Givaudan UK Pension Plan
Year ended 31 March 2020
Chair’s Statement
The Chair’s Annual Governance Statement – Year ended 31 March 2020
This Statement has been prepared by the Trustees of the Givaudan UK Pension Plan (the ‘Trustees’ ofthe ‘Plan’) to demonstrate how the DC Section of the Plan (with Legal & General – L&G) and AVC
arrangements (with L&G, Clerical Medical and Equitable Life) have complied with the governancestandards introduced under the Occupational Pension Schemes (Charges and Governance)
Regulations 2015 (the ‘Regulations’). The DC Section and the AVC arrangements are closed to newmembers and future contributions.
The AVC arrangements with Utmost, formerly Equitable Life, and Clerical Medical are legacy
arrangements, which the Trustees monitor on a regular basis. These funds represent a smaller
proportion of overall assets than the AVCs with L&G.
This Statement is in relation to the Plan year ending 31 March 2020 and covers five key areas:
1. An assessment of the DC Section against the Pensions Regulator’s principles and features for awell-governed DC scheme.
2. The investment strategy relating to the DC Section’s default option.
3. Charges, transaction costs and value for members.
4. The processing of core DC Section financial transactions.
5. The Trustees’ compliance with the statutory Knowledge and Understanding (‘TKU’) requirements.
The Trustees’ statement in respect of these requirements are set out herein.
The Trustees receive professional Defined Contribution (‘DC’) Investment and Governance advice fromTowers Watson Limited, a Willis Towers Watson Company (‘the Professional Adviser’). The DC Sectionof the Plan is administered by Aon Hewitt (‘the Plan’s Administrator’).
Summary of assessment results
The Trustees have previously assessed the DC Section against the Pensions Regulator’s revised Codeof Practice 13 and regulatory guidance for DC schemes, which came into force from 28 July 2016, andkeep their assessment under regular review. The last formal review was carried out for the year ending
31 March 2018.
The Trustees can confirm that the DC Section continues to meet all legal requirements set out in theCode. In addition, the DC Section meets the majority of the Pensions Regulator’s expectations that awell-run pension scheme should meet, and the Trustees have been working through any areas where
further improvement may be required. The Trustees were due to undertake their next formal review ofprogress against the Code during 2020. However, this has not taken place as the Company andTrustees are in consultation over whether to move the entire DC section of the Plan to a Master Trust.
A decision is expected in Q3 2020 and as a consequence the Trustees will then consider whether aformal update of an assessment is appropriate.

DC Section – Investment strategy – The Plan’s default arrangement
The Trustees’ investment beliefs & objectives
The Trustees have prepared a Statement of Investment Principles (SIP) which governs decisions about
investments in the DC Section, including the default strategy. The SIP capturesi.

The Trustees’ / managers’ aims and objectives

ii.

Their policies in relation to the:

iii.

iv.

a.

Kinds of investments to be heldb.

Balance between the different kinds of investmentc.

Risks, including how these are measured and managedd.

Expected return on investmentse.

The realisation of investments,f.

Financially material considerations over the appropriate time horizon of the invesrments,
including how those considerations are taken into account in the selection, retention andrealisation of investments; andg.

The extent (if any) to which social, environment or ethical considerations are taken into
account in the acquisition, retention and disposal of investments.

Their policy in relation to:a.

The exercise of the rights (including voting rights) attaching to the investments; andb.

Undertaking engagement activities in respect of the investments (including the methods bywhich, and the circumstances under which, the Trustees would monitor and engage with
relevant persons about relevant matters).

Their policy in relation to the Trustees’ arrangement with the fund managers, setting out
the following matters (or explaining the reasons why any of the following matters are not set out):a.

How the arrangement with the fund manager incentivises the fund manager to align its
investment strategy and decisions with the Trustees’ policies in sub-paragraph (ii) above;b.

How that arrangement incentivises the fund manager to make decisions based on
assessments about medium to long-term financial and non-financial performance of anissuer of debt or equity and to engage with issuers of debt or equity in order to improve theirmedium to long-term performance;c.

How the method (and time horizon) of the evaluation of the fund manager’s performanceand the remuneration for fund management services are in line with the Trustees’ policies
mentioned in sub-paragraph (ii) above;d.

