IN TOUCH 2 13 IN THIS ISSUE

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1 IN TOUCH 2 13 IN THIS ISSUE 02 Welcome to In Touch 03 Watch out for fraudsters 04 Linking up: look into it now 04 National fraud initiative 05 It pays to get in 06 Telling us who you want to receive benefits after you die 07 Your chance to be the deferred members representative 08 Scheme year 2012 / Investments 10 Fund accounts 11 Actuarial valuation 11 Annual meeting SPFOnline: the way to keep in touch with your pension 12 Contacting us: please tell us if you move

2 WELCOME TO IN TOUCH Nicola Smith Principal Pensions Officer, Strathclyde Pension Fund Office YOUR BENEFITS ARE GUARANTEED Your deferred benefits are based on your pensionable service and your pensionable pay, not on investment returns. Your deferred benefits will be paid by the Fund as set out in the regulations which are written and guaranteed by the Scottish Government. YOUR BENEFITS ARE KEEPING PACE WITH INFLATION As the CPI rose by 2.2% in the year to 30 September 2012, this was the basis for the increase to your deferred benefits from April The exact increase depends on the date your benefits were deferred. Page 4 of your deferred benefit statement shows what your yearly pension when you became a deferred member was and what it is now. WHEN YOU CAN HAVE YOUR BENEFITS Your deferred benefits can be paid from your 60th birthday onwards and our current process is to write to our deferred members as they approach 60. If you take your benefits before the LGPS normal retirement age of 65, they may be reduced if you are not protected by the rule of 85. WATCH OUT FOR FRAUDSTERS The last year has seen an increase in pension release scandals. The article on the next page explains the risks. SPFOnline THE WAY TO KEEP IN TOUCH WITH YOUR PENSION We expect to deliver the vast majority of our communications electronically within the next couple of years, including deferred benefit statements and In Touch. Why not sign up for SPFOnline when it is launched on our website? 02

3 WATCH OUT FOR FRAUDSTERS OFFERING YOU A LUMP SUM NOW FOR YOUR DEFERRED BENEFITS Don t let your deferred benefits become prey to fraudsters. Fraudsters are singling out people like you and claiming that they can help you cash in your pension early. What they don t say is that if you agree to this you could face a significant tax bill. They also don t explain that you could be falling into a terrible trap which has the potential to destroy your retirement. According to City of London Police Commander Steve Head, Pension liberation fraud is the new boiler room fraud phenomenon, as fraudsters seek to exploit new opportunities thrown up by the changing economic climate. If you are cold-called or text messaged with a deal to unlock your pension, don t touch it. Your deferred benefits are guaranteed and are keeping pace with inflation. For more information about the dangers of pension liberation, visit the following Government sponsored website: Predators stalk your pension Companies are singling out savers like you and claiming that they can help you cash in your pension early. If you agree to this you could face a tax bill of more than half your pension savings. Don t let your pension become prey. In Touch

4 LINKING UP: LOOK INTO IT NOW If you are currently working for an LGPS employer and have a previous period of Scottish LGPS service, you can link that period to your current service. If you link up your deferred benefits to your current service, you will receive one set of retirement benefits, calculated using: your total membership (old job plus new job) your final year s pay in your new job You will lose the right to link up if you do not elect to do so by 31 January This date is nine months later than announced in August 2012 s In Touch. LINKING UP: will count towards your pension annual allowance may affect the date you can take your deferred benefits without reduction is a decision that should take account of possible changes to your circumstances, pay and inflation NATIONAL FRAUD INITIATIVE (NFI) NFI is a counter-fraud exercise led by Audit Scotland. It collects information about individuals that is held by different public bodies on their different computer systems. NFI seeks to identify incorrect payments of social security benefits, housing benefits or pensions. As we have a statutory obligation to participate in NFI, we would like to make it clear that data we hold about you will be shared with other public bodies. We do not require your consent under the Data Protection Act 1998 to do this. You do have a right to obtain details of the personal information which we hold about you by making a request in writing to the Pensions Manager, Strathclyde Pension Fund Office. For the purposes of processing your personal information, Glasgow City Council is the Data Controller. The nominated representative of the Data Controller is the City Solicitor. For further information on data matching contact: Peter Marsh, Head of Audit & Inspection, City Chambers, George Square, Glasgow, G2 1DU Tel Fax Peter.Marsh@finance. glasgow.gov.uk 04

5 IT PAYS TO GET IN The Government has introduced new workplace pensions law. If you are working, your employer will need to automatically enrol you in a pension scheme every 3 years. You will have the option to leave the scheme again right away. But this is a big decision. If you opted out of the LGPS and are still working in local government you will be re-enrolled at some point. We would urge you not to wait for that but to consider getting back in now to build up further benefits. We have first hand experience of people who have regretted not being in the Local Government Pension Scheme (LGPS) for as long as they could. Looking back they say they made a mistake. WHY YOU SHOULD GET IN The LGPS is one of the best pension schemes there is. GETTING IN COSTS MUCH LESS THAN YOU THINK Your employer will pay most of the cost of the LGPS. And tax and national insurance breaks will cut the cost of your own contributions. GETTING IN OFFERS A NUMBER OF ADVANTAGES the opportunity to link up your deferred benefits extra pensionable service life cover benefits on permanent ill health GET IN GET AHEAD OF THE GAME We have first hand experience of people who have regretted not being in the Local Government Pension Scheme (LGPS). Looking back they say they made a mistake. Being in has many benefits. And the longer you re in the better. WHY YOU SHOULD GET IN The LGPS is one of the best pension schemes there is. It delivers: a pension based on your final salary a pension that increases each year in line with inflation a pension payable to your surviving spouse or partner on your death after retirement a tax free lump sum in exchange for some of your pension death in service protection of three times your pay as a tax free lump sum a pension for your surviving spouse or partner on your death in service an ill health pension paid from any age if you have two years service but are permanently unable to work The LGPS may change in future but it will still be one of the best pension schemes there is. GETTING IN COSTS MUCH LESS THAN YOU THINK Your employer will pay most of the cost of the LGPS. And tax and national insurance breaks will cut the cost of your own contributions. IT PAYS TO GET IN In Touch

6 TELLING US WHO YOU WANT TO RECEIVE BENEFITS AFTER YOU DIE We have ultimate discretion over payments, but you can tell us who you would like to receive any lump sum payable on your death. If you left service before 1 April 2009 and die before becoming a pensioner, the lump sum you are due at retirement (that is 3 times your deferred pension) is paid out. If you left service after 31 March 2009, 5 times the annual pension you have built up is paid out. Any lump sum payable on your death is in addition to any dependants pensions that are payable. Only leavers after 1 April 2009 can nominate a co-habiting partner for a pension paid on their death. You can guide us as to who you would like any death benefits paid to by completing our nomination forms available from the Deferred members FAQs area of our website at aspx?articleid=9414 HAVE YOU BECOME A DEFERRED PENSIONER AFTER 31 MARCH 2009? YES NO Are you unmarried and have you: Lived with someone for 2 years Whilst both of you have been free to marry or enter into a civil partnership Whilst you have been financially interdependent and Who you would like to receive a pension on your death Do you want to nominate someone for any lump sum paid on your death. YES NO YES NO Complete a nomination of co-habiting partner for survivor s pension form RETURN THE NOMINATION FORM(S) Complete a death grant nomination form Review your decision if your wishes or circumstances change 06

7 YOUR CHANCE TO BE THE DEFERRED MEMBERS REPRESENTATIVE The Representative Forum is a key part of our governance. We are looking for a deferred member to join the Forum. The Forum meets four times a year, so that representatives of all the parties with an interest in the Fund can discuss relevant issues and comment on proposals. The Representative Forum has close links with the Strathclyde Pension Fund Committee, the Fund s key decision-making body. The Convener of the Committee also chairs Forum meetings. The agendas for Committee and Forum meetings are similar, and a formal report is passed from the Forum to the Committee.? If you would like to speak on behalf of our 46,000 deferred members at our Representative Forum, please contact us by 31 October 2013 via an to spfo@glasgow.gov.uk headed Deferred Members Representative briefly detailing your relevant experience and explaining why you think that you would be suited to this role. We will then select an appropriate representative from those who express an interest. TRANSPARENCY We believe that a key element of good communication is transparency. All of our committee reports and a host of other information are available from the About Us / Committee papers area of our website at: In Touch

8 SCHEME YEAR 2012/2013 Councillor Paul Rooney Convener, Strathclyde Pension Fund Committee In the course of the year the Fund grew from billion to a new high water mark of billion. Other highlights of 2012 / 2013 were: migration to a next generation pension administration system implementation of our automatic enrolment strategy for our larger employers completion of the largest early retirement exercise in a generation Over the 12 months to 31 March 2013 the Fund s total membership grew slightly from 195,339 to 197,473. This includes: 81,994 employee members (81,522 a year earlier) 46,622 deferred members (46,274 a year earlier) 68,857 pensioners (67,543 a year earlier) THE COMING YEAR PROMISES TO BE INTERESTING AND PRODUCTIVE Following the enactment of the Public Service Pensions Bill, we will continue to play a key role in reform of the Scottish Local Government Pension Scheme. Along with trade unions and Scottish Government we will be part of the group negotiating the new career average LGPS. We will report on developments on our website as they occur. Now that we have agreed a digital communications strategy, we expect to see the vast majority of our communications delivered electronically within the next couple of years. We will also be rolling out our automatic enrolment strategy as more and more of our employers reach their staging date. Centrepiece is a campaign designed to ensure that automatic enrolment has the maximum possible positive effect on recruiting and retaining members. Lynn Brown Executive Director of Financial Services, Glasgow City Council 08

9 INVESTMENTS FUND RETURNS 2012/2013 NET ASSETS AS AT 31 MAR ,450 million NET ASSETS AS AT 31 MAR ,066 million EST NET ASSETS AS AT 30 JUN ,033 million FOCUS ON GROWTH Our continued focus on growth was rewarded this year. During the year we made significant changes to our investment strategy and structure. These were immediately effective. Our New Opportunities Portfolio funded several innovative investment ideas including us becoming a pioneer investor in UK infrastructure. Comprehensive information about our investments can be found from the About Us / Investment area of our website. LONG TERM PERFORMANCE Year to 31 March Mar Mar Mar Mar Mar Mar Mar Mar Mar Mar 3Yr 5Yr 10Yr Annualised % % % % % % % % % % % % % Retail Prices Consumer Prices Average Earnings Fund Return Benchmark WM Average RESPONSIBLE INVESTMENT We were one of the first pension funds to sign the UN Principles for Responsible Investment. Last year we appointed GES, a Stockholmbased global specialist, to engage on our behalf both with the companies in which we invest and with our investment managers. As a result we are now better informed, better focused and more productive on responsible investment. Our quarterly responsible investment reports are available from the About Us / Committee papers area of our website at aspx?articleid=2410 In Touch

10 FUND ACCOUNTS 2012/2013 The Fund s high watermark of 13.07bn was achieved despite 454m paid out in benefits and a fall in employer and employee contributions resulting from 2,120 members retiring in the year Paul Murphy, Fund Finance Manager, Strathclyde Pension Fund Office For the years ending 31 March 2011/ / FUND INCOME Contributions receivable from employers Additional contributions from employers Contributions receivable from employees Transfers in Other income 332,001 66, ,807 7,249 1, , ,525 51, ,683 6, ,624 FUND PAYMENTS Pensions Lump sums Refund of contributions Transfers out State scheme premiums Administrative and other expenses borne by the Fund Net addition from dealings with members 320, ,572 1,243 11, , ,768 43, , , , , ,543 23,081 RETURNS ON INVESTMENTS Investment income Investment management expenses Overseas tax Change in market value of investments Net returns on investments Net movement in the Fund during the year 154,467 (13,459) (4,471) (49,146) 87, , ,528 (15,207) (3,932) 1,443,886 1,592,275 1,615,356 ADD: Opening net assets as at 1st April EQUALS: Closing net assets as at 31st March 11,320,372 11,450,885 11,450,885 13,066,241 Our annual report provides detailed financial information about our scheme year 2012 / 2013 and is available from the Publications / Annual Reports area of our website. These accounts are still subject to audit. 10

11 ACTUARIAL VALUATION Our actuary conducts an actuarial valuation of the Fund every three years. As at 31 March 2011 their valuation established that the Fund was 97.3% funded. Our regular monitoring of our funding level indicates how this goes up and down over time. Funding level 100% 95% 90% 85% 80% 75% 70% 65% 60% 97.3% 83.4% The full 2011 valuation report is available from the Publications / Valuation reports area of our website. 55% 31-Mar Jun Sep Dec Mar Jun-12 Ongoing basis 30-Sep Dec Mar-13 The News area of our website has quarterly updates on our funding level. ANNUAL MEETING 2013 A full set of the slides used at the meeting on June 14 is available in the News area of our website. In Touch

12 THE WAY TO KEEP IN TOUCH WITH YOUR PENSION It s all too easy for us to lose contact with a deferred member, as you may change address several times before we can pay out your pension. It s really easy to keep us in touch with your whereabouts by using SPFOnline. You can also check the value of your deferred benefits, your personal details and your nominated beneficiaries. To request an activation key for online access, click on SPFOnline at the top right of any page on our website. CONTACTING US Please tell us if you move house Web: spfo@glasgow.gov.uk Tel: Strathclyde Pension Fund Office, P.O. Box 27001, Glasgow G2 9EW STRATHCLYDE PENSION FUND OFFICE MANAGING THE LOCAL GOVERNMENT PENSION SCHEME IN THE WEST OF SCOTLAND Ref: In Touch Aug 2013