Cobham Pension Plan Trustees Report to Members

Transcription

1 Cobham Pension Plan Trustees Report to Members For the year ended 31 March 2018

2 Contents Welcome Message from the Trustees 2 We have pleasure in presenting this year s Trustees Report to Members of the Cobham Pension Plan. The Trustees hope that you will find this report informative and of value. It is intended to provide members with an insight into the main details of the Plan for the year ended 31 March 2018, but is not a statutory document. There are some very important messages in this year s report and in particular we would strongly encourage you to read the items on Pension Scams (page 16) and the Pension Health Check (page 21). 3 Welcome 3 The Plan s Trustees and their Advisers 4 Summary of the Financial Statements for the Year Ended 31 March Membership 7 For Deferred Members: JLT Pension Decision Service 8 Investment Summary 9 Investment Performance 10 Managing Risk 12 Changes to the Plan 14 Annual Benefit Statements 15 Employer Covenant 15 Pension Scams 16 Pensions News 18 Cobham Pensions Website 20 Pension Health Check 21 Expression of Wish 21 General Information 22 Summary Funding Statement 25 Some of the highlights of the year are: The value of the Plan s assets stood at million at the year end. Company contributions totalling 17.1 million were paid into the Plan over the year ended 31 March Pensions and other benefits paid to members during the year amounted to 39.2 million. The triennial valuation of the Plan as at 31 March 2018 was completed and future contributions by the employer into the Plan were agreed between the Trustees and employer. The funding level of the plan has improved to 95%. Please see the Summary Funding Statement on page 25 for more information on this. The Trustees obtained an independent covenant assessment update on the Employer Covenant from BDO and set up a Sub-Committee to monitor the Employer Covenant. In June 2018 Sally Brooks stepped down as a Trustee and Andy Shepherd was appointed as a new Trustee. Please contact the Pensions Office with any feedback on this report, suggested items for inclusion in future reports or to raise any other matters related to the Plan. The Pensions Office address is given on page 21. The Trustees would also like to take this opportunity to wish you a very happy Christmas and New Year. Stephen Mallett Chairman of the Trustees

3 The Plan s Trustees and their Advisers The Trustees of the Plan are as follows: Summary of the Financial Statements for the year ended 31 March Stephen Mallett Chairman and Independent Trustee Mark Thomas Employer Nominated Trustee A summary of the income and expenditure of the Plan for the year ended 31 March 2018, together with the balance sheet position at that date (and the equivalent figures at 31 March 2017 for comparison), is set out below: Stephen Morris Employer Nominated Trustee Janet Ames Member Nominated Trustee REVENUE ACCOUNT During the year the assets of the Plan changed as follows: 000s 000s Value of fund at previous 1 April 762, ,191 Income 17,120 57,273 Andy Shepherd Employer Nominated Trustee Chris Yeo Member Nominated Trustee Change in value of investments 10,628 59,915 Expenditure (39,251) (31,702) VALUE OF FUND AT 31 MARCH 751, ,677 We welcome Andy Shepherd to the Trustee board as a replacement for Sally Brooks, who stepped down as a Trustee with effect from 26 June We would like to take this opportunity to thank Sally for her valuable contribution as a Trustee. Our current Member Nominated Trustee s terms of office are due to end in If you would like to represent the members of the Plan and put yourself forward for consideration as a Member Nominated Trustee, please contact Director of Pensions, Cobham plc, Brook Road, Wimborne, Dorset, BH21 2BJ pensions.office@cobham.com The Trustees have the power to appoint professional advisers to assist them with their duties. The principal advisers are listed below: Administrators and Pension Consultants: JLT Benefit Solutions Limited (Jardine Lloyd Thompson) Plan Actuary: Andrew Firbank of JLT Benefit Solutions Limited Auditors: KPMG LLP Bankers: The Royal Bank of Scotland plc Solicitors: Squire Patton Boggs (UK) LLP INCOME Company contributions normal special 17,100 17,100 Investment income 20 40,173 TOTAL INCOME 17,120 57,273 EXPENDITURE Pensions 18,782 18,018 Net purchase of individual annuities for AVC holders Cash option on retirement 2,939 4,219 Transfers out (individuals) 17,271 9,193 Death benefits Other payments 58 Fees and expenses TOTAL EXPENDITURE 39,251 31,702 Investment Consultants: Lane Clark and Peacock LLP