How the Trustees’ monitor portfolio turnover costs incurred by the fund manager, and how
they define and monitor targeted portfolio turnover or turnover range; ande.

The duration of the arrangement with the fund manager.

DC Section – Investment strategy – The Plan’s default arrangement (continued)
Similarly, the objectives and principles for the AVC arrangements have also been documented in aseparate SIP.
A copy of the SIP is appended to this Statement. The SIP is reviewed at least annually and no materialchanges have been made to the SIP during the year to 31 March 2020.
The Trustees also receive updates from the Professional Adviser with regards to market practice fordefault investment strategies in DC trust-based pension schemes.
The Trustees are responsible for the ongoing oversight of the DC Section’s investment strategies, funds
and managers, which includes monitoring the performance of all funds against the investment
managers’ objectives and benchmarks. The analysis and advice provided at Trustee meetings supports
the Trustees in determining whether it should consider making any changes to the investment strategy.
The DC Section’s current default investment option is a lifestyle option that targets annuity purchase atretirement. The lifestyle investment option automatically switches a member’s assets from higher risk
assets to lower risk assets on the approach to retirement. The switching commences ten years prior toa member's Target Retirement Age (TRA) selected retirement age and is designed to protect against
falls in value that may impact members’ ability to secure their retirement benefits, whilst seeking toachieve returns above charges and inflation during the prior years of investment. If a member has notselected a TRA, the default will be 65.
For members with more than 10 years to TRA, the default strategy invests in the Global Equity Fund.
10 years before a member’s TRA, investments are gradually moved into lower risk funds – government
bonds, index linked gilts and cash.
The Trustees are comfortable with the default arrangement, but continue to monitor the appropriatenessof it. The Trustees monitor performance of the funds within the default option, as well as other selfselect funds on a regular basis during Trustees’ meetings. The mix of investments at a member’s
selected retirement date assumes the member will take 25% of their DC account at retirement as a taxfree cash lump sum, and the remainder as an annuity.
The DC Section’s default investment and range of self-select options were last considered during areview of the SIP in 2018 and the Trustees were comfortable the strategy and performance remained
appropriate, based on an assessment of the likely choices members of the DC Section of the Plan
would make at retirement. The Trustees were due to undertake the next formal triennial review of theinvestment strategy during 2020. However, this has not taken place as the Company and Trustees arein consultation over whether to move the entire DC section of the Plan to a Master Trust. A decision isexpected in Q3 2020 and as a consequence the Trustees will then consider whether any formal reviewof the Plan’s DC Section investments is appropriate.

Core scheme financial transactions
The DC Section and the Plan’s AVC arrangements are closed to new members and future contributions
and so is not used as a Qualifying Scheme for auto-enrolment. Nevertheless, the Trustees still have aspecific duty to ensure that core financial transactions to the DC Section are processed promptly andaccurately. Some examples of core financial transactions are:•transfer of member assets into and out of the Plan.

•transfers between different investments within the Plan.

•payments to and in respect of members.

The Plan’s Administrator provides administration reports to the Trustees at every Trustees’ meeting.
The Trustees regularly monitor the core financial transactions of the Plan at each Trustees’ meeting via
this report. L&G also provide management information to the Trustees in respect of the AVC
arrangement. Information provided to the Trustee includes performance relative to Service Level
Agreements (‘SLAs’) for key tasks, which were for the year to 31 March 2020. In addition to SLAs, thePlan’s financial statements are audited annually, which includes details of the DC Section.
The administration reports also highlight any complaints raised in the period. During the period coveredby this Statement, Aon advised the Trustees that it had received no formal complaints.
The Trustees are therefore satisfied that during the Plan year, it had secured that the DC Section’s corefinancial transactions were processed promptly and accurately, and that no issues arose with regard tothe accuracy and timing.
Charges, transaction costs & value for members
Member-borne costs and charges
The Administration Regulations require the Trustees to make an assessment of charges and transaction
costs borne by DC Section members and the extent to which those charges and costs represent goodvalue for members. The Annuity Targeting Lifestyle option has a maximum annual cost of 0.165%. Thisis below the charge cap requirement of 0.75% on default funds.
The costs associated for many of the services required to operate the Plan and support members, suchas administration and communications, are met by the Plan’s sponsor.
Members in the Utmost AVC arrangement are invested in either the With-Profits Fund or the Deposit
Fund. The Annual Management Charge (AMC) for the Deposit Fund is 0.50%.
The majority of members in the Clerical Medical arrangement are invested in the With-Profits Fund.
There are a small number that remain invested in unit-linked funds and these funds have an AMC of0.50% p.a.
Transaction costs
Transaction costs and gains are those incurred by fund managers as a result of buying, selling, lendingor borrowing investments. These costs are allowed for within the unit price for each of the funds. In
2017, The Financial Conduct Authority (FCA) published its policy on how asset managers must disclosetransaction costs and administration charges.
The annual aggregate charges paid by the members (known as the Total Expense Ratio) and theapplicable transaction costs are set out below for the year to 31 March 2020.

