1 Table of contents 95

UTC (UK) Pension Scheme - Annual Report & Chair's Statement

UTC (UK) Pension Scheme - Annual Report and Financial Statements (Including Chair's Statement)

PS Document_2024-07-26_122241		33
UTC (UK) PS Accounts 31 12 2023 ALL SIGNED		1
UNITED TECHNOLOGIES CORPORATION (UK) PENSION SCHEME		1
ANNUAL REPORT AND FINANCIAL STATEMENTS		1
FOR THE YEAR ENDED 31 DECEMBER 2023		1
Registrar of Occupational and Personal Pension Schemes		1
Closure of the Scheme to the future accrual of benefits		5
Separation of United Technologies Corporation		5
On 3 April 2020 United Technologies Corporation separated its overall activities into three separate businesses and on the same date merged with Raytheon Company to form Raytheon Technologies Corporation (now known as RTX Corporation).		5
As a consequence of the above reorganisation the Trustee negotiated a revised parent guarantee with Raytheon Technologies Corporation (now RTX) which was executed on 31 March 2020. This has been further updated by a parent guarantee that was signed on...		5
Payments Deed		5
On 31 March 2020 a Payments Deed was executed setting out the contributions required to be paid by RTX Corporation to the Scheme. This Payments Deed was updated on 15 December 2022 following finalisation of the actuarial valuation at 31 December 2021 ...		5
Rule changes		5
Administration		5
Trustee		5
The Trustee has also established a Benefits Sub-committee (‘BSC’) which comprises of a minimum of three individuals. Currently three directors of UTC Pension Trust Limited and the Secretary to the Trustee Directors are appointed to the BSC. The BSC ...		6
The Trustee has also established two additional sub-committees: the Goodrich Section Administration Transfer Sub-Committee (GSATSC), and the Guaranteed Minimum Pension (GMP) Working Party (GMP WP). These are both temporary sub-committees set up to ov...		6
Membership		6
Transfer values		7
Pension increases		7
Increases to pensions in payment in the period are dependent upon the rules of their legacy pension arrangement and when the benefits were accrued and the minimum and maximum rates of increase for each section are set out in the table below. Deferred ...		7
Member pensions comprise a number of elements. The minimum and maximum levels of pension increases relate to elements of pensions, not necessarily the entire pension in payment.		7
Deferred pensions are increased in line with statutory requirements and/or the rules applicable to members depending upon the section of the Scheme to which they relate.		7
Financial development of the Scheme		8
The financial statements have been prepared and audited in compliance with regulations made under section 41 (1) and (6) of the Pensions Act 1995.		8
Report on actuarial liabilities		8
Having regard to the Scheme’s Statement of Investment Principles, the CIF Administrator prepared an Investment Implementation Policy. A copy of the latest Investment Implementation Policy agreed by the CIF Administrator is dated 2 February 2024 and a ...		10
Market volatility		12
Employer related investments		12
At 31 December 2023, less than 0.01% (2022; 0.01%) of the assets were indirectly invested in RTX, the ultimate parent of the principal employer of the Scheme through pooled investment vehicles with BlackRock (2022; BlackRock and Legal & General).		12
Environmental, Social and Governance considerations		12
The Taskforce on Climate-Related Financial Disclosures (‘TCFD’) have introduced disclosures which are now reflected in legislation applying to UK pension schemes and the Scheme has prepared a report outlining its approach to TCFD. This report is avail...		13
Implementation Statement		13
In conjunction with the Scheme’s investment adviser the Trustee has prepared an Implementation Statement covering, amongst other matters, the voting and engagement policies and the actions of investment fund managers used by the Scheme. A copy of this...		13
Statement of trustee’s responsibilities		13
The trustee’s responsibilities in respect of the financial statements		13
 show a true and fair view of the financial transactions of the scheme during the scheme year and of the amount and disposition at the end of the scheme year of its assets and liabilities, other than liabilities to pay pensions and benefits after the...		13
 contain the information specified in Regulation 3A of the Occupational Pension Schemes (Requirement to obtain Audited Accounts and a Statement from the Auditor) Regulations 1996, including making a statement whether the financial statements have bee...		13
The trustee’s responsibilities in respect of contributions		14
Report on the audit of the financial statements		31
Opinion		31
 show a true and fair view of the financial transactions of the scheme during the year ended 31 December 2023, and of the amount and disposition at that date of its assets and liabilities, other than liabilities to pay pensions and benefits after the...		31
 have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards comprising FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland”, and applica...		31
 contain the information specified in Regulation 3A of the Occupational Pension Schemes (Requirement to obtain Audited Accounts and a Statement from the Auditor) Regulations 1996.		31
Basis for opinion		31
Independence		31
Conclusions relating to going concern		31
Reporting on other information		31
Responsibilities for the financial statements and the audit		32
Responsibilities of the trustee for the financial statements		32
Auditors’ responsibilities for the audit of the financial statements		32
 Testing journal entries where we identified particular fraud risk criteria.		32
 Obtaining independent confirmations of material investment valuations and cash balances at the year end.		32
 Testing estimates and judgements made in the preparation of the financial statements for indicators of bias.		32
 Reviewing meeting minutes, any correspondence with the Pensions Regulator, and significant contracts and agreements.		32
 Holding discussions with the trustee to identify significant or unusual transactions and known or suspected instances of fraud or non-compliance with applicable laws and regulations.		32
 Assessing financial statement disclosures, and agreeing these to supporting evidence, for compliance with the Pensions Acts 1995 and 2004 and regulations made under them.		32
Included within the cash deposits and other net investment assets is an asset of £1,329k (2022: £5,334k) in respect of initial and variation margins arising from open futures contracts at the year end.		42
The nominal value represents the sterling value of the foreign currency amount of the contract translated at the year end spot rate.		42
Swaps		42
