STATEMENT OF INVESTMENT PRINCIPLES

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for theUBM Pension Scheme
Effective from August 2023
1.

Introduction

This Statement of Investment Principles (“SIP”) sets out the policy of UBM Trustees Limited (“theTrustee”) on various matters governing decisions about the investments of the UBM Pension Scheme(“the Scheme”). This SIP replaces the previous SIP dated July 2021.
The UBM Pension Scheme was established under a Definitive Trust Deed on 9 September 2013 toprovide benefits for and in respect of specified individuals. Assets and liabilities were transferred to theTrustee from United Trustees Limited, as Trustee of the United Group Pension Scheme, United Pension
Plan and United Magazines Final Salary Scheme (together the “Old Schemes”). The transfer of assets
and liabilities took place on and after 30 December 2013 on the terms specified in the Merger Deed
dated 2 December 2013.
The Scheme is a mixed benefit scheme, with separate Defined Benefit (“DB”) and Defined Contribution(“DC”) sections. The majority of the Scheme’s DC section assets were transferred out of the Scheme
shortly after the merger described in the paragraph above. The remaining DC assets of the Scheme
relate to legacy policies and are closed to new contributions. The Trustee’s policies specific to the
Scheme’s DC assets are set out in Section 7.
The SIP is designed to meet the requirements of Section 35 (as amended) of the Pensions Act 1995(“the Act”), the Occupational Pension Schemes (Investment) Regulations 2005 (“the Regulations”), thePension Regulator’s guidance for defined benefit pension schemes (March 2017) and the Occupational
Pension Schemes (Charges and Governance) Regulations 2015 (specifically in relation to the DC
section of the Scheme).
This SIP has been prepared after obtaining and considering written professional advice from Lane Clark& Peacock LLP (“LCP”), the Scheme’s investment adviser, whom the Trustee believes to be suitably
qualified and experienced to provide such advice. The advice takes into account the suitability ofinvestments and the need for diversification, given the circumstances of the Scheme and the overall
investment objectives of the Trustee, which are set out in this SIP.
UBM Limited, as the Principal Employer, has been consulted on the SIP.
The Trustee will review this SIP from time to time and, with the help of its advisers, will amend it asappropriate. These reviews will take place as soon as practicable after any significant change ininvestment policy and at least once every three years.
▪

Appendix 1 sets out details of the Scheme’s investment governance structure, including key
responsibilities of the Trustee, investment advisers and investment managers. It also contains a
description of the basis of remuneration of the investment adviser and the investment managers.

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Appendix 2 sets out the Trustee’s policy towards risk appetite, capacity, measurement and▪

management.
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Investment objectives

2.1. DB section
The Trustee’s objectives for the DB section are:▪

that the Scheme should be able to meet benefit payments as they fall due; and▪

that the Scheme’s funding position (ie the value of its assets relative to the assessed value of its
liabilities) should be at an appropriate level. The Trustee is aware that there are various
measures of funding, and have given due weight to those considered most relevant to the
Scheme.

2.2. DC section
The Trustee’s objective for the DC section of the Scheme is to provide members with access to an
appropriate range of investment options, reflecting the membership profile and the variety of ways thatmembers can draw their benefits in retirement. This also applies to the Additional Voluntary
Contributions (“AVCs”) held in the Scheme.
3.

Investment strategy

3.1. DB section
The Trustee, with the help of its advisers and in consultation with the employer, reviews the Scheme’s
investment strategy from time to time, taking into account the objectives described in Section 2.1 above.
The Trustee has agreed that the investment strategy of the Scheme should be based on the allocation
below.
Asset class

Strategic allocation

Control ranges

(%)

(%)

Diversified Growth Funds (DGFs)

10

5 – 15

Property10

5 – 15

Illiquid Credit10

5 – 15Liquid Credit

35

30 – 40

Liability Matching assets

35

30 – 40

Total

100

The Trustee’s policy is to target a level of expected return level that is sufficient to meet the Scheme’s
liabilities subject to ensuring the level of investment risk is appropriate given the Scheme’s
circumstances. The Trustee believes that the strategy above meets this objective.
The Scheme’s actual asset allocation is reviewed against the above control ranges at regular
Investment Sub-Committee (“ISC”) meetings. If, when reviewed, the asset allocation is outside theabove control ranges, consideration will be given to whether the Scheme’s asset allocation should be
rebalanced.

