CARRIER (UK) PENSION SCHEME YEAR ENDED 31 DECEMBER 2020
TRUSTEE’S REPORT
The Scheme incurs costs related to ongoing administration and other expenses and levies such as the Pension Protection Fund levy. The Trustee has agreed with the employer that the employer will make a contribution of £360,000 per annum to the Scheme to cover the estimated running expenses of the Scheme, subject to the proviso in the following paragraph. The employer will also reimburse the cost of the Pension Protection Fund levy. If the most recent actuarial report as at 31 st December certifies the assets of the Scheme are more than 105% of the Scheme’s liabilities on the Technical Provisions funding basis (derived using a consistent approach with that adopted for the 31 st December 2019 actuarial valuation) the contributions in respect of administrative and other expenses may be suspended until such time as a subsequent actuarial report certifies the assets to be less than 105% of the Scheme’s liabilities on the Technical Provisions basis.
The next actuarial valuation is due as at 31 December 2022.
Separation of United Technologies Corporation
As previously reported, in November 2018 United Technologies Corporation (UTC) announced its separation in to three separate businesses comprising of Carrier, Collins Aerospace and Otis. The separation took place on 3 April 2020. In light of UTC’s separation, the Trustee negotiated a revised parent guarantee, to replace the parent guarantee previously provided by UTC. The replacement guarantee was executed on 24 February 2020 and is provided by Carrier Global Corporation. A letter of the same date, signed as a deed by Carrier Global Corporation and the Trustee sets out terms that Carrier Global Corporation and the Trustee have agreed in relation to the replacement guarantee.
A Deed of Release was also executed on 24 February 2020, releasing UTC from the parent guarantee that was previously in place.
Investments
The Trustee has produced a Statement of Investment Principles as required by Section 35 of the Pensions Act 1995 and a copy is available on request.
The majority of the Scheme’s investments were held within the UTC Common Investment Fund (the ‘CIF’) at the beginning the year. However, in anticipation of the break-up of the UTC Group of companies on 3 April 2020 as referred to above, the Scheme withdrew from the CIF in February 2020 and all assets will, in future, be held directly by the Scheme.
The investment managers are remunerated on a fee basis, based on the value of the investments under their management.
The Scheme's investments are made in accordance with the Occupational Pension Schemes (Investment) Regulations 2005.
Under the terms of a Parent Guarantee provided by UTC (up to 24 February 2020) the Trustee agreed not to change the growth/protection split of the Scheme’s assets without seeking agreement from the Principal Employer first. The same terms apply in respect of the Parent Guarantee (effective from 24 February 2020) now provided by Carrier Global Corporation.
Custodians
Bank of New York Mellon was appointed to act as overall custodian to the Scheme following its withdrawal from the CIF in February 2020.
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