4 Summary of the Financial Statements for the year ended 31 March INVESTMENT ASSETS 000s 000s 6 Pensioner buy-in with Rothesay Life (Insurance Policies) 270, ,197 7 Annuities (Insurance Policies) Legal & General Investment Management (Equities) 89, ,094 Ruffer (Diversified Growth Fund) 67,604 92,591 Insight Investment Management (Liability Driven Investment and Absolute Return Bonds) 187, ,306 GMO (Diversified Growth Fund) 58,509 55,195 M&G (Absolute Return Bonds) 40,991 39,952 Illiquid credit [Private Credit] 30,560 17,594 Cash 1,625 17,249 AVC Investments Clerical Medical Equitable Life Assurance Society Standard Life Guardian Assurance Plc Zurich Assurance Ltd 1,038 1,110 Membership The membership of the Plan at 31 March 2018 (and 31 March 2017 for comparison) was as follows: ,461 Deferred 2,900 Pensioner Members 2,616 Deferred Members 2,862 Pensioner Members Total 5,361 Total 5,478 A Deferred Member is someone whose pensionable service has ceased and so is no longer paying contributions nor accruing any further benefits, but who still has preserved or deferred benefits which will come into payment in the future. A Pensioner Member is someone who is already in receipt of a pension from the Plan. Cash deposits and other investment balances TOTAL INVESTMENT ASSETS 749, ,077 OTHER BALANCE SHEET ITEMS Debtors 3,056 3,988 Creditors (1,332) (1,388) Net current assets 1,724 2,600 VALUE OF FUND AT END OF YEAR 751, ,677 Deferred Members Transfers and Early Retirement Pensions As a reminder if you are a Deferred Member of the Plan and; you wish to transfer your pension to your current employer or personal pension provider, or you are at least 55 years of age and would like to investigate whether you can draw your pension immediately, then please contact Jardine Lloyd Thompson (JLT) using the details set out on page 21. Please refer to the Investment Summary on page 9 for further explanation on Investment Assets and Investment Income.

5 For Deferred Members: JLT Pension Decision Service Investment Summary At 31 March 2018 the invested assets of the Plan were distributed as follows: With the advent of the new Pension Freedoms and Choices, pension members are being pointed towards services such as Pension Wise and TPAS (The Pension Advisory Service). But after you ve had a discussion, where do you go next? As mentioned in last year s report, the Trustees have arranged for the JLT Pension Decision Service to be provided. It has been specifically designed to take you through an initial conversation with one of their Retirement Relationship Managers, at no cost to yourself, where you will discuss your current circumstances and future needs so that you can understand the pension options available. The service is designed to put you in a position where you are clear about your options and what steps to take next, whether that is via a scheme pension, an annuity or an alternative arrangement. In the event that it is identified that you may benefit from regulated financial advice, you will be advised to contact your own Independent Financial Adviser (IFA). If you do not have an IFA, please see the next paragraph Finding an Independent Financial Adviser. 8 LDI Funds Insurance Policies % Diversified Growth Funds 36.3% Equities Absolute Return Bonds Private Credit 16.9% Cash & Other Investment Assets Call to book your no cost conversation now if you are thinking of drawing your pension benefits. 4.1% 0.2% 10.7% In July 2017 the Trustees took steps to further de-risk the portfolio by moving some assets from the Ruffer diversified growth fund to the Insight Liability Driven Investment (LDI) fund. 19.9% In November 2017 the Trustees moved the Legal & General passive equity portfolio into the Legal & General multi-factor equity fund together with further de-risking the portfolio with additional investments into the Insight LDI fund. In March 2018 the Trustees updated the Plan s Statement of Investment Principles. Finding an Independent Financial Adviser To find an IFA in your area go to or alternatively you may wish to seek recommendations from your family, friends and colleagues. An IFA will charge for their services and this is your cost. Since the Retail Distribution Review, effective 1 January 2013, IFAs can only charge you a fixed fee and not use commission. Investment types A brief description of each investment type is outlined below: LDI funds (Liability Driven Investment) These are funds that deploy a technique that aims to reduce the inflation and interest rate risks to which the Plan is exposed. Insurance Policies A bulk annuity policy from which the receipts are designed to directly match the liabilities of the Plan that have been insured. This type of investment significantly reduces the inflation, interest rate and longevity risks to which the Plan is exposed. Diversified Growth Funds (DGF) These are funds which invest across a broad range of asset classes and which focus on achieving long-term growth with relatively low volatility. Equities An equity is a share in the profitability and growth of a company. Equities provide investment returns in two ways:- 1. If the company does well, the value of the share should increase. However, the value of shares can go down as well as up. 2. Owners of shares may receive a dividend each year, depending on how well the company has performed. Absolute Return Bond Funds These are funds which invest across a broad range of fixed income assets and which focus on achieving long-term growth with low volatility. Private Credit This consists of direct loans made to small and medium sized businesses.

