2023 Chair’s Statement - PIMCO Europe Limited DC Pension Plan
Introduction
Under legislation set out in Regulation 23 of the Occupational Pension Schemes (Scheme
Administration) Regulations 1996 (SI 1996/1715) as amended by the Occupational Pension
Schemes (Charges and Governance) Regulations 2015 (SI 2015/879); The Occupational Pension
Schemes (Administration and Disclosure) (Amendment) Regulations 2018 (SI 2018/233); and The
Occupational Pension Schemes (Administration, Investment, Charges and Governance)(Amendment) Regulations 2021 (‘the 2021 Regulations’), the Trustee of the PIMCO Europe Limited
DC Pension Plan (the ‘Plan’) is required to prepare a statement (the ‘Statement’) on governance inthe annual report.
The Trustee is pleased to present the Trustee’s annual statement on DC governance for inclusionin the Report and Accounts for the Plan, covering the period 1 July 2022 to 30 June 2023. This
statement describes how the Trustee seeks to make sure that the Plan is well-managed anddelivers value for money services to members. In doing so, the Trustee provides the various
statutory disclosures required by legislation. This statement covers six key areas:
1.
2.
3.
4.
5.
6.

The investment strategy relating to the Plan’s default arrangement;
The processing of core financial transactions;
The annualised net return on investments for the lifestyle arrangements and self-select funds;
Charges and transaction costs within the Plan;
Value for Members assessment; andThe Trustee’s compliance with the statutory knowledge and understanding requirements.

The Plan was established in June 2014 and is administered by Scottish Widows, through the Mercer
Workplace Savings (‘MWS’) Platform.
The Plan is overseen by a sole Professional Trustee, ZEDRA Governance Ltd (‘ZEDRA’) (formallyknown as PTL Governance Ltd).
Default Investment Arrangements
Review of the default investment strategy and self-select fund range
The Trustee is responsible for setting the Plan’s investment strategy and for appointing investment
managers to implement that strategy. The Trustee must also establish a default investment
arrangement for members who do not select their own investment options from the fund range thatis available.
The Trustee last began a strategy review of the default investment strategy in January 2021. This
review considered whether the current default investment strategy remains appropriate for thePlan’s membership. No changes were made to the default investment strategy as a result of thisreview. The default strategy therefore continues to utilise the Mercer Smartpath™ delegated

PIMCO EUROPE LIMITED DC PENSION PLAN - CHAIR STATEMENT FOR THE YEAR ENDING 30
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Page 2

investment solution for the default arrangement and alternative investment lifestyles for additional
self-select investment options. The solution:••••

Provides a governed investment solution designed to improve outcomes in retirement by
providing good returns through the use of a risk-managed investment strategy;
Has a dynamic asset allocation which allows it to be changed for market economic conditions
to further increase long-term investment returns;
Is a cost effective investment solution; andIs designed to facilitate and improve member engagement.

The default growth phase is delivered through the Mercer Growth Fund. Part of Mercer’s role is to
set the strategic allocation of the fund and then invest relative to this allocation, taking tactical
positions dependent on the market environment, with the aim of adding value for investors.
As members approach retirement they will be asked to choose an appropriate Target Retirement
Fund that best reflects how they are likely to take their benefits in retirement. The Trustee, on
advice from its advisors, continues to believe that asking members to make these decisions nine
years from retirement provides a realistic decision-making horizon, with de-risking commencing
eight years from retirement.
As such, as members approach retirement they will be asked to choose:••

A retirement destination that best reflects their likely requirements for income in retirement –either annuity, cash or drawdown (or some combination of the three); andWhen they want to retire.

The investment of the members’ assets will then be moved to an appropriate Target Retirement
Fund, corresponding to the member’s target retirement year and chosen retirement destination. A
member may select the Target Annuity Retirement Path, the Target Cash Retirement Path or the
Mercer Target Drawdown Retirement Path. If no decision is made, they will be moved to a default
that the Trustee has chosen, currently the Scottish Widows Mercer Target Drawdown Retirement
Path. As part of the triennial investment strategy review that commenced in January 2021, theTrustee considered the suitability of the default lifestyle strategy targeting income drawdown andconcluded that it remains suitable and fit for purpose. The structure of the Target Drawdown
Retirement Path is suitable for members who wish to take drawdown at retirement as it:•••

Manages volatility: by reducing the allocation to the most volatile component of the asset
allocation – equities – first.
Is dynamically managed: the asset allocation is dynamically managed in response to market
conditions by Mercer’s Fiduciary Management business.
Utilises the Mercer Diversified Retirement Fund: which balances risk and return and is tailoredto the needs of an investor who wishes to remain invested through retirement.

PIMCO EUROPE LIMITED DC PENSION PLAN - CHAIR STATEMENT FOR THE YEAR ENDING 30
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Page 3

Environmental, Social and Governance (“ESG”) considerations
The Trustee considers that it is important that Environmental, Social and Governance factors areincorporated into the Plan’s investments. This is achieved using a “four-pillar framework”. Thesefour pillars ensure that sustainability in the Plan is considered across different dimensions, which
are:
•
•
•

•

Integration. The Trustee expects investment managers to consider any Environmental, Social,or Governance factor that might impact the value of members’ pension savings and toincorporate this into their decision-making process.
Stewardship. The Trustee expects investment managers to have strong processes in place toensure they are voting and engaging with companies to protect investors’ interests.
Investment. The Trustee believes that investing in sustainable themes, like reducing
greenhouse gas emissions, can offer return opportunities and can also help to manage risks.
For this reason, there is an allocation to a specific sustainable-focused fund within the default.
The Trustee also makes sustainable-focused funds available in the self-select fund range.
Screening. Although the Trustee prefers to engage with companies, they also want to avoid
profiting from activities that don’t align with investors’ values. For example, investments are
not made in companies involved in the production of cluster munitions.

