SM ITH KLI N E B E ECHAM PENSION PLAN

Transcription

1 SM ITH KLI N E B E ECHAM PENSION PLAN TRUSTEE REPORT 2016 Who What Where How More Info

2 SMITHKLINE BEECHAM PENSION PLAN TRUSTEE REPORT This document provides useful information and progress to date on the Who, What, Where and How of the Plan over the year ended 31 December It will help you understand how the Plan s finances have changed over the year, how its investments have performed, the current funding levels and the Trustee s overall strategy for protecting your pension benefits in the Plan. You should read the information and contact the relevant Plan Helpline (contact details can be found on the final page of this report) if you require further information. Welcome to the Summary Trustee Report and Accounts for 2016 and Summary Funding Statement for members of the SmithKline Beecham Pension Plan (the Plan ). The Plan is sponsored by GlaxoSmithKline Services Unlimited ( GSK ). This report provides a summary of the finances, investments and funding of the Plan over the year to 31 December Find out more about the Who, What, Where and How of the Plan and keep informed on how the Plan is performing. Also, don t forget to read the News section to learn about new regulations that affect the Plan and its administration. Please note that we do not purport to report on all new regulations and developments which may be relevant to you and the information which we have included is in summary form only and may not contain details material to you. For further information, you should consult a professional financial adviser. 2 Who Membership 3 What Financial highlights 4 Where Defined benefit section 5 Defined contribution section 6-9 How Funding information More Info News update Pensioners section 16 Further information 16-23

3 MEMBERSHIP - WHO IS IN THE PLAN? Who The charts below show the membership of the Plan as at 31 December DEFINED CONTRIBUTION MEMBERSHIP DEFINED BENEFIT MEMBERSHIP 4, ,199 Active members are current employees who still contribute to the Plan. Deferred members are former employees who are eligible for benefits for past service but have not yet retired. Pensioners are members who are 11,732 currently receiving a pension from the Plan. Total Membership: 4,471 Total Membership: 19,630 The Defined Contribution section closed for new contributions from 1 July 2009 Active members Deferred members Pensioners 3

4 What FINANCIAL HIGHLIGHTS HOW HAVE THE PLAN VALUES CHANGED OVER THE YEAR? The table below summarises the financial information contained in the full Report and Accounts for the year to 31 December The full Report and Accounts have been audited. The auditor s opinion on the accounts and the auditor s statement about contributions were unqualified. The auditor has certified that the accounts give a true and fair view of the financial information of the Plan. Copies of the full Report and Accounts are available to members on request from the Plan Helpline. Note: The values include 166 million of defined contribution assets held for SmithKline Beecham Pension Plan members. *GSK contributions include member contributions paid via Salary Sacrifice. million Value as at 1 January ,020 Income GSK Contributions* 75 Member Contributions* 0 Investment returns 636 Expenditure Pensions, transfers-out, expenses and other benefits paid to members and beneficiaries Value as at 31 December ,609 (122) 24

5 INVESTMENT FUND PERFORMANCE WHERE ARE THE FUNDS INVESTED AND HOW HAVE THEY PERFORMED? Where Defined Benefit Section If you are an employee member of the defined benefit section, you contribute 3% of your pensionable salary each month and GSK pays the rest of the cost of your pension benefits. Your contributions may be paid directly or via salary sacrifice. You can also make Additional Voluntary Contributions (AVCs) to boost your pension benefits. These are invested in the defined contribution section of the Plan and can be used to buy additional pension benefits or increase the lump sum you may take at retirement, subject to HM Revenue & Customs (HMRC) limits. Please see the Pension Allowances section for further information. If you are an employee member, your annual Total Reward statement shows the amount of pension you have earned as at 1 April each year and provides illustrations of the pension you might receive. Employee members can also view further information about the Plan on the UK HR page on Connect GSK (you need to be connected to the GSK network to access the information). Asset Allocation and Performance The assets of the defined benefit section of the Plan (the money that the Trustee puts aside to pay benefits), which are invested either directly or through the GSK Common Investment Fund, are invested with a view to obtaining good investment returns over the long term, without taking inappropriate risks, and to protect the value of the assets of the Plan from inflation. The investment return of the Plan s assets for 2016 was 21.6%. The Trustee has entered into liability hedging arrangements to make the funding more secure and to reduce volatility. How the assets are invested At 31 December 2016 the Plan asset allocation (rounded to the nearest 1%) was invested as shown below. 41% 59% Liability Matching this includes Bonds, Cash and Multi-Asset investment funds, along with the liability hedging programme Return Seeking this includes Equity, Property and Multi-Asset investment funds Managing the assets The Trustee regularly reviews the performance of the investment managers. Further information on the investments is included in the Full Report and Accounts which is available to members on request from the Plan Helpline. 5

