PENSIONS. New Pensions Administrator

Transcription

1 PENSIONS news Electrocomponents Pension Scheme Newsletter JANUARY 2015 Chairman s Letter This newsletter is the Trustees way of keeping you up to date both with what s happening with the Pension Scheme and wider changes to pensions. We hope you find this issue useful and engaging. New Trustee In July 2014, Jessica Severin decided to step down as a trustee as a result of moving abroad We are pleased to confirm that Rachel Potarzycka has replaced Jessica as a Company nominated trustee and over the last few months has been getting to grips with the role of a Pension Scheme trustee. Rachel has worked for Electrocomponents for nine years in various HR roles and is currently the HR Business Partner for Global Offer. Rachel is particularly keen to ensure that the pension scheme trustees continue to improve their communications and engagement with members and employees. New Pensions Administrator As we told you in November, after a rigorous selection process, we selected Capita to administer the Scheme with effect from 1 December Pensions are becoming increasingly complex and Capita bring a combination of innovative technology and specialist pensions experience. Capita s contact details can be found on the back page. We are in the process of developing a new website with Capita. This will include a microsite with general information on the pension scheme plus a secure area which will include: Up-to date information on your pension New modelling tools Online payslips for pensioners The ability to make changes to your pension online e.g. DC members will be able to change their investment choices and target retirement age The website will go live in Spring 2015 and Capita will be writing to you all with further details including log-on information. To ensure this goes to the correct address, if you have moved recently please let Capita know using their contact details on the back page. We are looking forward to partnering with Capita and trust you will appreciate the benefit of this new appointment. This year, as many members now have benefits in both the Defined Benefit and Defined Contribution sections, we have produced one newsletter for everyone. We are really keen to receive feedback on the newsletter and welcome your comments and suggestions about what you would like included in future newsletters using the contact details on the back page. Please also let us know if you have any ideas about other ways that the Trustees could improve our communication with you. This last year has seen much publicity and change around pensions. The biggest pensions news last year was in March 2014, when the Chancellor announced a number of fundamental changes to Defined Contribution pension provision in his budget. The changes proposed are significant and members will have considerable additional flexibility going forwards in terms of how they can access and utilise their personal account at retirement. (See page 3 for further information). You will already have received letters from the Trustees outlining the key changes and the Trustees will continue to communicate with members as and when further details become available. However, if you are close to retirement you may wish to speak to an independent financial advisor. Jeff Hewitt Chair of the Trustees

2 April 2015 New Pension Flexibilities for Defined Contribution pensions As outlined in previous communications in both July and November, in the March 2014 budget, the Chancellor announced some radical changes to pensions which caught many people in the pensions industry by surprise. Below we list some of the key changes. For more details, please see the November 2014 Budget update which was sent to all active and deferred members. Currently, the proposals are not law and so could change in the future. However, in the meantime you may want to speak to a financial advisor, especially if you are close to retiring. Remember, once you have bought an annuity you cannot reverse the decision at a later date (once the statutory cooling off period has expired). Flexible access to defined contribution pensions from age 55 Access to free impartial guidance at retirement Minimum retirement ages to increase from % pension tax charge on DC pots on death to be abolished if deceased is under age 75. Changes to State Pension In May 2014, a new pensions act was passed which included the following changes to State Pensions. Increases to State Pension Age The planned increased to State Pension Age from 66 to 67 between 2026 and 2028 will go ahead - it s worth remembering this when thinking about when you might retire from work. Introduction of new single tier state pension From 2016, there will be a new single tier state pension that you can claim if you reach State Pension age on or after 6 April 2016 and meet the Government s eligibility criteria. In particular, to claim the new state pension you need to have been born on or after 6 April 1951 if you are a man and on or after 6 April 1953 if you are a woman. The full new State Pension will be no less than per week. The actual amount is still be to set. Your National Insurance record is used to calculate your new State Pension and you usually need 10 qualifying years to qualify for the new State Pension. If you have been contracted-out of additional State Pension (which will be the case if you are a Defined Benefit member), your new state pension will be reduced. For more information on the new State Pensions, go to Pension Scams Don t Get Stung Even though the Government plans to relax the rules about how you take your pension, you will still face heavy tax penalties if you take it before age 55. If you are approached by a company claiming to be able to free you pension or release cash from your pension before age 55 be very cautious. For more information on the dangers of pension scams please see uk/individuals/dangers-of-pensionscams.aspx

3 Looking after the Scheme As well as making sure the Scheme is being run in the best interests of members, the Trustee Board follows guidance provided by the Pensions Regulator an organisation that regulates workplace pensions. Last year, the Regulator introduced 31 quality features, or standards, that every Defined Contribution pension scheme must be assessed against. These features underpin the principles for running a good pension scheme and represent high standards of governance and administration. The Trustees have completed an initial assessment with the assistance of Towers Watson and are pleased to let you know that the Scheme already meets the majority of the 31 features which include standards around investments, risk, governance, administration and communications. The Trustees have formed a plan to address any areas that need improvement, including carrying out a self-assessment of the Trustee board, reviewing member, including choices of contributions and increasing understanding of scheme membership profile to enable better decision making and more targeted communications in the future. The standards will be regularly reviewed to ensure the Scheme continues to be run well. Would you like to be a Trustee? Our Trustee Board consists of six directors - four chosen by the Company and two nominated by you, the Scheme members, known as Member Nominated Directors (MNDs). Our current Trustees are as follows: Company Appointed Jeff Hewitt (Chair) Edward Dowler Member Nominated John Adams Steve Hanson Paul Jackson Rachel Potarzycka The term for MNDs is three years and the term for our current MNDs is due to expire in Autumn Being a MND is a rewarding role where you will be representing the interests of your fellow plan members and helping shape the way the Plan is run and communicated to members. You will be committing to holding the position for a minimum of three years and in that time you will need to attend six meetings a year. You don t need to be a Pensions expert but you will need to complete training courses to build your knowledge. Watch out for a letter with full details on how you can apply to be a MND in May this year.

4 Defined Benefit Section Focus Actuarial Valuation and Benefit changes. As outlined in the Statement of Financial Health which was sent to all DB members last summer, following the Company s consultation with active members of the DB section and subsequent benefit changes, the 2013 valuation was completed in June last year. A plan to remove the deficit was agreed with the Company and the Trustees continue to monitor the funding position of the DB section and regularly discuss this with the Company. How are we invested? At 30 October 2014, the DB section had assets of over 405m which were invested in the following asset classes (figures are m): There have been no major changes in DB investments over the year but the Trustees have sold some long dated index linked gilts and increased their holdings in LGIMs matching plus funds. The cash holding is a short term position Equity (LGIM) Diversified Growth Funds (Standard Life/Baillie Gifford/Black Rock) High Yield Bonds (Wellington) The money that is paid into the DB section of the Electrocomponents Pension Scheme is pooled and invested by the Trustees, who use this pool of money (the assets) to pay all the benefits that have been promised to members. All of the Pension Scheme s assets are independent of and held separately from the Company Corporate Bonds (AXA & LGIM) Index Linked Gilts (LGIM) Matching Plus (LGIM Cash (LGIM) A more detailed breakdown of the Scheme s investments can be a found in the Scheme s annual report & accounts which is available on request from Capita (see back page for contact t details). How did the investments perform? The graph below shows the investment performance for the three year period to 30 September All returns are net of investment fees: LGIM UK Equity LGIM Overseas Equity LGIM Emerging Markets* Standard Life Gars BlackRock DDG Baillie Gifford DGF* Wellington HYD Axa Smart Beta* LGIM Corporate Bonds LGIM Index Linked Gilts LGIM LDI Benchmark Returns -1.0% 5.0% 10.0% 15.0% 20.0% *Assets invested in fund for less than 3 years

5 Defined Contribution Section Focus Are you paying enough into your pension? Being in the Pension Scheme will not necessarily mean that you will have enough money when you want to retire and you may need to work longer. In particular, if you were auto-enrolled into the Pension Scheme only 2% of your salary is currently being paid into your pension (1% by you and 1% by the Company). Increasing your contributions could mean you have more income during retirement and the more you pay, the more the Company pays see table below: You Pay Company Pays 1.0% 1.0% 2.0% 3.5% 4.0% 7.0% 6.0% 10.5% In addition, if you pay at least 2% contributions you will be entitled to higher death-in-service benefits and ill-health early retirement benefits. Most members of the Scheme pay their contributions via salary sacrifice which effectively means that you get both full tax and National Insurance relief on your contributions making it a very tax efficient form of saving for your retirement. The earlier you start planning and taking action to save for your retirement the better chance you have of achieving the outcome you want. Watch out for the new Capita website which will include a new projection tool to help you with your retirement planning How well is your pension performing? Along with the level of contributions paid, investment performance is one of the key factors which determines the amount of pension you will get in retirement. The graphs on the right show the investment performance of the freestyle funds over the last 12 months and over the last 3 years and the investment performance of the risk graded funds over the last 12 months and since inception (May 2011). Please note that performance for the EPS Pre-Retirement Fund for 12 months ending 30 September 2014 is not available as this fund was not introduced until October 2013 (replacing the EPS Bond Fund). The fund in which your pension contributions are invested in can have a significant impact on your final pension and the Pension Scheme Trustees strongly recommend you to take independent financial advice prior to making any investment decisions and suggest that you review your investments on a regular basis. Investment Performance for the 12 months ending 30 September 2014 (net of fees) EPS Equity Fund EPS Managed Bond Fund EPS Managed Equity Fund EPS Diversified Fund EPS Mangaed Cash Fund EPS Higher Potential Growth EPS Medium Potential Growth EPS Lower Potential Growth 0.00% 3.00% 6.00% 9.00% 12.00% 15.00% Investment Performance for the three years ending 30 September 2014 (net of fees) EPS Equity Fund EPS Managed Bond Fund EPS Managed Equity Fund EPS Diversified Fund EPS Mangaed Cash Fund EPS Higher Potential Growth EPS Medium Potential Growth EPS Lower Potential Growth 0.00% 5.00% 10.00% 15.00% 20.00% *Past performance of funds in which contributions are invested is no guarantee of future returns. The value of your investment can fall as well as rise and you may get back less than you had originally invested. Benchmark % Fund % Benchmark % Fund % For more details on the Funds, please refer to the Fund specific factsheets which can be found via

6 Keeping in touch If you want to contact us about anything to do with the Scheme, including updating your details, please contact Capita. Capita Contact Details Electrocomponents Group Pension Scheme, Capita, Hartshead House, 2 Cutlers Gate, Sheffield, S4 7TL Continuous Improvement We would welcome your feedback on any areas where our service can improved so if you have any feedback (good or bad) on the service you have received either from the Pensions Team or Capita please Rod Tanner at rod.tanner@rs-components.com. Is your Expression of Wish Form up-to-date? When you joined the Company, you would have been asked to complete an Expression of Wish Form to indicate to the Trustees how you wish your lump sum death benefits to be paid. The Trustee is not legally bound by the wishes you express on this form but it will take them into account when making a decision about who should receive the payment. If your circumstances change, if you marry, divorce or have children, for instance, you should complete a new Expression of Wish Form. In fact, it s a good idea to complete a new form regularly, even if your circumstances have not changed, so the Trustee knows that your wishes are up to date. If you are an active member of the Scheme then please complete the online form which can be found on the Company s intranet site (click on Life Assurance Nomination/Expression of Wish Form which can be found under the A - Z of HR Site). If you are a former member of the Scheme or a pensioner, we still need to have an up-to-date copy of the form. The form can be requested from Capita.