Value for member assessment

Scheme year ended 31 March 2026

The Trustee’s value for members assessment framework considers both the costs and benefits of membership of the DC arrangements. The costs and charges on all strategies and funds in which members were invested over the period are considered in order to evaluate the extent to which those costs and charges represent good value for members.

In relation to the benefits of membership, the Trustee has identified five core benefit categories of value for members as follows:

• Scheme governance – The Trustee believes that good governance is important to ensuring that a framework exists and is actively in use to help deliver better member outcomes. Only strong and stable providers should be appointed as this is important for the long-term outcome of members’ benefits. The use of safeguards and controls to manage operational risk is important and the number of errors should be minimised and any impact from errors should be corrected to put members back in the position they should have been in.  
• Investments – The Trustee considers a well-designed investment portfolio, which is subject to regular monitoring, and a varied range of investment funds, with appropriate charging structures, to be important to deliver better member outcomes. The Trustee believes it is important that performance of funds, over the long term, is in line with their market sector.
• Administration – The Trustee considers good administration and record keeping play a crucial role in ensuring that Scheme members receive the retirement benefits that are due to them.  In addition, the type and quality of service experienced by members has a bearing on the level of member engagement.
• Member communications – The Trustee considers effective member communications, and delivery of the right support and tools to help members improve their outcomes, to be essential to aid member understanding.
• Retirement options – The Trustee believes it is important to have retirement processes that enable members to make informed decisions and select an appropriate option(s) at retirement.

The Trustee has reviewed the above five core benefit categories and its assessment is summarised as follows:

Scheme governance: The Trustee has a suitable governance framework in place. The adequacy and effectiveness of governance and control over Data Protection, Information Security and Cyber Security is periodically reviewed by the Trustee. The Trustee reviews the risks relating to the DC arrangements annually, as part of the Scheme’s risk assessment framework. The Trustee has an Investment Committee in place which spends time discussing the Scheme’s DC arrangements. Any decisions that need to be taken by the full Trustee board are considered accordingly. An annual review, using professional advisers, is undertaken which assesses the financial strength of providers and the suitability and relevance of the DC arrangements and whether they represent value for members. Core financial transactions at Scheme-level and other key governance metrics are monitored quarterly. Regular meetings are held with the administrator to discuss and progress the areas of administration that require input from the Trustee.

Investments: The Scheme offers an appropriate range of investment options to members which have been agreed, following advice from the Scheme's investment adviser, with the specific needs of members in mind. The Trustee has pro-actively consolidated unit-linked funds where possible, to improve value for members by reducing the charges they pay from their unit-linked funds. As at the end of the Scheme Year, all unit-linked funds were held with L&G. With Profits Funds have been retained as the Trustee believes members are likely to value the guarantees they provide.

Administration: The Trustee monitors the administration of members’ DC benefits. The Trustee is satisfied that the Scheme administrator and the DC providers have robust systems and the capability to process financial transactions promptly and accurately in line with the agreed service levels and relevant regulatory requirements. Following a delay to action a request by the Trustee to reconcile data held for members with DC benefits, the Trustee will work with the administrator to understand the reasons for this and look for improvements to this aspect of the service provided over the next period. The Scheme’s administration procedure manuals are regularly reviewed and updated. Aptia provides a member helpline and the member experience is monitored through call statistics, complaint details and surveys that members are asked to complete after contacting the helpline.

Member communications: Members can register for access to the Scheme website www.aptiaoneview.co.uk/smiths which holds various Scheme documentation. L&G provides a Scheme-specific website for members of the L&G arrangement (legalandgeneral.com/workplace/s/smiths-group). The Trustee includes reminders for members to monitor their DC funds in the annual newsletter.

Retirement options: For the majority of members, the Trustee allows the proceeds arising from the DC arrangements to be taken as part of the tax-free cash sum or, in certain circumstances, to purchase a pension in the Scheme at retirement. The conversion factors are such that, in many cases, they are expected to be more favourable than annuity rates available elsewhere in the market. This enhances member outcomes at retirement. The Trustee no longer provides access to a Scheme-Authorised Independent Financial Adviser, but member communications and the Aptia oneview site signposts members to the MoneyHelper website where they can read how to find an independent financial adviser.

Costs and charges: In evaluating the costs and charges borne by members against the benefits of the DC arrangement, the Trustee has undertaken a benchmarking exercise to compare costs and charges against expectations. The table below sets out the current TERs for each of the unit-linked funds along with the Trustee’s adviser’s expected range for each asset class across the entire DC market. Note the TER on the Phoenix Life and Prudential With Profits funds is not explicit, costs of operating these funds are taken into account when the bonus rates are declared.

A Red/Amber/Green (“RAG”) rating based on the following methodology is assigned to each fund.

GREEN – Lower 50th percentile AMBER – Upper 50th percentile RED – Outside of expected range.

The tables above show that the charges members pay for all funds are rated green or amber, so they are within the range expected by the Trustee’s advisers, when compared to the entire DC market. The fact that some funds are rated amber indicates that members could find lower charges if they moved to a larger scheme. However, this does not mean the Scheme does not provide value to members as there are many good reasons why moving to a larger scheme would not be in members’ best interests, for example, losing the link between their DB and DC benefits.

Based on the information and the circumstances outlined above, the Trustee has concluded that, during the Scheme Year, the Scheme’s DC arrangements represented good value for members.