6 Where INVESTMENT FUND PERFORMANCE WHERE ARE THE FUNDS INVESTED AND HOW HAVE THEY PERFORMED? Defined Contribution Section Employee members of the defined contribution section of the Plan transferred to the GSK Pension Plan on 1 July 2009 for future service benefits. The funds built up before that date continue to be invested through the Plan. If you are a member of the defined benefit section of the Plan and pay Additional Voluntary Contributions (AVCs), these are invested in the defined contribution section of the Plan. These contributions can be used to buy additional pension benefits or increase the lump sum you may take at retirement subject to HMRC limits. Please see the Pension Allowances section for further information. Your defined contribution funds are invested according to your choice of investments. It is important that you keep your investment choices and, if you are in the GSK Lifecycle Investment option, your target retirement date under review to ensure they remain appropriate. If you would like to change the funds you are invested in, your target retirement date or know the value of your funds please contact the Plan Helpline. If you are an employee member you can view the value of your account online. This can be accessed from work or home at or via the UK HR page on Connect GSK or at Your annual Total Reward statement shows the value of your account as at 1 April each year and provides illustrations of the pension you might receive. 26

7 INVESTMENT FUND PERFORMANCE WHERE ARE THE FUNDS INVESTED AND HOW HAVE THEY PERFORMED? Defined Contribution Section Investment Fund Performance to 31 December 2016 The table below shows the performance figures (after fees) for the investment funds available to members of the Plan. The majority of the GSK funds are provided through a long term insurance policy with Legal & General Assurance (Pensions Management) Limited. If your retirement savings are invested in the Lifecycle investment strategy, the way your savings are invested will change as you approach your target retirement date. The GSK Lifecycle strategy invests in the funds indicated by (L) in the below table. Please note that some members have remained invested in a legacy Lifecycle investment option and this legacy option invests in the funds indicated by (O) in the below table. Some of the funds shown below were introduced for the first time in 2014, which are indicated by (N), these funds do not yet have full performance figures available. Investment funds Source: Investment Managers, Thomson Reuters Datastream for RPI All Consumer Index and FTSE All-Share Index. All figures are net of fees unless stated otherwise. 1 year (%) 3 years (% pa) 5 years (% pa) GSK Lifecycle (L) (N) 13.3 n/a n/a GSK Inflation Linked Pre-Retirement Fund (L) (N) (O) 20.3 n/a n/a GSK Global Equity Index Fund (O) GSK Diversified Growth Fund (N) n/a n/a GSK UK Equity Index Fund GSK Overseas Equity Index Fund GSK Cash Fund (L) (O) FTSE All-Share Index (for general information) RPI All Consumer Index (for general information) Where Freestyle Strategy With this investment strategy, you choose how your savings are invested from a range of available investment funds. If you need more information on the strategies or investment funds available, details of who to contact can be found on page 23. Lifecycle Strategy With Lifecycle, your savings are invested for you following an investment strategy designed for saving for your specified target pension date. More Information More information on the performance of the funds, fund risk profiles and investment fund factsheets are available from the Plan Helpline. For employee members, this information is also available on the UK HR page on Connect GSK.Connect GSK. Warning: Please remember that past performance is not a guide to future returns and future returns are not guaranteed. The value of an investment will fluctuate (this may be partly the result of exchange rate fluctuations) and you may not get back the full amount invested. 7

