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The trust into which payments are placed is a financially separate entity run by an independent board of Trustees, ensuring security of funds for the funeral plan holders.

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If you have any questions about the work we undertake here at the Golden Charter Trust then this is the place to find the answers. If you can't find your answer please contact us.

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The Statement of Investment Principles

I  Introduction

1. The Fundamental Purposes of The Golden Charter Trust (“The Trust”) are defined by its Trust Deed: they are “to ingather, hold, invest and administer the Trust Funds with a view to ensuring that the Trust Funds are at all times sufficient to meet, in full, the anticipated Invoice Costs of all Outstanding Plans and Matured Plans as certified by the [Trust’s] Actuaries…” (Consolidated Trust and Governing Deed 2015, Section 4).

2. In accordance with Articles 59 and 60 of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (FSMA), the provision of funeral plans backed by investments held in trust or by insurance contracts is excluded from the regulatory provisions of FSMA subject to certain conditions being met, being;  

a) The funeral plan Trust must be established in writing. 

b) The Trustees must appoint a professionally qualified independent fund manager to manage the assets of the Trust. 

c) More than half of the Trustees must be unconnected with the plan provider (i.e. Golden Charter Limited). 

d) Annual accounts must be prepared by the Trust and audited by a qualified company auditor. 

e) at least once every three years the assets and liabilities of the Trust must be determined, calculated and verified by a qualified actuary. 

3. In addition, Golden Charter Limited is a member of the Funeral Planning Authority (“FPA”), an organisation set up by the industry to regulate providers in the UK pre-paid funeral plan industry.  The FPA has certain rules governing membership some of which relate to the Trust and which mirror the mandatory requirements of the FSMA. The Trust is primarily governed by the general principles of Trust Law.

4. The Trust’s independent investment manager is currently Royal London Asset Management; there are other investment managers with specific mandates covering particular types of investment held by the Trust (see section IV below, “Strategy Implementation and Investment Managers”). 

5. The Trustees have appointed Barnett Waddingham LLP to provide both actuarial advice and investment consultancy services. In appointing Barnett Waddingham, Royal London Asset Management and the other investment managers, the Trustees have satisfied themselves in all cases that the appointees are qualified and experienced in providing comparable services to clients with objectives similar to those of the Trust.

6. Section 11 of the Trust Deed (“Powers of Trustees”) gives the Trustees powers to invest the Trust Funds in a wide range of different assets. The balance between assets primarily intended to preserve capital, and assets where the primary objective is growth, will be decided by the Trustees acting under advice from the actuaries and investment consultants.

7. The Trustees will give clear mandates to all investment managers and will monitor compliance with them. In particular a copy of this Statement of Investment Principles will be given to each investment manager at the start of their mandate and they will be required to confirm at least annually that they have conformed to these Principles. Any breach of the Principles must be reported immediately to the Trustees together with an explanation for the breach and an account of any corrective action taken.

8. The investment consultants will provide to the Trustees each month a statement of the performance of the Trust Funds, and of individual Investment Managers. The Trustees will formally review performance at least four times a year.


II  Trust Funds Governance

1. The Trustees are experienced business people from a wide range of backgrounds. In order to properly exercise their strategic decision making functions, they act under advice from the investment consultants and actuaries, and also from the investment managers who have discretionary powers within the terms of their mandates.

2. Primary responsibility for oversight of the Trust’s investment affairs is delegated to a specialist sub-group of Trustees, the Investment Strategy Group, all of whose members have significant experience of investment business. The Investment Strategy Group has no independent executive authority and all substantive decisions of policy are taken by the Trustees as a whole.

3. The Trustees’ responsibilities are governed by the Trust Deed, and by the general principles of Trust Law, whereby the Trustees act on behalf, and in the best interests of, the Trust’s beneficiaries. The primary beneficiaries of the Trust are the Funeral Directors who undertake to provide funeral services to planholders. The planholders themselves have no direct claim on the Trust, except where the Trustees may be required to refund to them all or part of their contributions to the Trust in the event of a cancellation of the plan.

4. The specific investment responsibilities of the Trustees include:

a) Determining the investment objectives of the Trust Funds and reviewing them from time to time.

b) Reviewing from time to time the SIP and changing it if appropriate.

c) Reviewing the suitability of the investment policy following the results of each actuarial or investment review by the actuaries and investment consultants.

d) Assessing the quality of the performance and processes of the investment managers.

e) Appointing and dismissing managers.

f) Monitoring compliance of the investment arrangements with the SIP on an ongoing basis.

g) Reviewing investment management fees and investment management arrangements.

h) Reviewing the performance of the investment consultants and actuaries.

i) Taking external advice on the optimum tax arrangements for the Trust Funds.