6 Investment Performance The Trustees regularly review the performance of the investment managers, who work within the framework of the Plan s Statement of Investment Principles - a document that is prepared and 10 regularly reviewed by the Trustees. 11 The table below summarises the performance of the Plan s assets for the year to 31 March 2018: Fund Manager * Return Over 12 Months to 31 March 2018 (%) Benchmark (%) Alcentra Private Credit ** Ruffer DGF Insight Real LDI Insight Nominal LDI Insight Absolute Return Bonds GMO DGF M&G Absolute Return Bonds * Annual performance figures for the multi-factor equity fund held with L&G are not available as investment in this fund commenced from 8 November ** Alcentra s target is to deliver a return of 8-10% pa, and the mid-point of the range is shown in the table above. Over the year the Plan s invested assets returned around 3.7%, broadly in line with the composite benchmark. The Plan s equity portfolio and GMO diversified growth fund portfolio produced strong positive returns. In particular, the emerging market exposure in these portfolios performed well over the year. While the M&G absolute return bond fund outperformed the benchmark, the Ruffer diversified growth portfolio and Insight absolute return bond fund produced slightly negative returns over the year. The Trustees increased the investment in the Insight LDI funds over the year to help reduce the volatility of the funding level against changes in market conditions. Whilst the Insight LDI funds have underperformed against their respective gilts-based benchmarks over the year, these funds have outperformed both the gilts and swaps-based benchmarks since inception as expected. Over the year to 31 March 2018 there were no cash distributions received from the Plan s LDI funds due to re-leveraging. This accounts for the reduction in investment income paid to the Trustee bank account compared to the previous year. The majority of the income generated by the Plan s invested assets was reinvested in the asset portfolios rather than paid to the Trustee bank account. The investment in the Alcentra private credit fund returned around 7.3% over the year and distributions from this fund have been used as planned to manage the Plan s ongoing cash flows. It is likely that the Plan will need to continue to be able to provide benefits to its members for 40 or more years. Therefore, investment strategies adopted by the Trustees are required to recognise the long term nature of these liabilities and are targeted at long term returns, rather than reacting to short term market trends. The Trustees are diligent on behalf of the members in monitoring the performance of the Plan s investment managers. The investment managers are invited to attend Trustees meetings on a regular basis to ensure that the Trustees investment strategy is being properly executed and that performance is in line with expectation. The Trustees also obtain independent opinions on the managers from their Investment Consultants on a quarterly basis. Additional Voluntary Contributions (AVCs) If Members have paid AVCs, they are reminded that appropriate investment of contributions is crucial to the eventual benefits that can be delivered at retirement. This is because the eventual value of the AVCs is dependent on the contributions paid in, the investment growth the fund achieves, and the annuity rates available at retirement (the rates used to convert a Member s fund at retirement into a pension). AVCs are a defined contribution (DC) arrangement. If you have an AVC policy within the Plan and would like to access the new DC pension flexibilities introduced by the Government in April 2015, you will either need to transfer your AVCs to a new provider or contact JLT about the possibility of taking your AVC proceeds as cash from the Plan (subject to tax at your marginal rate). Please seek independent financial advice if you wish to consider this. More detail can be obtained from JLT, the address for which is provided on page 21.

