2013 NEXT GROUP PENSION PLAN

Size: px

Start display at page:

Download "2013 NEXT GROUP PENSION PLAN"

Merryl Stone
6 years ago
Views:

1 2013 NEXT GROUP PENSION PLAN SUMMARY OF THE ANNUAL REPORT AND ACCOUNTS FOR THE PERIOD 9 OCTOBER 2013 TO 30 SEPTEMBER 2014 ISSUED BY NEXT PENSION TRUSTEES LIMITED DESFORD ROAD ENDERBY LEICESTER LE19 4AT MARCH 2015

2 TRUSTEE'S REPORT This report is issued by the Trustee to keep you informed of the affairs of the 2013 Next Group Pension Plan (the "Next 2013 Plan"). It includes information contained in the full annual report of the Trustee, a copy of which may be obtained from the Group Pensions Manager whose address is given at the end of this report. It also includes the Summary Funding Statement of the Next 2013 Plan which provides an update on the financial health of the Plan. The Next 2013 Plan has three sections, the Defined Benefit section, the Defined Contribution (or Money Purchase ) section and the Money Purchase Top-up section. Members who joined the former Next Group Pension Plan* on or before 1 October 2000 are in the Defined Benefit section. Active members of the Defined Benefit section also have the opportunity to contribute into the Money Purchase Top-up section. Members joining from 1 October 2000 are in the Money Purchase section. Helen Coley and John Huckerby are Member Nominated Directors (MNDs) and were re-appointed to that role in An MND can be removed from office only by agreement of all the other Directors but will automatically cease to hold office if they cease to be employed by the Next Group of companies for reasons other than immediate retirement under the Next 2013 Plan or, in the case of all MNDs, they become employed by a company which Next Plc (the "Company") regards as a competitor. The Company can remove the other Directors at any time. The current term of office for each Director ends in: Ian Richards: February 2017 Paul Cassidy: April 2016 Adrian Trotter, Helen Coley, Andrew Jones and John Huckerby: June 2018 MEMBERSHIP On 9 October 2013 all active members of the Next Group Pension Plan, along with some deferred and pensioner members, transferred to the Next 2013 Plan. A summary of membership of the Next 2013 Plan at the period end is given below: DEFINED BENEFIT SECTION 30 September 2014 Active Members 1,115 Deferred Pensioners 2,822 Undecided Members** 15 Members with pensions in payment ,256 MONEY PURCHASE SECTION Active Members 2,834 Deferred Pensioners 108 Undecided Members** , TOTAL 7,298 ===== *All Defined Benefit section members originally joined the Next Group Pension Plan (the Next Plan ) and transferred to the 2013 Next Group Pension Plan as mentioned under membership above. **Undecided members include those former active members who have left entitled to a refund of contributions or a transfer to another pension arrangement but have yet to indicate their choice. 1

3 INVESTMENTS The Trustee holds the investments of the Next 2013 Plan in trust, keeping them quite separate from the finances of the Company. As at 30 September 2014, the Next 2013 Plan was invested in the following proportions: ASSET ALLOCATION 30 September 2014 UK Equities 31.0% Overseas Equities 27.9% Property Funds 4.1% AVC Investments 0.1% Managed Fund 10.5% Managed Fund Index Linked Gilts 6.5% Managed Fund Index Linked Corporate Bonds Managed Fund Equity Linked Bonds Cash Total 12.9% 6.5% 0.5% % ====== The Managed Fund proportion represents the Money Purchase and Money Purchase Top-up sections of the Next 2013 Plan. All other asset classes (excluding Cash) relate to the Defined Benefit section. During the period to 30 September 2014 the return on the assets (against their benchmark) was as follows: Investment Manager Annual Benchmark Benchmark Return Return BlackRock active UK equity (Focus +7.9% +6.1% FTSE All-share fund) BlackRock active UK equity (FTSE +2.3% +6.1% FTSE All-share +4% fund) Legal & General passive UK equity +6.1% +6.1% FTSE All-share Investec active global equity +17.9% +11.2% MSCI AC World Unigestion active global equity +15.1% +11.2% MSCI AC World Standard Life UK Property +11.6% +7.8% Gilts All Stocks +2% F&C UK equity-linked bonds +12.9% +13.7% Composite benchmark F&C Overseas equity-linked bonds +22.0% +22.9% Composite benchmark Legal & General passive corporate bonds +11.1% +11.1% iboxx Non-Gilts Over 15 Years Legal & General passive index-linked gilts +12.9% +12.9% FTSE A Index Linked Over 15 Years BlackRock cash +0.5% +0.4% 3-month LIBOR 2