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The Diversified Growth Funds will contain a variety of underlying asset classes, including equities,
bonds and alternative assets.

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The Liability Matching assets allocation aims to hedge some of the interest rate and inflation risks of the
Scheme’s liabilities.
3.2. DC section
The Trustee has made available a range of investment funds for members including equity and bondbased funds as well as a cash fund. Each member is responsible for specifying one or more funds forthe investment of their account, having regard to their attitude to the risks involved. The DC policies areclosed to new contributions and there is no default investment option.
4.

Considerations made in setting the investment arrangements

When deciding how to invest the Scheme’s assets, the Trustee considers a number of risks, including,but not limited to, those set out in Appendix 2. Some of these risks are more quantifiable than others,
but the Trustee has tried to allow for the relative importance and magnitude of each risk.
The Trustee considered a wide range of asset classes for investment, and the expected returns andrisks associated with those asset classes, as well as the Trustee’s beliefs about investment markets
and which factors are most likely to impact investment outcomes..
In setting the strategy the Trustee considered:▪

the Scheme’s investment objectives;▪

the best interests of members and beneficiaries;▪

the circumstances of the Scheme, including the profile of the benefit cash flows (and the ability tomeet these in the near to medium term), the funding level of the Scheme, and the strength of thecovenant of the Principal Employer to the Scheme;▪

the risks, rewards and suitability of a number of possible asset classes and investment strategies
and whether the return expected for taking any given investment risk is considered sufficient given
the risk being taken;▪

the need for appropriate diversification between different asset classes to ensure that both the
Scheme’s overall level of investment risk and the balance of individual asset risks are appropriate;▪

the need for an appropriate degree of liquidity across the Scheme’s investments; and▪

for the DC section, the need for appropriate diversification between and, where appropriate, within
the investment options offered to members.

The Trustee’s key investment beliefs, which influenced the setting of the investment arrangements, areas follows:▪

asset allocation is the primary driver of long-term returns;▪

risk-taking is necessary to achieve return, but not all risks are rewarded;▪

risks that are typically not rewarded should generally be avoided, hedged or diversified;▪

investment markets are not always efficient and there may be opportunities for good active
managers to add value;3109780▪

investment managers who can consistently spot and profitably exploit market opportunities are
difficult to find and therefore passive management, where available, can be better value;

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environmental, social and governance (ESG) factors, including but not limited to climate-related
factors, are likely to be one area of market inefficiency and so managers may be able to improverisk-adjusted returns by taking account of ESG factors;▪

long-term environmental, social and economic sustainability, including the implications of climatechange, is one factor that the Trustee should consider when making investment decisions; and▪

costs have a significant impact on long-term performance.

5.