7 Managing Risk One of the Trustees duties is to ensure that there are adequate controls and procedures in place so that the Plan can be run efficiently. To assist them in fulfilling this duty the Trustees maintain a risk register which is reviewed at every quarterly meeting. Each key risk that is identified by the Trustees is assessed for its likelihood of occurrence, the severity of any impact it could have on the Plan, and for actions that can be taken to mitigate, or even remove, that risk. As part of their risk management programme the Trustees have established an integrated risk management policy which they review at each Trustees meeting. That policy considers the ways in which the three key financial risks (funding, investment and covenant) interact, and the ways in which those risks can be mitigated. Some of the risks that are identified can be considered as one off risks, as they relate to particular events or transactions. Once the event has passed or the transaction is complete, the Trustees will form a judgement as to whether it is appropriate for the risk to be closed off on the risk register. The Trustees believe that this process is particularly important to facilitate the smooth running of the Plan and to mitigate foreseeable risks. One key aspect of the Trustees risk management programme is to ensure that the membership data is accurate and up to date. This involves taking steps to ensure that members keep the Trustees informed of any address changes and that information relating to membership of the Plan is accurate. As part of this latter process the Trustees are working with HMRC to ensure that the contracting-out records, and in particular the Plan s Guaranteed Minimum Pensions (GMPs) held by the Trustees are consistent with those held by HMRC. Guaranteed Minimum Pensions (GMPs) The GMP is the part of the pension that the Plan must provide as a minimum as a result of a member having been contracted out of the State Earnings Related Pension Scheme, or SERPS. GMPs accrued between the years 1978 and 1997, and are intended to represent an approximation of the pension that would have built up in SERPS had the Plan not been contracted out. When a member retires, the Plan s administrators calculate the amount of the pension that relates to the GMP, and the amount of the pension that is the excess over the GMP. Each part of the pension is treated in different way in terms of the increases that are granted in the period prior to the pension being paid and in the period during which the pension is paid. It is therefore important that the amount of the GMP is accurate, and this is done by comparing the records held to enable the GMP to be calculated with those held by HMRC, who are responsible for the state pension scheme. The Trustees are continuing to work with HMRC to reconcile all of the Plan s GMP records. HMRC have experienced resource issues which has slowed the progress of this project however, the Trustees pension administrators continue to work towards completing the necessary stages of the project this year in advance of the HMRC deadline which is December The formula that is used to calculate a GMP is different for men and women. In a High Court ruling in October 2018 the judge concluded that GMPs must be equalised, and the Trustees are consulting their advisers on what this means for the Plan and the steps that will need to be taken to comply with that ruling once the Plan s GMP s have been reconciled against the records held by HMRC.