When considering climate change in particular, the Plan’s growth phase of the chosen default
investment strategy – the Mercer Growth Fund – has made a pledge to target net zero carbon
emissions by 2050.
Underlying asset allocation changes made to the strategy during the Plan year
During the Plan year, Mercer also undertook its own review of the Smartpath investment solutions,with some strategic changes being made to the Default Lifestyle Option:-

The cash allocation at-retirement was reduced from 25% to 10% for the following reasons:- To reduce the cash “drag” on the portfolio, and to increase the expected return delivered netof fees.
- To continue to offer protection to the absolute value of a member’s pension savings.
- To maintain risk/return efficiency of current solution- To recognise that members are increasingly likely to go into drawdown- There is already a cash allocation within the Diversified Retirement Fund which can be
dynamically managed depending on market conditions.

- Gold and global index-linked government bonds were introduced to the strategy to increase
exposure to ‘real’ assets (i.e. inflation-sensitive assets); and- Credit, multi-factor equity and low volatility equity allocations were reduced within the strategy
to fund the above changes.

PIMCO EUROPE LIMITED DC PENSION PLAN - CHAIR STATEMENT FOR THE YEAR ENDING 30
JUNE 2023
Page 4Mercer Global Listed Infrastructure Fund
In addition to this, in February 2022, Mercer Workplace Solutions (“MWS”) identified the Plan had
holdings in the Mercer Global Listed Infrastructure Fund in respect of two members, with the firstmember having invested in February 2021. While this Fund had not (at that time) been formally
added to the Plan’s fund range, it had inadvertently been made available to the Plan by Scottish
Widows. As a result of this, MWS held thorough discussions with Scottish Widows to ensure thatgoing forward, Scottish Widow’s internal controls are sufficiently robust to ensure that the Plan’sfund range is maintained in line with the Trustee’s instructions and that no action is taken without
the Trustee’s permission. Resultant operational enhancements that have been put in place by
Scottish Widows have been discussed in detail with the Trustee.
When considering this matter, the Trustee concluded an infrastructure fund option would beappropriate for the Plan’s fund range and that, subject to it being deemed suitable, the Fund could
remain available within the fund range. Investment advice to this effect provided to the Trustee inAugust 2022. As such, the fund remains included in the self-select fund range of the Plan.
Ongoing performance monitoring
Over the year the Trustee and their advisers have reviewed the performance of the investment
funds and the current default arrangement against their stated objectives on a quarterly basis. To
enable the Trustee to review the performance of the investment funds, MWS provide the Trusteewith quarterly reports that highlight net performance against benchmarks and also any change tothe rating Mercer assigns to the underlying funds (including ESG ratings where appropriate).
These reports are reviewed by the Trustee and where there have been any concerns these areraised with the investment manager via Mercer. Each regular review focusses, in particular, on theextent to which the return on investments relating to the default arrangement, including any
technical defaults (after deduction of any costs and charges which are relevant to thoseinvestments) is consistent with the Trustee’s aims and objectives in respect of the default
arrangements (as recorded in the SIP). The Trustee may also undertake reviews of specific aspectsof the SIP and the performance of the default arrangements.
Technical defaults
In March 2020, the underlying investment manager(s) of the Plan’s UK Property Fund,
Threadneedle, suspended trading in their fund owing to difficulties valuing properties as a result of
COVID-19 in the first three quarters of 2020. As a result, members’ contributions were re-directedto the Cash Fund, without member consent, on a temporary basis, unless they took action to selectan alternative investment. Guidance released by the Department for Work & Pension in April 2018refers to when members’ funds are moved within a scheme without consent, should be classed asa default arrangement (a technical default). The Trustee is therefore reporting the following fund astechnical default within the Plan:•

Mercer Cash Fund, identified as a default in April 2020.

PIMCO EUROPE LIMITED DC PENSION PLAN - CHAIR STATEMENT FOR THE YEAR ENDING 30
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Page 5The Trustee’s objective in using this fund as the technical default was to aim to preserve the valueof any contributions invested rather than to seek long term investment growth. The charges appliedby this fund are below the statutory charge cap for a default fund.
The Cash Fund has the lowest expected volatility of the funds offered by the Plan.
Statement of Investment Principles
In accordance with the Administration Regulations, the Trustee has appended (under Appendix A)
the latest copy of the Statement of Investment Principles (the ‘SIP’), incorporating the default SIP,
prepared for the Plan in compliance with Section 35 of the Pensions Act 1995 and regulation 2 /regulation 2A of the Occupational Pension Schemes (Investment) Regulations 2005, adopted on
10 August 2023.
The SIP is also available on request, by contacting the HR team. Furthermore, this Statement ispublished on a publicly available website, www.pimco.co.uk, and is signposted in the annual benefit
statements, which are issued by Scottish Widows.
The SIP covers the following key matters in relation to the default arrangement (including any
technical defaults):•••

The Trustee’s aims and objectives in relation to the investments held in the default arrangement;
The Trustee’s policies on issues such as: the kinds of investments to be held; the balance
between different kinds of investments; risks, including the ways in which risks are to bemeasured and managed; the expected return on investments; the realisation of investments;
and the extent (if at all) to which Environmental, Social or Governance (ESG) considerations
are taken into account when selecting, retaining or realising investments;
An explanation of how these aims, objectives and policies (which together form the Trustees“default strategy”) are intended to ensure that assets are invested in the best interests ofmembers whose benefits are invested in the default arrangement.