Implementation of the investment arrangements

Before investing in any manner, the Trustee obtains and considers proper written advice from its
investment adviser on the question of whether the investment is satisfactory, having regard to the needfor suitable and appropriately diversified investments.
Details of the investment managers, their objectives, investment guidelines, and custody arrangements
are set out in the separate Investment Policy Implementation Document (“IPID”).
The Trustee has signed agreements with the investment managers setting out in detail the terms on
which the portfolios are managed. The investment managers’ primary role is the day-to-day investment
management of the Scheme’s investments. The managers are authorised under the Financial Services
and Markets Act 2000 (as amended), or under similar regulation where not domiciled in the UK, to carryout such activities.
The Trustee and investment managers to whom discretion has been delegated exercise their powers togiving effect to the principles in this Statement of Investment Principles, so far as is reasonably
practicable.
The Trustee has limited influence over managers’ investment practices because all the Scheme’s
assets are held in pooled funds, but it encourages its managers to improve their practices whereappropriate.
The Trustee‘s view is that the fees paid to the investment managers, and the possibility of their mandate
being terminated, ensure they are incentivised to provide a high quality service that meets the statedobjectives, guidelines and restrictions of the fund. However, in practice managers cannot fully aligntheir strategy and decisions to the (potentially conflicting) policies of all their pooled fund investors in
relation to strategy, long-term performance of debt/equity issuers, engagement and portfolio turnover.
It is the Trustee’s responsibility to ensure that the managers’ investment approaches are consistent with
its policies before any new appointment, and to monitor and to consider terminating any existingarrangements that appear to be investing contrary to those policies. The Trustee expects investment
managers, where appropriate, to make decisions based on assessments of the longer term financial
and non-financial performance of debt/equity issuers, and to engage with issuers to improve theirperformance. It assesses this when selecting and monitoring managers.
The Trustee evaluates investment manager performance by considering performance over both shorterand longer-term periods as available. Except in closed-ended funds where the duration of theinvestment is determined by the fund’s terms, the duration of a manager’s appointment will depend on

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strategic considerations and the outlook for future performance. Generally, the Trustee would be
unlikely to terminate a mandate on short-term performance grounds alone.

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The Trustee’s policy is to evaluate each of its investment managers by reference to the manager’s
individual performance as well the role it plays in helping the Scheme meet its overall long-term
objectives, taking account of risk, the need for diversification and liquidity. Each manager’s
remuneration, and the value for money it provides, is assessed in light of these considerations.
The Trustee recognises that portfolio turnover and associated transaction costs are a necessary part ofinvestment management and that the impact of portfolio turnover costs is reflected in performance
figures provided by the investment managers. The Trustee expects its investment adviser toincorporate portfolio turnover and resulting transaction costs as appropriate in its advice on the
Scheme’s investment mandates.
6.

Realisation of investments

The Trustee regularly monitors the cash flow requirements for the Scheme and has agreed to draw
regular income from its investments where necessary. It has also put in place procedures with theinvestment managers and their administrators for the realisation of any further investments to meet
additional cash flow requirements.
For the DC section, the Trustee’s policy is to invest in funds that offer daily / weekly dealing (with the
exception of with profits arrangements) to enable members to realise and change their investments
readily.
7.

Financially material considerations and non-financial matters

The Trustee has considered how environmental, social, governance (“ESG”) and ethical factors should
be taken into account in the selection, retention and realisation of investments, given the time horizon of
the Scheme and its members.
The Trustee expects its investment managers (where appropriate) to take account of all financiallymaterial considerations (including climate change and other ESG considerations) when making
investment decisions. It seeks to appoint managers that have appropriate skills and processes to do
this, and may consider investing in funds (where appropriate) that demonstrate the incorporation of
ESG factors, including climate-related factors, into the investment process. The Trustee will, from time
to time review how its managers are taking account of these issues in practice, for example by meetingwith managers at regular ISC meetings.
The Trustee has limited influence over managers’ investment practices where assets are held in pooled
funds. However, it encourages its managers to improve their practices where appropriate.
The Trustee has considered whether to take into account any non-financial matters (ie matters relating
to the ethical and other views of members and beneficiaries and the principal employer, rather thanconsiderations of financial risk and return) in the selection, retention and realisation of investments, andhas decided not to.
8.

Voting and engagement

The Trustee recognises its responsibility as an owner of capital, and believes that good stewardshippractices, including monitoring and engaging with investee companies, and exercising voting rights

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attaching to investments, protect and enhance the long-term value of investments. The Trustee hasdelegated to its investment managers the exercise of rights attaching to investments, including voting

