme is subject to indirect foreign exchange, interest rate and other price risk arising from the underlying financial instruments held in the funds managed by SSGA and HSBC.

Currency risk

The Scheme is subject to currency risk because some of the Scheme’s investments are held in overseas markets via pooled investment vehicles (indirect exposure). The Scheme’s liabilities are denominated in sterling and to the extent that there is exposure to non-sterling currencies the Trustees will consider whether to hedge this risk.

12. Concentration of investments

Investments accounting for more than 5% of the net assets of the Scheme were:

2017 2016 £000 % £000 %

B&CE Global Investments (up to 85% shares) Fund 1,659,240 85 811,877 85

B&CE Pre-Retirement Fund 242,856 12 110,942 11

1,902,096 97 922,819 96

These investments are pooled investment vehicles which have multiple underlying assets none of which exceeds 5% of the net assets of the Scheme.




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13. Employer-related investments

The top 100 investments as at 31 March 2017 have been calculated on a look-through basis to the underlying holdings of the pooled funds invested in by the Scheme. The employer-related investments are the participating employers in which the Scheme invests at arms-length through the investment managers.

Investment % of Investment % of Investment Investment1 Royal Dutch Shell 1.35% 51 Glencore 0.28%2 HSBC Holdings 1.04% 52 AIA Group 0.28%3 British American Tobacco 0.78% 53 Exxon Mobil 0.28%4 AT&T 0.73% 54 Johnson & Johnson 0.28%5 Nestle 0.72% 55 Amazon.com 0.28%6 Samsung Electronics 0.70% 56 BASF 0.28%7 BP 0.68% 57 Banco Santander 0.27%8 GlaxoSmithKline 0.64% 58 SAP 0.27%9 Apple 0.62% 59 Anheuser-Busch InBev 0.27%10 UK Treasury Gilt 4.25% 2032 0.60% 60 Australia & New Zealand Banking 0.26%11 UK Treasury Gilt 4.25% 2055 0.57% 61 RWE Finance EMTN 0.26%12 UK Treasury Gilt 4.5% 2034 0.56% 62 JPMorgan Chase 0.26%13 Roche Holding 0.55% 63 HSBC Holdings EMTN 0.26%14 Novartis 0.53% 64 Facebook 0.26%15 UK Treasury Gilt 4.25% 2036 0.52% 65 Allianz 0.26%16 UK Treasury Gilt 4.5% 2042 0.51% 66 National Australia Bank 0.25%17 UK Treasury Gilt 4% 2060 0.50% 67 BAT International Finance EMTN 0.25%18 UK Treasury Gilt 4.75% 2038 0.48% 68 Daimler 0.24%19 AstraZeneca 0.48% 69 Unilever NV 0.24%20 UK Treasury Gilt 3.5% 2045 0.47% 70 Vodafone Group EMTN 0.23%21 UK Treasury Gilt 4.25% 2040 0.46% 71 Wells Fargo 0.23%22 UK Treasury Gilt 3.75% 2052 0.46% 72 Mitsubishi UFJ Financial Group 0.23%23 UK Treasury Gilt 4.25% 2046 0.45% 73 UK Treasury Gilt 2.5% 2065 0.22%24 Pfizer 0.45% 74 BHP Billiton Ltd 0.22%25 Diageo ERI 0.45% 75 General Electric 0.22%26 UK Treasury Gilt 3.25% 2044 0.44% 76 ENEL Finance International 0.21%27 Commonwealth Bank of Australia 0.43% 77 GDF Suez EMTN 0.21%28 Vodafone Group 0.43% 78 BT Group 0.21%29 GlaxoSmithKline Capital EMTN 0.42% 79 BHP Billiton PLC 0.20%30 UK Treasury Gilt 4.25% 2039 0.41% 80 Thames Water Utilities Cayman EMTN 0.20%31 Microsoft 0.41% 81 Alphabet (A) 0.20%32 UK Treasury Gilt 3.5% 2068 0.41% 83 BNP Paribas 0.20%33 Toyota Motor Corp 0.40% 83 Alphabet Inc 0.20%34 UK Treasury Gilt 4.25% 2049 0.40% 84 Bank of America ERI 0.20%35 Unilever 0.37% 85 Novo Nordisk 0.19%36 GE Capital Funding EMTN 0.35% 86 Lloyds TSB Bank EMTN 0.19%37 Reckitt Benckiser Group 0.35% 87 Compass Group 0.19%38 Prudential 0.34% 88 Citigroup EMTN 0.19%39 Lloyds Banking Group 0.34% 89 Gatwick Funding Limited EMTN 0.19%40 TOTAL 0.34% 90 Procter & Gamble 0.18%41 Wal-Mart Stores 0.34% 91 CRH 0.18%42 Westpac Banking 0.33% 92 ING Groep 0.18%43 Shire 0.33% 93 HSBC Bank EMTN 0.18%44 Siemens 0.32% 94 WPP 0.17%45 Rio Tinto 0.31% 95 Deutsche Telekom 0.17%46 Sanofi 0.31% 96 UBS Group 0.17%47 National Grid 0.30% 97 LVMH Moet Hennessy Louis Vuitton ERI 0.17%48 Barclays 0.29% 98 Aviva 0.17%49 Bayer 0.29% 99 Chevron 0.17%50 Imperial Brands 0.29% 100 E.ON International Finance EMTN 0.16%

