PensionsTalk The newsletter for members of the Lafarge UK Pension Plan

Transcription

1 PensionsTalk The newsletter for members of the Lafarge UK Pension Plan PENSIONS February 2012

2 Welcome Another busy year has passed as I welcome you to PensionsTalk. PensionsTalk is the annual newsletter from the Trustee that keeps you informed of the progress of the Lafarge UK Pension Plan (the Plan). During the past twelve months the Trustee and Lafarge have discussed a number of changes which you will find described within this issue of PensionsTalk, including the cessation of Final Pay accrual and the reorganisation of the company structure supporting the Plan (known as the Scheme Apportionment Arrangement). Following the sale of Lafarge Plasterboard Ltd, I wish to thank Clive Ellwood, Finance Director, for his contribution as a Trustee Director of the Plan and to welcome Jenny Honeysett, Financial Controller of Lafarge Cement as a new company-appointed Trustee Director. The next election of representatives to the Pensions Consultative Council (PCC) is due to take place during Active and pensioner members of the Lafarge UK Pension Plan will be invited to seek nominations to stand as a candidate. More details on how to participate will follow later this year. 2

3 We continue to live in an uncertain economic climate and the Trustee continues to monitor and manage the investments very carefully. The value of the Plan s assets as at 30 June 2011 was 2,337 million, an increase of 210 million over the previous year. By 31 December 2011, the value of the Plan s assets stood at around 2,361 million. For more about the Plan s investments turn to page 6. As well as the Plan s financial position, it is also important to monitor the funding position, as the Trustee needs to know how much money the Plan needs to provide the benefits now and in the future. The next formal valuation of the Plan is due as at 30 June 2012, with the results available in We prepare a periodic update as at 30 June, which is contained in the attached Summary Funding Statement. However, the value of the Plan s liabilities have continued to rise, as the cost of pension provision has increased. It is anticipated that the funding level has fallen since 30 June 2011, but will have been offset by the closure to Final Pay accrual. We hope you find this issue of PensionsTalk to be of interest and invite you to let the Trustee Directors know what you think by contacting us using the details given on the back page. Norman Braithwaite Chairman Inside this issue Plan finances page 4 Investment perspective page 6 (Final Pay Section) DC Focus page 8 Plan news page 10 3

4 Plan finances Every year, the Trustee produces a Report & Accounts for the Plan, which sets out the money coming into and being paid out of the Plan. The key figures are summarised on the right. At the start of the year (1 July 2010) the Plan s assets were valued at 2,127.2 million. Over the year, that increased by 210 million to 2,337.4 million. Income in the year up to 30 June 2011 The company paid in 28.2m PenXchange contributions paid on behalf of members 5.8m Money Purchase members paid in 1.1m Income from investing the money 61.7m Total income 96.8m Expenditure in the year up to 30 June 2011 Pensions paid 110.6m Tax-free lump sums taken 9.1m Death benefits 0.9m Payments in respect of leavers 1.3m Administration costs 2.4m Pension Protection Fund and similar levies m Investment managers fees 3.7m Total expenditure 133.7m 4 The information is taken from the full Report & Accounts for the year ending 30 June 2011, which have been audited by KPMG, the Plan s independent auditor. You can download a copy from the Lafarge Pensions website or request one from the Pensions Department (see page 12).

5 Who is in the Plan? Total membership figures fell by around 1,000 to 35,288 by 30 June 2011, at which point the membership was as follows: Final Pay Defined Contribution 1, Active Members 11, Deferred Pensioners 20,299 Pensioners and Dependants On 1 November 2011, all active Final Pay members were transferred to PensionBuilderplus, where they will build up future benefits on a Defined Contribution basis. 5

6 Investment perspective (Final Pay Section) What is the Plan invested in? The Trustee s primary aim is to strike a balance between investing in those assets that provide growth and those that match the Plan s liabilities (the benefits that will have to be paid out). The Trustee wants to reach a position where the Plan is self-sufficient, i.e. it does not need to rely on the employer to make up any shortfall between the Plan s assets and its liabilities. Having a wide range of investment types helps to reduce the risk of a fall in one particular asset class having a significant effect on the fund value. Types of investments The graph shows how the assets of the Final Pay Section were invested on 30 June Asset % n Equities UK 21.4 n Equities Overseas 25.7 n Fixed Interest 21.9 n UK Index-Linked 17.9 n UK Property 4.5 n Private Equity 3.6 n Other managed funds 3.1 n Cash deposits and other assets 1.9

7 Our managers At 30 June 2011, the Plan s investment managers and their respective holdings were as follows: Investment returns The continuing financial crisis has led to a number of ups and downs in the global markets over the last year. Although performance did not match the level achieved in the previous year, nevertheless the Plan achieved good positive growth during the year to 30 June The Plan s investments grew by 14.3%, which was slightly better than the benchmark of 14.1%. The annualised returns for one, three and five years have been as follows: Manager % held n Lafarge Investment Management 63.2 n Fidelity 10.6 n Legal & General 8.4 n BNP Paribas Real Estate 4.5 n PIMCO 4.1 n Pantheon 3.6 n Rogge 1.8 n BlackRock 1.7 n Nephila 1.7 n M&G Investments 0.4 Annualised returns ending 30 June 2011 The Plan % Benchmark % 1 year years years

8 DC Focus DC survey To help focus on issues which are important to our PensionBuilderplus and AVC members, the Trustee Board has a Defined Contribution (DC) Committee. The Committee recently conducted a survey of contributing members, to help understand what information members use in order to make their investment decisions. From the responses it was encouraging to learn that the information made available to members is considered to be helpful. However, it was clear that more can be done to improve access. We are therefore exploring ways to make the investment information more widely available, and have started by adding the latest investment fund Fact Sheets, produced by L&G, directly to our website. If you have ideas about how we can improve our communications to you, please let us know. 8