Charges, transaction costs & value for members (continued)

Core fund range

Aggregate
Transaction Cost

Total Expense
Ratio

L&G Global Equity Fixed Weights (50:50) Index
Fund0.01%

L&G Over 15 Year Gilts Index Fund

0.05%

0.15%

L&G Over 5 Year Index-Linked Gilts Index Fund

0.12%

0.22%

L&G Cash Fund

0.00%

0.13%

0.20%

These funds are also the individual components of the Plan’s default investment option
There are multiple AVC providers including Legal & General (L&G), Utmost and Clerical Medical. AVCs
held with Utmost and Clerical Medical are in with-profits policies and so as such charges and transaction
costs for those funds are implicit within the bonuses applied to the funds.
The TERs applied to the bundled L&G AVC fund range are shown in the following table:
Aggregate
Transaction
Cost

Total Expense
Ratio

L&G Global Equity (30:70) Index Fund 75% Hedged

0.04%

0.51%

L&G World (Ex-UK) Equity Index-0.01%

0.49%

L&G UK Equity Index Fund

-0.02%

0.47%

L&G Property Fund

-0.50%

1.28%

L&G Pre-Retirement Fund

-0.02%

0.49%

L&G Cash Fund

-0.05%

0.46%

AVC fund range

Charges, transaction costs & value for members (continued)
Illustration of the effect of charges
The Occupational Pension Schemes (Administration and Disclosure) (Amendment) Regulations 2018
require the Trustees to produce a “£ and pence” illustration showing the compounded effect of costs
and charges on the projected account size of representative members. As a result the Trustees haveset out an illustration below which shows the projected value, over different time horizons, for two
example members of the DC Section.

Years
1
3
5
10
15
20
2530

Member age 35
Current fund value £7,500
After
Before£7,800£7,800£8,500£8,400£9,200£9,100£11,300£11,100£13,900£13,500£17,100£16,500£17,200£16,500£17,400£16,600

Member age 50
Current fund value £15,000
After
Before£15,600£15,600£17,000£16,900£18,400£18,300£18,600£18,300£18,800£18,400-These illustrations are intended to be an estimation of the potential effects of costs and charges on DC
account sizes. The Trustees continue to work hard to ensure members are receiving good value fromthe DC Section, and this is covered in more detail in the next section.
Assumptions and notes
1.
2.
3.
4.
5.
6.
7.
8.
9.

Projected pension account values are shown in today’s terms.
Investment returns and costs/charges as a percentage reduction per annum are assumed to be
deducted at the end of the year.
Charges and costs are deducted before applying investment returns.
Switching costs are not considered in the lifestyle strategy.
Inflation is assumed to be 2.5% each year.
Values shown are estimates and are not guaranteed.
The gross projected growth rate for the Annuity Target Lifestyle Strategy (Default) go from 6.8%
to 2.7% (adjusted depending on term to retirement)
Transactions costs and other charges have been provided by L&G and cover the period
1 April 2019 to 31 March 2020.
The DC Section’s assumed normal retirement age is 65.

Value for members – How the Trustees meet the Pension Regulator’s value for members’ requirements.
The Trustees are committed to ensuring that members receive good value from the DC Section (i.e. thecosts and charges deducted from members’ accounts provide good value in relation to the benefits andservices provided by, or on behalf, of the DC Section).
The Trustees commissioned Willis Towers Watson to carry out an independent value for members
assessment in September 2020, in line with the Code of Practice requirements, for the period covering
this Statement, to support the Trustee in their own assessment of the DC Section. As a result, theTrustees are satisfied that the DC Section of the Plan does provide good Value for Members.