8 Where INVESTMENT FUND PERFORMANCE WHERE ARE THE FUNDS INVESTED AND HOW HAVE THEY PERFORMED? In addition, some members hold investments in legacy with-profits funds, which are closed to further investment. Investment funds 1 year (%) 3 years (% pa) 5 years (% pa) Equitable Life With-Profits Fund (Policy value increase) Zurich Unitised With-Profits Fund (UWP 1) Zurich With-Profits Pension Fund (UWP 4) Zurich Main AVC Plan Prudential With-Profits Fund MGM With-Profits Fund Friends Life With-Profits Fund Source: Investment Managers, Thomson Reuters Datastream for RPI All Consumer Index and FTSE All-Share Index. All figures are net of fees unless stated otherwise. 8

9 INVESTMENT FUND PERFORMANCE WHERE ARE THE FUNDS INVESTED AND HOW HAVE THEY PERFORMED? Where Equitable Life GSK has a group UK pension policy with Equitable Life in respect of the Equitable Life With- Profits Fund. Further information on Equitable Life With-Profits Fund, such as bonus rates and enhanced capital distributions can be found at bonus-rates/. Zurich update Zurich manages a range of With-Profits Funds on behalf of members. Further information on the Zurich With-Profits Funds can be found at personal/pensions-and-retirement/manage-my-pension/with-profits. Prudential Further information on the Prudential With-Profits Fund can be found in the factsheet at MGM For further information on the MGM With-Profits Fund, please refer to your annual statement. Friends Life Further information on the Friends Life With-Profits Fund can be found at co.uk/funds/with-profits/supplementary-information.jsp. Please select the FP With-Profits Factsheet. Further support regarding your With-Profits Fund Should you have any questions regarding your With-Profits Funds or wish to consider transferring your With-Profits Funds, please contact the Plan Helpline. 9

10 How Additional Contributions Both GSK and the Trustee have a common objective for the Plan to be fully funded and the increase in the expected cost of meeting the liabilities following the 2014 valuation means that GSK has committed additional contributions to the Plan. The Trustee has agreed with GSK a nine year deficit recovery plan from 31 December Under the recovery plan, GSK has agreed to pay deficit contributions from 2016 of million per year, as well as an additional deficit contribution of million in April These contributions are intended to make good, by the end of 2023, the shortfall identified in the 31 December 2014 valuation. SUMMARY FUNDING STATEMENT HOW IS THE PLAN FUNDED? This Funding Statement is intended to give you information about the funding of the Plan. The funding position The Trustee and GSK regularly review the funding of the Plan to ensure that there will be sufficient funds to cover current and expected future pension payments. In addition, formal actuarial valuations are normally carried out every three years and these serve as an important check on the funding position. A formal valuation was last carried out as at 31 December 2014 and the Trustee and GSK have agreed principles to fund current and future expected pension payments. The Plan s actuary also carries out annual updates at 31 December each year, along with quarterly updates for the 31 December 2014 triennial update Trustee to monitor how the assets and liabilities are changing. The next formal valuation is due at 31 December The table below shows that, despite positive asset growth and additional contributions from the Company, which together led to a significant increase in the value of the Plan s assets over 2016, the funding deficit increased slightly over the period. The main reason for the increase in deficit is that interest rates fell which places a higher value on the Plan s liabilities, more than offsetting the increase in the value of the Plan s assets. Scheme 31 December 2015 annual valuation 31 December 2016 annual update Assets 1 2,917 million 2,864 million 3,444 million Liabilities 1 3,046 million 3,044 million 3,634 million Surplus / (Deficit) ( 129 million) ( 180 million) ( 190 million) Funding level 96% 94% 95% 1 Excludes the Money Purchase assets / liabilities and liabilities backed by insurance policies 10