Core Financial Transactions
As required by the Administration Regulations, the Trustee must ensure that “core financialtransactions” are processed promptly and accurately. Core financial transactions are (broadly):••••

Investment of contributions made to the Plan by members and their employer(s);Transfers into and out of the Plan of assets relating to members;
Switches of members’ investments between different funds within the Plan; andPayments from the Plan to or in respect of members/beneficiaries (e.g. payment of death
benefits).

PIMCO EUROPE LIMITED DC PENSION PLAN - CHAIR STATEMENT FOR THE YEAR ENDING 30
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Page 6

The Trustee monitors this through:•Agreeing minimum timescales for processing requests, including core financial functions with
Scottish Widows, as the Plan’s administrator. The Trustee reviews this through theadministration reports produced by Scottish Widows quarterly, which provides information on
how promptly any member enquiries are dealt with. The Trustee has historically identified thatreporting could be improved in order to provide clarity on the timing of payment of contributions.
As a result, improvements to the reporting are provided through an additional contribution
report.
Reviewing any complaints received from the membership to see if there are any concerns withthe administration provided by Scottish Widows.
Scottish Widows’ own internal quality control processes, which ensure the accuracy oftransactions.
The Trustee also maintains a Risk Register, which is used to identify risks occurring andpotentially impacting the Plan and the internal controls in place to manage these risks.
A Payment Schedule, which sets out timescales for the Company to remit monthly contributions
to the Plan. The deduction and payment of contributions is reviewed by the Company andTrustee. This has been reviewed and updated and signed on 21 December 2023.
All financial transactions are subject to annual audit requirements as part the Trustee’s Annual
Report and Accounts.

•
•
•
•
•

The Trustee has an administration agreement in place with Scottish Widows through the Mercer
Workplace Savings (MWS) platform. The administration agreement sets out the service standards
expected of Scottish Widows and, if Scottish Widows’ service falls below the Service Level Failure
Point for the same SLA over three consecutive months, financial penalties are payable to theTrustee by Scottish Widows until the situation is rectified. These penalties are designed toincentivise Scottish Widows to continually meet service standards.
The expected service standards are:
SLA

Description

TargetService
Level (%)
99.5

2

WebsiteAvailability

3

Documentation 97.0

Service Level
Failure Point
(%)
97.5

85.0

Comment
Scottish Widows shall ensure that theWebsite is available to Users during thehours of 08:00 and 17:30 on Business
Days.
Scottish Widows shall provide electronic
access to policy documentation held
within the portal library to members
within two Business Days of receipt of all
required new joiner details submitted in

PIMCO EUROPE LIMITED DC PENSION PLAN - CHAIR STATEMENT FOR THE YEAR ENDING 30
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Page 7

4

Contribution
Processing

100.0

90.0

5

Investment
Transactions

97.0

85.0

6

GeneralEnquiries

97.0

85.0

7

Payments Out

97.0

85.0

8

Payments In

97.0

85.0

an electronic format from either the
Client or a Member. Hard copies, where
issued, will be issued within fiveBusiness days of receipt of all required
new joiner details submitted in hard copy
format.
Subject to the completion of the longest
delayed dealing cycle, Scottish Widows
shall process regular contributions andallocate to Member policies within two
Business Days of receipt of the validated
contribution schedule and reconciled
payment.
Scottish Widows shall action investment
transaction (switches, redirections andsingle contributions where appropriate)
requests from Members or Trustees
within three Business Days from the dateof receipt of complete instructions.
Scottish Widows shall respond to noncomplex general enquiries from
Members (such as valuations,projections, contribution statements andchange of details) within fiveBusiness Days of receipt of the enquiry.
Subject to the completion of the longest
delayed dealing cycle, Scottish Widows
shall process payments out within fiveBusiness Days of receipt of thecompleted payment authority form andall required documentation from theauthorised party. In respect of payments
to Members on retirement, the period offive (5) Business Days referred to in this
SLA shall commence from the normal
retirement age of the retiring Member.
Subject to the completion of the longest
delayed dealing cycle, Scottish Widows
shall issue confirmation to Members or
Trustee Clients that transferred assets
have been allocated as at the date ofreceipt of both payment and complete

PIMCO EUROPE LIMITED DC PENSION PLAN - CHAIR STATEMENT FOR THE YEAR ENDING 30
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Page 89Complaints

0.01

0.02

10

Helpline

97.0

95.0

documentation within five Business Daysof receipt.
Scottish Widows shall ensure that upheld
complaints constitute not more than 1 inevery 10,000 (0.01%) lives within the
Mercer Platform book on a monthly
basis.
Scottish Widows shall answer all calls to
the Mercer helpline during the hours of
08:00 and 17:30 Monday to Friday(excluding Bank/Public Holidays).

The overall performance attained during the reporting period was 98% of events being processed
within the agreed target dates.
The administrator has adopted a number of processes to ensure that core transactions are carriedout promptly and accurately. These include:•••

Daily monitoring of bank accounts,
A dedicated contribution processing team, andTwo individuals checking all investment and banking transactions.

