THE DELPHI LOCKHEED AUTOMOTIVE LIMITED PENSION PLAN

Transcription

1 Registration Number THE DELPHI LOCKHEED AUTOMOTIVE LIMITED PENSION PLAN Report and Accounts For the Year Ended 31 December 2008

2 C O N T E N T S Trustee and Advisers 1 Report of the Trustee 2-8 Investment Report 5-7 Statement of Trustee s Responsibilities 8 Report of the Actuary 9-10 Schedule of Contributions Independent Auditors Report Fund Account 15 Net Assets Statement 16 Notes to the Financial Statements Independent Auditors Statement about Contributions 23 Summary of Contributions 24 Members Information 25 Appendix: The GM (UK) Common Investment Pool Report & Accounts for the year ended 31 December 2008

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4 THE DELPHI LOCKHEED AUTOMOTIVE LIMITED PENSION PLAN TRUSTEE and ADVISERS Principal Employer Delphi Lockheed Automotive Limited Trustee Delphi Lockheed Automotive Pension Trustees Limited Directors of the Trustee Employee Representatives Bill Ryan, Susan Surman (resigned 29 August 2008) Ian W. Neale (appointed 16 September 2008) Company Representatives Helen Hewson, Eileen Barnes, Sonia James Secretary to the Plan Marion McDonald Actuary A. Murrell Watson Wyatt LLP Registered Auditors PricewaterhouseCoopers LLP Investment Manager Promark Global Advisors Limited (formerly named GM Asset Management (UK) Limited) Solicitors CMS Cameron McKenna (resigned 14 March 2008) Slaughter and May LLP (appointed 14 March 2008) Bankers Lloyds TSB Bank plc Investment Consultants Watson Wyatt LLP Fund Administration General Motors UK Limited Griffin House, Osborne Road Luton, Bedfordshire LU1 3YT 1

5 Report of the Trustee for the year ended 31 December 2008 The Trustee of The Delphi Lockheed Automotive Limited Pension Plan (the Plan ) presents its annual report together with the investment report, actuarial statements and certificates, summary of contributions, compliance statement and financial statements for the year ended 31 December Constitution of the Plan The Plan was established on 1 October 2000 under, and is governed by, a Trust Deed and Rules, as amended. The new section of the Plan is contracted-out of the Second State Pension (S2P). The closed section of the Plan is a defined benefit pension arrangement, where pensions are determined by earnings levels and length of service. The new employee section is a defined benefit pension arrangement with different accrual rates depending on contribution rates. The Plan is contributory and provides retirement and dependants pensions. The Plan also provides death benefits, before and after retirement, and discretionary ill-health pensions. In the new section, members are contracted-out of S2P under the provisions of the Pensions Act 1995 (the Pensions Act ), using the reference scheme test basis which requires the Plan Actuary to certify that the Plan is expected to provide pensions for at least 90% of contributing members, which are at least as good as those under a reference scheme set out in the Pensions Act. The level of contributions to the Plan with effect from the Plan valuation as at 1 January 2007, is determined by agreement between the Trustee of the Plan and the Principal Company, Delphi Lockheed Automotive Limited (the "Company"), and, in default of agreement, by the Pensions Regulator, in accordance with the requirement of the Pensions Act The cost of providing benefits not covered by members contributions is provided by the participating companies. If the Plan were ever to be terminated, the benefits payable will be determined in accordance with the Plan Rules and overriding legislation. Plan Advisers There are written agreements in place between the Trustee and each of the Plan advisers listed on page 1 and also with the Company. Management of the Plan The Trustee of the Plan, Delphi Lockheed Automotive Pension Trustees Limited, is appointed and may be removed by the Company. The Plan rules contain provisions for the appointment and removal of the Trustee. The names of the current Trustee Directors are included on page 1. Susan Surman resigned as a member-nominated director on 29 August 2008 and was replaced by Ian W.Neale who was appointed on 16 September To conform to the provisions of the Pensions Act 2004, the Trustee is in the process of finalising consultation for the appointment of member nominated directors. The Trustee met on 5 occasions during the year. 2