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rights, and engagement with issuers of debt and equity and other relevant persons about relevant
matters such as performance, strategy, capital structure, management of actual or potential conflicts ofinterest, risks and ESG considerations.
The Trustee does not monitor or engage directly with issuers or other holders of debt or equity. It
expects the investment managers to demonstrate good stewardship practices with regards exercisingownership rights and undertaking monitoring and engagement, considering the long-term financial
interests of the beneficiaries.
The Trustee monitors managers’ activities in relation to ESG factors, voting and engagement on aregular basis and discusses this subject with managers at regular ISC meetings. It seeks to understandhow the managers are implementing their stewardship policies in practice to confirm that theirstewardship is effective and aligned with its expectations.
The Trustee has selected Climate Change as its key ESG priority to provide a focus for its monitoring ofinvestment managers’ voting and engagement activities. The Trustee reviews its ESG priorities
regularly and updates them if appropriate. It communicates these stewardship priorities to its managers
and also confirms its more general expectations in relation to ESG factors, voting and engagement.
If the Trustee’s monitoring identifies areas of concern, it will engage with the relevant manager toencourage improvements.
The Trustee seeks to appoint managers that have strong stewardship policies and processes, reflecting
where relevant the recommendations of the UK Stewardship Code issued by the Financial Reporting
Council, and from time to time the Trustee reviews how these are implemented in practice.

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Responsibilities, decision-making and fees

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The Trustee has decided on the following division of responsibilities and decision-making for the

Appendix 1

Scheme. This division is based upon the Trustee’s understanding of the various legal requirements
placed upon it. The Trustee’s view is that this division allows for efficient operation of the Scheme
overall, with access to an appropriate level of expert advice and service. The Trustee’s investment
powers are set out within the Scheme’s governing documentation.
1.

TrusteeIn broad terms, the Trustee is responsible in respect of investment matters for:▪

setting the investment strategy, in consultation with the employer and after receiving advice fromits advisers;▪

developing a mutual understanding of investment and risk issues with the employer;▪

reviewing the investment policy following the results of each valuation, and / or after any review ofinvestment strategy (eg any asset liability modelling exercise);▪

appointing (and, when necessary, dismissing) the investment managers and the investment
adviser;▪

monitoring the exercise of the investment powers that they have delegated to the investment
managers and monitoring compliance with Section 36 of the Act;▪

formulating a policy in relation to financially material considerations, such as those relating to ESG
considerations (including but not limited to climate change);▪

setting a policy on the exercise of rights (including voting rights) and undertaking engagement
activities in respect of the investments;▪

communicating with members as appropriate on investment matters, such as the Trustee’s
assessment of its effectiveness as a decision-making body, the policies regarding responsible
ownership and how such responsibilities have been discharged;▪

putting effective governance arrangements in place and documenting these arrangements in asuitable form;▪

reviewing the content of this SIP from time to time and modifying it if deemed appropriate; and▪

consulting with the employer when reviewing the SIP.

2.

Investment managers

In broad terms, the investment managers will be responsible for:▪

managing their respective portfolios, within the guidelines agreed with the Trustee;▪

taking account of financially material considerations (including climate change and other ESG
considerations) as appropriate when managing the portfolios of assets;▪

exercising rights (including voting rights) attached to investments and undertaking engagement
activities in respect of investments; and▪

providing the Trustee with regular information concerning the management and performance of
their respective portfolios.

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3.

Investment adviser

Appendix 1 (cont)In broad terms, the investment adviser will be responsible, in respect of investment matters, as
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requested by the Trustee, for:▪

advising on how material changes within the Scheme’s benefits, membership, and funding
position may affect the manner in which the assets should be invested and the asset allocation
policy;▪

advising on the selection, and review, of the investment managers. Such advice takes account of
LCP’s assessment of the nature and effectiveness of managers’ approaches to financially material
considerations (including climate change and other ESG considerations) and stewardshippractices; and▪

participating with the Trustee in reviews of this SIP.

4.

Fee structures

The Trustee has agreed Terms of Business with the Scheme’s investment adviser, under whichcharges are calculated on a “fixed fee” or “time-cost” basis.
The investment managers receive fees calculated by reference to the market value of assets undermanagement. The fee rates are believed to be consistent with the manager’s general terms for
institutional clients and are considered by the Trustee to be reasonable when compared with those ofother similar providers.
The fee structure used in each case has been selected with regard to existing custom and practice, andthe Trustee’s view as to the most appropriate arrangements for the Scheme. However, the Trustee willconsider revising any given structure if and when it is considered appropriate to do so.
5.