Adherence to these processes is reviewed annually by the Trustee through the AAF 01/06 reportprovided by Scottish Widows, which is an independent audit of compliance with their internal
controls and processes. The latest AAF report was shared with the Trustee in June 2023, for theperiod 1st January 2022 to 31st December 2022 and did not report any material concerns with thecontrols and processes in place.
During the Plan year, the Trustee noted instances in single quarters, in which individual Service
Levels were not achieved, however the service did not fall below the level to trigger payment of afinancial penalty. Each of these instances was raised with Scottish Widows and efficiently rectified,or satisfactory reasoning provided as to why the Service Level had not been met. Mercer alsoestablished monthly calls with Scottish Widows to ensure that any identified problems are rectified
quickly and steps taken to ensure that these errors do not re-occur.
On behalf of the Trustee, Mercer also oversees the performance of Scottish Widows as part of the
Mercer Workplace Savings platform, examining operational performance to determine theperformance trends. This includes areas of day-to-day operations, SLA performance andcomplaints. All activity is discussed and documented with actions carried forward and monitored
both at a client and portfolio level. Mercer raises any concerns with the Trustee quarterly, or moreregularly if deemed urgent, with details of operational performance and the key points from theirgovernance.

PIMCO EUROPE LIMITED DC PENSION PLAN - CHAIR STATEMENT FOR THE YEAR ENDING 30
JUNE 2023
Page 9During the Plan year, the Trustee continued to review the actions it takes in meeting the
expectations of the Pensions Regulator, as set out under its DC Code of Practice 13 for thegovernance and administration of defined contribution pension schemes. The Code sets out thestandards of conduct and practice that the Regulator expects trustee boards to meet in complying
with their duties in legislation. The Trustee, with support from Mercer, has an action plan which isreviewed annually and these actions have been included within the Business Plan. An action
included carrying out a site visit at Scottish Widows every three years. The Trustee last undertooka site visit with Scottish Widows in July 2022. This was brought forward by the Trustee from its due
date in the autumn 2022 due to a number of concerns about Scottish Widows’ controls. Senior
representatives from Scottish Widows met with the Trustee and Mercer to discuss the issues
experienced and the improved controls in place to avoid such issues in the future. Since thismeeting, significant improvements have been made and the Trustee and Mercer will continue toclosely monitor ongoing standards going forward.
Charges and Transaction Costs
As required by the Administration Regulations, the Trustee is required to report on the member
borne charges and transaction costs for the investments used in the default investment option as
well as the wider fund choice available and assess the extent to which the charges and costs
represent good value for members.
The total charges payable, quoted in the following table as TER (Total Expense Ratio), applicableto the Plan’s default arrangement (including any technical defaults) are detailed below. The TER isa measure of the total costs associated with managing and operating an investment fund. These
costs consist primarily of management fees and additional expenses, such as trading fees, legal
fees, auditor fees and other operational expenses. The Trustee can confirm that the default funds
remain within the statutory charge cap of 0.75% p.a. of funds under management since April 2015
and Scottish Widows monitors these charges on a quarterly basis to ensure they remain below thiscap.

PIMCO EUROPE LIMITED DC PENSION PLAN - CHAIR STATEMENT FOR THE YEAR ENDING 30
JUNE 2023
Page 10TER(% p.a.)Mercer Growth
0.391
Mercer Drawdown Retirement
0.443
Mercer Target Drawdown 2024 Retirement
0.446
Mercer Target Drawdown 2027 Retirement
0.447
Mercer Target Drawdown 2028 Retirement
0.435
Mercer Target Drawdown 2029 Retirement
0.424
Mercer Target Drawdown 2030 Retirement
0.413
Mercer Cash
0.250
Source: Mercer and Scottish Widows. Fee Data as at 30 June 2023
Fund NameTransaction Costs(% p.a.)
0.137
0.093
0.099
0.128
0.130
0.132
0.134
0.000

The Trustee has also adopted a range of risk profiled funds and a range of passively and actively
managed funds, which allows members to tailor their own investment strategy. The charges (TER)
and transaction costs for the self-select funds in which members were invested in during the Plan
year, are detailed below:
TER
Transaction Costs
Fund Name(% p.a.)(% p.a.)Mercer Active Global Equity
0.860
0.333
Mercer Active Global Small Cap Equity
1.030
0.622
Mercer Global Listed Infrastructure
1.020
0.297
Mercer Diversified Growth
0.440
0.232
Mercer Passive Sustainable Global Equity Hedged
0.290
0.240
Mercer Shariah
0.490
0.034
BlackRock - Passive UK Equity
0.218
0.020
BlackRock - Passive Overseas Equity
0.225
0.005
BlackRock - Passive US Equity
0.213
0.020
BlackRock - Passive Europe (ex-UK) Equity
0.230
0.014
BlackRock - Passive Japan Equity
0.217
0.000
BlackRock - Passive Asia Pacific (ex-Japan) Equity
0.230
0.000
BlackRock - Passive Emerging Markets Equity
0.443
0.000
BlackRock - Passive Fixed Interest Gilts
0.219
0.082
BlackRock - Passive UK Corporate Bonds
0.230
0.064
BlackRock - Passive Index-Linked Gilts
0.219
0.012
PIMCO - Emerging Markets Bond
1.050
0.230
PIMCO - Global High Yield Bond
0.740
0.190
PIMCO - Global Investment Grade Credit
0.680
0.170
PIMCO - Income Strategy
0.740
0.160
PIMCO - Diversified Income
0.880
0.200
PIMCO - Dynamic Multi Asset
1.070
0.200
LGIM - Pre-Retirement
0.255
0.018

