Popular Report Incapacity pensions. Welcome. Financial overview. Transfer values. Pensions Board. Online help with AVCs

Transcription

1 Popular Report 2008

2 to the popular version of the 2008 Annual Report and Accounts. We hope that you will find the information both helpful and interesting. In addition to the financial information, we include an explanation about the new regulations on transfer values and the reason this has delayed your benefit statement this year. We also provide some useful information about our AVC providers' websites and how these can help you, plus news of a check on incapacity pensions. If you wish to review the report online, you will be able to access it at: The full report consists of some 30 A4 pages, but if you would like to see a printed copy, please contact the Pension Department at the address below: The Pension Department Griffin House Osborne Road Luton LU1 3YT Or team@thepensiondepartment.co.uk

3 New Government regulations move responsibility for the calculation of transfer values from the actuary to the Trustee. Unfortunately, although the regulations became effective on 1 October 2008, guidance was not published by the Regulator until 29 September. The Trustee immediately started to review the method and assumptions used, based on advice from the actuary. Unfortunately, as the calculation of transfer values is now plan specific, each pension plan requires its own calculations and these calculations turned out to be extremely complicated. Consequently it was not possible to simply amend the current method of calculation; instead, a fundamental reprogramming of the pension system was required. As a result, there has unfortunately been a delay in the provision of transfer values and this is also one of the reasons for the delay in the provision of the annual benefit statement, for which we apologise.

4 Online help with your AVCs Many members have chosen to pay Additional Voluntary Contributions (AVCs) to increase their benefits under the Plan and both our AVC providers now have useful websites. A Key Features document, among many other useful tools and calculators, can be found on the Prudential's 'Retirement Zone' at: Using the 'Your Plan' link, you will be asked to sign in with your username and password. Your username will consist of your Plan code 'A005' and your National Insurance number. Your password will be your National Insurance number. These will be case sensitive. For example, A005AB123456C would be a username and AB123456C would be a password. Fidelity has a number of decision making tools to help members plan for retirement. Members can go to the 'Planning for Retirement' area of the Fidelity Pensions website at: Alternatively, you can find the tools via the 'Knowledge Point' tab within PlanViewer at: and click on the link to 'Tools & Learning'. For help with your username and PIN, please contact Fidelity's Pensions Service Centre via at pensions.service@fil.com.

5 Check on incapacity pensions The most obvious benefit of being a Plan member is a pension at retirement. However, one of the most appreciated Plan benefits is an immediate pension when a member is unfortunately no longer capable of earning a living for themselves and for their families. Over the years, many members have had cause to be grateful for this benefit. It is important to remember, though, that the Trust Deed says that an incapacity pension will cease to be payable if the member is no longer able to meet the definition of incapacity. This is why the Trustee chose to review the pension of each of the members receiving a pension due to incapacity during the year. We are pleased to report that, thankfully, there were no cases where action needed to be taken.

6 - fund value 000 Fund value 1 January ,034 Net additions from dealing with members 208 Net returns on investments (7,867) Management expenses (355) Fund value 31 December ,020

7 - investment Equities Investments in shares of companies listed on the major stock exchanges of countries in Europe, Asia and America, and in some developing economies in Europe, Asia and South America. UK equities 30% International equities 42% Emerging market equities 3% UK index-linked bonds 3% UK fixed interest bonds 5% International hedged fixed interest bonds 5% Property 12% Property A combination of UK investment properties including offices, shops and industrial units. The objective is to achieve income and capital returns. Bonds These are investments in loans issued by governments and companies around the world. Hedging is a process that removes the movements of foreign currencies when compared to Sterling. This reduces the volatility of overseas investments and ensures that the Plan receives the local market return.

8 - membership numbers Total Plan membership increased by nine to 430 members during the year. Deferred members fell by one, while pensioners and active members each increased by five. as at 31 December Pensioners Deferred members Active members Total

9 - income & expenditure Income 000 Company contributions normal 521 Company contributions special 86 Employee contributions 226 AVC contributions 25 Other (PPF Levy) 262 Total 1,120 Expenditure 000 Pensions (627) Lump sum commuted pension (217) Death benefits (8) Payments to and on account of leavers (60) Administration expenses (355) Total (1,267)

10 - investment performance After five years of gains based on excessive consumer borrowing, markets began to fall in 2007 and this fall accelerated in The markets initially fell slowly, but then fell sharply in the second half as the credit crunch really took hold with the bankruptcy of Lehman Brothers in the US. Banks had lent huge sums of money to borrowers who had little chance of repaying their debts. The reserves on the balance sheets of the banks were massively overstated and this overvaluation had to be corrected. Confidence in the global financial system evaporated and governments moved to recapitalise the problem banks, while at the same time putting huge amounts of cash into the global economy. The loss of confidence globally caused a sharp recession, large declines in asset values and a loss of consumer confidence. Unemployment has risen and businesses have cut back on production. The authorities responded by cutting interest rates aggressively to encourage consumption and took other actions to limit the size and duration of the recession. These actions had worked to such an extent that, by the end of the second quarter of 2009, most economies were emerging from their recessions. Unlike previous falling markets, there was no place for investors to hide. Major equity markets lost anywhere from a third to two thirds of their value; financial sectors declined by more than 50%, while materials and industrials both lost more than 40%. Health care and utilities lost the least. Despite the credit market disruptions, the broader bond markets delivered positive total returns on the back of sharp rallies in government bonds. Total rates of return for Total rates of return for periods ended 31/12/2008 periods ended 31/12/2007 (annualised) (annualised) 1 year % 3 years % 5 years % 1 year % 3 years % 5 years % Plan returns (29.1) (5.5) Benchmark (27.3) (4.8) Out/(under) performance (1.8) (0.7) (0.5) (0.1) 0.2 (0.3)

11 Employee Representatives Ian Neale (appointed 16 September 2008) Bill Ryan (Chairman) Susan Surman (resigned 29 August 2008) Company Representatives Eileen Barnes Helen Hewson (Vice Chairman) Sonia James

12 Contact us The Pension Department Griffin House Osborne Road Luton LU1 3YT Designed and produced by Wordshop, Sherborne, Dorset.