P ENSIONS FOCU S. for Retired Members. Financial Position. National Fraud Initiative. Comments and Questions SUMMER 2004 ISSUE 3

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1 P ENSIONS FOCU S for Retired Members SUMMER 2004 ISSUE 3 Financial Position National Fraud Initiative Comments and Questions

2 IN THIS ISSUE National Fraud Initiative Keep an eye on your State Pension You may not know! In this third edition of Pensions Focus for Retired Members I have introduced a section referring to your comments and have added our responses where appropriate. A section of this newsletter is dedicated to financial matters and provides a more detailed insight on those matters connected with investment and performance. I hope you find this informative and would welcome your views on the adequacy of the content. I intend revising the date of the next edition to pre-date next year s pensions increase. This will allow me to give you advance notice of the increase and tell you about the timing of the various documents that are sent to you around April of each year. 5 Unison Retired Members Section 6 Childrens Pension John Moore Treasurer to the North Yorkshire Pension Fund 7 8 Financial Position Customer Survey National Fraud Initiative 2004 As part of the annual audit of the Pension Fund s accounts the County Council is legally obliged to take part in an anti-fraud exercise organised by the Audit Commission. Investors in People We are pleased to announce that the Financial Services Directorate, of which the Pensions Section is part, has been awarded Investors in People status. The initiative involves sending details of all payments made by the Pension Fund in the year to date to the Audit Commission in October 2004 so that they can be compared to information supplied by other public bodies. This will be used to help confirm that the pension paid to you is correct and also to check whether pensioners claiming Housing Benefit have declared all their income correctly. This is part of a much wider initiative covering most public sector employees and pensioners as well as records for housing benefits and student loans. All information exchanged is treated in strict confidence and the processing complies with the Data Protection Act. You do not need to do anything. If you have any concerns on this matter please contact Ian Smithson from the Internal Audit Service on extension 2739 at County Hall ( ).

3 Pension advices a reminder We only send you a pension advice when your pension goes up or down by 1 or more from the previous month. But we ll make sure that you get a pension advice in April and probably May so you can see the changes the annual increase has made to your pension. When your pension settles down to a regular monthly amount we'll start to send you an advice only when your pension goes up or down by 1 or more again. Rest assured, your pension will continue to be paid on the last working day of each month. (It should be noted that a number of pensioners receive their payment on the 6th of each month and this will continue to be the case). Keep an eye on your state pension Are you under State Pension Age, the age when you qualify for the State Retirement Pension? If you are - did you know you could get a forecast of how much your state pension is likely to be when you get to State Pension Age? All you have to do is get a form BR19, fill it in and send it off to the Retirement Pensions Forecasting & Advice Unit, Pensions and Overseas Benefits Directorate, Tyneview Park, Newcastle Upon Tyne, NE99 1BA. To obtain a BR19 form please contact the Benefits Agency on (01609) And if your State Retirement Pension will not be as big as it could be, your forecast will tell you what Class 3 voluntary National Insurance contributions you could pay to top it up. If you have already reached State Pension Age and have a question about your State Retirement Pension please contact the Benefits Agency on (01609) Working Again? If your pension was awarded on your own retirement it may need to be adjusted if you get another job with either a local authority or another employer who uses the Local Government Pension Scheme. The adjustments normally last for the period of time you have the new job. But if you were awarded compensation for early retirement the first time you retired the adjustments may be permanent. The rules are complicated, so the best advice we can give you is to get in touch with us if you get another job. Were you working again on 1 April 2004? Some changes were made to the Local Government Pension Scheme rules on 1 April One of the changes relates to employees who are in receipt of a LGPS pension and are working again (re-employed) and contributing to the LGPS in their new employment. Prior to 1 April 2004 when an employee, in receipt of a LGPS pension who was reemployed and was contributing to the LGPS, retired for the second time they could usually receive a pension based on all of their LGPS service and the pensionable pay which they earned in their second employment. This is called combining pension benefits. This provision has been removed and it is no longer possible for anyone who became re-employed from 2 April 2004 to combine their pension benefits when they retire for the second time. However, protection has been given for anyone in receipt of a LGPS pension who was reemployed and contributing to the LGPS as at 1 April These members can elect to retain the right to combine their pension benefits by writing to the Pensions Section responsible for calculating their pension benefits when they retire for the second time. If you were reemployed and contributing to the LGPS as at 1 April 2004 and have not received a letter from the Pensions Section please get in touch with Anna Binks on as the protection may apply to you.