6 Report of the Trustee for the year ended 31 December 2008 (cont d) Risk Management The Trustee has overall responsibility for internal controls and risk management. They are committed to identifying, evaluating and managing risk and to implementing and maintaining control procedures to reduce significant risks to an acceptable level. In order to meet this responsibility the Trustee has adopted a risk policy. The objective of this policy is to limit the exposure of the Trustee, and the assets that it is responsible for safeguarding, to business, financial, operational, compliance and other risks where possible. The Trustee has created a Risk Register. The purpose of the Risk Register is: to highlight the scope of risk to which the Plan is exposed from the Trustee s perspective; to rank those risks in terms of likelihood and impact; and to identify management actions that are either currently being taken, or that are believed should be taken, in order to mitigate the identified risks. Trustee Training The Pensions Act 2004 requires trustees to have knowledge and understanding of pensions legislation, investments, the scheme s trust deed and rules, their statement of investment principles, the statement of funding principles and other documentation which sets out administration policy in relation to the plan. A training log has been established by the Trustee and each director is responsible for reporting to the Plan secretary which module of the Pension Regulator s toolkit they have completed and which additional training programmes they have attended. During the year Trustee Directors have attended specialist training courses offered by the Plan advisors and investment managers. Actuarial Valuation The Trustee must obtain an actuarial valuation of the Plan at least once every three years, to determine the funding level and to provide the basis for it to agree the contribution schedule with the employer. The latest actuarial valuation of the Plan was carried out by the Plan Actuary at 31 December The results of a valuation form the basis for decisions about contributions to the Plan for future service benefits. The actuary works out if the assets currently in the Plan are sufficient to pay the past service benefits that have already accrued. To do this, he uses many assumptions and these are agreed between the Trustee and the Company. If there is a shortfall in the Plan for the past service benefits, the Trustee negotiates with the Company to agree a plan to achieve a fully funded status. This was the first valuation since the Pensions Act 2004 introduced new requirements for the funding of Pensions Schemes; the Pensions Regulator has published a new code of practice on funding and guidance on how it will monitor funding discussions. The Pensions Protection Fund (PPF) has also been created and the Plan has now to consider the additional levies as part of its cost structure. The principal assumptions underlying the valuation were: the discount rate, which took into account the ability to actually achieve a higher return than gilts, was set at of 5.8%pa, price inflation of 3.0%pa, salary increases of 3.0%pa, pension increases (in excess of GMP) of 3.0%pa, and investment returns of 7.3%pa for the next 2 years. Mortality assumptions have been revised upwards with 65 year old males assumed to live to 84 and females to 88 years. At 31 December 2006, the market value of the assets of the Plan, excluding AVC s, was 25.0 million. This was sufficient to cover 99% of the benefits that had accrued to members. This is a shortfall of 0.2 million relative to the Technical Provisions, i.e., the levels of assets agreed by the Trustee and the Company as being appropriate to meet member benefits. The actuary is also required to show what the position would be on a solvency basis with assets used to buy annuities from an insurance company. The statutory estimate of solvency ratio is 48%. The next actuarial valuation will take place as at 1 January

7 Report of the Trustee for the year ended 31 December 2008 (cont d) Plan Membership Employee members Number at 1 January Add Adjustment (1) Employees joining during the year 14 Less Employees leaving during the year Retirements (3) Early leavers with deferred pensions (3) Early leavers with refunds (2) (8) Number at 31 December Pensioner members Number at 1 January Add New pensioners during the year 3 New dependent pensioners 1 Deferred pensions into payment 2 6 Less Deaths and terminated pensions (1) Number at 31 December Deferred members Number at 1 January Add Leavers during the year 3 Less Transfers out (2) Deferred pensions into payment (2) (4) Number at 31 December Total membership at 31 December Pension Increases The guaranteed rate of annual increase of pensions in excess of the GMP in the course of payment, for service before 31 December 2005, is the rise in the Retail Prices Index up to a maximum of 5%; for service thereafter the cap is reduced to 2.5%. In April 2008, in accordance with the recommendations of the Company and with the approval of the Trustee, the eligible members received an increase on that part of their pension, in excess of the GMP, for service to 31 December 2005, of 4% which was the increase in the RPI for the year ended 31 December 2007, and for service thereafter, of 2.5%. 4