11 How If GSK were to become insolvent In the unlikely event that GSK were to become insolvent, the Plan would have to be wound up and the Trustee would seek to secure members benefits with an insurance company. An insurance company would take over the responsibility and risk of funding the Plan s benefits and would typically use an even more conservative approach to calculating the liabilities of the Plan than GSK and the Trustee currently do. If responsibility for the Plan s benefits were to be transferred to an insurance company, the actuary estimated that the Plan had sufficient assets, as at 31 December 2016, to secure around 71% of members benefits (69% as at 31 December 2015). Pension Plan members benefits receive a degree of protection from the Pension Protection Fund (PPF). If GSK were to become insolvent and there were insufficient funds in the Plan to provide pension benefits, a reduced level of benefits would be payable to the members from the PPF. The Trustee regularly monitors the covenant of GSK and some of the factors that it considers include credit ratings, profitability, market capitalisation, cash flow and liquidity. No payments to GSK The law requires the Trustee to confirm that over the 12 months to December 2016 there were no payments made to GSK from the Plan s assets. We can confirm that no payments have been made to GSK from the Plan s assets. No intervention by the Pensions Regulator The law requires the Trustee to confirm that over the 12 months to December 2016 the Pensions Regulator has not modified the Plan rules or imposed a schedule of contributions on the Plan. The financial protection available on DC assets is outlined in the Chairman s DC Statement on page 18. If, as a result of the funding position you are considering leaving the Plan, you should consider obtaining professional financial advice before taking this step (and in many cases this is now a requirement). 11

12 News Defined Contribution (DC) flexibilities From 6 April 2015, the Government brought into effect DC pension flexibilities on how members can take their benefits at retirement. DC members aged 55 and over can be provided with the following options at retirement: z Take up to 25% of their fund as tax-free cash; and z Use the remainder of the fund to purchase an annuity; or z Take the remainder of the fund as cash (taxed at the member s marginal rate of tax); or z Use the remainder of the fund for income drawdown (known as Flexi Access Drawdown Fund (FADF)); or z A combination of the last three bullets above. Alternatively (or in addition) it is possible to take a series of cash lump sums from the fund, with the first 25% of each lump sum payable tax-free, and the remaining 75% of each lump sum taxed at the member s marginal rate of tax (calculated by adding the taxable part of the lump sum to their income). In order to offer its DC plan members the opportunity to benefit from the pension flexibilities introduced by the Government and to be consistent with market practice, the following additional facilities are available to Plan members with DC benefits by GSK. Lump Sum: Members aged 55 and over are able to periodically take a cash lump sum from their DC account, while remaining in employment with GSK and continuing to build up benefits in the Plan up to retirement. This is called taking an Uncrystallised Funds Pension Lump Sum (UFPLS) from their DC accounts. 25% of each lump sum may be taken tax-free, with the remainder taxed at the member s marginal rate. A member aged 55 or over who has left service with GSK can take a single UFPLS in relation to their entire DC account. An UFPLS gives these members more flexibility and the option to use their DC savings to potentially better suit their needs while remaining in GSK s employment. Taking an UFPLS reduces the member s Annual Allowance for DC benefits and they would be subject to the Money Purchase Annual Allowance (MPAA) going forwards. Members should therefore seek advice from an Independent Financial Adviser (IFA) if they wish to pursue this option. Drawdown: There are no drawdown facilities available through any of the GSK plans, therefore, members will need to transfer their full DC account out of the Plan in order to exercise an income drawdown option. In doing so, members would become subject to the MPAA. A flexible access drawdown option has been made available for DC members at retirement by partnering with a third party drawdown provider, Legal & General. To access this drawdown option, members are still required to transfer their DC account to Legal & General. This option will allow members greater choice to use their DC account in a way which best suits them. Members wishing to drawdown are not restricted to using Legal & General for this purpose and are be able to select any drawdown provider of their own choice. 12