Employer-related investments as defined above are held in the companies identified with an ERI symbol.




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14. Current assets

2017 2016 £000 £000

Contributions due in respect of:

Employers 6,163 8,589

Employees 5,081 6,473

Other debtors 5,027 3,260

Cash balances 12,413 10,475

28,684 28,797

Contributions due to the Scheme from employers and employees at 31 March 2017 totalled £11,244k (2016: £15,062k).

15. Current liabilities

2017 2016 £000 £000

Tax deducted from benefits 250 140

Contributions pending settlement with investment manager 14,580 12,303

Contributions prepaid 12,326 6,343

Contributions to be returned to employers 171 168

Other creditors 770 878

Amounts owed to the Administrator 458 -

28,555 19,832

In 2016 there was £867k owed to the Administrator which was included in Other debtors.

16. Related party transactions

Related party transactions and balances comprise:

• The administration fees amounting to £6,518k (2016 – £2,799k) mentioned in note 7 which is payable to B&CE Financial Services Limited.

• As explained on page 25, all fees payable to the Trustee’s Directors, amounting to £147k (2016 – £108k), were met by the Founder.

• The Founder uses the Scheme for its employees and its employer pension contributions amounted to £949k (2016 – £698k).

• PAN Trustee Services Ltd (part of PAN Group) uses the Scheme for its employees and its employer pension contributions amounted to £14k (2016 – £0k). Andrew Cheeseman is the Chairman of PAN Group, while Steve Delo is Chief Executive Officer of PAN Governance LLP (part of PAN Group).

17. Events after the end of the reporting period

The Trustees have agreed to receive the transfer in of the EasyBuild Pension Scheme, a group stakeholder pension scheme administered by B&CE. They have decided that, from 1 September 2017, EasyBuild contributions will be made, and new employees added, to The Scheme. Following this date, the EasyBuild pension savings (including those of EasyBuild members who are no longer contributing) will be transferred to the Scheme (unless members opt out of the transfer).




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The People’s Pension Trustee LimitedManor Royal, Crawley, West Sussex, RH10 9QP. Tel 0300 2000 555 Fax 01293 586801 www.bandce.co.uk

Registered in England and Wales No. 8089267. To help us improve our service, we may record your call.

Documents

Pension scheme registry number: 12005993 · The People s Pension Scheme Annual report and financial statements for the year ended 31 March 2017 1 At a glance 2 Chair’s review 4