Pensions Post Trustees annual report

Transcription

1 January Pension Plan Pensions Post Trustees annual report Keeping you up to date with our Plan Welcome to the latest issue of Pensions Post. In this issue, we update you on some developments concerning the people who run the Plan, with news about a change to our Trustees. We have then gone back to basics to give you a recap on how the Plan works, and how and when your pension is paid when you retire. If you re an active or deferred member we then remind you to think about your pension planning. A recent paper from the Department for Work and Pensions (DWP) tells you how much of your income you should be aiming to replicate in retirement. While the Plan gives you a good start to your pension savings, you may find it helpful to think over your plans for when you retire, and how you can make sure you will have an income to support the life you want to live when the time comes for you to stop working. We cover this in more detail on page 6. As always at this time of year, we then give you an overview of the Plan s finances and investments for the year ended 30 June The information provided has been taken from the audited Report and Accounts, and a full copy of this is available on the Plan s website, We then provide some details about the Plan s funding position on page 8, following on from the update that we gave you in July 2012, and tell you more about when you can expect the results of the Plan s latest valuation, as at 30 June We hope you continue to enjoy reading Pensions Post and if you have any comments, please contact us using the details on page 11. Inside An update on the Trustees How the Plan works How can you plan for your retirement? Pensions news Funding update The Plan s accounts Investment update Useful information

2 An update on the Trustees Recent Trustee developments There have been some recent developments that will mean some changes to the people who run the Plan for you. Stuart Priday has left us, and so has our chairman, Gordon Bissett. We would like to take this opportunity to thank them both sincerely for the hard work they have put in and the invaluable service they have given to the Plan and its members over the years. Following Gordon s departure, we asked him about his time as chairman of the Trustees, and we feature a profile opposite. Gordon was instrumental in pioneering the Plan s move into electronic communications A profile of our past chairman, Gordon Bissett Gordon joined Ladbrokes in 1978, and in the 35 years since has gone on to hold influential line management roles, as well as his role as Chairman of the Trustees. He was also instrumental in pioneering the Plan s move into electronic communications and the use of to keep in touch with all members. If you have not yet signed up to receive Plan communications electronically and would like to do so, please see page 11. Gordon spent 25 years overseeing the management of Ladbrokes two greyhound stadia and organising proceedings both inside and outside the races, including international TV broadcasts. Recently he returned from an eight-day climb of Mount Kilimanjaro which raised a very impressive 56,500 for several charities. In retirement he also plans to spend some time painting and decorating, although he is sure he has unfinished business in the greyhound industry! Gordon s time as a Trustee Gordon s principles as a Trustee were formed 20 years ago by the book Legal Obligations and Responsibilities of a Trustee and three rules have stayed with him. He says: Make sure: The money that should be in place is in place. The people that should be paying in are paying in. The right person gets the right pension at the right time. He names managing the 2005 split of the Hilton Group Pension Plan into the Ladbrokes Pension Plan and the Hilton UK Pension Plan (following the sale of Hilton International Hotel division) as one of his biggest challenges: All of our Trustees and advisers worked together towards a common goal then, and that has remained the case, he says. He has thoroughly enjoyed his time as a Trustee: It s not just about a sense of duty: it s a lot stronger than that. You feel personally responsible for members: all of the Trustees do. There is a lot of training, good advisers, and all of us ensure that everything is right. What we always try to do is carry out the wishes of members. 2

3 The role of a Trustee is absolutely fascinating. It s all about focussing on those three rules I mentioned, and everything falls into place. I would definitely recommend it. The earlier you start saving, the greater the benefit As a final piece of advice, he recommends that you start saving as early as you can: Nobody starts saving early enough. Even people who start at the first opportunity could start earlier! Pay into a pension plan no matter what. Once you are saving, can you increase what you re paying in? Above all, the earlier you start, the greater the benefit. Your team of Trustees The Trustees of the Plan from December 2013 are set out below. Employer Nominated Sue Harley Charles McAulay Member Nominated David Bowen Jane Hutchinson Chris Lynch Paul Plowright As a result of changes to the Trustee Board, the Trustees and Ladbrokes are working together to understand the most appropriate operating model for the future. We will update you when we know more. 3