13 News Annuity: Members who built up some or all of their DC account with contributions paid before July 2009, have the option to purchase a pension under the Plan or they can purchase a pension (annuity) from an insurance company with this part of their DC account. Members who built up some or all of their DC account with contributions paid after 1 July 2009 can only purchase an annuity from an insurance company with this part of their DC account. An annuity is guaranteed to be payable for the member s lifetime and at the point of taking out the annuity, the member chooses the terms on which the annuity is purchased. Some of the terms a member can choose are: z The level of any increases to the annuity each year. z The level of spouse s pension payable. z The guarantee payment period of the annuity. The terms chosen for the annuity will affect the initial amount of annuity that will be payable. Further details on annuities are available from the Pension Wise website at: Guidance: One of the requirements of the Government s new flexibility opportunities is that members will be able to receive good quality guidance before they make decisions around their pension options. In addition to the guidance available externally through the Government s appointed facilitators (Citizens Advice, Pension Wise and the Pensions Advisory Service), GSK has extended its current Financial Education program for active employees. More Information: For more information contact the Plan Helpline. Members of the Defined Benefit (DB) pension plans: Please note that the changes outlined in this section apply to members with DC benefits only If you are a DB member who is considering transferring to a DC arrangement to access the increased pension flexibilities, you are required to seek advice from an IFA, if the value of your DB benefits under the Plan is more than 30,

14 News State Pension Age increases Following changes to legislation, the female state pension age is gradually rising from age 60 to 65 by November All state pension ages will then rise to age 66 between December 2018 and October All state pension ages are expected to further rise to age 67 by 2028 and to age 68 by The Pensions Act 2014 also provides for a periodic review of state pension ages in light of changes to life expectancy and other relevant factors. The Secretary of State was due to review state pension ages by 7 May 2017, with subsequent reviews at least every six years. However, on 28 April 2017, a Department for Work and Pensions spokesman confirmed that the review and any decision on changes to state pension ages would be made after the General Election on 8 June The timetable for the increase in state pension ages from 67 to 68 could change as a result of a future review. Defined Contribution investment funds The Trustee, in conjunction with GSK, regularly reviews the range of investment funds offered to members of the Plan to ensure that these continue to meet the needs of GSK employees and former employees saving for retirement and market best practice. The most recent fund restructure was in 2014, when the GSK Diversified Growth Fund and the GSK Inflation Linked Pre- Retirement Fund were introduced, along with changes to the GSK Lifecycle strategy. If you need more information contact the Plan Helpline. Appropriateness of investment funds Whilst the Trustee has determined the current investment fund offerings are appropriate for members needs, in line with best market practice, a review of the funds is currently ongoing. Should the Trustee decide to make any changes to the funds, you will be notified in due course. If you believe there is a requirement for further funds please contact the Plan Helpline. 14

15 News Pension allowances The Annual Allowance limit is the amount of pension savings you can build up in any tax year before being subject to tax. You receive tax relief at your marginal rate up to the lower of 100% of your income from employment and the Annual Allowance. From 6 April 2016 the Annual Allowance of 40,000 is tapered for an individual in any tax year when: z the individual s adjusted income for the tax year is more than 150,000 (adjusted income is income from all sources, including pension savings), and z the individual s threshold income for the same tax year is more than 110,000 (threshold income is income from all sources, excluding pension savings). For every 2 of adjusted income an individual earns over 150,000, the Annual Allowance for that tax year is reduced by 1. The maximum taper is 30,000, leaving a tapered Annual Allowance of 10,000. Therefore if your adjusted income is over 210,000, there is no further reduction. Further information on the Annual Allowance is available at: www. gov.uk/government/publications/pensions-tapered-annual-allowance and on calculating your threshold and adjusted income are available at: ptm If at retirement your total pension benefits (from all sources) exceed the Lifetime Allowance limit, you will incur additional tax on the excess. The Lifetime Allowance was reduced to 1 million from 6 April The Government has proposed that from , the Lifetime Allowance will be increased by inflation (the Consumer Prices Index). If you think you may be affected by either the tapered Annual Allowance or Lifetime Allowance, you may wish to review your level of additional pension contributions. It is recommended that you should speak to an independent financial adviser before making any changes to your pension contributions or if you require any assistance in calculating your adjusted income or threshold income. Further information on HMRC allowances is available at www. hmrc. gov.uk and via the UK HR page on Connect GSK for employee members. Pensions Advice Allowance (PAA) From 6 April 2017, the Government introduced the PAA. The PAA allows members to take up to 500 in any given tax year (up to a maximum of three times in total) from their Defined Contribution (DC) pension savings to pay for financial advice. The Trustee is currently considering the requirements of the PAA and whether this can be introduced under the Plan. You will be advised in the future, should this be made available to Plan members. 15