9 Legal & General Investments Members of PensionBuilderplus and members who pay Additional Voluntary Contributions (AVCs) have a choice of seven investment funds with Legal & General Investment Management Ltd. There is a further Global Equities Fund available to our Lifestyle investors. These funds offer varying degrees of return and risk, and full details and the recent performance of each fund can now be found on our website: Here you can view a recent Fact Sheet for each of the funds available or follow the link to Legal & General s own website for more detailed information. Transferring in benefits Contributing PensionBuilderplus members have been given the opportunity to transfer in benefits from previous pension arrangements to their Personal Investment Account. This only applies to employees who were members of PensionBuilderplus on 1 November 2011, who have a pension fund or a number of smaller pension funds elsewhere, not exceeding 50,000 in total. If you are interested in bringing your pension savings together into PensionBuilderplus, please contact the Pensions Helpline ( ) and ask about transferring in. You may be able to transfer them into your Personal Investment Account. Please note that any transfers must be completed by 31 December Sale of Lafarge Plasterboard On 4 November 2011, Lafarge sold the Plasterboard business in the UK to Etex, a Belgian company that manufactures and supplies building materials. The Trustee of the Lafarge UK Pension Plan has agreed that Plasterboard s employees will remain members of PensionBuilderplus until 31 March 2012, when Etex will have set up new pension arrangements. 9

10 Plan news Lafarge closes the Plan to Final Pay accrual On 31 October 2011, the Final Pay Section of the Plan was closed to future accrual. This means that contributing members can no longer build up pension in the Final Pay Section. On 1 November 2011, following a three-month consultation, nearly 1,900 contributing Final Pay members automatically joined, and started to pay contributions to, PensionBuilderplus, our Defined Contribution plan. During the summer, Lafarge employees in the UK attended Pension Roadshow presentations, and were given a range of information telling them about the proposed changes. A new Lafarge Pensions website was launched, which was regularly updated with Frequently Asked Questions and a series of Fact Sheets. Feedback was encouraged from affected members who were represented during the consultation process by the Pensions Consultative Council member representatives. As a result, a number of amendments were made to the company s original proposals. During October and November a further 50 pension seminars were arranged around the country to help improve member understanding of the options now available to Lafarge employees in the UK. Information and support will continue to be made available to make sure members of PensionBuilderplus are best placed to make informed decisions to provide for their future. Thank you to all the members who provided feedback and to the PCC member representatives for their considerable input to the process. Rule amendments The Trustee and Lafarge have agreed a number of Rule amendments to reflect the changes required to both the Final Pay Section and the Defined Contribution Section of the Plan. These have been communicated to affected members of the Plan and include the retention of entitlement to a Supplementary Allowance for In-Service Deferred members, the provision for the Trustee to agree a policy for benefits drawn after Normal Retirement Age 10

11 or after the date at which they could have been drawn unreduced, and more flexibility around partial transfers out and the ability to take a cash sum at retirement. Scheme Apportionment Arrangement Early in 2012, Lafarge and the Trustee of the Plan finalised a transfer of liabilities, technically known as a Scheme Apportionment Arrangement (SAA). The Plan is reliant on the continued support and financial input from Lafarge. Up to now, this support (or covenant) has been provided by the Lafarge UK businesses that participate in the Plan. However, to strengthen the covenant it has been agreed to transfer the direct liability from the UK businesses to a UK-based holding company called Lafarge International Holdings Ltd (LIHL). Furthermore, and importantly, if LIHL were to fail to make payments to the Plan due under the Schedule of Contributions, or the Recovery Plan, Lafarge SA has signed a formal agreement with the Trustee to step in and meet the funding obligations. The Trustee of the Plan is satisfied that the terms of this major covenant restructuring, involving changes to the statutory employer structure and the addition of a new parental support agreement from Lafarge SA, will provide the Plan with improved protection now and in the future. If you would like a little more detail about the SAA, please call the helpline. LIHL owns a number of Lafarge s overseas interests and so has sufficient resources available to meet its funding obligations under the Recovery Plan and also has sufficient assets to satisfy the covenant requirements. 11

12 The Plan website Over the past few months, a new website has been created for the Plan, which is now available at: The website provides information to current and past Lafarge UK employees about the Lafarge pension arrangements in the UK. It is intended to help you understand the benefits and the options that are available to you as a member of the Lafarge UK Pension Plan. There are sections of the website that should be of interest to all members, including an area specifically for pensioners and another for members of PensionBuilderplus. The website has been designed to help you to move around easily from one section to another. We will continue to develop the site and welcome any comments or observations you may have. Please your comments to: info@lafargeukpensions.com Changes to State Pension Age (SPA) Currently the SPA for men is 65. On 6 April 2010 the SPA for women started to increase gradually from 60 to 65 to match mens SPA by 6 April The Government has now agreed changes to increase the SPA. You will not be affected by these changes if you are a woman born before 6 April 1953 or a man born before 6 December Under the new regulations, womens SPA will increase more quickly to 65 by November SPA will then increase to 66 for both men and women between December 2018 and October A more recent announcement by the Chancellor in his Autumn statement may see further increases in the SPA from 66 to 67 between April 2026 and April LAFARGE PENSIONS DEPARTMENT Lafarge UK Services Limited, Regent House, Station Approach, Dorking, Surrey RH4 1TH Tel: (pensioners and deferred pensioner members) (employee members) Fax: info@lafargeukpensions.com 12