PIMCO EUROPE LIMITED DC PENSION PLAN - CHAIR STATEMENT FOR THE YEAR ENDING 30
JUNE 2023
Page 11

Threadneedle – Property
0.840
Source: Mercer and Scottish Widows. Fee Data as at 30 June 2023

-0.113In the context of a DC pension plan, transaction costs arise from the buying and selling of assets
when members buy and sell units of funds or when managers trade within pooled funds. These
costs of manager trading are borne by members invested in the fund options. Where there is anegative transaction cost, this indicates that transacting has resulted in a net revenue rather thana net cost for the fund.
There is little flexibility for the Trustee to impact transaction costs as managers will essentially passon the underlying costs of buying and selling securities in the market. Further, the turnover level of
trading will impact the level of costs i.e. passive managers will have low levels of trading and low
levels of cost whilst active managers will have the opposite. As a result it is difficult to compare
managers, even between active managers.
Net returns on investments

The tables below set out annualised net performance for the 1 and 5 year periods for the lifestylearrangements (for age 25, 45, and 55) and for the self-select fund range.
Lifestyle strategies – Drawdown, Cash andAnnuity Strategies*

Annualised returns to 30 June 2023 (%)
1 year (%)

5 years (%)

25, 45

4.7

3.9

55

4.7

3.7

Age of member

Source: Mercer and Scottish Widows*As the growth phase is equal between lifestyles, the expected returns are assumed to be the equal
as well.
Self-select funds

Annualised returns to 30 June 2023 (%)
1 year (%)

5 year (%)

Mercer Active Global Equity

12.7

9.2

Mercer Active Global Small Cap Equity

12.7

6.0

Mercer Global Listed Infrastructure

-3.2

-*

Mercer Cash Fund

3.0

0.9

Mercer Diversified Growth

4.9

3.9

Mercer Passive Sustainable Global Equity
Hedged

16.8-*

PIMCO EUROPE LIMITED DC PENSION PLAN - CHAIR STATEMENT FOR THE YEAR ENDING 30
JUNE 2023
Page 12Mercer Shariah

17.0

-*

BlackRock - Passive UK Equity (c) (d)

8.2

3.0

BlackRock - Passive Overseas Equity (c) (d)

13.4

10.1

BlackRock - Passive US Equity (c) (d)

13.7

12.4

BlackRock - Passive Europe (ex-UK) Equity

19.5

7.4

BlackRock - Passive Japan Equity (d)

13.6

3.9

BlackRock - Passive Asia Pacific (ex-Japan)
Equity3.2

3.5BlackRock - Passive Emerging Markets Equity

-4.4

1.7

BlackRock - Passive Fixed Interest Gilts (d)

-24.4

-8.2

BlackRock - Passive UK Corporate Bonds

-7.0

-1.6

BlackRock - Passive Index-Linked Gilts

-17.5

-5.8

PIMCO - Emerging Markets Bond

5.1

-0.4

PIMCO - Global High Yield Bond

8.6

1.6

PIMCO - Global Investment Grade Credit

1.4

-0.5

PIMCO - Income Strategy

5.0

1.6

PIMCO - Diversified Income

3.6

0.1

PIMCO - GIS Dynamic Multi Asset

-4.4

-*

LGIM - Pre-Retirement

-14.2

-4.3

Threadneedle - Property

-16.7

1.1

Source: Mercer and Scottish Widows* Performance is not available for some funds due to their recent inception dates.

Reporting of Costs and Charges
Using the charges and transaction cost data provided by Scottish Widows and in accordance withregulation 23(1)(ca) of the Administration Regulations, as inserted by the 2018 Regulations, theTrustee has prepared an illustration detailing the impact of the costs and charges typically paid bya member of the Plan on their retirement savings pot. The statutory guidance provided has been
considered when providing these examples.
The below illustrations have taken into account the following elements:• Savings pot size;

PIMCO EUROPE LIMITED DC PENSION PLAN - CHAIR STATEMENT FOR THE YEAR ENDING 30
JUNE 2023
Page 13••••

Contributions;
Real terms investment return gross of costs and charges;
Adjustment for the effect of costs and charges; andTime.

To make this representative of the membership, the Trustee has based this on the average member
age of 35, using a starting pot size of £37,000 and contributions of £1,450 a month.

Most Popular

Cheapest Fund

Arrangement byHighest Expected

Lowest Expected

Most Expensive

Return Fund

Investment Return

Fund

Technical Default

members
Mercer Target

BlackRockBlackRockBlackRock IL Over

Mercer Active

Drawdown

Japanese Equity

US Equity

5 Year Gilt Index

Global Small Cap

Retirement Lifestyle

Mercer Cash

EquityStrategy*
Pot Size

Pot Size

Pot Size

Pot Size

Pot Size

Pot Size

Pot Size

Pot Size

Pot Size

Pot Size

Pot Sizewith nowithwith nowith nowith nowithwith nowithwith nowithwith noPot Size
with

Charges

Charges

Charges

Charges

Charges

Charges

Charges

Charges

Charges

Charges

Charges

ChargesYe

Incurred

Incurred

Incurred

Incurred

Incurred

Incurred

Incurred

Incurred

Incurred

Incurred

Incurred

Incurred

ar

(£)

(£)

(£)

(£)

(£)

(£)

(£)

(£)

(£)

(£)

(£)

(£)