4 How the Plan works We recognise that many members find pensions difficult to understand. With that in mind, we intend to update you on the ins and outs of the benefits that the Plan offers in future issues of Pensions Post and in this issue, we ve provided a short recap on the benefits that the Plan offers you as a member. The basics of the Plan Your pension when you retire is worked out using three main criteria as follows: Your pensionable service This is the length of time you have earned pension in the Plan. x Your final pensionable salary This is the average of your three highest consecutive pensionable salaries in the last ten years. The rate at which you earn pension in the Plan every year x For most members this is 1/80 or 1/60 of your final pensionable salary. = Annual pension When you retire, your pension will be paid to you in monthly instalments for the rest of your life, which will increase broadly in line with inflation. Your pensionable salary is your basic annual salary at 6 April each year less the Lower Earnings Limit applicable at the same date. For example Pension Plan Larry joins the Plan in 1988 and retires in 2013 at age 65. What he earned in 2011, 2012 and 2013 were his highest consecutive salaries. His final pensionable salary is worked out like this: 20, , ,000 = 63,000 63,000 divided by 3 = 21,000 His final pensionable salary is therefore 21,000. As he has completed 25 years pensionable service and he earns pension every year at a rate of 1/80th of his final pensionable salary, his pension when he retires is: Larry s pensionable service 25 years x Larry s final pensionable salary 21,000 Rate at which pension is earned 1/80 x = Annual pension 6, Please note: The example above is fictitious and provided for illustrative purposes only. It does not represent any promise or guarantee as to the amount of benefit you may receive, and the actual amount of any pension payable will depend on circumstances, which may be different from the assumptions in the above illustration. 4

5 Do you know how much your pension could be? If you want to find out, this depends on what type of member you are: If you re an active member, refer to your benefit statement, which you can expect to arrive in the post soon. We write to you once a year with a benefit statement to tell you how much your pension is likely to be at retirement. If you re a deferred member, you will have received a benefit statement when you left to tell you how much your pension was likely to be when you retired. We will have also given you details about how you can claim your pension in the future. You will not receive annual statements after leaving service, but we can always provide you with updates if required. If you re a pensioner member, you ll already be receiving your pension once a month to help support you when you are no longer at work. You will receive a payslip once a year unless your pension is adjusted by more than 5 per month, in which case we will send you a payslip each month. What else does the Plan provide for you? For further information on important features of the Plan, such as death benefits and pension increases, you can refer to the Plan booklet, available on the Tools and resources section of the website at Electronic communications The Trustees are keen to send Plan communications electronically to as many members as possible. It is quicker, more environmentally friendly and it saves the Plan money. If you would like to receive Pensions Post and other Plan communications via , please contact the Administration Team using the details on page 11. We ll also send you a pension increase letter once a year, at the end of March, to tell you how any pension increase been worked out. In addition, you will receive a P60 each year around May, which details your annual pension and tax details relating to your Plan benefits. 5

6 How can you plan for your retirement? If you re an active or deferred member, the Plan provides you with an important way to save for retirement, and may help you to build up a good pension, as we discussed in the previous section. Yet while the Plan provides you with an important benefit, you may still find it useful to take some time to plan for your retirement, and consider whether you could be doing more to prepare. To help you to think about your future, the following steps can help: 1. Where could your retirement take you? First, think about what you want your retirement to look like will you have some commitments, such as mortgages, loans or other debts that will mean money will be tight? Or could it be a time filled with holidays? If you prefer the thought of the latter, you may need to start saving more to achieve your goals. The Department for Work and Pensions (DWP) suggests that to achieve an acceptable standard of living, you may want to aim for a retirement income that corresponds to the figures given in the table below, based on your income while you are at work. Annual income bracket whilst at work Under 12,000 12,000 to 22,100 22,100 to 31,600 31,600 to 50,500 Over 50,500 Target annual income you might need in retirement 80% (i.e. up to 9,600) 70% (i.e. 8,400 to 15,470) 67% (i.e. 14,807 to 21,172) 60% (i.e. 18,960 to 30,300) 50% (i.e. from 25,250) These ratios were published by the DWP in 2013, (based on earlier research from the Pensions Commission) and include the State Pension. The lower your income, the greater the proportion of State Pension that will make up your retirement income. The higher your income, the more the onus is on you to make sure that you are saving enough. 2. When do you want to retire? Many of us dream of an early retirement, but how close are you to turning this dream into reality? Think seriously about when you want to retire and how much you will need. Visit the Money Advice Service s website, which has a budget planning tool accessible at 3. Stay on course Once you have an idea of how much your pension could be worth, there are a number of steps that you can take to make sure that you are doing all you can to get to the lifestyle you want when you stop working: Check the benefits that you are entitled to from the Plan. If you are an active member, refer to your benefit statement. Check what other pension arrangements you have and how much they might pay you. For example, if you re a deferred member of the Plan, what does your current employer give you in terms of pensions? Check any State Pension that you are entitled to (see the box below for more information). Consider making extra savings towards your retirement. One way to do this could be through making payments into Ladbrokes defined contribution pension arrangement, the Ladbrokes Pension Scheme provided by Legal & General. If you re thinking about this, start sooner rather than later: the longer you save, the greater your pension could be at the end. If you would like more information on how to do this please contact Phil Rixon, using the details on page What is the State Pension? The State Pension is a regular income paid to you by the Government, when you reach a qualifying age (the State Pension age). This is currently a week, and can be increased if you receive the State Second Pension (S2P). From April 2016 the State Pension is set to change to a flat-rate pension of 144 per week which will rise in line with inflation. Visit to see how much you could get and for more information on the State Pension in general.

