Pensions Update. Boots Pension Scheme

Transcription

1 Pensions Update Boots Pension Scheme Autumn 2016

2 Welcome THE INTRODUCTION OF PENSIONS FLEXIBILITY There has been plenty to keep the AND CHOICE HAS CREATED Trustees and the Company busy from BOTH OPPORTUNITY a pensions perspective this year. AND CONFUSION We had to deal with the introduction of pensions flexibility and choice (which has created both opportunity and confusion); historically low interest rates and volatile investment markets; and most recently the impact of the EU Referendum. Since the EU Referendum, Gilt yields have fallen to historic lows, leading to higher liabilities for many pension schemes. The impact on the Scheme s funding will not be known immediately, as the Scheme actuary, Aon Hewitt, started work on the full valuation as at 1 April 2016 in advance of the Referendum. A valuation is a long and complex process, and we do not expect to know the outcome until sometime next year, when we will write to you with the details. Once the valuation has been concluded, the Trustees and the Company will discuss what additional contributions, if any, are required. The Trustees will also use this as an opportunity to continue to review the Scheme s investment strategy. The investment performance is shown on page 13. Following the introduction of pension freedoms for members of Defined Contribution ( DC ) arrangements in April 2015, it is clear that 2 Pensions Update 2016

3 people are taking advantage of these new options in increasing numbers. Remember that if your Boots benefits are valued at more than 30,000, the Trustees will need evidence that you have received independent financial advice before we can allow a transfer out of the Scheme to take place. See page 5 for more details. Finally, we have some forthcoming vacancies on the Board of Trustees, as David Thompson and Angela Farrell reach the end of their terms of office in October, although both intend to stand again for re-election. If you think you can offer your time to the important role of running the Scheme, or you know someone you think would make a good Trustee, please read the article starting on page 14. What s inside Scheme noticeboard 4 Your pension options 6 AGM coming soon to a screen near you 8 Who s who in the Scheme? 9 Facts & figures 10 Investments 12 Could you help run the Scheme? 14 Staying in touch 16 As always, if you should have any queries regarding your pension please contact the Pensions Team in Nottingham using the contact details on the back cover. Richard Oppenheim Chairman Pensions Update

4 Scheme noticeboard Security updates to our website As we told you in last year s report, we have a new pensions website that covers the various schemes that employees have contributed to over the years. Our section, for the Boots Pension Scheme specifically, has become a member-only zone. This means that you will need to enter a username and password to access the information in this section. It means we can put a lot more information on the website, as some of it is commercially sensitive so we do not want it available on a public site. Remember, the website has been designed to be mobile friendly, so you can look at it on your smartphone or tablet, when you re at home or out and about. To access the member-only zone, you will need to register. Go to the pensions website, select I m in the Boots Pension Scheme and follow the online prompts. You will need to enter the following information: your name your address your date of birth your National Insurance number 4 Pensions Update 2016

5 Transferring your benefits Members may be interested in transferring their benefits out of the Scheme to more flexible arrangements. This is particularly so they can take advantage of the pension freedoms that came into force in April last year, which we reported on in the last Update. If you convert your safeguarded benefits into flexible benefits by transferring out of the Scheme, it would be up to you to decide what to do with your flexible benefits. If the value of your benefits is greater than 30,000, you must take independent financial advice before transferring out. You can use the Company s appointed advisory firm, Workplace Solutions, for advice on transferring out but they would charge you for their service. You might therefore prefer to find your own adviser. You can find an independent financial adviser in your area on this website: Pensions Update