1

55,20055,00055,20055,10055,20055,10054,10054,00055,20054,50054,63054,487

3

93,10092,00093,10092,70093,10092,60088,50087,90093,10089,90090,16189,592

5

132,000

130,000

132,000

131,000

132,000

131,000

122,000

121,000

132,000

125,000

126,057

124,87210

241,000

233,000

241,000

237,000

241,000

237,000

208,000

205,000

241,000

218,000

217,414

213,84215

363,000

346,000

363,000

356,000

363,000

355,000

294,000

287,000

363,000

314,000

311,132

303,92520

500,000

470,000

500,000

488,000

500,000

487,000

380,000

368,000

500,000

413,000

407,272

395,13425

651,000

602,000

655,000

635,000

655,000

633,000

466,000

447,000

655,000

517,000

505,896

487,48230

805,000

731,000

831,000

799,000

831,000

797,000

552,000

526,000

831,000

624,000

607,068

580,985

Notes:
1. Projected pension pot values are shown in today’s terms, and do not need to be reduced further
for the effect of future inflation, which has been assumed to be 2.5% pa.
2. The starting pot size is assumed to be £37,000
3. Contributions of £1,450pcm are assumed from age 35 to 65 years with no change to salary
4. Values are estimates and are not guaranteed
5. The projected growth rate for each fund is as follows:
Fund

Gross expected real return above inflation (p.a.)

PIMCO EUROPE LIMITED DC PENSION PLAN - CHAIR STATEMENT FOR THE YEAR ENDING 30
JUNE 2023
Page 14Mercer Target Drawdown Retirement
Lifestyle Strategy (Most Popular
Arrangement by members)
BlackRock Japanese Equity (Cheapest
Fund)BlackRock Passive US Equity (Greatest
Expected Return)BlackRock IL Over 5 Year Gilt Index(Lowest Expected Investment Return)Mercer Active Global Small Cap Equity(Most Expensive Fund)
Mercer Cash Fund (Technical Default)

1.6%-2.3%

2.40%
2.40%
0.00%
2.40%
0.50%

* depending on the numbers of years to retirement
6. The Transaction Costs relate to the average transaction costs incurred in the last three Plan
years. Where a transaction cost has been recorded as a negative, we have revised this within
the illustration to reflect 0.0% per annum.
The Trustee has presented a further illustration below to represent the average deferred memberof the Plan.
This is based on the average deferred member at age 35, using a starting pot size of £37,000. It
is assumed that there are no contributions being paid to the Plan.

Most Popular

Cheapest Fund

Arrangement byHighest Expected

Lowest Expected

Most Expensive

Return Fund

Investment Return

Fund

Technical Default

members
Mercer Target

BlackRockBlackRockBlackRock IL Over

Mercer Active

Drawdown

Japanese Equity

US Equity

5 Year Gilt Index

Global Small Cap

Retirement Lifestyle

Mercer Cash

EquityStrategy*

Ye

Pot Size

Pot Size

Pot Size

Pot Size

Pot Size

Pot Size

Pot Size

Pot Size

Pot Size

Pot Size

Pot Sizewith nowithwith nowith nowith nowithwith nowithwith nowithwith noPot Size
with

Charges

Charges

Charges

Charges

Charges

Charges

Charges

Charges

Charges

Charges

Charges

Charges

Incurred

Incurred

Incurred

Incurred

Incurred

Incurred

Incurred

Incurred

Incurred

Incurred

Incurred

Incurred

ar

(£)

(£)

(£)

(£)

(£)

(£)

(£)

(£)

(£)

(£)

(£)

(£)

1

37,90037,70037,90037,80037,90037,80037,00036,80037,90037,200£37,189£37,0923

39,70039,10039,70039,50039,70039,40037,00036,60039,70037,800£37,571£37,277

5

41,70040,60041,70041,20041,70041,20037,00036,40041,70038,400£37,956£37,46210

47,00044,60047,00046,00047,00045,90037,00035,90047,00039,900£38,937£37,93115

53,10049,00053,10051,40053,10051,20037,00035,30053,10041,400£39,943£38,40520

59,90053,90059,90057,30059,90057,10037,00034,80059,90043,000£40,975£38,885

PIMCO EUROPE LIMITED DC PENSION PLAN - CHAIR STATEMENT FOR THE YEAR ENDING 30
JUNE 2023
Page 1525

67,00058,70067,50064,00067,50063,70037,00034,30067,50044,700£42,034£39,37130

73,70062,70076,20071,40076,20071,00037,00033,80076,20046,400£43,120£39,863

Notes:
1. Projected pension pot values are shown in today’s terms and do not need to be reduced
further for the effect of future inflation, which has been assumed to be 2.5% pa.
2. The starting pot size is assumed to be £37,000
3. Values are estimates and are not guaranteed
4. The projected growth rate for each fund is as follows:
Fund
Mercer Target Drawdown Retirement
Lifestyle Strategy (Most Popular
Arrangement by members)
BlackRock Japanese Equity (Cheapest
Fund)BlackRock Passive US Equity (Greatest
Expected Return)BlackRock IL Over 5 Year Gilt Index(Lowest Expected Investment Return)Mercer Active Global Small Cap Equity(Most Expensive Fund)
Mercer Cash Fund (Technical Default)

