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Bridge Trustees adopts FTSE UK DC Benchmarks for Lighthouse Pensions Trust

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Bridge Trustees Limited, the independent Trustee of Lighthouse Pensions Trust, is adopting the FTSE UK DC Benchmarks as part of its Investment Governance Process.

While the primary benchmark is whether the scheme delivers on its objectives in the best interests of its members, the investment governance approach will also:

1) evaluate whether the default strategy over the long run delivers on its absolute return targets relative to inflation

2) evaluate how the default strategy compares to the FTSE UK DC 100% Benchmark on a risk-adjusted basis net of fees for discrete cohorts of savers.

The scheme’s Investment Governance Processes are based on The Pension Regulator’s Template for Governance Plan, which provides a checklist of processes against the Principles for investment governance of work-based defined contribution (DC) schemes.

Lighthouse Pensions Trust’s default investment option is BirthStar Target Date Funds which is managed by AllianceBernstein.

Ian Davies, Independent Trustee, Bridge Trustees Limitedm says: “We took the decision to adopt the benchmark in the context of ensuring best practice around investment governance.  The recent DWP consultation and draft legislation on default strategy reviews makes clear that proper evaluation and review of the default investment strategy will become a statutory priority. For this we need the appropriate toolkit to inform a more meaningful discussion.  The creation of the FTSE UK DC Benchmarks is a welcome and progressive step in this respect.”

Kevin Bourne, Managing Director of AOG, FTSE Group, says: “The FTSE UK DC Benchmark Index Series has been developed to promote transparency and enable evaluation of value add, as part of a broader investment governance framework.  With auto enrolment creating up to 9 million new savers, it is essential that fiduciaries and decision-makers are able to ensure the interests of these investors are put first.  We believe the FTSE UK DC Benchmark Index Series will help trustees evaluate the performance of their default strategy as a whole.”

Tim Banks, AllianceBernstein manager of the scheme’s default investment option, says: “We welcome the Lighthouse Pension Trust’s decision to adopt this important benchmark for their DC savings strategies. This clear reference point allows for an independent evaluation of risk-adjusted performance of different savers and groups according to their expected retirement date. The FTSE UK DC Benchmark helps Trustees provide better governance, have more informed discussions and ultimately hold their asset managers to account.”

Roger Sanders, MD of Lighthouse Group Employee Benefits, says: “We are supportive of initiatives by the Trustee to ensure that the Lighthouse Pensions Trust continues to innovate in line with evolving best practice, to build on the exacting standards we applied from launch.  It is essential to us and our employer clients that members’ interests are put first, and we are glad that the investment governance framework can be better informed by this development.”

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