8 Report of the Trustee for the year ended 31 December 2008 (cont d) Transfer Values Regulations were published in April 2008 which moved responsibility for the calculation of transfer values from the actuary to the Trustee. Unfortunately, although the regulations became effective on 1 October, 2008, guidance on the calculation of transfer values was not published by the Regulator until 29 September. As soon as the regulations were published, the Trustee immediately started to review the method and assumptions used, based on advice from the actuary. As the calculation of transfer values is now plan specific, each of the pension plans requires its own calculations. Administration set up a process to work through the applications in date received order, giving priority to those requiring them for divorce purposes. Review of Financial Development of the Plan Due to Plan administrative delays and the Trustee s on-going assessment of the employer covenant, financial statements, and therefore a statement from the auditor, were not obtained within seven months of the Plan's year end. In all other material respects, the financial statements have been prepared and audited in accordance with regulations made under section 41(1) and (6) of the Pensions Act The Plan has also adopted the revised Statement of Recommended Practice, Financial Reports of Pension Schemes (May 2007) in this report and accounts. Further Information Further details of investment performance are included in the investment report. Requests for additional information about the Plan generally, or queries relating to members' own benefits, should be made to the Plan administrators, whose address appears on page 1 of this report. Further information for members is included in members information at the back of this annual report. The US subsidiaries and operations of the Company s ultimate parent undertaking, Delphi Corporation ( Delphi ) remain in Chapter 11 bankruptcy status, as per the voluntary petitions for business reorganisation filed in October The non-us subsidiaries and operations of Delphi, including the Company, were not included in the filing and have continued their normal business operations without supervision from the US courts and are not subject to Chapter 11 requirements. There remain no restrictions in their ability to pay their creditors. During the last three years Delphi has made significant progress in resolving the legacy issues and implementing its transformation plan however, as of the date of this report, Delphi and its non-us subsidiaries and operations remain in Chapter 11 reorganisation. The Trustee has been advised that the Company remains committed to the Plan, it continues to meet its obligations under the schedule of contributions, and has no plans to reduce pension payments, cease contributions, or close the Plan. Investment Report The Plan participates in The GM (UK) Common Investment Pool ( CIP ) the generic name for ten Pension Fund Pooling Vehicles ( PFPV s) and one Property Unit Trust ( PUT ). The CIP holds investments on behalf of the Plan and is administered by a corporate trustee, Promark Investment Trustees Limited ( PITL ) (formerly named GM Investment Trustees Limited), which appoints independent investment managers to manage the investments. The Trustee entered into a contract with a PITL holding company, Promark Global Advisors Limited ( PGAL ) (formerly named GM Asset Management (UK) Limited), to provide investment management services. Details of investments and a financial review are set out in the report and financial statements of the CIP which form an integral part hereof. As required under section 35 of Pensions Act 1995, copies of the Statement of Investment Principles ( SIP ) are available on request from the Plan administrators. 5

9 Report of the Trustee for the year ended 31 December 2008 (cont d) Investment Objectives The Trustee wishes to ensure that the Plan can meet its obligations to the beneficiaries while recognising the cost implications to the participating companies of pursuing excessively conservative investment strategies. The Trustee appointed Watson Wyatt to conduct an asset-liability study early in 2004, following the previous actuarial valuation to determine the appropriate strategic asset allocation of the Plan based on the known liabilities of the Plan. As part of this study the Trustee, in consultation with the Company, determined the objectives of the Plan. These objectives were defined as: a) The acquisition of suitable assets of appropriate liquidity which will generate income and capital growth to meet, together with new contributions from members and the Company, the cost of current and future benefits which the Plan provides, as set out in the Trust Deed and Rules. b) To limit the risk of the assets failing to meet the liabilities over the long term. c) To minimise the long term costs of the Plan by maximising the return on the assets whilst having regard to the objective shown under b. Asset Allocation The current strategic asset allocation has been in place since December Asset Allocation % UK Equities 30 International Equities 42 Emerging Market Equities 3 UK Index-Linked Bonds 3 UK Fixed Interest Bonds 5 International Hedged Fixed Interest 5 Property A new asset-liability study will be carried out shortly. Asset Allocation The Trustee has signed an investment management agreement with PGAL, the investment trustee of the CIP, covering PGAL s role in controlling the asset allocation for the Plan, and aiming to add value through tactical asset allocation. As required, additional contributions to the Plan are invested in new units in the various PFPV s or if cash is required to pay pensions or other benefits, units are liquidated from the PFPV s. Wherever possible, PGAL tries to match any transactions with other pension plans in the CIP. Employer-Related Investments At 31 December 2008, the Plan held no employer-related investments. 6