16 News Info Pensioners section What you need to know Pensioners increases in payment Due to the way the Plan has developed over the years, different levels of pension increases may be provided to different groups of pensioners, usually determined by reference to the date pensionable service ended and whether their pensions originated in another group scheme which was subsequently merged into the Plan. In addition, different increase levels may apply to different elements of a pensioner s pension. Increases to certain elements may be the responsibility of the Government or may be guaranteed under the Plan rules and in some cases may have been provided on a discretionary basis. Whilst some discretionary increases have been granted by GSK in the past, this practice has been reviewed. GSK has informed the Trustee of its intention that should any discretion be granted in the future, CPI will be used as the measure of inflation rather than RPI. This process will be considered annually. All guaranteed increases under the Plan will continue to be provided in full. Updating your nomination form You should make sure your nomination of beneficiaries form is up to date so that the Trustee can take your wishes into account in the distribution of any lump sum payable on your death. If your circumstances have changed and you need to update your form, please contact the Plan Helpline. If you are an employee member you can check the date your nomination form was submitted on your online Total Reward Statement. This can be accessed from work or home at: UK HR page on Connect GSK Pensioners will be informed of the increase to their pensions, where one is being provided, during December 2017 (effective from 1 January 2018). 16

17 Info Socially Responsible Investment (SRI) Socially Responsible Investing (SRI) is most commonly understood to mean investing in a manner that takes into account the impact of investments on wider society and the natural environment, both today and in the future. The Trustee annually reviews its SRI policies as part of the Trustee business planning process, and the GSK pension plans publish a Statement of Investment Principles which provides a high level overview of the SRI policies. The Trustee aims to be an engaged and responsible long-term investor in the assets and markets in which it invests. The Trustee believes that the integration of environmental, social and governance (ESG) factors within Investment Managers investment processes is not detrimental to the risk and the sustainable long-term expected returns from the Plan s investments. The Trustee does not wish to interfere with the day to day investment decisions of its investment managers. However, the Trustee does encourage its investment managers to comply with the principles outlined in the Principles for Responsible Investing and the UK Stewardship Code where this is appropriate for their mandate, as well as to take into account social, environmental and ethical considerations in the selection, retention and realisation of investments in so far as this is consistent with their overall objectives. The Trustee regularly reviews the voting strategy of its investment managers. The Trustee also supports the principle of shareholder activism and, for relevant mandates, prefers its investment managers to have an explicit strategy, outlining the circumstances in which they will engage with a company on ESG matters and how they will measure the effectiveness of this strategy. For the GSK pension plans, the majority of the assets are managed by Legal & General Investment Management (LGIM). LGIM comply with the principles set out in the UK Stewardship Code and LGIM are also a signatory to the UN Principles of Responsible Investment. In addition, LGIM maintain a large, dedicated team which is responsible for ESG monitoring and which is actively engaged in encouraging companies to improve their ESG standards. A detailed review of LGIM s ESG activities, including examples of LGIM s engagement activities with companies, can be found in the Corporate Governance report located at: 17