Performance assessment

The Trustee is satisfied, taking into account the external expertise available, that there are sufficient
resources to support its investment responsibilities. The Trustee believes that it has sufficient expertiseand appropriate training to carry out its role effectively.
It is the Trustee’s policy to assess the performance of the Scheme’s investments, investment manager
and professional advisers from time to time. The Trustee will also periodically assess the effectivenessof its decision-making and investment governance processes and will decide how this may then bereported to members.
6.

Working with the Scheme’s employer

When reviewing matters regarding the Scheme’s investment arrangements, such as the SIP, theTrustee gives due consideration to the employer’s perspective. While the requirement to consult does
not mean that the Trustee needs to reach agreement with the employer, the Trustee believes that better
outcomes will generally be achieved if the Trustee and employer work together collaboratively.

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Policy towards risk

Appendix 2

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1.

Risk appetite and risk capacity

Risk appetite is a measure of how much risk the Trustee is willing to bear within the Scheme in order tomeet its investment objectives. Taking more risk may mean that those objectives can be achieved
more quickly, but it also means that there is a greater likelihood that the objectives are missed, in theabsence of remedial action.
Risk capacity is a measure of the extent to which the Trustee can tolerate deviation from its long-term
objectives before attainment of those objectives is seriously impaired. The Trustee aims to strike theright balance between risk appetite and risk capacity.
When assessing the risk appetite and risk capacity, the Trustee considered a range of qualitative andquantitative factors, including:▪

the strength of the employer’s covenant and how this may change in the near/medium future;▪

the Scheme’s funding target;▪

the Scheme’s liability profile, its interest rate and inflation sensitivities, and the extent to which theseare hedged;▪

the Scheme’s cash flow and target return requirements; and▪

the level of expected return and expected level of risk, now and as the strategy evolves.

When deciding on the current investment strategy, the Trustee reviewed the expected level of risk andbelieved this level of risk to be appropriate given the Trustee’s and employer’s risk appetite andcapacity, and the Scheme’s objectives.
2.

Approach to managing and monitoring investment risks

The Trustee considers that there are a number of different types of investment risk that are important tomanage and monitor. These include, but are not limited to:
2.1.

Risk of inadequate returns
A key objective of the Trustee is that, over the long-term, the Scheme should have adequate
assets to meet its liabilities as they fall due. The Scheme is invested in assets expected to
produce sufficient long-term returns, but there is a risk that returns realised over the long term
will be inadequate. There is also a risk that the value of the Scheme’s assets and theassessed value of its liabilities may diverge in certain financial and economic conditions overthe short term. This risk has been taken into account in setting the investment strategy and ismonitored by the Trustee on a regular basis.
For the DC assets, as members’ benefits are dependent on the investment returns achieved, it
is important that investment options are available which can be expected to produce adequate
real returns over the longer term. The Trustee took this into account when considering thefund range to make available to members.

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2.2.

Investment manager risk

Appendix 2 (cont)This is the risk that an investment manager fails to meet its investment objectives. Prior to

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appointing any investment managers, the Trustee receives written advice from a suitably
qualified individual, and carries out an investment manager selection exercise. The Trustee
monitors its investment managers on a regular basis to ensure they remain appropriate for
their selected mandates.
2.3.

Risk from lack of diversification
This is the risk that failure of a particular investment, or the general poor performance of agiven investment type, could materially adversely affect the Trustee’s ability to meet its
investment objectives. The Trustee believes that the need for the Scheme’s assets to beadequately diversified between different asset classes and within each asset class has been
met by the strategy outlined in Section 3 and by the guidelines agreed with the investment
managers.
Furthermore, the Trustee believes that the Scheme’s DC fund options provide a suitably
diversified range for members to choose from.

2.4.

