Your Pension. Your Future. PENSION. In this issue...

Transcription

1 PENSION JANUARY 2017 For members of the Defined Benefit Section of the Prudential Staff Pension Scheme Your Pension. Your Future. In this issue Chairman s introduction Meet the DB Section Administration Committee Will Brexit affect my pension? 2016 Annual Report & Financial Statements Current issues Here to help

2 2 Welcome to this year s edition of Pension Overview the magazine for the Prudential Staff Pension Scheme (the Scheme). This year we have produced two magazines - one for the members of the Defined Benefit (DB) Section and the second for members of the Defined Contribution (DC) Section. This allows us to focus on providing you with information that is relevant to you. There will continue to be the usual mix of Scheme specific and more general pensions news, which we hope you will find both interesting and informative. First, let us hear from the Chairman. It gives me great pleasure to welcome you to our 2016 edition of Pension Overview. Inside you will find articles on matters that can affect your pension within the Scheme and the latest financial updates. You should have also received, in October 2016, a more detailed update on the financial health of the DB Section of the Scheme. This is a statutory requirement for defined benefits schemes. A copy of this update is also available on the Scheme website Overall, the assets of the Scheme decreased in value by 74m during the Scheme year ended 5 April The DB Section assets decreased by 106.2m, as benefit payments were greater than the net return on investments and contributions to the Scheme. The DC Section s assets increased by 32m. The assets of the DB Section of the Scheme slightly underperformed their benchmark over the 12 months to 5 April After allowing for income, capital gains and movements in market values, the return on the DB Section s assets for the 12 months to 5 April 2016 was 2.6% which was 0.3% below the benchmark. The total membership for the DB Section of the Scheme as at 5 April 2016 was 36,589 members. During the year there were some changes to the Trustee Board. William Rutherford (Director, Prudential Capital plc) was appointed on the 12 April 2016 by the Employee membership. William replaced Lynda Martin who resigned in September John Paino was appointed on 17 July 2016 by the Pensioner membership, replacing Bernard Dawkins. It is always good to know a little about the people who are responsible for the management of the Scheme. To that end we have commissioned a series of 60 second interviews with Trustee Directors - starting with William and John, our newest Trustee Directors. John s interview can be found on page 5 and both interviews are on the Scheme website Bernard Dawkins, whose term of office ceased on 16 July 2016, served as a Trustee Director for eight years and I would like to thank him for his valuable contribution to the Trustee Board. Our Trustee Board is made up of talented individuals who, whilst sharing a collective commitment to the Scheme, also bring a wide range of differing skills, which assist greatly in the effective running of the affairs of the Scheme. As usual, the last year has been a busy one for all of us involved in the administration and management of the Scheme. I would like to extend my thanks to the Pensions Management Team, all our advisers and my fellow Trustee Directors for their continued hard work and support throughout the year. Michael Abrahams CBE DL Chairman of the Trustee of the Prudential Staff Pension Scheme The Trustee Board The Trustee Board of Prudential Staff Pensions Limited is made up of ten Trustee Directors, six of whom are appointed by the Company and four who are elected by the members. The current Board members are: Michael Abrahams CBE DL Chairman David Green David Higgins David Martin John Paino Member Nominated Director Karen Robinson William Rutherford Member Nominated Director Andrew Swan Neville Swift Member Nominated Director Deborah Webb Member Nominated Director Trustee advisers The Trustee has appointed a number of professional advisers to assist with the running of the Scheme. A full list is available in the Scheme s Annual Report & Accounts, but a number of them are listed below: Role Actuarial advisers DB Section Administrator Auditor Communications advisers Legal advisers Provider Willis Towers Watson Limited Aon Hewitt Limited KPMG LLP Concert Consulting (UK) Limited Mayer Brown International LLP DB Investment consultants Willis Towers Watson Limited Pension Overview January 2017 Prudential Staff Pension Scheme