10 Report of the Trustee for the year ended 31 December 2008 (cont d) Custody Appropriate steps have been taken to safeguard the assets of the Plan. Details of the custody arrangements for the majority of the assets which are held in the CIP are set out in the report and financial statements of the CIP. Documents of title to the other assets of the Plan are held by the Company. Investment Performance During 2008, markets were negative and the Plan s overall return was (29.10)% before fees, 1.80% below its customised benchmark. Three and five year annualised returns were (5.50)% and 2.90%, 0.70% and 0.50% below the benchmark, respectively. Total Rates of return For Periods ended 31/12/2008 (annualised) Total Rates of return For Periods ended 31/12/2007 (annualised) 1 year 3 years 5 years 1 year 3 years 5 years % % % % % % Plan returns (29.10) (5.50) Benchmark (27.30) (4.80) Out/(under)- performance (1.80) (0.70) (0.50) (0.10) 0.20 (0.30) Market reports and detailed analysis of the CIP performance are set out in the report and financial statements of the CIP. Since the year end, the value of investments in the global market place has fluctuated considerably due the current economic environment. This has also had a significant impact on the total rates of return in the value of the Plan s investments in the CIP. Based on the latest available unaudited management data, as of 30 June 2009, the Plan s return to date in 2009 was approximately 0.8% compared to a benchmark of 1.1%. 7

11 Report of the Trustee for the year ended 31 December 2008 (cont d) Statement of Trustee's Responsibilities The financial statements are the responsibility of the Trustee. Pension scheme regulations requires the Trustee to make available to Plan members, beneficiaries and certain other parties, audited financial statements for each Plan year which: show a true and fair view, in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), of the financial transactions of the plan during the plan year and of the amount and disposition at the end of the plan year of its assets and liabilities, other than liabilities to pay pensions and benefits after the end of the plan year, and contain the information specified in the Schedule to the Occupational Pension Plans (Requirement to obtain Audited Accounts and a Statement from the Auditor) Regulations 1996, including a statement whether the financial statements have been prepared in accordance with the Statement of Recommended Practice Financial Reports of Pension Schemes. The Trustee has supervised the preparation of the financial statements and has agreed suitable accounting policies, to be applied consistently, making any estimates and judgements on a prudent and reasonable basis. The Trustee is also responsible for making available certain other information about the Plan in the form of an Annual Report. The Trustee is responsible under pensions legislation for ensuring that there is prepared, maintained and from time to time revised a schedule of contributions showing the rates of contributions (other than voluntary contributions) payable towards the Plan by or on behalf of the employer and the active members of the plan and the dates on or before which such contributions are to be paid. The Trustee is also responsible for keeping records in respect of contributions received in respect of any active member of the plan and for monitoring whether contributions are made to the plan by the employer in accordance with the schedule of contributions. Where breaches of the schedule occur, the Trustee is required by the Pensions Acts 1995 and 2004 to consider making reports to the Pensions Regulator and to members. The Trustee also has a general responsibility for ensuring that adequate accounting records are kept and for taking such steps as are reasonably open to it to safeguard the assets of the plan and to prevent and detect fraud and other irregularities, including the maintenance of an appropriate system of internal control. Trustee: Delphi Lockheed Automotive Pension Trustees Limited Name (Trustee Director): Signature: July

12 Report of the Actuary ACTUARY S CERTIFICATION OF TECHNICAL PROVISIONS Actuarial certificate given for the purposes of Regulation 7(4) (a) of the Occupational Pension Schemes (Scheme Funding) Regulations 2005 Name of Scheme: The Delphi Lockheed Automotive Limited Pension Plan Calculation of technical provisions I certify that, in my opinion, the calculation of the Plan s technical provisions as at 31 December 2006 is made in accordance with regulations under section 222 of the Pensions Act The calculation uses a method and assumptions determined by the trustees of the Scheme and set out in the Statement of Funding Principles dated 3 April Signature: Adrian Murrell Adrian Murrell Fellow of the Institute of Actuaries 11 April 2008 Watson Wyatt Limited 3 Falcon Gate Shire Park Welwyn Garden City Hertfordshire AL7 1TW Phone: Fax:

13 Report of the Actuary (cont d) The Delphi Lockheed Automotive Limited Pension Plan Actuary's certification of Schedule of Contributions 1. Adequacy of rates of contributions I certify that, in my opinion, the rates of contributions shown in this schedule of contributions are such that the statutory funding objective could have been expected on 31 December 2006 to be met by the end of the period specified in the recovery plan dated 3 April Adherence to statement of funding principles I hereby certify that, in my opinion, this schedule of contributions is consistent with the Statement of Funding Principles dated 3 April The certification of the adequacy of the rates of contributions for the purpose of securing that the statutory funding objective can be expected to be met is not a certification of their adequacy for the purpose of securing the Plan s liabilities by the purchase of annuities, if the Plan were to be wound up. Adrian Murrell Fellow of the Institute of Actuaries Date 3 April Watson Wyatt Limited 3 Falcon Gate Shire Park Welwyn Garden City Hertfordshire AL7 1TW Authorised and regulated by the Financial Services Authority 10