8 Changes to the Plan Increased flexibilities for Defined Contribution pensions 14 Your pension in the Cobham Pension Plan 15 independent financial adviser s letter in order employer s covenant, through a combination is a Defined Benefit pension. This means for the transfer to proceed. of presentations from the chief financial your pension is determined by your length of officer, input from our independent covenant service and your salary. (Please also refer to advisers and now the Employer Covenant the AVC section on page 11) Sub-Committee. As explained in previous reports, there is another type of pension called Defined Contribution, where the benefits you can take depend on a pot of money that you build up throughout your working life. Additional flexibilities were introduced by the Government for Defined Contribution pensions in April Where deferred members of the Plan wish to access these flexibilities, for example by purchasing a drawdown fund or taking their full fund as cash (with only the initial 25% being tax free), you will only be able to do this by transferring from the Plan to another approved pension provider. To transfer you can request a transfer pack from the pension administrators. You have the right to one transfer value quotation per year from the Plan at no cost to yourself. To transfer you will also need to obtain independent financial advice. You must consider your options very carefully with your independent financial adviser and read the Pensions Regulator s information on Pension Scams (see page 16 for more information on Pension Scams). If after considering your options you still wish to transfer out to another provider, you will need to complete the documentation sent to you by the pension administrators and return it with a signed declaration and your Transfer of Equitable Life Additional Voluntary Contributions (AVCs) to Reliance Life Equitable Life is proposing to sell their book of business to Reliance Life. For the sale to go ahead, trustees and policyholders need to vote on this as well as the proposal obtaining High Court approval. As part of the proposed transfer to Reliance Life, Equitable with-profit guarantees will be exchanged for a one-off uplift to Members policy values and these will be applied on transfer to Reliance Life. No uplift will apply to unit-linked funds. Members who have AVCs with Equitable Life will receive separate communications from the Trustees regarding the transfer as more information on this becomes available. Outsourcing of the Administration of AVCs Zurich, Clerical Medical, Standard Life and Guardian have now outsourced the administration of the AVCs invested with them to Scottish Widows, Lloyds Banking Group, Phoenix Group and Reassure respectively. However, if you have any questions regarding your AVCs you should still contact JLT in the first instance. Annual Benefit Statements As a reminder to deferred members of the Plan, you do not receive annual benefit statements as a matter of course. As the Cobham Pension Plan is a defined benefit (final salary) scheme, your pension is calculated based upon the period of service for which you contributed to the Plan whilst working and ceased at either the date you left the Company or when the Plan closed to future accrual. At this point you would have received a deferred pension certificate giving details of your pension entitlement. Whilst your benefit remains in the fund it is increased in deferment by set percentages dictated by the government legislation. If you wish to receive an update on your pension amount then you can request this directly from the pension administrators, JLT Benefit Solutions. Members may make one request in any 12 month period. The administrators could make a charge for any additional requests. Employer Covenant Cobham is committed to ensuring that the Plan has sufficient funds to pay the benefits promised to members. We regularly assess the In January 2018 the Trustees set up a Sub- Committee to monitor the Employer Covenant. The Sub-Committee is made up of three Trustees under the Independent Chairman and includes both an Employer Nominated Trustee and a Member Nominated Trustee. To carry out this work the Sub-Committee members signed a non-disclosure agreement and were given access to privileged Company data. This enables the Trustee Sub-committee to fully understand Cobham s longevity to support the Plan. The Trustees remain encouraged by the results of our recent assessments. The employer continues to pay significant contributions towards reducing the shortfall in the Plan while temporarily suspending dividend payments to shareholders.

9 Pension Scams Beware! This continues to be a big issue for pension schemes. Pension scams are a constant threat to To help avoid scams, keep an eye out for: If you re approached by anyone selling pension retirement savers everywhere, especially Being contacted out of the blue by phone, products, you should check everything 16 in light of new retirement flexibilities. text, or door-to-door. yourself and don t rely on what you re being 17 The Pensions Regulator is keen for people to understand how to avoid them. People claiming to be from government agencies like Pension Wise or the Financial Conduct Authority. These agencies do not sell pension products and they do not make calls out of the blue. Pushy sales people; don t be pressured into signing anything before you re ready to. Some scammers will offer to courier paperwork to you in an effort to get you to sign documents quickly. Promises of high or guaranteed interest rates, creative investments or loopholes. Overseas transfers, unless you re moving overseas and are transferring to your new country of residence. Promises of cash before age 55. Remember that the minimum age for retirement is 55, and this is set by the government. told. If you re approached by someone claiming to be a financial adviser, you can check whether they re registered with the Financial Conduct Authority at You can also check a list of known pension scams at You can find out more about pension scams at individuals/dangers-of-pension-scams If you ve been approached by an individual or organisation that you suspect may be operating a pension scam, or if you have signed anything relating to a pension transfer that you now suspect may be a scam, get in touch with Action Fraud as soon as possible on For further information about pension scams, you should visit the Pensions Regulator s website at the following address:

10 Pensions News Changes to the Lifetime Allowance Should you require any information in respect of the LTA then you should in the first instance contact your IFA or the pensions administrator, JLT at the address shown on page 21. Ban on Cold Calling 18 The Lifetime Allowance (LTA) represents the value of pension that can be built up over your lifetime before further additional tax charges The Government has carried out a consultation on draft regulations to ban pensions cold calling. The draft regulations are intended The Financial Services Compensation Scheme (FSCS) will now protect the total value of 19 are applied. It reduced from 1.25 million to to ban live, unsolicited direct marketing calls pension annuities in the event an insurer 1.0 million with effect from the 2016/17 tax relating to pensions through which people fails (previously the FSCS only awarded 90% year, and around that time the government could be encouraged to access their pensions protection). As the Trustees currently invest announced that it would be indexed in line savings in order to invest in inappropriate or some of the Plan s assets in insurance policies with the Consumer Prices Index with effect scam investments. which pay annuities to the Plan, this is a from the 2018/19 tax year. That indexing The ban is intended to cover: welcome additional layer of protection for has been applied, and in respect of the tax Offers of a free pension review, or other the Plan. year 2018/19 the LTA is million, and free financial advice or guidance. in respect of the tax year 2019/20 it will be million. Assessments of the performance of the individual s current pension funds. Inducements to hold certain investments within a pensions tax wrapper including overseas investments. Promotions of retirement income products such as drawdown and annuity products. Inducements to release pension funds early. Inducements to release funds from a pension and transfer them into a bank account. Inducements to transfer a pension fund. Introductions to a firm dealing in pensions investments. Offers to assess charges on the pension. We will keep members updated on progress in future newsletters. GDPR: General Data Protection Regulation As of 25 May 2018, the General Data Protection Regulation (GDPR) came into force. The Trustees hold personal information about Plan members which is needed to run the Plan and pay benefits. The Trustees are considered data controllers in respect of this information and have responsibilities under data protection laws, including the new GDPR, to keep it safe. The Trustees Privacy Notice sets out how personal information is processed and the arrangements put in place to protect it. The Scheme Actuary s Fair Processing Notice explains when, why and how the Scheme Actuary collects and uses your personal data in carrying out his duties as Scheme Actuary to the Plan. The Trustees GDPR Policy and Documentation are now held under Member Documents on the website com/cobham/cpp.asp The Scheme Actuary s Fair Processing Notice can be found on JLT s website at jlt-benefit-solutions-scheme-actuary If you have any questions about how your personal information is treated, please contact the Plan administrators, Jardine Lloyd Thompson. Jardine Lloyd Thompson s contact details are provided on page 21. The Financial Services Compensation Scheme (FSCS) The Pensions Advisory Service s (TPAS) move to The Pensions Ombudsman (TPO) The Pensions Advisory Service s (TPAS) dispute resolution function has moved to The Pensions Ombudsman (TPO). The move included the transfer of the TPAS dispute resolution team and volunteer network which, at the point of transfer, was over 300 advisers. The transfer was effective from 19 March Prior to the transfer, customers could approach both TPO and TPAS for help when dealing with a pension complaint. TPAS tended to focus on complaints before the pension scheme s internal dispute resolution procedure (IDRP) had been completed, while TPO typically dealt with complaints that had been through a scheme s IDRP. The transfer aims to simplify the customer journey. Customers will be able to access all pension dispute resolution, previously handled by two services, whether pre or post IDRP at TPO.