4 You may not know!! The North Yorkshire County Council (NYCC) administers the North Yorkshire Pension Fund (NYPF). The active scheme members in the Fund are, for the most part, employed within the geographical boundaries of the NYCC. Those employees could be working for any one of 57 employers ranging from the largest, North Yorkshire County Council to the smallest, Fulford Parish Council. In between there are District, Borough and City Councils, National Park, Police and Fire authorities, Colleges etc. There are pensioners or dependants receiving benefits from the Fund and 9000 deferred beneficiaries who have left their contributions in the Fund until they retire or choose, and are permitted, to transfer their contributions to another employers fund. Membership Types Active Pensioner Deferred 5% Dependents Pensioners & 24% Refund Frozen 50% 21% Membership continues to increase and an indication of the increase over a 12-month period is shown below: Frozen Refunds Pensioners & Dependents /03/ /03/2003 Deferred Pensioner Active During 2003/4 there were over 3000 new joiners whilst around 350 members retired. In dealing with the retirements we provided over 800 estimates and approximately 550 actual calculations. Of course between joining the scheme and retirement there are many other changes that may affect pension benefits such as purchasing additional benefits, transferring between funds/schemes, refunds etc. Altogether we carry out around 6000 benefit calculations per annum as well as recording new or revised information for joiners and those members whose circumstances have changed. As well as the bread and butter processes, the 20 staff in the benefits administration team deal with a range of other activities not least of which is communicating with members and employers via newsletters, benefit statements, internet and the more traditional letter and telephone. This is no more than a brief insight into the work of the benefits administration team and should space permit in future issues, we will tell you more about our work in association with the actuary, legal advisers, fund managers etc.

5 Pension Payroll All the administration dealing with your regular pension payment is provided by the North Yorkshire County Council payroll service on behalf of the North Yorkshire Pension Fund. Should you have any queries such as: incorrect tax codes change of bank details pension not being paid You should contact the Payroll Manager as follows: The Payroll Manager County Hall Northallerton North Yorkshire DL7 8AL Tel: (01609) ext Backdated Pay Awards When pay awards are agreed and paid, often they are agreed after the date when the new pay rates should have been paid. For those still working, the backdated pay increase is paid along with their normal salary or wages. But for those who have left, some employers do not pay the backdated pay increase at all unless a claim is made. If you retired recently, in the last 12 months or so, and at the time you retired a pay award was outstanding you should get in touch with your former employer to claim any backdated pay that might be due to you. And if there is, make sure that pension contributions are deducted from the backdated money. Because if they are that will increase the final pay your pension and lump sum were worked out on. And an increase to your final pay will mean that we will recalculate your pension and lump sum. And that means you ll get some back pay from NYPF too! Unison - Retired Members Section The Retired Members Section of the North Yorkshire branch of Unison have asked us to let you know that they continue to operate on behalf of retired members. If you are interested in finding out more about the role they play and the events taking place you should contact the Retired Members Secretary as follows: Sheila C Crosby Manse Side 16, Church Lane Swainby Northallerton North Yorkshire DL6 3EA Tel: (01642) sheilacynthia@unisonfree.net Backdating of LGPS membership for part-time workers The cases of part-time workers who have left their part-time employment and have submitted an IT1 Employment Tribunal form within 6 months of leaving are being dealt with by their former employer. Decisions have been made on which employees fall into the relevant categories to allow them to pay pension contributions to backdate their membership of the LGPS. Guidance on how the arrears of pension contributions should be calculated has been received and relevant employees will be contacted after the calculations have been carried out on the contributions which are payable and the effect backdating of membership will have on an employee s benefits from the LGPS. It still remains essential that any employee who leaves their part-time employment and wishes to backdate their LGPS membership completes an IT1 Employment Tribunal form within 6 months of leaving employment. The IT1 form can be obtained from local Job Centres or Citizens Advice Bureaux. Alternatively a form can be obtained through the Employment Tribunals website at enghomeind.html

6 Children's Pension Pensions are payable under the LGPS in respect of children of LGPS members who die either before or after leaving employment or retiring. Children under 17 years of age are usually automatically eligible. Children who are physically or mentally incapacitated and became so whilst a child are usually also eligible whatever their age. Children who are 17 or over are usually eligible if they have, since becoming 17, been engaged continuously in full-time education or in training for a trade, profession or vocation. For those children who are 17 or over and in full-time education or training we will require confirmation from the educational establishment or employer of the duration of the course or the training. Entitlement to the child's pension will cease at the date the educational course or training ends. The payment of the child's pension will be made to a parent or guardian until the child reaches the age of 18. When the child reaches age 18 payment may be made directly to the child, if appropriate. Retired Members Comments and Questions One of our pensioners living abroad asked about the implications of pension credit. You can only get pensions credit if you live in Great Britain and are: habitually resident in the United Kingdom, the Channel Islands, the Isle of Man or the Republic of Ireland or treated as habitually resident in the UK. More information is available in the Pensions Service booklet entitled A Guide to Pension Credit where the habitual resident rules are explained on page 70. It should be noted that in some cases, you may be able to keep Pensions Credit if you leave this country temporarily. A retired member from York asked if we could provide more financial information. The article in this issue has been expanded to include a greater level of detail. We were pleased to receive congratulatory comments on the content and presentation of Pensions Focus and would like to thank all retired members for their responses. On the move? - don t forget to let us know Statistics show that every year around 5% of people throughout the country change their address. If you re one of those 5%, please don t forget to let us know your new address. It s important we keep in touch.

