The North British Distillery Company Limited Pension Scheme
Contents
- Statement of Investment Principles
- Implementation Statement
Statement of Investment Principles
Background
This Investment Statement sets out the principles governing decisions about investments for The North British Distillery Company Limited Pension Scheme (“the Scheme”) to meet the requirements of The Pensions Act 1995, as amended by the Pensions Act 2004, and The Occupational Pension Schemes (Investment) Regulations 2005.
It is subject to periodic review by the Trustees at least every three years and more frequently as appropriate.
In preparing this Statement, the Trustees have consulted with the principal employer (The North British Distillery Company Ltd) and have taken professional advice from their Investment Consultant (Isio).
The Trustees are aware of, and adhere to, the Myners principles which set out a code of conduct for investment decision making and governance.
Investment Objective
The Scheme closed to new entrants but remained open to future benefits accrual on 1 January 2008. Subsequently, on 31 December 2014, the Scheme closed to future benefit accrual.
The primary objective of the Scheme is to provide pension and lump sum benefits for the current members on their retirement, and/or benefits on death before or after retirement for their dependents on a defined benefit basis.
Following the Scheme achieving a fully funded position on the Technical Provisions basis, the Trustees’ funding objective was to reach and maintain a fully funded position on an insurance buy-out basis with the aim of achieving a transaction with an insurer.
In November 2022, the Trustees restructured the strategy using all of the Scheme’s funds and an additional company contribution to purchase an insurance buy-in policy covering all Scheme liabilities.
The Scheme’s present investment objective is therefore the responsibility of the insurer.
Investment Strategy
The Trustees translated their objectives into a suitable strategic asset allocation benchmark for the Scheme.
Following the insurance buy-in transaction, day-to-day investment decisions have been delegated to the insurer. The benchmark is reflected in the mix of funds in which the Scheme invests and is consistent with the insurance buy-in.
Choosing Investments
The Trustees appointed Standard Life (“SL”) as the Scheme’s insurer. SL is authorised under the Financial Services and Markets Act 2000 to undertake investment business.
SL manages the Scheme’s assets on behalf of the Trustees with the objective of matching the cost of providing benefits covered by the policy.
The Trustees have no authority over the investments made by SL on the Scheme’s behalf.
Risk
The Trustees analyse the level of risk within the Scheme’s investment strategy when reviewing the investment strategy.
In November 2022 the Trustees completed a buy-in transaction with the goal of achieving a full insurance buy-out. This protects members’ accrued pensions and transfers investment risk to Standard Life.
Expected Return on Investments
The Scheme’s objective via the insurer is to achieve returns consistent with the nature and duration of the Scheme’s liabilities.
Realisation of Investments
The Trustees operate a bank account for daily cashflow needs and maintain a formal cashflow policy.
All remaining investments are held within the buy-in policy and cannot be realised.
Environmental, Social and Governance Considerations
The Trustees recognise the importance of ESG considerations. However, following the buy-in transaction, asset management is delegated to Standard Life.
Exercise of Voting Rights
Voting rights are delegated to Standard Life with the objective of preserving and enhancing long-term shareholder value.
Additional Voluntary Contributions (AVCs)
Some members made AVC contributions. However the AVC arrangement is now closed following cessation of benefit accrual on 31 December 2014.
Trustees
- Fraser MacDonald – Trustee
- David Rae – Trustee
- Alan Kilpatrick – Trustee
- William Copland – Trustee
- James Paul & Partners Limited – Trustee
- ACMCA Limited – Trustee
Appendix A – Asset Split (31 December 2023)
| Fund Manager | Assets | Mandate |
|---|---|---|
| Standard Life | 100% | Buy-In Policy – invested in line with Scheme liabilities |
| Trustee Bank Account | £0.3m | Cash |
Appendix B – Key Risks
- Investment Risk: Assets underperforming relative to liabilities.
- Funding Risk: Insufficient assets to meet liabilities.
- Covenant Risk: Employer unable to support the Scheme financially.
- Interest Rate & Inflation Risk
- Market Risk
- Credit Risk
- Currency Risk
- Longevity Risk
Appendix C – Investment Arrangement Policies
- Investment providers aligned with Scheme objectives.
- Performance reviewed against medium- and long-term objectives.
- Performance assessed net of costs.
- Low portfolio turnover expected after buy-in.
- The buy-in policy is considered a permanent investment.
Implementation Statement
Background
The Department for Work and Pensions (DWP) introduced regulations requiring improved disclosure of financially material risks, including Environmental, Social and Governance (ESG) factors.
Trustees must outline policies for managing these risks in the Statement of Investment Principles (SIP) and demonstrate adherence through an Implementation Report.
Statement of Investment Principles
The SIP includes policies covering:
- Management of financially material considerations including ESG factors
- Stewardship of the Scheme’s investments
Implementation Report
The report demonstrates that the Trustees continue to follow the principles outlined in the SIP.
It details:
- Actions taken to manage financially material risks
- Approach to ESG considerations
- Engagement with investment managers
- Voting behaviour of investment managers
Summary of Key Actions
Following the Trustee decision to proceed with a buy-in policy covering all Scheme benefits with Standard Life, all Scheme invested assets were sold in November 2022 to fund the transaction with additional company support.
Implementation Statement Confirmation
This report demonstrates that the Trustees of The North British Distillery Company Limited Pension Scheme have adhered to the Scheme’s investment principles and policies regarding financially material considerations including ESG factors and climate change.
James Paul & Partners Limited – Trustee
Fraser MacDonald – Trustee
Date: 19 May 2025