Gross expected real return above inflation (p.a.)
1.6%-2.3%

2.40%
2.40%
0.00%
2.40%
0.50%

* depending on the numbers of years to retirement
5. The Transaction Costs relate to the average transaction costs incurred in the last three Plan
years. Where a transaction cost has been recorded as a negative, we have revised this within
the illustration to reflect 0.0% per annum.
*The TER and transaction costs applicable during the Mercer Target Drawdown Retirement
Lifestyle Strategy depend upon how close a member is to retirement. During the growth phase (withmore than eight years to retirement), a member is invested in the Mercer Growth Fund. With lessthan eight years to retirement, assets are gradually moved out of the Mercer Growth Fund and into
the Mercer Diversified Retirement Fund and BlackRock Cash Fund. Details of the member borne
charges applicable to each of these funds can be found listed in the table above.
Value for Members
The Trustee is required to annual assess the extent to which the Plan delivers value for members
across three key areas:
Assessment area
Type of assessment
Costs and charges
Comparative assessment against three larger DC
arrangements, considering the level of ongoing memberborne charges and transaction costs.

PIMCO EUROPE LIMITED DC PENSION PLAN - CHAIR STATEMENT FOR THE YEAR ENDING 30
JUNE 2023
Page 16

Net investment performance
Governance and administration

Comparative assessment against three larger DC
arrangements, considering investment performance net of all
member-borne costs and charges.
Standalone assessment of the Plan’s governance andadministration arrangements, covering: core financialtransactions; record keeping; default investment strategy;
investment governance; trustee knowledge andunderstanding; member communications; and managementof conflicts of interest

The Trustee has carried out a value for members assessment as at 30 June 2023. The
conclusions of this assessment are set out below:
Assessment area
Costs and charges

Net investment performance

Governance and administration
Overall

Conclusion
The Trustee has assessed the Plan as offering reasonablevalue from a costs and charges perspective, when also
accounting for investment performance of the options
assessed. While charges are generally higher than thecomparators, in some cases this has been compensated byhigher net investment performance over the periods
assessed; particularly for actively managed funds.
The Trustee has assessed the Plan as offering reasonablevalue from a net investment performance perspective.
Performance has been mixed compared with the comparator
arrangements, while the Trustee notes the strategy’s
stronger focus on diversification and risk management
relative to some of the comparators.
The Trustee has assessed the Scheme as offering goodvalue from a governance and administration perspective.
Overall, considering all three areas set out above, theTrustee has assessed the Plan as offering reasonable value
for members.
Based on its assessment, The Trustee is liaising with the
Employer regarding options for the future, in order toimprove value for members.

This Statement will be published on a publicly available website, www.pimco.co.uk, and will besignposted in the annual benefit statements, which are issued by Scottish Widows.
Knowledge and Understanding

PIMCO EUROPE LIMITED DC PENSION PLAN - CHAIR STATEMENT FOR THE YEAR ENDING 30
JUNE 2023
Page 17

The Plan is run by a sole Professional Trustee, ZEDRA Governance Ltd (previously known as PTL
Governance Ltd). Following PTL being acquired by ZEDRA Governance Limited at the end of 2021,
PTL Governance Limited changed its name with effect from 7 July 2022 to ZEDRA Governance
Limited (ZEDRA). ZEDRA is a specialist provider of independent governance services primarily to
UK pension arrangements. Amongst other appointments ZEDRA act as an independent trustee onover two hundred trust based pension schemes and sit on a number of Investment GovernanceCommittees (IGCs). ZEDRA has oversight or responsibility for in excess of £134bn of pension
assets. More information on ZEDRA can be found at www.zedra.com. There have been no changes
to the Trustee over the year.
ZEDRA has a training program for all of their staff and are subject to independent audit on theircontrols and processes through the AAF 02/07 reporting. As part of the AAF process, the Trustee
is required to confirm that the current team have an appropriate level of knowledge andunderstanding to be able to represent ZEDRA as Trustee of the Plan. The annual review process
within ZEDRA identifies training needs for each individual and includes a requirement for relevant
staff to undertake a minimum level of Continuing Professional Development (CPD) each year. Twonominated Client Directors are assigned to work on all ZEDRA sole trustee appointments. The
Client Directors liaise regularly on scheme related matters and all key decisions must be signed off
by both Client Directors, or escalated to another Client Director for peer review in the event of adiffering opinion.
Clare James acted as the lead Client Director managing the Plan for the Plan year supported by asecond Client Director, Payam Kazemian. Debbie Mather and other members of the ZEDRA teamalso provide day-to-day support and peer review functions. Clare is a qualified actuary and so has
an in depth understanding of the funding and investment issues related to the Plan. Clare holds the
PMI Certificate in Pension Trusteeship and she is accredited as a Professional Trustee by the
Association of Professional Pension Trustees (APPT). Over the period, Clare has met the CPD
requirements of the actuarial profession and the APPT.
Clare has undertaken regular relevant training throughout the year including:•
ESG;•
Responsible/sustainable investment;•
Stewardship;•
Requirements of the new General Code of Practice;•
EDI and its integration on Trustee Boards and in pension schemes;•
Value for Members•
Developments in the DC Master Trust Marketplace•
At retirement options for DC members
Payam Kazemian has an in depth understanding of the funding and investment issues related to
the Plan. Payam is also subject to CPD requirements and is an accredited Professional Trusteewith the Association for Professional Pension Trustees (APPT). Payam has undertaken regulartraining throughout the year including:PIMCO EUROPE LIMITED DC PENSION PLAN - CHAIR STATEMENT FOR THE YEAR ENDING 30
JUNE 2023
Page 18

•
•
•
•
•
•

Diversity for pension schemes;
Approach to drawdown;
Pension scams;Managing administration provider;
Trends in Master Trust market; andGDPR.