3 Meet the DB Section Administration Committee The Trustee has delegated some of the day-to-day responsibilities for managing the Scheme to various Committees made up of smaller groups of Trustee Directors. Each Committee has terms of reference which detail its responsibilities. All Committees report back to the Trustee Board with updates of their meeting and suggestions and recommendations. The role of the DB Section Administration Committee is to oversee administration and ensure that members receive the correct level of benefits at the correct time. The DB Section Administration Committee is made up of the following Trustee Directors: Deborah Webb Member Nominated Director (Chairwoman of the DB Administration Committee) John Paino Member Nominated Director Karen Robinson Neville Swift Member Nominated Director Will Brexit affect my pension? Following the announcement that the UK will leave the EU, many pension scheme members will be asking themselves How does this affect my pension? It is probably too early to predict with any certainty what impact this will have. In the short term, we are entering a period of uncertainty both politically and economically whilst Britain prepares to withdraw from the EU. There have already been very significant movements in financial markets since the outcome of the EU referendum was announced. Significant portions of the Scheme s assets are invested currently in matching assets. The aim of this investment approach is to reduce the Scheme s exposure to interest rate and inflation risk. As a result, the Scheme s funding level has remained broadly stable in recent months, despite the large movement in investment markets. Nevertheless, the Trustee recognises that there continues to be uncertainty about the future both in terms of the economic and regulatory impact. Therefore, the Trustee, in conjunction with its actuarial and investment advisers, is continuing to carefully monitor the situation. 3

4 5 April 2016 Annual Report & Financial Statements Each year the Trustee produces the Scheme s Annual Report & Financial Statements. This document includes a report on the DB Section actuarial liabilities and investment risk disclosures. It also now includes a Chairman s Statement on Governance in relation to DC Section funds. A summary of the financial highlights and membership for the 12 months to 5 April 2016 is shown below. You can view the full Report & Financial Statements in the Documents section of the website FINANCIAL HIGHLIGHTS DB Section DC Section Net assets at 6 April ,167.0m) 219.7m) Contributions received (including Company contributions and additional member contributions) 11.5m) 41.1m) Transferred-in -)) 2.8m) Other income (including insurance policy income) -)) 1.6m) Benefits and payments payable (including pensions, related benefits and administration expenses) ( 284.0m) ( 10.7m) Net return on investments 166.5m) ( 3.0m) Net assets at 5 April ,061.0m) 251.5m) MEMBERSHIP The membership of the DB Section of the Prudential Staff Pension Scheme at 5 April 2016 comprised of: Employee members 750 Members with deferred benefits 16,320 Pensioners and beneficiaries 19,519 4 INVESTMENTS The investment policy for the DB Section of the Scheme is determined by the Trustee in consultation with the Principal Employer and Willis Towers Watson Limited, the appointed investment consultant. The investment objective set by the Trustee is to achieve a target level of investment return whilst minimising the amount of risk taken. In doing this, the nature and duration of the Scheme s liabilities are taken into account. The current DB Section asset allocation benchmark at 5 April 2016 is set out in the table below: Asset Class UK Equities 2.9% Companies Financing Fund 0.4% Global REITs 1.0% Illiquid Credit 1.0% Distressed Debt Credit 1.0% Multi-Strategy Credit 5.7% Secure Income Property 1.0% Liability Matching Assets* 87.0% Total 100.0% *Liability Matching Assets consist of Fixed Interest and Index- Linked Gilts, Corporate Bonds, Cash and Swaps. Allowing for income, capital gains and movements in market values, the return on the Scheme s DB Section assets for the 12 months to 5 April 2016 was 2.6% which was 0.3% below the benchmark return. For the year ended 5 April 2016, aggregate returns were driven mainly by the positive performance of the matching asset portfolio as bond yields fell over the period. The main detractors to performance were the performance of the equity mandates and some of the multi-strategy investments. The absolute returns achieved over longer periods, together with the Scheme s benchmark returns, are shown below: Period to 5 April year 3 years 5 years DB Section return (% p.a.) Benchmark return (% p.a.) Details of all the investment managers are shown in the Investment report section of the full Report & Financial Statements available on our website Pension Overview January 2017 Prudential Staff Pension Scheme