18 Info Chairman s DC Statement As the Trustee of the Plan, we have to make certain statements each year which form the Chairman s statement within the report and accounts. In summary, this year s statement covered the following: z The Plan has a default investment option in place for members who do not make an explicit choice regarding the investment of their funds. We consider this approach to be in the best interests of relevant members, and will continue to conduct a full review of this strategy at least every three years. In February 2017, we carried out a review of the default investment option and concluded that the default option to move members assets towards annuity purchase at retirement remains appropriate. z We have reviewed the processes and controls implemented by the Plan administrators, investment platform provider and investment managers, and consider them to be suitably designed to ensure that core financial transactions are processed promptly and accurately. Where deficiencies have been identified, appropriate action has been taken. z We undertook a Value for Money assessment in November 2016 and this is scheduled to be repeated at least annually. The assessment showed that the investment options available to members represented good value for money all options are available at lower-than-average fees compared to other similar pension schemes, and significantly lower than comparable retail funds. z We have arrangements in place for ensuring that we have the required knowledge and understanding to exercise our functions as Trustee. z In August 2016, we undertook an assessment of the Plan s two underlying managers, Legal & General Investment Management and Standard Life, against the UK Stewardship Code. We were satisfied that both underlying managers achieved the highest compliance level for each of the principles, achieving best practice compliance with comprehensive public disclosure. 18

19 Info The Trustee regularly looks at its governance responsibilities and undertakes a quarterly review which assessed whether their systems, processes and controls across key governance functions were consistent with those set out by The Pensions Regulator. Based on these ongoing assessments we believe that we have adopted the standards of practice set out in the DC Code of Practice and DC regulatory guidance. These help demonstrate the presence of DC quality features, which we believe will help deliver better outcomes for our members at retirement, as set out above. Legal & General Assurance (Pensions Management) Limited ( L&G ) is regulated by the Financial Conduct Authority. This type of investment arrangement is common amongst defined contribution pension schemes in the UK. In the event of L&G becoming insolvent, the Trustee is eligible for protection under the Financial Services Compensation Scheme. This means the Trustee could make a claim (on behalf of members) for up to 100% of the value of the Plan s assets invested through the L&G insurance policy. Additionally, the assets underlying our L&G policy are held separately from L&G s other assets and are ultimately held by the underlying investment managers custodians. This should provide an additional element of protection as the investment managers custodians operate a system of internal controls to ensure the security of assets in the investment funds is not compromised. Following our assessment, we were satisfied with the level of protection available to members assets, and believe that risks to the security of assets are being minimised where possible. We will continue to monitor the situation on an annual basis. 19

20 Info Looking after your data Some personal data for Plan members (such as date of birth and salary) is required for the running of the Plan, including paying out the right benefits. The use of this data is regulated under the Data Protection Act, which places certain responsibilities on those who exercise control over the data (known as data controllers under the Data Protection Act). Data controllers would include the Trustee of the Plan, and, in certain circumstances, pension plan administrators and professional advisers to the Plan. These may include the scheme actuary, Aon Hewitt Limited, who have provided further details on how Aon Hewitt Limited uses personal data when it provides actuarial services to UK pension scheme trustees. Further information is available at Regular checks are undertaken to ensure no breach of the Data Protection Act has taken place by any of the data controllers or those processing data on their behalf and all professional advisors comply with stringent data security requirements. Data Protection new requirements From 25 May 2018, the General Data Protection Regulation (GDPR) will come into effect, which is new European data privacy laws and despite Brexit, the Government has confirmed that the GDPR will apply in the UK from that date. The main aim underpinning GDPR is to create a unified regulatory data protection regime that is fit for the digital age. Whilst many of the GDPR s requirements are similar to existing data protection provisions, the new rules will strengthen data protection requirements by introducing new contractual obligations, increasing the amount of information that needs to be given to individuals, enhancing reporting obligations in the event of a breach and imposing heavier sanctions for non-compliance. More information on GDPR is available on the European Commission website at: Electronic forms of communication The Trustee is required by law to make available certain information (including documents) to members and pensioners. The Trustee is seeking in future to supply more information electronically by making it available on a website and separately writing to inform you of the website address and the information available on it. Distributing information, particularly long documents, in this way is environmentally friendly and cost effective. It is, however, appreciated that it may not suit everyone. Should you not wish information to be made available to you in this way, you can contact the Plan Helpline and paper copies will continue to be supplied. 20

21 Info Pensions Liberation Scams Please be aware that pension liberation scams are operating. The organisations behind the scam may offer you opportunities and cash incentives to transfer your pension benefits to unregulated schemes, often with promises of guaranteed high returns. Some warning signs to look out for, as noted on the Pensions Wise website, are if an individual or company: z contacts you unexpectedly about your pension money, by telephone, text message, visiting you in person or in other ways; z says you can access your pension money before 55 and that they can help you with this; z encourages you to take out a large lump sum, or your whole pension pot in one go, and to let them invest it for you; z asks you to transfer your money quickly, even sending documents to you by courier - never make a rush decision about your pension money; z uses words like pension liberation, loan, loophole, free pension review or one-off investment ; z offers you an investment described as unique, overseas, environmentally friendly, ethical or in a new industry. More information is available from the Pensions Regulator at: Exposure to GSK within DC investment funds Within the DC investment funds available through the GSK plans, there is some exposure to investments in GSK. Whilst there is no legal requirement for investments in GSK to be excluded from these funds, if you hold investments in GSK through other means e.g. share plans and long term incentives, you may wish to consider whether your DC funds remain appropriate, taking into account your overall exposure to investments in GSK. The table below illustrates the approximate exposure to GSK within each DC fund as at 31 December 2016: DC Investment Fund Exposure to investment in GSK GSK Lifecycle Fund 0.829% GSK UK Equity Index Fund 3.460% GSK Overseas Equity Index Fund 0.002% GSK Diversified Growth Fund 0.180% GSK Inflation Linked Pre-Retirement Fund 1.600% GSK Cash Fund 0.000% GSK Global Equity Index Fund* 1.043% *Not available for new investors. 21

22 Info TRUSTEES AND ADVISERS WHO LOOKS AFTER THE PLAN? The SB Pension Plan is set up under a trust and is managed by the Trustee, SmithKline Beecham Pension Plan Trustee Limited. The trust s assets are kept separately from the assets of GSK and cannot be used for any purpose other than to pay pension benefits and Plan expenses. The Trustee is responsible for running the Plan in accordance with the trust deed and rules and in the best interests of the members; it closely monitors its providers to ensure they are carrying out their work competently. Trustee Directors The current Directors of the Trustee are: Independent Trustee Director: The Law Debenture (JIC) Pension Trust Corporation, represented by David Felder GSK Nominated Trustee Directors: Moira Beckwith, Keith Bradford and Tom Houston (Chairman) Member Nominated Trustee Director: Malcolm Consterdine (pensioner) Secretary to the Trustee: Steve Mac Krell The current Directors of the Common Investment Fund are: The Law Debenture Pension Trust Corporation plc (represented by Mark Ashworth - Chairman), Sarah-Jane Chilver-Stainer, the Law Debenture (JIC) Pension Trust Corporation (represented by David Felder), Tom Houston, Steve Jordan and Allen Powley Trustee Director changes since last year s report The Law Debenture (JIC) Pension Trust Corporation (represented by David Felder) joined the Trustee Board on 30 June On the Common Investment Fund, the Law Debenture (JIC) Pension Trust Corporation (represented by David Felder) joined the Trustee Board on 15 September

23 Info Advisers The Plan s advisers are: Actuary: Jonathan Gainsford, Aon Hewitt Limited Auditors: PricewaterhouseCoopers LLP Legal advisers: Simmons & Simmons LLP Investment and asset allocation advisers: Cardano (Cardano Risk Management Limited) and Mercer Limited Administrators: Equiniti Large print version If you would like a large print version of this report please contact the Plan Helpline. Where can you get more information Copies of the Full Report and Accounts, Statement of Investment Principles, Valuation Report, plus other documents relating to the Plan s funding are available to members on request from the Plan Helpline. SB Pension Plan Helpline: Defined Benefit sbteam@equiniti.com From overseas +44 (0) Defined Contribution gskteam@equiniti.com From overseas +44 (0) Changing your address If you are an employee member, you can update your address online via Workday on the UK HR page on Connect GSK. All other members should contact the Plan Helpline to update their details. Stiefel Stiefel@barnett-waddingham.co.uk Total Reward for employees: UK HR page on Connect GSK GSK HR Service Centre for GSKUK.HR@gsk.com Internal Freephone From overseas +44 (0)

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