5. In carrying out their responsibilities, the Trustees consult with the actuaries and investment consultants, investment managers, tax advisers and receive written advice as and when required. The Trustees are however ultimately responsible for the decisions they take.

6. The responsibilities of the investment managers include:

a) At their discretion, but within any guidelines given by the Trustees, implementing changes in the asset mix and dealing in specific investments.

b) Providing the Trustees with monthly reports of the assets, transactions, cash reconciliation, performance, actions and any changes in policy or process and ensuring that the taxation status of the Trust funds is not adversely impacted by any changes in the structure of investments.

c) Providing each year written confirmation that the principles of this SIP and the terms of their mandate have been observed, and confirming that they have had due regard to the need for diversification within their mandated portfolios and for the suitability of the investments for the Trust Funds.

d) Reporting immediately any breach of the SIP or of the mandate, and giving an account of any remedial action.

7. Barnett Waddingham’s role as actuaries to the Trust is dictated by the Regulated Activities Order (see above section I paragraph 2), whereas their role as investment consultants is purely at the discretion of the Trustees. However, taken together under both headings, their responsibilities include:

a) Participating with the Trustees in annual reviews of the SIP.

b) Advising the Trustees of changes in the Trust Funds’ funding position that may affect how the assets should be invested.

c) Advising the Trustees of any changes in the investment environment that could present either opportunities or problems for the Trust Funds.

d) Undertaking reviews of the Trust Funds’ investment arrangements including reviews of the asset allocation strategy and current investment managers, from time to time as agreed with the Trustees.

e) Carrying out annual (or more frequently as required) valuations and advising on the financial position of the Trust Funds.

8. The Trustees’ principal investment objective is to invest the Trust Fund assets in such a way as to maximise the likelihood that the returns on the assets (net of CPI, tax and costs), will be sufficient to meet the agreed invoice costs of all pre-paid funerals sold to date, based on guidance from the actuaries and investment consultants concerning predicted investment returns and the anticipated crystallisation of the liabilities. The Trustees also seek to limit the volatility of the funding position and this is taken into account when considering the required returns.


III  Asset Allocation Strategy

1. The Trust Fund’s long term strategic target is to hold the majority of assets in index linked gilts, with the balance divided between global equities, diversified growth funds, long lease property, infrastructure assets and cash. This policy has been adopted by the Trustees, under guidance from the actuaries and investment consultants, in the belief that it is the most suitable way for the Trust to fulfil its Fundamental Purposes as defined in the Trust Deed and by this SIP.

2. The Trustees, in conjunction with the investment consultants, monitor the actual asset allocation of the Trust Funds, and if necessary will instruct the investment consultants to rebalance towards the strategic benchmark either by redirecting incoming or outgoing cashflows or by an internal reallocation of funds between different investment mandates.

3. Monthly valuations from the investment managers are obtained to enable the actual asset allocation to be calculated. The investment consultant liaises with the administrators of the Trust Funds to ensure that cashflows are invested or redeemed in accordance with asset allocation strategy.

4. The Asset Allocation Strategy is designed to ensure that the Trust Fund assets are diversified, liquid, and of appropriate investment quality. The Trustees monitor the strategy regularly to satisfy themselves that these criteria are being met.

IV  Strategy Implementation and Investment Managers

1. As noted above (section I paragraph 2) Royal London Asset Management are the Trust’s nominated independent investment managers. In addition, they manage a significant proportion of the Trust’s assets, which are currently invested in index-linked gilts. The other investment managers are Baillie Gifford and Co, Newton Investment Management, Aviva Investors, Artisan Partners and Partners Group. 

2. The various manager mandates of Trust Fund assets, as at 30 June 2016,  together with the agreed benchmarks was as follows:   

 

 

Manager

Mandate

Benchmark

RLAM

Index-linked gilts

15% FTSE A Index Linked Under 5 Year Gilt Index

65% FTSE A Index Linked 5-15 Year Gilt Index

20% FTSE A Index Linked Over 15 Year Gilt Index

Aviva Investors

Long Lease Property

50% FTSE 5-15 Year Gilt Index

50% FTSE Over 15 Year Gilt Index

Partners Group

Infrastructure

None

Artisan Partners

Global Equity

MSCI All Country World Index

Newton

Real Return Fund

1 Month LIBOR

Baillie Gifford

Diversified Growth Fund

UK Base Rate

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