In accordance with sections 247 and 248 of the Pensions Act 2004, the Trustee is required tomaintain an appropriate level of knowledge and understanding that, together with professional
advice available to them, enables them to properly exercise their functions and duties in relation to
the Plan.
The table below shows how these requirements have been met during the year.
Requirement
Trustees must describe how,through the scheme year thetrustees have demonstrated aworking knowledge of the trust
deed and rules.

Trustees must describe how,through the scheme year thetrustees have demonstrated aworking knowledge of thecurrent SIP.

Trustees must describe how,through the scheme year thetrustees have demonstrated aworking knowledge of all

How metThe Trustee is conversant with, and has demonstrated aworking knowledge of, the Trust Deed and Rules by having
access to the documents on their online directory andproviding decisions in line with the Rules. If there are any
ambiguities over the interpretation of the Rules, legal advice
is sought from the Plan’s lawyers Sackers LLP.
The Trustee confirms that the current team has an
appropriate level of knowledge and understanding and Plan
specific understanding to be able to represent ZEDRA as theTrustee of the Plan.
The Trustee is conversant with, and has a working
knowledge of the current SIP, which has recently beenrevised. The Trustee undertakes regular training on
investment matters and ZEDRA is a regular commentator on
the wider DC market. The Trustee has sufficient knowledgeof investment matters to be able to challenge their advisor.
During the year, the SIP was reviewed and updated
following the inclusion of the Trustee’s sustainability policy.
The SIP was approved 10.8.2023 and a copy placed on the
PIMCO web site https://www.pimco.co.uk/engb/search/#q=SIP&sort=relevancy
ZEDRA operates a governance framework which includes
policies on how the Trustee will deal with conflicts, manage
risk, ensure key tasks are completed in time and deal withmember complaints. The Trustee reviews these documents
on an annual basis to ensure they are still suitable andPIMCO EUROPE LIMITED DC PENSION PLAN - CHAIR STATEMENT FOR THE YEAR ENDING 30
JUNE 2023
Page 19

documents setting out thetrustees’ current policies.

makes any changes as required. The Trustee aims to reviewof the Code of Practice 13 requirements triennially, the last
review was carried out in December 2021.
The Trustee is conversant with, and has demonstrated aworking knowledge of, the Plan documents, which has beenachieved through the maintenance of an online directory that
contains all the relevant documents and policies. The
Trustee with its knowledge and understanding of pension
schemes, the issues faced and their governance framework,when working alongside its advisors is able to properly
exercise its functions to act properly and effectively inmembers' best interests and deliver good member outcomes
for the contributions made. At each meeting the Trustee
reviews the business plan and whether they have effectively
delivered the requirements under the business plan.

Trustees must describe how,through the scheme year thetrustees have demonstrated
that they have sufficientknowledge and understandingof the law relating to pensions
and trusts.

Trustees must describe how,through the scheme year thetrustees have demonstrated
that they have sufficientknowledge and understandingof the relevant principles
relating to the funding andinvestment of occupational
schemes.

In addition, during the Plan year:• The Trustee prepared an Implementation Statement.
• Last reviewed the Risk Register on 12 December
2023.
ZEDRA works for a broad range of clients and is familiar withthe law relating to pensions and trusts. This can bedemonstrated through the qualifications held by the Trustee
and their continued involvement with many pension
schemes.
The Trustee’s advisors, Mercer, attends each meeting andgives the Trustee an overview of market and legislative
developments, including Trustee duties and requirements forstrong governance. In addition, Mercer provides specifictraining on any relevant aspect ahead of any scheme
reviews or new legal requirements.
The Trustee reviews their training needs on a regular basis.
As noted above, Clare attended various training sessions
throughout the year in order to maintain sufficient knowledge
and understanding of the relevant principles relating to thefunding and investment of occupational schemes.

PIMCO EUROPE LIMITED DC PENSION PLAN - CHAIR STATEMENT FOR THE YEAR ENDING 30
JUNE 2023
Page 20

Trustees must describe how,through the scheme year thetrustees have demonstrated
that their combined knowledge
and understanding, together
with available advice, enable
them to properly exercise theirfunctions.

The Trustee receives professional advice from Mercer andSackers to support them in reviewing the performance of thePlan and in governing the Plan in line with the Trust Deed
and Rules and the relevant skills and experience of thoseadvisers is a key criterion when evaluating advisor
performance or selecting new advisers. The advice received
by the Trustee along with their own experience allows themto properly exercise their function as Trustee.
The Company covers the cost of the Trustee and its advisors
who attend each Trustee meeting and are available tosupport the Trustee at any time during the year and answer
any queries or concerns they may have.

The Trustee will also continue to review and assess, on an ongoing basis, whether the systems,
processes and controls across key governance functions are consistent with those set out in thePensions Regulator’s Code of Practice 13 and any updates to the accompanying guidance.
This statement has been prepared in accordance with Regulation 23 of the Occupational Pension
Schemes (Scheme Administration) Regulations 1996 as amended by the Occupational Pension
Schemes (Charges and Governance) 2015 (together ‘the Regulations’) and I confirm that the above
statement has been produced by the Trustee to the best of their knowledge.
This Chair Statement was Approved and Signed on 11.1.2024 by Clare James, Client
Director of Zedra Governance Limited – Chair of the Trustee of the PIMCO Europe Limited
DC Pension Plan

Appendix A - SIP