The notional principle of the swap is the amount used to determine the swapped receipts or payments. Collateral of £2,984k (2022: (£2,516k)) is held for the unrealised gain on swaps, comprising cash. This is held in accounts with seven (2022; seven) d...		42
Bonds with a fair value at the year end of £337,780k (2022: £265,350) had been sold subject to repurchase contracts and therefore continued to be recognised in the financial statements. In addition, bonds with a fair value at the year end of £21,711k ...		44
The fair value of financial instruments has been estimated using the following fair value hierarchy;		45
Level (1): The unadjusted quoted price in an active market for identical assets or liabilities that the entity can access at the measurement date.		45
Level (2): Inputs (other than quoted prices included within level 1) that are observable for the asset or liability, either directly or indirectly.		45
Level (3): Inputs are unobservable, i.e. for which market data is unavailable for the asset or liability.		45
Pooled investment vehicles which are traded regularly are generally included in category (2). Where the absence of regular trading or the unsuitability of recent transaction prices as a proxy for fair value applies, valuation techniques are adopted, a...		45
The Scheme’s investment assets and liabilities have been included at fair value within these categories as follows:		45
FRS 102 requires the disclosure of information in relation to certain investment risks.		46
Credit risk: this is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation.		46
Market risk: this comprises currency risk, interest rate risk and other price risk.		46
 Currency risk: this is the risk that the fair value or future cash flows of a financial asset will fluctuate because of changes in foreign exchange rates.		46
 Interest rate risk: this is the risk that the fair value or future cash flows of a financial asset will fluctuate because of changes in market interest rates.		46
 Other price risk: this is the risk that the fair value or future cash flows of a financial asset will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk), whether those changes are caused...		46
The Trustee determines the investment strategy. The Scheme has exposure to these risks because of the investments it makes in following the investment strategy set out below. The CIF Administrator manages investment risk, including credit risk and mar...		46
The following table summarises the extent to which the various classes of investments are affected by financial risks:		47
United Technologies Corporation (UK) Pension Scheme		78
Implementation Statement for the Year to 31 December 2023		78
Insert from: "UTC CIF Accounts 31 12 2023 ALL SIGNED.pdf"		55
CIF Document_2024-07-26_122123		63
UTC CIF Accounts 31 12 2023 ALL SIGNED		55
The financial statements have been prepared and audited in compliance with regulations made under section 41 (1) and (6) of the Pensions Act 1995.		58
Investment performance		59
All investments except for Secure Income (pooled) Funds are considered to be marketable on a short-term basis.		59
At 31 December 2023, less than 0.01% (2022; 0.02%) of the CIF assets were indirectly invested in RTX Corporation, the ultimate parent of the principal employer of the UTC (UK) PS through pooled investment vehicles with BlackRock (2022; BlackRock and L...		59
 give a true and fair view of the financial transactions of the CIF during the year and of the amount and disposition at the end of the year of its assets and liabilities;		60
 state whether applicable United Kingdom Accounting Standards, including FRS 102, have been followed, subject to any material departures disclosed and explained in the financial statements; and		60
 comply with the requirements of the Administration Agreement dated 6 April 1983 (as amended).		60
Report on the audit of the financial statements		61
Opinion		61
§ give a true and fair view of the financial transactions of the CIF during the year ended 31 December 2023, and of the amount and disposition at that date of its assets and liabilities; and		61
§ have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards comprising FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland”, and applica...		61
Basis for opinion		61
Independence		61
Conclusions relating to going concern		61
Reporting on other information		61
Responsibilities for the financial statements and the audit		62
Responsibilities of the trustee for the financial statements		62
Auditors’ responsibilities for the audit of the financial statements		62
§ Testing journal entries where we identified particular fraud risk criteria.		62
§ Obtaining independent confirmations of material investment valuations and cash balances at the year end.		62
§ Testing estimates and judgements made in the preparation of the financial statements for indicators of bias.		62
§ Reviewing meeting minutes, any correspondence with the Pensions Regulator, and significant contracts and agreements.		62
§ Holding discussions with the trustee to identify significant or unusual transactions and known or suspected instances of fraud or non-compliance with applicable laws and regulations.		62
§ Assessing financial statement disclosures, and agreeing these to supporting evidence, for compliance with the Pensions Acts 1995 and 2004 and regulations made under them.		62
The notes on pages 12 to 23 form part of these financial statements.		65
The financial statements on pages 10 to 23 were approved by the Administrator and signed on its behalf.		65
Expenses are rebated as additional units where inbuilt unit pricing exceeds agreed manager charges.		68
Purchases and sales of pooled investment vehicles include £342,919k and £336,910k respectively purchases and sales of cash-based liquidity funds.		68
Investment transaction costs		68
Direct transaction costs incurred in the year amounted to £4k (2022: £8k) and are comprised wholly of commissions.		68
In addition to the direct transaction costs, indirect costs are incurred through the bid-offer spread on pooled investment vehicles and charges made within those vehicles. It is not possible to quantify the level of indirect transaction costs.		68
Included within the cash deposits and other net investment assets is an asset of £1,329k (2022: asset of £5,334k) in respect of initial and variation margins arising from open futures contracts at the year end.		69
The nominal value represents the sterling value of the foreign currency amount of the contract translated at the year-end spot rate.		70
Swaps		70
The notional principal of the swap is the amount used to determine the swapped receipts or payments. Collateral of £2,984k (2022: (£2,516k)) is held for the unrealised loss or gain on swaps, comprising cash. This is held in accounts with seven (2022; ...		70

Made with FlippingBook Publishing Software