7 The Financial Position The solvency position of the Pension Fund has improved to 65% since the last Pensions Focus. This means that the value of the assets would meet 65% of the cost of the liabilities as at 31 March 2004 (55% at 31 March 2003). This can be mainly attributed to the global recovery in equity markets and hopefully a continued recovery in 2004 will see the solvency improve further. The following is a summary of the assets held in the Fund as at 31 March 2004, analysed by main asset category:- m % of Fund UK Equities (ie shares) Overseas Equities Fixed Interest:- Government Bonds Corporate Bonds Index Linked Bonds Cash and Other Short Term Assets The top 10 share holdings, and their percentage of the Fund as at 31 March 2004 are as follows:- Market Percentage of Value Value of Fund 000 % 1. Vodafone Group PLC 21, BP PLC 15, HSBC Holdings PLC 14, Royal Bank of Scotland Group PLC 13, GlaxoSmithkline PLC 13, Barclays 6, Astrazeneca 5, Shell Transport and Trading 5, HBOS 4, BAT 4, Total 104, The new fund managers have now all been with us for over a year. The 12 month performance returns to 31 March 2004 are 2.2% in excess of the benchmark figures set by the Pension Fund Committee. The investment performance of the Fund overall, as well as individual managers, is constantly monitored. A report on performance, including the solvency of the Fund, is presented to the quarterly meetings of the Pension Fund Committee. The 31st March 2004 is the effective date of the Fund s next statutory triennial valuation. This is the date at which the Actuary assesses the value of all the Fund s liabilities. The valuation is based on current membership numbers and includes a review of all the assumptions made previously regarding inflation, asset performance, early retirements and longevity (average life expectancy). Once the liabilities are established this is compared to the market value of the assets to form a view on the Fund's solvency. Based on the results of this valuation, the Actuary and the Pension Fund Committee will then agree the contribution rates to be paid by employers for the next 3 years. The Committee will take into account any feedback from employers at this stage. The Government is now concluding its stocktake of the LGPS overall. The proposals are intended to encourage more people to join the Fund and to offer more flexibility to existing members. They are also intended to make the Fund more economically viable. Thus in future all Pension Funds will have to produce a Funding Strategy Statement (FSS). This will be a transparent statement of how the Fund s investment strategy is intended to meet its future liabilities. The aim of the FSS is to encourage Funds to take a prudent longer-term view of their liabilities and to establish and maintain constant employer contribution rates. These Statements must be produced by 31 March The outcomes of the valuation and the FSS will prompt a review of the investment strategy. This will consider whether the current strategy is still appropriate to the Fund or if any alternative approaches would better match the liability profile of the Fund. We will provide an update on all the above issues in the next edition of Pensions Focus.

8 Customer Survey Over the last 6 months we have made a point of asking our recently retired members for their opinion on the level of service we provide. I am pleased to say the survey results demonstrate that those retired members are generally very happy with the way we have dealt with the calculation and payment of their benefits. Customer Satisfaction Survey 2004/5 Level of Satisfaction 5 - Unsatisfactory 4 -Poor 3 - Satisfactory 2 - Good 1 - Excellent Client Responses % A Newsletter to meet your needs? It s important that Pensions Focus gives you information about your pension that you want to read about. If you have any ideas about what you would like to see in future issues of Pensions Focus please do let us know. So, what did you think? We hope that you have enjoyed reading your 2004 Pensions Focus. Don't forget, if you have any comments or suggestions for future issues please let us know. Your comments will be very gratefully received. Published by the North Yorkshire Pension Fund, County Hall, Northallerton, North Yorkshire. DL7 8AL Telephone: (01609) Fax: (01609) pensions@northyorks.gov.uk Next Edition We anticipate that the next edition of Pensions Focus for Retired Members will be rescheduled for distribution in March The reasoning behind this is to bring you as much information in advance of the annual pensions increase as possible. Visit the North Yorkshire Pension Fund website...