11 Cobham Pensions Website The website provides you with up to date information about the Plan, the Trustees, and useful links to independent sites where members can access additional information on pension issues. Pension Health Check Address It is very important that the Trustees have up to date and accurate address information in respect of all members so that they can keep members informed of issues that affect the Plan and to inform members about their benefits. From time to time steps are taken to attempt to trace any member for whom we no longer hold a current address and, in many cases, we are successful at tracing such members. Please consider which of the following boxes you can tick: Have I moved? Yes Have I updated the Plan with my new address? Yes No If your answer is No, please urgently advise your new address details to our pension administrators: Cobham Pensions Jardine Lloyd Thompson c/o Post Handling Centre St James s Tower 7 Charlotte Street Manchester M1 4DZ cobhampensions@jltgroup.com Expression of Wish It is important that you keep your Expression of Wish form up to date. You should complete a new form if there is any change in personal circumstances which may affect your nominations, for example, if you marry, have children or get divorced Terms of Use The website can be accessed by going to: A unique User Number is NOT required to access the above website. Remember, the site operates under certain terms and conditions that you are deemed to be accepting by using the site. Should you have any queries or problems accessing the website, please contact the Plan administrator s helpline on If you are not married or in a civil partnership and would like the spouse s pension to be paid to your partner in the event of your death, then you are required to write a letter to the Trustees making the request. The letter will be held with the Expression of Wish form, and only in the event of your death, will the Trustees consider your request. Please consider which of the following boxes you can tick: Have my circumstances changed? In all communication please include your full name, date of birth or NI number and, where you are updating your address, your old address as well as your new address. When sending this via , please ensure you password protect your personal information. Yes Have I completed a new expression of wish form? Yes No If your answer is No, please request a new expression of wish form from: Pensions Office Cobham plc Brook Road Wimborne Dorset, BH21 2BJ pensions.office@cobham.com

12 General Information Internal Disputes Procedures Any complaints relating to membership of the Plan should be addressed, in the first instance, to the Company Secretary: The Company Secretary Cobham plc, Brook Road Wimborne, Dorset BH21 2BJ Cobham would like to be able to resolve all complaints on an informal basis. However, if a complainant is still not satisfied, the formal dispute procedure can be followed, a copy of which may be obtained from the Pensions Office or alternatively found on the Cobham Pensions Website. The Pensions Advisory Service (TPAS) If you have general requests for information or guidance concerning your pension arrangements which cannot be resolved by the Plan administrators or the Trustees, The Pensions Advisory Service (TPAS) is available to assist Members and beneficiaries. Members with a query regarding membership of the Plan should always contact either the Trustees or their advisers in the first instance. TPAS can be contacted through their website or at the following address: TPAS, 11 Belgrave Road, London SW1V 1RB The Pensions Ombudsman If a complaint cannot be resolved by the Plan administrators or the Trustees, you should contact The Pensions Ombudsman. Members with a query regarding membership of the Plan should always contact either the Trustees or their advisers in the first instance. The Pensions Ombudsman can be contacted through their website or at the following address: The Pensions Ombudsman 10 South Colonnade Canary Wharf E14 4PU enquiries@pensions-ombudsman.org.uk The Pension Tracing Service The Pension Tracing Service keeps up-to-date records of all schemes, which can help Members track down pension schemes they have belonged to in the past. The Pension Tracing Service can be contacted at: Pension Tracing Service The Pension Service 9, Mail Handling Site A Wolverhampton WV98 1LU Would you like to know more? For more detailed information regarding any aspect of the Plan, please refer, in the first instance, to the Plan literature. However, if you have a particular question that you cannot find the answer to, please contact Jardine Lloyd Thompson, by telephone on or by post at: Cobham Pensions Jardine Lloyd Thompson c/o Post Handling Centre St James s Tower, 7 Charlotte Street Manchester M1 4DZ or by cobhampensions@jltgroup.com