14 Schedule of Contributions The Delphi Lockheed Automotive Limited Pension Plan Schedule of Contributions This schedule of contributions has been prepared by the Trustee, after obtaining advice from the Scheme Actuary, Adrian Murrell. It specifies the rates and due dates of employer and employee contributions from 1 April 2008 and the likely expenses to be incurred by the Plan. All contributions are subject to review following the next scheduled actuarial valuation currently due at 31 December Name of employer Delphi Lockheed Automotive Limited 2 Rates of contribution 2.1 Active members will contribute at the following rates of Pensionable Pay: for members accruing benefits with a fraction of 1/90 th, 3% for members accruing benefits with a fraction of 1/75 th, 4% for members accruing benefits with a fraction of 1/60 th, 5% Additional Voluntary Contributions can be paid in addition to the above rates 2.2 The employer will contribute at a rate of 9.2% of Pensionable Salaries from 1 April 2008 in respect of future accrual of benefits, the provision of death benefits and the expenses of administering the Plan. 2.3 As the Employer has paid contributions at a rate of 14.6% of Pensionable Pay over the period 1 January 2007 to 31 March 2008, no additional contributions are required in relation to the deficit. 2.4 The Employer will provide additional funding to meet the Plan s annual levy payable to the Pension Protection Fund. The employer will pay the levies in full provided the total contribution to the Plan in relation to future service contributions and the annual levy is no more than 700,000 per annum in 2008, 2009 and From time to time, higher contributions than those set out in 2.2, 2.3 and 2.4 may be paid. 3 Due dates for payment Member contributions: to be paid into the Plan no later than the 19 th of each month after that in which they are deducted from earnings. Employer contributions: except in relation to contributions in 2.4, to be paid into the Plan no later than the 19 th of each month after that to which they relate; 11

15 Schedule of Contributions (cont d) Notes: 1 This schedule does not cover the employer's commitment to pay across to the Trustee any additional voluntary contributions made by members. 2 The above contributions include an allowance for investment charges, fees in respect of professional advisors, lump sum death benefits and other expenses met by the Trustee which are paid from the resources of the Plan as and when they fall due. Agreed on behalf of the Trustees, Delphi Lockheed Automotive Limited Pension Plan Agreed on behalf of Delphi Lockheed Automotive Limited W.P. Ryan J. A. Parsons.. Chair of Trustees Director Date: 28 March 2008 Date: 3 April 2008 Date of Schedule (for reference purposes): 31 March

16 Independent Auditors Report to the Trustee of The Delphi Lockheed Automotive Limited Pension Plan We have audited the financial statements of The Delphi Lockheed Automotive Limited Pension Plan for the year 31 December 2008 which comprise the Fund Account, the Net Assets Statement and the related notes. These financial statements have been prepared under the accounting policies set out therein. Respective responsibilities of Trustee and Auditors The Trustee s responsibilities for obtaining an Annual Report and audited financial statements prepared in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice) are set out in the statement of Trustee s responsibilities. Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements and International Standards on Auditing (UK and Ireland). This report, including the opinion, has been prepared for and only for the Trustee as a body in accordance with Section 41 of the Pensions Act 1995 and for no other purpose. We do not, in giving this opinion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing. We report to you our opinion as to whether the financial statements give a true and fair view and contain the information required by the relevant legislation. We also report to you if, in our opinion, we have not received all the information and explanations we require for our audit. We read the other information contained in the annual report and consider whether it is consistent with the audited financial statements. This other information comprises all of that set out in the contents page. We consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the financial statements. Our responsibilities do not extend to any other information. Basis of Audit Opinion We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by or on behalf of the Trustee in the preparation of the financial statements, and of whether the accounting policies are appropriate to the Plan's circumstances, consistently applied and adequately disclosed. We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements. 13

