SAIF Golden Charter

Trust in independence

The idea that money is ‘held in trust’ is a comforting one, conjuring up images of stacks of cash under lock and key. Of course, with hundreds of millions of pounds’ worth of plan holder money safeguarded in The Golden Charter Trust, the truth is slightly more complex.

Eight Trustees are now responsible for protecting and growing The Golden Charter Trust, with Ian Barnett the most recent to be appointed. While he only took up his new position at the end of last year, the workings of the funeral profession and of Golden Charter are anything but new to him.

After a long banking career – he has been a member of the Chartered Institute of Bankers in Scotland since 1968 – Ian started down a path that would lead to more than a quarter-century’s direct experience with funeral planning. Originally Golden Charter’s Bank Manager from 1989, he served as Managing Director for four years from 2003, in addition to spending time as a Director of the Funeral Planning Authority (FPA) and Funeral Planning Council (FPC).

Ian said: “Setting up a Trust is fraught with difficulties, but from the beginning in 1990, Golden Charter understood the importance of keeping the cash separate from the company which sells the plans.

“The realities both of funeral planning and of Golden Charter’s business decisions have had an impact on how it developed. The Trust Deed was amended in 2001 to take account of new Financial Services Authority (FSA) rules and the creation of the FPA, which meant a third party could monitor the position and ensure that the Trust was running in line with its principles.

“Meanwhile, Golden Charter’s relationship with Help the Aged expanded the base of Trustees, with one of those staying on board after the Help the Aged relationship ended.”

Those decades of development led to further changes recently, as the Trust added an incorporated business.

“The FPA requires an independent Trust to look after the cash, and this is also a legal requirement,” said Ian, “but Trust accounts are not in the public domain and the taxation of Trusts and trust income is complex.”

Therefore, to bring certainty to taxation and to create visibility, a limited company was set up to hold and invest the Trust assets.

The accounts of the limited company will be lodged with Companies House and will be there for all to see, while the Trust itself will still be in existence to remain within the required FPA and legal framework – “all cash must still be paid into a Trust at the outset”, Ian explained.

After 26 years of operation, the Trust is now in its strongest position ever, carefully managed and more than 100% funded.

As of 31 March this year, the unaudited net assets of The Golden Charter Trust were in excess of £760 million. Equally important, noted Ian, is that the spread of investments is intended to ensure the Trust is diverse enough to manage the risk of the market.

Ian said: “The Trust’s current, fully funded position means that sufficient cash is available to pay for all plan holders’ future funerals, rising in line with the Consumer Price Index. That not only offers comfort to families who take out plans, but also reflects the focus on funeral directors at the heart of the Trust.

“The Trustees are legally responsible for looking after the investments, ensuring available funds at the time of need to pay the funeral director’s invoice as agreed between Golden Charter and the funeral director.

“Key to understanding how the Trust works is that the funeral director is the primary beneficiary. And having an independent funeral director on the Board of Trustees gives the Trust a feel for how funeral directors, and in particular the members of the association who own Golden Charter, may feel about any decision.”

James Tovey, owner of funeral director Tovey Bros, has filled that role until now, with Paul Stevenson of Paul Stevenson Funeral Directors set to take his place. His history, with 30 years’ experience in the funeral profession and more than 20 as a Managing Director, as well as a wide range of roles outside of his own business in organisations like Scottish SAIF and SAIFCharter, means he has the experience vital to any work with the Trust.

The other Trustees all offer a broad and in-depth knowledge base to ensure that all decisions are made advisedly. Aside from James, two other chartered accountants safeguard The Golden Charter Trust: Geraldine Gammell, former Director of The Prince’s Trust in Scotland, and Iain Webster, who is a partner in the accountancy firm William Duncan.

Also on the Board is Gordon Brough, a qualified lawyer and General Counsel for Aberdeen Asset Management. Gordon provides a legal perspective to many issues, including governance.

Rounding out the Board’s experience are investment manager Gareth Howlett, professional trustee and investment expert David Kidd, and Chair Ian Blackford MP, whose career has included responsibility for the Dutch equity business of Deutsche Bank.

“The number of Trustees has risen along with the growing importance of governance,” Ian Barnett explained. “This has ensured a spread of experience and discipline beyond simply investment knowledge. The Board meets regularly throughout the year, and members are appointed to different sub-committees.”

Alongside the Trust’s regular full meetings, the four sub-committees – Audit, Investment, Nominations, and the joint Working Group, which works directly with Golden Charter – meet throughout the year.

Bringing many of these strands together is the Trust Company Secretary Leo Gaughan who, unlike the Trustees themselves, is employed full-time, based at Golden Charter’s principal place of business. Leo is a Chartered Accountant, and he previously worked in Golden Charter’s finance department.

He still works closely with the company’s finance team in the preparation and issue of management accounting information and analysis to the Trustees, and in the annual audit and preparation of statutory accounts and the Annual Report.

Ian said: “As well as looking after the various day to day requirements of the Trust, including authorising the payment of plan maturities to funeral directors, Leo is a necessary and useful conduit between the company and the Trust, and the placement of the Company Secretary role at Golden Charter’s premises is vital to the smooth running of the Trust.”

With the Trust continuing to grow alongside Golden Charter and the funeral planning market, its future aims involve continuing to successfully balance payments for maturing funeral plans with the prudent management of the fund itself. Steps toward that future are already being taken: a new statement of investment principles is currently being finalised to make this management as clear and transparent as possible.

At this stage in the Trust’s development, Ian emphasised, the key to every decision is clear to each Trustee: “Safety first, the Trust is here for the long term, and funeral directors and plan holders can remain reassured that their interests are in capable hands.”