5 Current issues 2016 MND results The Trustee recently carried out two exercises to seek nominations to fill two Member Nominated Director (MND) positions - one from the Pensioner membership and one from the Employee membership. We received multiple nominations for both vacancies and therefore ballots were held to choose the successful candidates. PENSIONER MEMBERSHIP RESULT The Trustee Board would like to congratulate John Paino on his election. He received approximately 41% of the votes. The other candidates who stood were Gary Hood and Roger Seingier who we would like to thank for offering their services. EMPLOYEE MEMBERSHIP RESULT More congratulations, this time to William Rutherford who has been elected, having received approximately 68% of the Employee member votes. The other candidate was Stefan Orban and again we would like to thank him for standing. 60 Second interview with John Paino Our Communications consultant recently caught up with John Paino (JP), the newly elected Pensioner Nominated Director, to talk to him about his career with the Prudential and how he fills his time now that he s retired. John, congratulations on your appointment as Trustee Director. How have you found the first few weeks in the role? JP: So far very enjoyable, I have an operational HR background and some pensions knowledge, having worked with the Scheme over the last few years, but being a Scheme Trustee requires a vast amount of knowledge and I am certainly at the start of a steep learning curve. Great to hear you are settling into the role. Before you retired you worked for Prudential for around 36 years, I am sure a lot of the members already know you, however for the benefit of those that don t, can you tell us a little about your Prudential career? JP: Of course. My background is in operational management with a focus on business transformation. I managed the transition of services from the UK to Belfast and the creation of our Indian offshore operations in I was also a member of the Board of PPMS prior to my retirement. My involvement with HR started in I was asked to help stabilise the operational aspects of Prudential s HR functions. This was sold to me as a six-week assignment, however once the transformation was complete I was asked to remain within HR to oversee delivery. That is where I then stayed until the last year of my career when I had a commercial role overseeing Prudential UK s property and procurement portfolios. Sounds like you had a fulfilling and varied career. Now you are retired what are your interests? JP: I have always enjoyed sport; football and boxing especially, however in recent year s horseracing and golf are major hobbies of mine. Horseracing is this as a spectator or are you more involved, for example in ownership? JP: Very much as a spectator and a contributor to the bookies holiday fund. My other passion is travel. I have always had my annual golf and sailing trips, however retirement has allowed me to plan to see the world. This year we went to India and we also plan to visit South East Asia and South Africa. You really are travelling the world! I understand you are involved in a London charity, can you tell us a little more about that? JP: Through the Pilotlight programme, I became involved with the Castlehaven Community Association. Castlehaven is a charity focused on the needs of disadvantaged people in the Camden area of London. I am a Trustee, sitting on two of their Committees, one focused on HR issues and the other on business development. I feel very lucky having spent the majority of my working career at Prudential; working with Castlehaven has given me the chance to really understand what life is like for those who are less advantaged. John, thank you for finding the time to talk to us, I look forward to catching up with you again. 5

6 Pension information at your fingertips Do you know you can access your pension information in an instant? The Scheme s website has been designed to give you clear, concise information that is readily available. From the website you can, at the click of a button, access the secure member area where you can: Review your personal details Raise a request with the dedicated Administration Team Get in touch In addition If you are a Pensioner member, you can also: y View details of your current pension in payment; y View your payslips; y View your P60; and y Find out how future increases are applied. If you are an Employee member, you can also: y View and print historic Annual Benefit Statements....And remember the site is easy to access and available to you 24 hours a day, 7 days a week! When is an app not an app? 6 WHEN IT S A WEBSITE! Your smartphone or tablet s home screen is not just for apps. Whatever platform you are using, you can pin your favourite websites to your home screen so you can quickly access them. Why not put the Scheme website on your home screen? If you have an iphone follow these simple steps (similar principles may apply for use on other smartphones): Step 1 Open up the browser app on your device. Step 2 Input www. prudentialstaffps.co.uk. Step 3 Tap on the Share icon at the bottom. This looks like a square with an arrow pointing upwards. Step 4 Select the Add to Home Screen icon. Step 5 Tap on the word Add in the upper right hand corner. Pension Overview January 2017 Prudential Staff Pension Scheme