17 Independent Auditors Report to the Trustee of The Delphi Lockheed Automotive Limited Pension Plan (cont d) Opinion In our opinion: the financial statements give a true and fair view, in accordance with United Kingdom Generally Accepted Accounting Practice, of the financial transactions of the Plan during the year ended 31 December 2008, and of the amount and disposition at that date of its assets and liabilities, other than the liabilities to pay pensions and benefits after the end of the year, and the financial statements contain the information specified in Regulation 3 of, and the Schedule to, the Occupational Pension Schemes (Requirement to obtain Audited Accounts and a Statement from the Auditor) Regulations PricewaterhouseCoopers LLP Chartered Accountants and Registered Auditors London

18 Fund Account for the year ended 31 December 2008 Notes Year Ended Year Ended 31-Dec Dec-07 '000 '000 Contributions and benefits Contributions receivable 3 1,120 1,305 1,120 1,305 Benefits payable Leavers Administrative expenses ,267 1,475 Net (withdrawals)/additions from dealings with members (147) (170) Returns on investments Change in market value of investments 8 (7,840) 1,347 Investment management expenses 7 (27) (31) Net returns on investments (7,867) 1,316 Net increase / (decrease) in the fund during the year (8,014) 1,146 Net assets of the Plan At 1 January 27,034 25,888 At 31 December 19,020 27,034 15

19 Net assets statement as at 31 December 2008 Notes 31-Dec Dec-07 '000 '000 Investments Pooled investment vehicles 8, 9 18,270 26,329 AVC investments ,985 27,093 Current assets Current liabilities 12 (110) (120) Net current assets / (liabilities) 35 (59) Net assets of the Plan at 31 December 19,020 27,034 The financial statements summarise the transactions of the Plan and deal with the net assets at the disposal of the Trustee. They do not take account of obligations to pay pensions and benefits which fall due after the end of the Plan year. The actuarial position of the Plan, which does take account of such obligations, is dealt with in the Report of the Actuary on pages 9 to 12 and in the Report of the Trustee on page 3, and these financial statements should be read in conjunction with them. The financial statements on pages 15 to 22 were approved by the Trustee on and are signed on their behalf by: The Trustee (Delphi Lockheed Automotive Pension Trustees Limited) Signature: Name (Trustee Director): 16

20 Notes to the financial statements for the Year ended 31 December Basis of preparation The financial statements have been prepared in accordance with the Occupational Pension Schemes (Requirement to obtain Audited Accounts and a Statement from the Auditor) Regulations 1996, and in accordance with the Statement of Recommended Practice, Financial Reports of Pension Schemes (revised May 2007) (the revised SORP ). 2. Accounting policies Contributions Normal contributions, both from the members and from the employer, are accounted for as they fall due under the schedule of contributions, the Plan rules and the recommendations of the actuary. Employers augmentation contributions from the employer are accounted for in accordance with the agreement under which they are paid, or in the absence of such an agreement, when received. Additional voluntary contributions from the members are accounted for in the month deducted from the payroll. Employers deficit funding contributions are accounted for in accordance with the agreement under which they are being paid for in the absence of an agreement on a receipt basis. The presentation of the information on contributions in the prior year has been reclassified to be consistent with the current year and as required by the revised SORP. Total contributions are unchanged. Benefits Where members can choose whether to take their benefits as a full pension or as a lump sum with reduced pension, retirement benefits are accounted for on an accruals basis on the later of the date of retirement and the date the option is exercised. Other benefits are accounted for on an accruals basis on the date of retirement, death or leaving the Plan as appropriate. Transfers to and from other Plans Transfer values represent the capital sums either receivable in respect of members from other pension plans or payable to the pension plans of new employers for members who have left the Plan. They are accounted for on a cash basis or where the Trustee has agreed to accept the liability in advance of receipt of funds on an accruals basis from the date of the agreement. Group transfers, where the Trustee has agreed to accept the liability prior to the receipt, are accounted for in accordance with the agreement. Investments Investments in unitised funds represent the Plan's share of the accumulated fund of the ten Pension Fund Pooling Vehicles (PFPV s) and one Property Unit Trust (PUT), collectively known as The GM (UK) Common Investment Pool (CIP), calculated in accordance with the Trust Deed. In accordance with the revised SORP, units held in the unitised funds are valued at bid net asset value. In the prior year they were valued at mid net asset value. The difference in valuation is immaterial to the financial statements and therefore comparatives have not been restated. As a result, the comparative figures for investments are reported on a mid net asset value basis. The adjustment in valuation from mid to bid in the prior year is included in current year change in market value. 17