4 ACCOUNTS SUMMARY An independent auditor carries out an audit each year and a summary of the audited accounts for the period from 9 October 2013 to 30 September 2014 is set out below. 2013/14 m FUND AT 9 OCTOBER ASSETS TRANSFERRED FROM THE NEXT GROUP PENSION PLAN INCOME Contributions 18.7 Investment income 4.6 Change in market value of investments 58.2 COST OF BENEFITS Pension benefits and lump sums payable (3.5) Transfers to and from other schemes (1.0) EXPENSES Administration expenses and professional fees* (3.2) FUND AT 30 SEPTEMBER ==== DEFINED BENEFIT SECTION MONEY PURCHASE TOP-UP SECTION 6.9 MONEY PURCHASE SECTION ==== * The administration and professional fees include Investment Management fees of 1,989,000 and an accrual for Pension Protection Fund levies of 250,000. FUNDING THE DEFINED BENEFIT SECTION The Defined Benefit section is a funded pension arrangement in which assets are accumulated and invested in order to provide income to finance the benefits that are being paid, and will be paid in the future to members and their dependants. The benefits payable are specified in the rules of the Next 2013 Plan. The actuary carries out periodic valuations of the Next 2013 Plan to assess the funding of the Defined Benefit section. The last formal valuation of the Next 2013 Plan was carried out as at 31 October The Summary Funding Statement included within this report sets out the results of this valuation along with the results of the latest annual funding update carried out as at 30 September The Pension Protection Fund (PPF), which came into operation on 6 April 2005, was established to pay compensation to members of eligible defined benefit pension schemes in the event of a qualifying insolvency in relation to their employer and there being insufficient assets in the pension scheme to cover the benefits protected by the PPF. Each year defined benefit schemes are required to pay levies to the PPF. The levies accrued by the Next 2013 Plan in the period to 30 September 2014 (in respect of the year 2013/14) amounted to 250,000. The PPF does not extend to money purchase benefits as these should be unaffected by any funding deficiency in the Defined Benefit section. 3

5 INCREASES TO DEFINED BENEFIT PENSIONS IN PAYMENT Pensions that are currently being paid consist of various parts, each part receiving different levels of increases in payment: 1. the Guaranteed Minimum Pension (GMP) 1 earned before 6 April 1988, 2. the GMP earned between 6 April 1988 and 5 April 1997, 3. the pension in excess of any GMP earned before 6 April 1997, 4. the pension earned between 6 April 1997 and 5 April 2005, and 5. the pension earned since 6 April Pensions in payment are reviewed annually. The Government currently increases item 1 above in line with the Consumer Prices Index (CPI) by adding to the State Pension in April each year. Under the contracting-out requirements, the Trustee must increase item 2 by CPI up to a maximum of 3% in any year (if CPI is above 3% then the Government currently pays the excess by adding to the State Pension). The Trustee also guarantees to increase item 4 by RPI up to a maximum of 5% in any year and item 5 by RPI up to a maximum of 2.5% in any year. Item 3 does not have any guarantee. The Trustee may also provide discretionary increases to any element of pension. The annual inflation index which determines the guaranteed increases referred to above is measured to September each year. The RPI over the year to September 2013 was 3.2% and CPI was 2.7%. The increases applied with effect from 1 December 2013 were: 3.0% on item 2 above, 2.5% on items 3 and 5 and 3.2% on item 4. Pensioners receive individual notification of the amount of their total pension following the annual review. Some pensioners have other guarantees as a result of membership of schemes which were previously merged with the Next Group Pension Plan, prior to transfer to the Next 2013 Plan, between 1990 and 1994 and these are reflected in their individual notifications. MANAGEMENT OF THE NEXT 2013 PLAN The Directors of the Trustee met formally at least once during each quarter to receive a report from all the investment managers, review the management accounts and discuss Next 2013 Plan business generally. In addition, further meetings of the Trustee were held to examine specific issues. The Trustee determines the investment policy for the Defined Benefit section after consulting with its investment advisors and Next Group Plc. The Trustee delegates the day to day management of the investments of the Defined Benefit section to its investment managers. During the year the Trustee reviewed its auditors. After interviewing several candidates, they decided to appoint KPMG LLP to replace Deloitte LLP. Deloitte LLP indicated that there were no issues adversely affecting the interests of members, when offering their formal resignation. 1 The GMP is the minimum pension which the Next 2013 Plan must provide for pensionable service between 6 April 1978 and 5 April 1997 from age 60 in the case of a woman and age 65 in the case of a man, and as a result of Next 2013 Plan members being contracted-out of the State Earnings Related Pension Scheme whilst they were members of the former Next Group Pension Plan. It is broadly equal to the pension which would have been earned in that scheme over that period had members not been contracted-out. 4