7 Single-tier flat-rate State Pension and how to get a forecast The State Pension system changed from 6 April 2016, when a new single-tier flat-rate State Pension was introduced. If you reached State Pension Age before 6 April 2016, you are unaffected by this change. However, if you were born after 5 April 1951 (for men) or 5 April 1953 (if you are a woman) the amount of State Pension you receive will be based on the new system. If you want to find out more please visit 6 APRIL 2016 If you are aged 50 or over and are entitled to the new State Pension, you can get an estimate of how much you might get under the new rules. To find out how to apply for a State Pension Statement visit or call the Future Pension Centre on , or +44(0) if you are outside the UK. Tax codes for pensions in payment The DB Section Administrator receives electronic notification from HM Revenue and Customs (HMRC) of changes to pensioners tax codes. HMRC are likely to write to Pensioner members in January and February each year to advise members of the tax code that is to apply from the following 6 April. The DB Section Administrator will apply this code with effect from your May pension payment. This is because the April payment is paid before 6 April. If you have a query regarding your tax code, you must contact HMRC directly as they will not discuss or divulge details regarding a member s tax code with the DB Section Administrator or the Trustee. Your P60 The Tax Office dealing with your Scheme pension is: HM Revenue & Customs Pay As You Earn PO Box 1970 Liverpool L75 1WX Telephone You will need to quote the Scheme s reference 083/AP2 and your National Insurance number. If HMRC advises a change in a pensioner s tax code after the monthly pension payroll has been run, the code will not be applied until the following month. We would like to remind pensioners that your April payslip will again be your P60. This document is proof of the amount of tax you have paid on your pension and therefore it is important that you retain a copy for your records. Protecting your loved ones If the worst happens, it s good to know that those close to you are protected. The Scheme provides benefits to your Spouse, Civil Partner and/or Dependant(s) in certain circumstances, if you were to die before them. Some of these benefits may be payable as a lump sum at the discretion of the Trustee and do not normally form part of your estate for Inheritance Tax purposes. 7 It is important that you complete an Expression of Wish Form and make sure it is updated whenever your circumstances change. The Form can be downloaded from the Documents section of our website The Form, once received, lets us know who you would prefer to receive any benefits. The Trustee will also use other sources of information as part of its investigations and is not legally bound to follow your instructions. However, where no legal documents (such as a Will) exist, it can be the only source of information available to the Trustee. In the event of there not being a completed Expression of Wish Form, the Trustee has to act without your guidance when exercising its discretion. It is therefore important that you complete a Form and keep it up to date. Lump sum death benefits are payable should an Employee member die in service or a Pensioner member dies within 5 years of retiring.

8 A message from the Pensions Manager As a Pensioner member, staying in touch and letting us know when your address or bank details change is very important. Without these details you may not receive the valuable benefits to which you are entitled, or you may experience a delay in payment. There are two ways you can advise us of changes to your personal details: 1. Contact the Scheme s dedicated Administration Team you can find current details below or you can visit and click on Contact then Administrators for the most up-to-date telephone number, and postal address. Marion Steel is the Pensions Manager for the Prudential Staff Pension Scheme. She is responsible for the day-to-day management of the Scheme, supporting the Trustee in ensuring that the Scheme operates effectively, as well as considering how the Scheme s operations should evolve over time. Outside of work, Marion enjoys music, cooking, cycling, and spending time with family and friends. 2. Access the secure members area through the Scheme s website where you can view your current details and make some changes online. 8 BE PREPARED When you call the Scheme s dedicated Administration Team their first priority is to protect your personal data. So, for your own security you will always be asked for: y Your full name (including any middle names); y Your date of birth or full address; y Your member reference or one of the following: The date you joined or left the Scheme (Year/Month) The date you joined or left the Company (Year/Month) The date your pension commenced (Year/Month - Pensioner members only) The amount of your last pension payment (to the nearest pound - Pensioner members only) Here to help If you have any questions about any of the topics discussed in this edition of Pension Overview, or the Scheme in general, please visit the Scheme s website. If you have a question that is personal to you and can t be answered by the website, help is available Monday to Friday (9am to 5pm) from your dedicated Administration Team. Write to: The Prudential Staff Pension Scheme Defined Benefit Section PO Box 196 Huddersfield HD8 1EG Helpline: (UK callers) (44) (Overseas callers) Pensions Manager If you have any questions which cannot be answered by your dedicated Administration Team, or you have any other comments, you can contact the Pensions Manager, Marion Steel. Prudential Staff Pension Scheme 3 Sheldon Square Paddington London W2 6PR hrstaffpensions@prudential.co.uk PSPSDB@aonhewitt.com SmartPhone users can scan here for a direct link to the website using an appropriate QR reader app. Published by The Trustee of the Prudential Staff Pension Scheme, Laurence Pountney Hill, London EC4R 0HH. Designed and produced by Concert Consulting UK Ltd Pension Overview January 2017 Prudential Staff Pension Scheme