Assumptions and notes (continued)
The Assessment considered:
Scheme governance and management───The Trustees receive professional advice in respect of the Plan, in addition to legal and audit
services to ensure the Plan is run efficiently and effectively.
High quality Plan governance is delivered by the Trustees. The Trustees have previously
undertaken an assessment of the Plan against tPR’s Code of Practice 13 and Regulatory Guidance
and taken action where necessary.
Member Nominated Trustees are in place to diversify the skillset of the Board.

Investment
────Members are provided with a lifestyle option in both the DC Section and the AVC arrangement
which provides an option to members that aims to address key investment risks.
The investment fund options are regularly monitored by Trustees in terms of their performance andstrategy.
Members can also choose to invest in the individual funds, along with the ability to switch between
those funds.
The fund management charges are low and competitive when benchmarked against schemes thathave a similar investment strategy.

Administration
──Both the DC Section and AVCs are administered by professional, highly-regarded administration
providers.
Members have access to a member helpline which can help members with queries such astransferring in or out and drawing their pension. The helpline team have broad experience within
the pensions industry.

Communications
─Where necessary Trustees prepare and issue target communications to members of both the DC
Section and AVC arrangements.
─ L&G AVC members have access to an L&G microsite which holds various fund literature including
fund fact sheets.
─ L&G AVC Members also have access to a pension modelling tool from L&G which allows members
to estimate how much their pension plan could be worth when they retire.
─ An AVC guide and a guide to the DC Section have also been prepared for members.
The majority of members remaining in the legacy AVC policies are invested in with-profits funds (whichinclude certain benefit guarantees). As such, the Trustees are unable to fully assess the value offeredby these arrangements due to the complexity involved in assessing the costs and investment returns
associated with investing in a with-profits fund.
Trustees’ Knowledge and Understanding (TKU)
The Pensions Act 2004 sets out the requirement for trustees to have appropriate knowledge andunderstanding of the law relating to pensions and trusts, the funding of occupational pension schemes,
investment of pension scheme assets and other matters to enable them to exercise their functions astrustees properly. The comments in this section relate to the Trustee as a body in dealing with thewhole Plan and are not restricted to the DC Section.
The Trustees have a good working knowledge of the documentation in place for the Plan (including theSIP, Trust Deed & Rules, Trustees’ Report & Accounts and Risk Register), and review thisdocumentation when appropriate.

Trustees’ Knowledge and Understanding (TKU) (continued)
The Trustees have a strong TKU process in place which enables them, together with the advice
available to them, to exercise their functions as Trustees of the Plan. The Trustees’ approach to meeting
the TKU requirements includes (but is not limited to):•••••Receiving training at each Trustees’ meeting as a standing agenda item, covering relevant subjects
proposed by the Professional Adviser.
On an ongoing basis, the Trustees receive industry theme and hot topics updates concerning
legislative, regulatory, provider and wider market developments from the Professional Adviser
where relevant to the Plan and/or its members.
If necessary, the Trustees receive relevant ad-hoc training delivered by the Professional Adviser
as and when specific issues may arise.
The Secretary to the Trustees records all training in the Trustees’ training logs.
As appropriate, completion of the relevant parts of the Pensions Regulator’s Trustee Toolkit isundertaken by each Trustee.

The Professional Adviser has undertaken an independent assessment of the TKU process and has
confirmed that it meets the regulatory standards and is therefore compliant with the Pensions
Regulator’s DC Code of Practice no 13 (paragraphs 27-58) and the Code of Practice no 7 on TKU. TheTrustees are satisfied that they have met the relevant legislative requirements.
Trustees receive ongoing training on the DC Section. In particular, over the year to March 2020 theTrustees have received specific training and advice in relation to strategic options for the future of theDC Section. This is a recurring item at meetings that continued during the Plan year and will result in aconclusion to be reached in Q3 2020.
Taking account of actions taken individually and as a trustee body to date, and the professional advice
available to them, the Trustees though consider that they are properly equipped to exercise theirfunctions as Trustees of the Plan.
Signed by the Chair of the Trustees of the Givaudan UK Pension Plan

Robin Storey
Date