Liquidity/marketability riskThis is the risk that the Scheme is unable to realise assets to meet benefit cash flows as theyfall due. The Trustee is aware of the Scheme’s cash flow requirements and believes that thisrisk is managed appropriately via the measures described in Section 6 of this SIP.
For the DC assets, this is the risk that core financial transactions, such as disinvesting
members assets on retirement, are not processed promptly due to lack of liquidity in theinvestments. The Trustee manages this risk by only making available pooled funds with daily /weekly dealing within the DC fund options (with the exception of with profits arrangements).

2.5.

Environmental, social and governance (ESG) risks
Environmental, social and corporate governance (ESG) factors are sources of risk to the
Scheme’s investments, some of which could be financially material, over both the short andlonger term. These potentially include risks relating to factors such as climate change,
unsustainable business practices, and unsound corporate governance. The Trustee seeks to
appoint investment managers who will manage these risks appropriately on their behalf andfrom time to time reviews how these risks are being managed in practice.

2.6.

Collateral adequacy risk
The Scheme is invested in leveraged Liability Driven Investment (“LDI”) arrangements toprovide protection (“hedging”) against adverse changes in interest rates and inflation
expectations. The LDI manager may from time to time call for additional cash to be paid to the
LDI portfolio in order to support a given level of leverage. Collateral adequacy risk is the riskthat the Trustee when requested to do so will not be able to post additional cash to the LDI
fund within the required timeframe. A potential consequence of this risk is that the Scheme’sinterest rate and inflation hedging could be reduced and that the Scheme’s funding level could
suffer subsequently as a result. In order to manage this risk, the Trustee ensures that the
Scheme has a sufficient allocation to cash and / or other highly liquid assets which can bereadily realised, so that cash can be posted to the LDI manager at short notice.

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2.7.

Risk from excessive charges

Appendix 2 (cont)Within the DC assets, if the investment management charges together with other charges

Page 11 of 11levied on, for example, transfers or early retirement are excessive, then the value of amember’s account will be reduced unnecessarily. The Trustee is comfortable that the charges
applicable to the Scheme are in line with market practice and assess regularly whether these
represent good value for members.
2.8.

Credit riskThis is the risk that one party to a financial instrument will cause a financial loss for the otherparty by failing to discharge an obligation. The Scheme is subject to credit risk because it
invests in bonds via pooled funds. The Trustee manages its exposure to credit risk by
investing in pooled funds that have a diversified exposure to different credit issuers.

2.9.

Currency risk
Whilst the majority of the currency exposure of the Scheme’s assets is to Sterling, the Scheme
is subject to currency risk because some of the Scheme’s investments are held in overseas
markets. The Trustee considers the overseas currency exposure in the context of the overall
investment strategy, as well as in the context of the employer covenant, and believes that thecurrency exposure that exists diversifies the strategy and is appropriate.

2.10.

Interest rate and inflation risk
The Scheme’s assets are subject to interest rate and inflation risk because some of the
Scheme’s assets are held in bonds or interest rate swaps via pooled funds. The interest rateand inflation exposure of the Scheme’s assets hedges part of the corresponding risks
associated with the Scheme’s liabilities. The net effect is to reduce the volatility of the funding
level, and so the Trustee believes that it is appropriate to have exposures to these risks in thismanner.

2.11.

Other non-investment risks
The Trustee recognises that there are other, non-investment, risks faced by the Scheme, andtakes these into consideration as far as practical in setting the Scheme’s investment
arrangements.
Examples include:▪

longevity risk (the risk that members live, on average, longer than expected); and▪

sponsor covenant risk (the risk that, for whatever reason, the Principal Employer is unable
to support the Scheme as anticipated).

Together, the investment and non-investment risks give rise generally to funding risk. This is
the risk that the Scheme’s funding position falls below what is considered an appropriate level.
The Trustee regularly reviews progress towards the Scheme’s funding target, both in thelonger-term as well as against short-term milestones, comparing the actual versus the
expected funding level.
By understanding and considering each of the risks that contribute to funding risk, the Trustee
believes that it has addressed and is positioned to manage this general risk.