6 Your pension options The normal retirement age for the Scheme is 65, at which point the Pensions Team will send you information on your pension and the options that you have. If you would like to draw your pension at a different age, please get in touch for information on the options available. Please note that the earliest age that you can draw your pension is 55, and early retirement terms are subject to the Trustees discretion. We thought it would be helpful though to outline here how your pension is calculated when you start to draw it. This depends on your age at the time. Remember that it is possible to draw your pension and carry on working for the Company. Please note that although the outline in this article applies to most members, there are some historic benefits where this is different. In particular, there are some different terms that may apply for members who left the Scheme before 1 July Please contact the Pensions Team in Nottingham if you have any questions on this. Drawing your pension early up to age 60 Your pension will be reduced by what s known as an early retirement factor. Your pension is reduced as it will be payable longer than we assumed, but in a way that is the same cost to the Scheme. This ensures all members are treated equally. 6 Pensions Update 2016

7 Drawing your pension early between age 60 and 65 Your full pension will be payable without any reduction. No early retirement factor is applied for drawing your pension in these five years. If you are unclear, contact the Pensions Team. Although there could be exceptions, in most cases there is no advantage in delaying payment beyond age 60 as pensions aren t increased to allow for your pension being paid for a shorter time than if you had drawn your pension at age 60. Drawing your pension later after age 65 If you draw your pension after age 65, your pension will be increased to allow for it being paid for a shorter time. Pensions Update

8 Join us for our online AGM We hope you will be able to join us at this year s AGM, which we are running as an online webinar for the first time. This will enable more of our members to join in, as they will not have to travel to Nottingham. What is a webinar? The webinar is a presentation that you can see using your computer, smartphone or tablet. There will also be a commentary, so you need to make sure you have your computer s volume switched on. There will be an opportunity for you to ask questions by typing a message, either in advance of the AGM (you can do this when you register for the webinar) or during the webinar itself, using the live message link that will be on your screen. To join the webinar, you first need to register online at: You will need to provide: your name your address You will then be ed an invitation and link to join the webinar, which will be activated on 9 November at 3pm. 8 Pensions Update 2016

9 Pensions Update

10 Who s who in the Scheme? The Scheme is run by a corporate Trustee company called Boots Pensions Limited. The directors of this Trustee company (the Trustees ) are either appointed by the Company or nominated by the members of the Scheme. Two of the member-nominated Trustees are coming to the end of their terms of office, although we do expect that they will stand for re-election. On pages we have provided some more information about what s involved in being a Trustee and how to apply for this important role if you are interested. Nominated by members David Thompson Angela Farrell John Yeates (appointed 16 November 2015) Nominated by the Company Richard Oppenheim Mark Muller Dave Vallance Kevin Birch (appointed 2 October 2015) The Trustees participate in various specialist sub-committees, which meet between main Board meetings to discuss specific issues. These sub-committees are: Investment Committee Valuation Committee Audit Committee Ill-Health Committee Secretary to the Trustees Jim Robson Scheme advisers The Trustees appoint professional advisers to help them run the Scheme. From time to time, they review their advisers and may change providers. Scheme Actuary Robert Mellor, Aon Hewitt Ltd Investment Consultant Aon Hewitt Ltd Auditor KPMG LLP Banker National Westminster Bank plc Investment managers and advisers Legal & General Investment Management Ltd (bonds and equities) Schroder Investment Management Ltd (property) Wellington Management International Ltd (bonds) Financial advisers EY Solicitors Sacker & Partners LLP 10 Pensions Update 2016

11 Facts & figures Highlights from the 2015/16 Report and Accounts The overall value of the Scheme s assets at the start of the year (1 April 2015) was... During the year to 31 March 2016, the Company contributed... The Scheme s investments generated an income of... The change in value of the Scheme s investments (minus its administration costs) came to... The Scheme paid out benefits worth... So, overall, the value of the Scheme s assets at 31 March 2016 was... 6,310.4m 34.6m 136.3m 34.2m 186.1m 6,329.4m Membership Total 61,441 27,832 Pensioners 33,609 Preserved pensioners (who are receiving Scheme benefits, including husbands, wives and dependants) (who have benefits in the Scheme to draw at a later date) Pensions Update