21 Notes to the financial statements for the year ended 31 December 2008 (cont d) Valuation of AVC s with the Prudential Corporation is provided by Prudential and this includes the capital value of policies in payment. The unit linked AVC funds offered by Fidelity Pensions Management are Open Ended Investment Company ( OEIC ) funds and have a single price as valued by the investment manager. Investment income Interest on cash deposits and other investment income have been accounted for on an accruals basis. Administrative expenses The administrative expenses of the Plan are paid by the Plan, but investment and other related expenses are paid by the appropriate PFPV s and are borne by the Plan in proportion to its share therein. Investment management expenses Investment management fees are accounted for on an accrual basis. Acquisition costs are included in the purchase cost of investments. 3. Contributions receivable Participating companies Normal Augmentations Other (PPF Levy) Members Normal Additional voluntary contributions ,120 1,305 Employers augmentations are paid in respect of certain benefits to individuals. 4. Benefits payable Pensions Commutations and lump sum retirement benefits Lump sum death benefits

22 Notes to the financial statements for the year ended 31 December 2008 (cont d) 5. Payments to and on account of leavers Refunds to members leaving service 7 1 Payments for members joining state scheme 0 1 Transfers to Delphi Affiliated Pension Plans Individual transfers out to other schemes Administrative expenses General Motors UK Ltd administration charges Other administration and processing charges 1 2 Actuarial fees Audit fees 3 3 Legal and other professional fees 4 10 Pensions regulator /PPF levy Investment Management Expenses Investment management fees Performance measurement fees

23 Notes to the financial statements for the year ended 31 December 2008 (cont d) 8. Investments Investments in The GM (UK) Common Investment Pool Value at Purchases at cost Sales Proceeds Change in Market Value Value at UK Equity PFPV 7, (301) (2,322) 5,474 International Equity PFPV 11, (10) (4,577) 7,401 Emerging Market Equity PFPV (266) 606 Index-Linked Bonds PFPV (296) UK Bonds PFPV 1,382 0 (522) International Bonds PFPV 1,373 0 (450) (29) 894 Property Unit Trust 2,829 0 (58) (736) 2,035 Cash PFPV 81 1,003 (781) Pooled investment vehicles 26,329 2,149 (2,418) (7,790) 18,270 AVC s - Prudential (23) AVC s - Fidelity (50) 209 AVC Investments (23) (50) ,093 2,173 (2,441) (7,840) 18,985 NB: 24 in AVC Investments above differs from that disclosed in note 3 due to timing differences with regard to contribution payments. The change in market value of investments during the year comprises all increases and decreases in the market value of investments held at any time during the year and investment income received and receivable, including profits and losses realised on sales of investments during the year. The adjustment in the cash PFPV, where the unit value remains constant, recognises the interest on cash deposits in the CIP, partially offset by payment of certain fees. The investment manager, Promark Global Advisors Limited (formerly named GM Asset Management (UK) Limited), and Promark Investment Trustees Limited (formerly named GM Investment Trustees Limited), the operator of The GM (UK) Common Investment Pool, are both registered in the UK. Since the year end, the value of investments in the global market place has fluctuated considerably due to the current economic environment. This has also had a significant impact on the value of the Plan s investments in the CIP. Based on the latest available unaudited management data, as of 30 June 2009, the aggregate value of the Plan s investment in the pooled investment vehicles was approximately 18.3 million valued on a mid-price basis. 20

24 Notes to the financial statements for the year ended 31 December 2008 (cont d) 9. Pooled investment vehicles 31-Dec-08 Units Price Value Investment in the PFPV s/put comprising the CIP at market value UK Equity PFPV 3,408, ,474,368 Emerging Markets Equity PFPV 162, ,864 International Equity PFPV 5,919, ,400,424 Property Unit Trust 725, ,035,298 Index-Linked Bonds PFPV 234, ,003 International Bonds PFPV 404, ,245 UK Fixed Interest Bonds PFPV 445, ,427 Alternative Investments PFPV Cash PFPV 310, ,902 18,269,622 The investment in the CIP represents the Plan s share of each of the pooled funds within the CIP calculated in accordance with the provisions of the Trust Deed. In accordance with the revised SORP, units held in the unitised funds at 31 December 2008 are valued at bid net asset value. At 31 December 2008 the Plan held 1.12% (2007: 1.14%) of the total aggregate investment in the CIP. 10. AVC investments The Trustee holds assets invested separately from the main fund in the form of insurance policies from Prudential Corporation or unit linked funds from Fidelity Pensions Management securing additional benefits on a money purchase basis for those members electing to pay additional voluntary contributions. Members participating in this arrangement each receive an annual statement made up to 31 December confirming the amounts held to their account and the movements in the year. The aggregate amounts of AVC investment are as follows: Prudential Corporation Fidelity Pensions Management