6 2013 NEXT GROUP PENSION PLAN SUMMARY FUNDING STATEMENT Legislation concerning the funding of Defined Benefit pension arrangements was introduced by the Government in 2006; this included a requirement to give all members and beneficiaries information about the funding of their scheme. How the Next 2013 Plan Defined Benefit section operates The Next 2013 Plan, like most Defined Benefit schemes, operates with a single common fund for investments into which all contributions (employer and employee) are paid and from which all benefits are payable. The Trustee obtains an actuarial valuation of the Next 2013 Plan at least once every three years from an independent actuary. The valuation has two main purposes: 1. To compare the value of the benefits already earned by members in the Defined Benefit section of the Next 2013 Plan with the assets built up from contributions and past investment returns. 2. To determine the level of contributions required to meet future benefit payments. The most recent formal funding valuation of the Next 2013 Plan was as at 31 October 2013 and the results were as follows. Assets 505.5m Amount needed to provide benefits 463.9m Surplus/(Deficit) 41.6m Funding level 109% As the Next 2013 Plan was in surplus at the valuation date no contributions are needed to make up any shortfall in assets compared to the liabilities. Following the valuation the Trustee and the Company agreed that the Company would continue to pay regular contributions of 17.5% of active members basic salary frozen as at 31 October An approximate review of the financial position of the Next 2013 Plan was carried out as at 30 September 2014 when it was estimated that the funding of the Next 2013 Plan had fallen to around 99% as follows: Assets 541.0m Amount needed to provide benefits 546.4m Surplus/(Deficit) ( 5.4 m) Funding level 99% This fall in the funding level from 109% as at 31 October 2013 is principally due to a fall in yields available on Government bonds relative to inflation resulting in a significant increase in the value placed on the liabilities. Investment returns on assets have been lower than the increase in liabilities therefore the overall impact is a reduction in the funding level. The funding level is calculated on an on-going basis, making reasonable assumptions on asset returns. 5

7 The importance of the employers support The Trustees objective is to have enough money in the Next 2013 Plan to pay pensions now and in the future. Success against this objective relies on the employers ( the Company ) continuing to support the Next 2013 Plan because: The funding level can fluctuate, and when there is a funding shortfall, the Company will usually need to put in more money The actual progress of the Next 2013 Plan may be different from the projected progress: for example, investment returns may be lower or higher than projected in a particular period. What would happen if the Next 2013 Plan started to wind up? The legislation requires that you are given an indication of the Next 2013 Plan s financial position if it were to wind up for any reason. In such circumstances the participating employers in the Next 2013 Plan would be required to make payment into the Next 2013 Plan with a view to enabling the defined benefit pensions earned by members to be secured by purchasing annuities from an insurance company. This would probably be more expensive than the value of the defined benefit pensions earned calculated in the actuarial valuation. As at 31 October 2013, the assets of the Next 2013 Plan were estimated to be sufficient to provide 64% of its liabilities by the purchase of annuities and deferred annuities. If the employers were to become insolvent then they might not have sufficient funds available to make up the assets to the full cost of securing the defined benefit pensions with an insurance company. In such circumstances the Trustee may approach the Pension Protection Fund with a view to it taking over the Next 2013 Plan and pay compensation to members to make up part of the shortfall in benefits. On a winding up of the Next 2013 Plan the Money Purchase Top-up fund and AVC benefits in respect of defined benefit members are treated separately from the defined benefit pensions and so, apart from any deduction for expenses, they should be provided in full. The Trustee is required by law to provide you with this information on the Next 2013 Plan s solvency position. It does not imply that there is any current intention, on the part of either the Company or the Trustee, to wind up the Next 2013 Plan. Further information If you would like further information about the Next 2013 Plan, or would like a copy of the report on the Next 2013 Plan s latest actuarial valuation, please write to the Group Pensions Manager at the address at the end of this report. Important: If you are thinking of leaving the Next 2013 Plan for any reason, you should consult a professional advisor, such as an independent financial advisor, before taking any action. Additional documents available on request The Statement of Investment Principles. This explains how the Trustee invests the money paid into the Next 2013 Plan. The Schedule of Contributions. This shows how much money is being paid into the Next 2013 Plan. The Annual Report and Accounts of the 2013 Next Group Pension Plan, which shows the Next 2013 Plan s income and expenditure in the period up to 30 September An Annual Benefit Statement If you are not drawing a pension from the Next 2013 Plan (and have not received a benefit statement in the previous 12 months) you can ask for a statement that provides an illustration of your likely pension. The 2013 Next Group Pension Plan Actuarial Report as at 31 October 2013, this contains details of the Actuary s check of the Next 2013 Plan s financial security as at 31 October Statement of Funding Principles. This sets out the Next 2013 Plan s funding plan. 6

8 Money Purchase Section The administration of the Money Purchase section is delegated to Capita. Initial queries on the Money Purchase section should be raised with Capita, whose address is given at the end of this report. Any specific queries which you are unable to resolve with Capita should be referred to the Next Group Pensions Department. You should also contact the Next Group Pension Department for details of the investment funds available under the Money Purchase section. The Trustee, in consultation with its Money Purchase investment advisers, selects and monitors the investment managers with whom the Money Purchase section funds and AVCs are invested. Data Protection Some personal data for scheme members and their dependants and nominated beneficiaries (such as date of birth and salary) is required for the running of the scheme, including paying out the correct benefits. The use of this data is regulated under the Data Protection Act 1998, 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 Trustees of the scheme, and, in certain circumstances, third party administrators and professional advisers to the scheme. These may include the actuary and Towers Watson, who have provided further details online 2. For and on behalf of Next Pension Trustees Limited Ian Richards CHAIRMAN 2 7

9 THINGS YOU NEED TO DO Stay in Touch You should advise the Next Group Pensions Department of any change in address otherwise the payment of your benefits might be delayed. If you prefer to use for faster communication and have previously given your address to either the Next Group Pensions Department or Capita, please ensure that you notify them of any changes that might have occurred in the past and remember to tell them when it changes in the future. If you have not registered an address with the Next Group Pensions Department, it is strongly recommend that you do as this is proving to be the most efficient and fastest way of keeping you informed quickly, on important matters that could affect your pension. Investment Choices If you are in the Money Purchase section or are paying or have paid AVCs as a Defined Benefit section member, you have certain choices as to how your funds are invested. You should keep your investment selection under regular review and if you wish to make a change, you should contact Capita. You should also advise Capita of any change to your intended retirement age. If you are in the Money Purchase Top-up section, you also have certain choices as to how your funds are invested. You should keep your investment selection under regular review and if you wish to make a change, you should contact the Next Group Pensions Department. You should also advise the Next Group Pensions Department of any change to your intended retirement age. FURTHER INFORMATION The Pensions Advisory Service (TPAS) and the Pensions Ombudsman TPAS is available at any time to assist members and beneficiaries of the Next 2013 Plan with any query which they may have or any difficulties that they may have failed to resolve with the Trustee or the administrators. The Pensions Ombudsman may investigate and determine any complaint or dispute of fact or law in relation to the Next 2013 Plan. Pension Schemes Registry The Pension Schemes Registry is maintained to help people to trace pension benefits that they may have from previous employers. The Next 2013 Plan is registered with the Registry. The Pensions Regulator (TPR) TPR can intervene if it considers that a pension scheme s trustees, employer or professional advisers are not carrying out their duties correctly. The addresses of TPAS, the Pensions Ombudsman, the Pension Schemes Registry and TPR are set out below. Pensions Pensions Ombudsman: Pension Schemes Registry: The Pensions Advisory Service: Regulator: TPAS Pensions Ombudsman Pension Schemes Registry Pensions Regulator 11 Belgrave Road 11 Belgrave Road PO Box 1NN Napier House London London Newcastle-upon-Tyne Trafalgar Place SW1V 1RB SW1V 1RB NE99 1NN Brighton BN1 4DW 8

10 WHO'S WHO Trustee: Directors of the Trustee Company: Ian Richards (Independent) Andrew Jones (Employer Nominated Director) Paul Cassidy (Employer Nominated Director) Next Pension Trustees Limited Adrian Trotter (Employer Nominated Director) Helen Coley (Member Nominated Director) John Huckerby (Member Nominated Director) The Next Group Pensions Department: John Stevenson - Group Pensions Manager Telephone: Next Pension Trustees Limited pensions@next.co.uk Desford Road Enderby, Leicester LE19 4AT INVESTMENT MANAGERS AND ADVISERS Investment Fund Managers: Scheme Actuary: BlackRock Investment Management (UK) Limited Mr R Bhabra 12 Throgmorton Avenue Towers Watson London Three Brindleyplace EC2N 2DL Birmingham, B1 2LN Legal Advisers: F&C Managed Pension Funds Limited Exchange House Primrose Street London, EC2A 2NY Investec Asset Management Woolgate Exchange 25 Basinghall Street London, EC2V 5HA Legal & General (Pensions Management) Limited* One Coleman Street London EC2R 5AA Standard Life Investments 1 George Street Edinburgh EH2 2LL Threadneedle Investment Managers** 60 St Mary Axe London EC3A 8JQ Unigestion SA 8c,avenue de Champel CP387 CH1211 Geneve 12 Scheme Administrator (Money Purchase section): Capita Hartshead House 2 Cutlers Gate Sheffield, S4 7TL Telephone: nextpensions@capita.co.uk 9 Wragge Lawrence Graham & Co Two Snowhill Birmingham B4 6WR Investment Consultants: (Defined Benefit section) Lane, Clark & Peacock LLP 95 Wigmore Road London, W1U 1DQ (Money Purchase section) Towers Watson Three BrindleyPlace Birmingham, B1 2LN Auditors: KPMG LLP Audit and Risk Advisory Services One Snowhill Snow Hill Queensway Birmingham, B4 6GH Bankers: Barclays Bank Plc Leeds Group of Branches 77 Albion Street Leeds, LS1 5AW AVC Providers*: Equitable Life Assurance Society Walton Street Aylesbury Buckinghamshire HP21 7QW * Legal & General (Pensions Management) Limited also act as AVC Providers. ** Up until December All queries regarding the Next 2013 Plan should be addressed in the first instance to the Next Group Pensions Department (for Defined Benefit and Money Purchase Top-up members) or Capita (for Money Purchase section members). ==========================================================================

WH-12ppbrochure - artwork:layout 1 22/11/12 15:51 Page 1 EMPLOYEE PENSION PLAN

WH-12ppbrochure - artwork:layout 1 22/11/12 15:51 Page 1 EMPLOYEE PENSION PLAN 2013 WH-12ppbrochure - artwork:layout 1 22/11/12 08:50 Page 2 WILLIAM HILL EMPLOYEE PENSION PLAN ( Plan ) Membership is open