12 Investments At 31 March 2016, the Scheme s investments were valued at 6,329.4m During the year under review, the Trustees have maintained their strategy of investing 85% of the Scheme s assets in bonds and Gilts and other interest rate and inflation-linked products (the matching portfolio ). The remaining 15% is invested in a growth portfolio comprising UK equities, overseas equities and property. The changes that the Trustees made during the year to the matching portfolio have helped to shield the Scheme from many of these difficulties. The Trustees continue to consider the impact of the vote to leave the EU on markets and the Scheme s investments. During the year, the Trustees made some changes to the matching portfolio, investing in a wider range of investments in order to improve the resilience of the Scheme to risks. This included increasing the allocation to UK government bonds (Gilts). The vote by the UK electorate to leave the EU in June 2016 continues to have a significant impact on financial markets around the world. In the UK, stock markets have been volatile and government yields have fallen to all-time lows, putting increased pressure on the funding position of UK defined benefit pension schemes. 12 Pensions Update 2016

13 Split of assets 31 March 2016 Investment performance to March 2016 Matching Portfolio Bonds, swaps and Gilts 80.4% Pensions Funding Partnerships and cash 5.1% Growth Portfolio Equities 9.0% Property 5.5% One year (%) Three years (% p.a.) Total Scheme Matching Portfolio Equities Property Source: Aon Investment Source: Aon Pensions Update

14 Help us run the Scheme that will fund your retirement Do you have: the ability to understand complex issues? an interest in finance or pensions? experience of working with groups or as a board? the desire to help fellow members? Then the role of Trustee for the Boots Pension Scheme could be for you 14 Pensions Update 2016

15 Who can apply? Any member of the Scheme, including members yet to draw a pension and pensioners, can put themselves forward to be considered as a member-nominated Trustee. However, the 1995 Pensions Act sets out certain circumstances, such as bankruptcy or any kind of financial offence, that may disqualify somebody from being a Trustee. Your Application Pack includes the full list of conditions. Please make sure none of these apply to you if you wish to put your name forward. What s involved in being a Trustee? A member-nominated Trustee is appointed for a five-year term of office, with the possibility of being able to re-apply when the term expires. A Trustee can resign from the position at any time by giving sufficient notice, and the term of office will end if they leave the Scheme. Various meetings take place throughout the year which Trustees are expected to attend. There is a lot of reading of technical papers in your own time, such as reports from our investment managers and advisers. Training and support will be provided. What s in it for you? The wide-ranging duties of a Trustee mean that the role can be time consuming and demanding. However, this is a great opportunity to work with people from different areas of the business, develop new skills and learn more about the pension scheme that will fund your retirement. How to apply If you wish to apply for the role, please write to Alliance Healthcare & Boots Pensions, Nottingham NG90 7GP; group.pensions@boots.co.uk; or telephone and request an Application Pack. This is also the time for you to clear up any questions you may have before you apply. Your Pack will include more detailed information about the role of a Trustee and the selection process. It will also include an Application Form which you should fill in and return by Friday 18 November You will need to provide a supporting statement which should include a little background information on yourself, your reasons for applying, the skills and experience you can bring to the role, your availability and your commitment. Pensions Update

16 Staying in touch If you have any questions about your benefits, or anything covered in this newsletter, please get in touch with us. You can also request copies of any official Scheme documents, such as the Trustee s full Report & Accounts, on which the financial summary in this newsletter is based, or any documents relating to the Scheme s funding. Helpline: (internal) group.pensions@boots.co.uk Website: ahb-ukpensionportal.co.uk Write to: Alliance Healthcare & Boots Pensions, Nottingham NG90 7GP NOMINATION FORM Remember to fill out a Nomination Form to tell the Trustees who you would like them to consider for the payment of any lump sum benefits in the event of your death. If your personal circumstances change, for example if you get married or divorced, you may wish to review your Nomination Form. You can download a form from the Scheme website,