25 Notes to the financial statements for the year ended 31 December 2008 (cont d) 11. Current assets Contributions receivable employers 46 0 Contributions receivable employees 16 0 AVC contributions receivable 2 1 Prepaid expense Pension regulator/ppf levies 29 0 Cash balances All contributions due to the Plan relate to the month of December 2008 and were paid in full to the Plan within the timescale required by the Schedule of Contributions currently in force. 12. Current liabilities Pensions and PAYE payable (7) (6) Lump sums payable (14) 0 Transfers payable 0 (29) Payable re Members joining State Scheme 0 (1) Accrued expenses (89) (84) (110) (120) 13. Related party transactions The majority of administration expenses are initially paid by the principal Delphi company, Delphi Lockheed Automotive Limited and then recharged to the Plan excluding VAT. The principal charges are actuarial, legal, audit, pension administration and investment management charges. Total cost for 2008 was 129,000 ( ,000). At year end 89,000 (2007: 29,000) was outstanding and included in current liabilities. 22

26 Independent Auditors Report about Contributions to the Trustee of The Delphi Lockheed Automotive Limited Pension Plan We have examined the Summary of Contributions to The Delphi Lockheed Automotive Limited Pension Plan for the year ended 31 December 2008 which is set out on the following page. Respective responsibilities of Trustee and Auditors The Trustee s responsibilities for ensuring that there is prepared, maintained and from time to time revised a schedule of contributions are set out in the statement of Trustee s responsibilities. Our responsibility is to provide a statement about contributions to the Plan in accordance with relevant legislation and to report our opinion to you. This report, including the statement about contributions, has been prepared for and only for the Plan s Trustee as a body in accordance with Section 41 of the Pensions Act 1995 and for no other purpose. We do not, in giving this statement, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing. Basis of statement about contributions We planned and performed our work so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that contributions reported in the Summary of Contributions have been paid in accordance with the relevant requirements. For this purpose the work that we carried out included examination, on a test basis, of evidence relevant to the amounts of contributions payable to the Plan and the timing of those payments under the schedule of contributions. Our statement about contributions is required to refer to those breaches of the schedule of contributions which we consider to be material for this statement and which come to our attention in the course of our work. Statement about contributions to the Plan [Except for the late payment of contributions disclosed more fully in the Summary of Contributions,] in our opinion, the contributions payable to the Plan required by the schedule of contributions during the year ended 31 December 2008 as reported in the Summary of Contributions on the following page have in all material respects been paid in accordance with the schedule of contributions certified by the Actuary on 18 January 2005 and 3 April PricewaterhouseCoopers LLP Chartered Accountants and Registered Auditors London

27 Summary of Contributions payable in the year During the year ended 31 December 2008, the contributions payable to the Plan by the Employer and Employee were as follows: Required by the schedule of contributions Employee Employer Normal contributions Augmentations 0 86 Total Other contributions payable PPF Levy contribution AVCs 25 0 Total (as per Fund Account) Signed on behalf of the Trustee (Delphi Lockheed Automotive Pension Trustees Limited): Name: Signature (Trustee Director):

28 Members Information Pensions Tracing Service Contact details for the Pensions Tracing Service, which can help members trace an old pension s scheme that they have lost contact with, are: Pensions Tracing Service, Tyneview Park, Whitley Road, Newcastle, NE98 1BA Telephone: The Pensions Advisory Service Any concern connected with the Plan should be referred to Mr D Mount, Pensions Administration Manager, who will try to resolve the problem as quickly as possible. Members and beneficiaries of occupational pension Schemes who have problems concerning their Scheme which are not satisfied by the information or explanation given by the administrators or the Trustees can consult with the Pensions Advisory Service (TPAS). A local TPAS adviser can usually be contacted through a Citizen's Advice Bureau. Alternatively TPAS can be contacted at: 11 Belgrave Road, London SW1V 1RB Telephone: Pensions Ombudsman In cases where a complaint or dispute cannot be resolved, normally after the intervention of TPAS, an application can be made to the Pensions Ombudsman for him to investigate and determine any complaint or dispute of fact or law involving occupational pension Schemes. The address is: 11 Belgrave Road, London SW1V 1RB Telephone: