The Miller Executive Pension Scheme

Information relating to investments, costs and charges taken from the Chair's annual governance statement for the scheme year ended 30 April 2025

Chair's annual statement regarding governance for the Scheme year ended 30 April 2025

Introduction

The Law Debenture Pension Trust Corporation plc ("LDPTC") is the sole Trustee of the Miller Executive Pension Scheme ("the Scheme").

An annual Chair's statement is prepared to demonstrate the extent to which the Trustee meets certain governance standards that are required of defined contribution (DC) occupational pension schemes under regulations*. It relates to the Scheme year ended 30 April 2025. Certain information from the Chair's statement must be published on a publicly available website. This information, along with some background information about the Scheme, is shown below.

Background

The Scheme was established on 18 June 1986 as a top-up scheme providing DC benefits for executives of the employer and is governed by a Trust Deed & Rules which sets out the nature of the scheme. The Scheme has been closed to new members and contributions since 31 March 2006, when a contract-based Self Invested Personal Pension (SIPP) replaced the Scheme as the vehicle in respect of future provision. The employer had initially expected that the Scheme could be wound up following its closure to future contributions. However, a number of members would have been disadvantaged had the Scheme been wound up at that time because they were invested in policies which carried valuable guarantees (e.g. guaranteed annuity rates) or transfer penalties. The Scheme is therefore run as a closed scheme for the remaining members. During the scheme year there were no member movements, with 9 deferred members remaining in the Scheme.

Costs and charges

The funds used and the respective charges borne by members over the reporting period are outlined in this section. The Total Expense Ratio (TER) consists principally of the manager's annual management charge (or AMC) for managing and operating a fund. The TER also includes the costs for other services paid for by the fund, such as the legal costs, registration fees and custodian fees. However, they exclude other costs that are also member borne, which can therefore have a negative effect on investment performance, such as transaction costs.

Transaction costs are incurred in the day-to-day operation of the investment funds, e.g. in relation to fund trades and switching between investment funds. Transaction costs in particular will vary significantly depending on a fund's investment remit and on the market environment. Due to the way in which transaction costs are required to be calculated, they can be negative or positive in nature; a negative figure is effectively a gain from trading activity, whilst a positive figure is a cost from trading activity. The Trustee has requested details of the transaction costs applicable to the investment funds in the Scheme.

The following table provides details of the charges and transaction costs for each of the investment options over the Scheme Year to 30 April 2025 (data sourced from each relevant investment manager).

[1] The TER figures encompass commission that is deducted from members' funds. These are represented as an average across members. Please also note that these figures are as at 30 April 2024 as Phoenix Life did not respond to the data request within the respective timeframe.

[2] Phoenix Life have confirmed that remaining Scheme members in this fund have passed their normal retirement dates and are therefore no longer receiving bonuses, nor are charges being applied.

[3] The charges on these with profits funds are implicit and are taken into account before the bonus rates are declared. Standard Life have supplied TERs, noting them to be an illustrative comparison. In each case, the Standard Life TERs are made up of a 1% illustrative management charge, and the remainder is the cost of the guarantees provided in each of the policies less a scheme-specific discount of 0.203%. By their nature, the charging structures for with-profits are not transparent.

Scheme administration charges are borne by the employer and, therefore, have no impact on members' funds. Other costs borne by the employer, but which provide value to members include the Trustee's professional fees and costs of advice (e.g. consultancy and legal costs).

[4] Please note these figures are as at 31 March 2025.

Costs and charges illustrations

To demonstrate the impact of charges and transaction costs on a members' pension savings over time, the Trustee has produced illustrations in line with statutory guidance from the Department for Work & Pensions. These illustrations are set out below and are designed to cater for representative cross-sections of the Scheme's membership.

For each individual illustration, each savings pot has been projected twice; first to allow for the assumed investment return gross of the costs and charges of the fund; and second for the assumed investment return net of the costs and charges of the fund.

To determine the parameters used in these illustrations, the Trustee has analysed Scheme membership data relevant to the reporting period of this statement and ensured that the illustrations take into account the following:

• A representative range of pot sizes
• A representative range of costs and charges, including the lowest and the highest.
• A representative period of Scheme membership, covering the approximate duration that the youngest Scheme member (currently aged 61) may take to start withdrawing benefits – as the Scheme's normal retirement age is also 60 we have selected a period of 5 years for illustration purposes.

As the Scheme is closed to new contributions, the Trustee has not included future contribution assumptions in these illustrations.

The funds used in these illustrations have been chosen from the range used by Scheme members for the following reasons:

* The regulatory guidance requires the use of historical average transaction costs for these projections. The assumed charges take into account the average transaction cost over the last five years, where this information has been made available by the investment managers.

** We have excluded with-profits funds from this calculation as we do not believe it is appropriate to model such a fund in this way due to the investment smoothing mechanism and the inherent opacity of the charges. In addition, the charge figures supplied by Standard Life were only illustrative (so we cannot say for certain it was the highest-charged fund). We have also excluded the Phoenix Life funds which only have one investor in each.

Illustration 1: £20,000 pension pot

Illustration 2: £200,000 pension pot

Note on how to read this table: If a member had £200,000 invested in the Aviva Managed Fund on 30 April 2025, when they came to retire in 5 years the savings pot could grow to £228,308 if no charges are applied but to £216,900 with charges applied.

Notes

1. Projected pension pot values are shown in today's terms, so recognise the effects of future inflation. It is for this reason some funds show negative real growth
2. Inflation is assumed to be 2.5% each year
3. No further contributions are assumed to be paid
4. Values shown are estimates and are not guaranteed
5. Charges for each fund used in the illustrations are those outlined in this statement
6. The projected growth rates for each fund or arrangement are in line with those produced for the Scheme's 2022 Statutory Money Purchase Illustrations (SMPI) and are given in the fund table. This is based on the latest SMPI assumptions available.
7. The starting date for the illustrations is 30 April 2025.

Net investment returns

The Trustee is required to disclose returns, net of charges and transaction costs, for the default investment arrangement and for each fund that members are able, or were previously able, to select and in which members' assets were invested during the Scheme year. When preparing this section of the statement the Trustee has taken account of the relevant statutory guidance.

[1] The performance figures provided for this fund are as at 30/09/2025.

[2] The performance figures provided for this fund are as at 31/03/2025.

[3] The performance figures provided for this fund are as at 30 April 2024 as Phoenix Life did not respond to the data request within the respective timeframe.

[4] Phoenix Life have not provided exact performance figures for this fund, however have confirmed that no further annual bonuses are paid for members who have passed their Normal Retirement Date and that since this point the rate of interest received by members has been broadly in line with the Bank of England base rate.

[5] The value of a with-profits fund investment is not directly exposed to fluctuations in the value of the underlying assets. Instead, returns are 'smoothed' through the addition of bonuses (known as regular bonuses and final bonuses) which aim to provide members with a steady rate of return. The figures in the table above comprise the regular annual bonuses (after charges) applied to members' accounts. Any terminal bonus is not included in the net investment return calculation as it is not applied until the policy is encashed.

Value for Members

The Trustee is required to assess annually the extent to which the charges and transaction costs borne by members represent good value.

Analysis was undertaken by the Trustee's professional advisers, Barnett Waddingham, and the findings were set out in a report dated November 2025. The Trustee considered the report and confirmed its value for members' assessment as outlined in this statement.

This year, the Trustee took a proportionate approach to the VFM assessment for the period, recognising that it is in the process of transferring all assets to members and winding up the Scheme. The Trustee noted the legacy nature of the policies, how they had been set up and managed and concluded that overall, the Scheme provided moderate value for members over the Scheme year.

Value assessment of costs and charges

The Trustee has considered the extent to which the charges (and transaction costs, if available) borne by members represent good value to members over the reporting period. There is no definition of "good value" and so the process of assessment is a subjective one. The Trustee has considered the regulatory guidance and has made its assessment taking account of the following:

• Members of the Scheme pay the investment management charges (shown above), with the employer bearing all other costs of running the Scheme.
• Communications are provided to members in the form of investment manager statements.
• The Scheme members are former senior employees of an insurance business. Members are therefore thought likely to have above average earnings and savings, above average levels of financial sophistication, and expected to be able to access independent financial advice.
• A review of the investment funds used by the remaining members of the Scheme (and charges), carried out by the Trustee's investment adviser which made some recommendations.

Based on these recommendations and taking into account all of the above considerations, the Trustee has determined that, based on the information available, while some investment policies used by members do represent good value (e.g. where they have valuable guarantees), others may not represent good value, depending on the specific features of the policies held (e.g. penalties and possible continuing commission payments).

Further work has been undertaken by the Trustee, with our advisers, to establish the specific features of the policies held for each member and, based on this fuller understanding, particularly with regard to guarantees and penalties, we have taken steps to consider feasible alternatives to running the Scheme on as a small, maturing DC scheme. We have:

• considered whether developments in the pensions market e.g. master trusts may provide better value for members, possibly enabling them to gain access to more competitively-priced investment opportunities and online features;
• investigated the options for securing or compensating members for lost guarantees or penalties incurred should the decision be taken by the Trustee with the approval of the Principal Employer, Miller Insurance Services LLP, to secure remaining benefits and wind up the Scheme; and
• undertaken data audit and validation work to demonstrate that the Scheme records are in good shape should the decision be taken to secure remaining benefits and wind up the scheme.

Our next steps will include:

• ensuring that members receive a communication outlining the features and benefits of their investment policies in the Scheme;
• recommending to members that they take financial advice to help them understand their investment policies and actively review whether their attitude to risk and their retirement plans are aligned with their investments in the scheme, as they approach retirement;
• communicate the wind up process and personal options, including what will happen if they don't make a choice (the default option), to the remaining members.

The Trustee's Annual Report for the year ended 30 April 2024, including its full annual Chair's statement about the governance of the Scheme, is available on request from the Trustee. Please contact the Scheme Secretary Andy.Peek@lawdeb.com

* Section 23 of the Occupational Pension Schemes (Scheme Administration) Regulations 1996 ("the regulations")