7 Pensions news Keep on top of what s happening in pensions and how it could impact you. Pension tax update The Government has recently announced changes to what are known as the annual and lifetime allowances, which will come into effect from 5 April To find out more about this, refer to the guide to pension tax on our website at SiteCollectionDocuments/TAX_NEWS_2013.pdf For most members, these reductions to tax relief are unlikely to have a direct impact to their Plan membership. Pension liberation an update In the summer edition of Pensions Post we made you aware of a rise in pension liberation schemes, which encourage members to access their pension before the age of 55. The Government and Her Majesty s Revenue & Customs (HMRC) are concerned about the consequences for members of participating in liberation activities, and have taken steps to curb them. What you need to be aware of Members who participate in such schemes face losing up to 70% of their funds back to HMRC, as they can lose any tax benefits that they gained on their savings. In addition the firms offering to release the funds early often charge high fees on top, leaving the member with significantly less money than they thought they would receive. So please be cautious if you are approached by a company or individual offering you with a chance to get a loan, saving advance or cash back from your pension, or accessing your pension early. You can read more about pension liberation on the Pensions Regulator s website at pension-liberation.aspx The Government and HMRC are concerned about the consequences for members of pension liberation 7

8 Funding update The funding level shows a comparison between how much money the Plan has and how much it will need in the long term to pay members benefits when they become due - so it s an important measure for the Trustees to monitor regularly. Every three years a detailed look is taken at the Plan s funding level by undertaking an actuarial valuation. The most recent valuation was carried out as at 30 June Work on the next full valuation, which has an effective date of 30 June 2013, is currently underway we will report the results as soon as they are known. In addition to the full actuarial valuation the Plan obtains updates on its funding level on a regular basis. The most recent formal funding update available was carried out as at 30 June On 30 June 2012, the Plan s financial position on an ongoing basis was as follows: The Plan had assets of 288 million available for paying out benefits. The estimated amount of money required to provide the benefits for all members was 345 million. This means that there was an estimated shortfall of 57 million as at 30 June The Plan s funding level on the ongoing basis was therefore 83%. The shortfall on the ongoing basis as at 30 June 2010 was 32 million. The 25 million increase in the shortfall between 30 June 2010 and 30 June 2012 was due to adverse changes in financial market conditions offset partly by favourable investment returns and the Company s deficit contributions. More information on the funding level can be found in the full Report and Financial Statements, or in previous issues of Pensions Post, which you can find on the Plan website, The funding level is an important measure to keep an eye on 8

9 The Plan s accounts The Plan s assets continued to grow over the past year. Here you can see how much money went in and out of the Plan, so together with the funding update, you can keep an eye on the financial health of the Plan. Pension Plan 1 July June 2013 (figures in 000s) 1 July June 2012 (figures in 000s) Value as at 1 July 290, ,686 Total income 10,650 11,716 Change in value of investments 26,072 18,349 Total expenditure ( 12,045) ( 12,497) Value as at 30 June 314, ,254 Membership The chart below shows how the line-up of the Plan has changed in the last year: As at 30 June 2013 Contributing members 719 Pensioner members 1, % Deferred members 1,206 As at 30 June 2012 Contributing members 812 Pensioner members 1,430 Deferred members 1,225 Want to know more? The Plan s accounts, highlighted above, were audited by Baker Tilly UK Audit LLP, who gave their view that the accounts were a fair and true view of the transactions of the Plan. For a full copy of the Report and Financial Statements for the year ended 30 June 2013 visit our website at 9

10 Investment update As a member of the Plan, your pension is based on your salary and the amount of service you have in the Plan rather than the performance of investment markets. However, investment performance does have an effect on the Plan s assets, and if you are interested in how the markets have affected the Plan, you can find out more below. 30 June 2012 (%) 13.8% 11.7% 11.7% Where our investments are held In the chart to the right you can see a breakdown of where the Plan s money was invested as at the end of the Plan years to 30 June 2012 and 30 June % 20.2% As the Plan s estimated benefit payments vary from time to time, we keep our investment strategy under review and will update you with any changes in future issues of Pensions Post. 30 June 2013 (%) An update on our investment strategy We regularly review the Plan s investment strategy to achieve a suitable balance between cash flow, performance and risk and decide how much we should invest in the different asset classes to achieve this. This strategy resulted in a 60% allocation to bonds and a 40% allocation to equities and Diversified Growth Funds (DGFs) as at 30 June The Trustees are currently reviewing the investment strategy and will provide a further update in the next issue of Pensions Post. 14.0% 39.8% 13.0% 13.4% 19.8% How the investments performed The estimated overall Plan return over the one year and three year period ended 30 June 2013 was 9.0% and 9.9% a year respectively. The estimated overall Plan return over the five years to 30 June 2013 was 7.5% a year. If you want to know more about the Plan s investments, you can read: the latest Statement of Investment Principles; and UK Equities Overseas Equities UK Corporate Bonds UK Index-linked Gilts Diversified Growth Funds (DGFs) Jargon buster Visit the Tools and resources page of the Plan s website for definitions of some key pension and investment terms the Report and Financial Statements for the year ended 30 June on the Plan s website at: 10

11 Useful information Where can I find more up to date pensions information? You can get more information by visiting the websites below. Go to: for important Plan news and resources, and information on matters such as pension and death benefits. for Government information and public services. There is also a section dedicated to pensions and retirement planning, which you can find at for help with complaints and disputes about the way that pension arrangements are run. for help with member and beneficiary pension queries. for information on the Pensions Regulator, including a list of pensions resources. Nomination form If you die as a contributing or deferred member of the Plan, or if you die within five years of taking pension benefits from the Plan, your family (spouse, civil partner or dependants) may be entitled to benefits payable on your death. You should complete a nomination form to explain to the Trustees to whom you would wish any such death benefits to be paid. The Trustees will use their discretion in deciding who should receive any benefits payable. If your circumstances have changed then you may want to update your nomination form. A copy of the form is available on the Plan s website, Professional advisers The Trustees use a number of professional advisers for specialist tasks. A full list of the Plan s advisers is included in the Trustees Annual Report and Financial Statements 2013, which you can find on the Plan s website, Contact details If you have any questions about the information shown in Pensions Post, which you are unable to find an answer to by visiting the Plan s website ( or if you have any queries about your Plan benefits, you can contact us using the details below: Ladbrokes Pension Plan Administration Team The Ladbrokes Administration Team, Hymans Robertson LLP, One London Wall, London, EC2Y 5EA 8 ladbrokesadmin@hymans.co.uk Phil Rixon, Senior Reward Manager Phil Rixon, Ladbrokes plc, Imperial House, Imperial Drive, Rayners Lane, Harrow, Middlesex, HA2 7JW 8 phil.rixon@ladbrokes.co.uk Keep your details up to date! It is important to keep your personal details such as your address up to date, as outdated information may mean that: Benefits are not settled as quickly Important messages may not reach you as swiftly as they should Delays may lead to financial hardship. Make sure you keep in touch with the Plan s developments, by making sure we have your correct address. You can tell us of any change to your address by contacting the Ladbrokes Administration Team. 11

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