13 Summary Funding Statement Regulations require the trustees of all pension plans which provide benefits calculated on a final salary basis to provide their members with information regarding the funding level. This is useful when considering the security of members benefits. The information in this section is based on the latest triennial valuation that was carried out as at 31 March How is my pension paid for? Both Cobham and Plan Members have paid contributions to the Plan so that pensions can be paid to Members when they retire. As there are no longer any active Members in the Plan, no member contributions are due. However the employer continues to pay contributions to fund the Plan s deficit. The money to pay for Members pensions is held in a common fund. The Trustees use specialist advice to invest the contributions to help ensure that Members receive their benefits when they fall due. The latest funding valuation The most recent funding valuation for the Plan showed that on 31 March 2018 the funding position was broadly as follows: Assets (excluding AVCs) Amount needed to provide benefits (known as the technical provisions ) Shortfall 742.8m 780.6m 37.8m Funding Level 95% The funding level at the previous annual update of the Plan, as at 31 March 2017, was 89%, representing a deficit of 90.7m. As part of the 31 March 2018 triennial valuation, in order to remove the deficit, the Employer has agreed to pay regular monthly deficit reduction contributions to the Plan of: 500k per month payable from September 2018 until February 2024 and; 31k payable in March The Trustees have a funding plan (the Statement of Funding Principles) agreed with the Employer which aims to make sure there is enough money in the Plan to pay for pensions now and in the future. The amount of money which the Employer pays into the Plan may go up or down following regular funding checks by the Actuary (known as Actuarial Valuations). Using this information, the Trustees come to an agreement with the Employer on future contributions; this is detailed in the Schedule of Contributions which is available on request. 25

14 Summary Funding Statement Payment to Cobham There has not been any payment to Cobham The full valuation as at 31 March 2018 showed that the assets could not have paid for the full benefits of all Members to be provided by an insurance company if the Plan had wound up at that date. The estimated shortfall in funds needed to ensure that all Members benefits could be paid in full if the Plan had started winding up at 31 March 2018 was 329.0m. The Employer would therefore be required to pay this into the Plan to enable the Members benefits to be completely secured with an insurance company. It may be, however, that the Employer would not be able to pay this full amount. If the Employer became insolvent, the Pension Protection Fund might be able to take over the Plan and pay compensation to Members. Further information and guidance is available on the PPF website at Or members can write to the Pension Protection Fund at: Pension Protection Fund Renaissance 12 Dingwall Road Croydon Surrey CR0 2NA Why does the funding plan not call for full solvency at all times? 26 out of Plan funds in the previous twelve months. status over the year, the Trustees commissioned The full solvency position assumes that 27 an independent assessment of the Company s benefits will be secured by buying insurance What would happen if the Plan financial status, and set up a specific Subpolicies. Insurers are obliged to take a very started to wind up? Committee to monitor the Employer Covenant. cautious view of the future and need to make a Please be reassured that it is a legal requirement The Trustees, based on the independent profit. The cost of securing pensions in this way to provide this information and it does not assessment and other work carried out by the also incorporates the future expenses involved imply that the Employer has any intention Sub-Committee, are pleased to report that in their in administration. By contrast, Cobham s to wind up the Plan. opinion the Company is in a good position to funding plan assumes that the Group will continue to support the Plan. continue in business and support the Plan. The importance of Cobham s support The Trustees objective is to have enough money in the Plan to pay pensions now and in the future. However, the success of the Plan relies on Cobham continuing to support the Plan because: with effect from 1 January 2016 Cobham agreed to separately settle any expenses of running the Plan and this is in addition to the Employer contributions to fund the Plan deficit; the funding level can fluctuate, and when there is a funding shortfall, Cobham will usually need to put in more money; the target funding level may turn out not to be enough, such that Cobham will need to put in more money. As well as receiving regular information from the Company regarding the Company s financial Where can I get more information? If Members have any questions, or would like more information including a copy of the Plan booklet, Actuarial Valuation, Schedule of Contributions, Statement of Investment Principles, Statement of Funding Principles, Recovery Plan or Annual Report & Accounts please contact: Director of Pensions Cobham plc Brook Road Wimborne Dorset BH21 2BJ pensions.office@cobham.com

15 Pensions Helpline: November 2018