THE DELCO ELECTRONICS OVERSEAS CORPORATION PENSION PLAN

Transcription

1 Registration Number THE DELCO ELECTRONICS OVERSEAS CORPORATION PENSION PLAN Report and Accounts For the Year Ended 31 December 2008

2 C O N T E N T S Trustee and Advisers 1 Report of the Trustee 2-8 Investment Report 6-7 Statement of Trustee s Responsibilities 8 Report of the Actuary 9-10 Schedule of Contributions Independent Auditors Report Fund Account 15 Net Assets Statement 16 Notes to the Financial Statements Independent Auditors Statement about Contributions 23 Summary of Contributions 24 Members Information 25 Appendix: The GM (UK) Common Investment Pool Report & Accounts for the year ended 31 December 2008

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4 THE DELCO ELECTRONICS OVERSEAS CORPORATION PENSION PLAN TRUSTEE and ADVISERS Participating Company Delco Electronics Overseas Corporation Trustee DEOC Pension Trustees Limited Directors of the Trustee Employee Representatives G. Rigby, (Chairman, appointed 31 January 2008) I. Gorry, J. Collins, R. Leigh, T. Prout, (Chairman, retired 31 December 2007; reappointed 31 January 2008) Company Representatives I. Gaskell (Vice Chairman, appointed 11 February 2008), J. Burns (appointed 11 February 2008), I. George (appointed 11 February 2008), Mrs L. Kelly, A. Leyland, Ms L. Sandford Secretary to the Plan D. P. Mount Actuary G. Thompson Hewitt Associates Limited Solicitors Slaughter and May LLP Registered Auditors PricewaterhouseCoopers LLP Bankers Lloyds TSB Bank Plc Investment Manager Promark Global Advisors Limited (formerly named GM Asset Management (UK) Limited) Investment Consultants Watson Wyatt Limited Plan Administration General Motors UK Limited Griffin House, Osborne Road Luton, Bedfordshire LU1 3YT 1

5 Report of the Trustee for the year ended 31 December 2008 The Trustee of The Delco Electronics Overseas Corporation Pension Plan (the Plan ) presents its annual report together with the investment report, actuarial statements and certificates, summary of contributions, compliance statement and financial statements for the year ended 31 December Constitution of the Plan The Plan was established on 31 July 1988 under, and is governed by, a Trust Deed and Rules, as amended. It is a registered pension scheme under the Finance Act The Plan is contracted-out of the Second State Pension (S2P). The Plan is of the defined benefit type where pensions are determined by earnings levels and length of service. The Plan is contributory and provides retirement and dependants pensions. The Plan also provides death benefits, before and after retirement, and discretionary ill-health pensions. Membership in the Plan is not compulsory but employees are eligible to become full or associate members based on certain scheme criteria. Full members are contracted-out of S2P; associate members are not contracted-out. Service after 6 April 1997 is contracted out using the reference scheme test basis introduced by the Pensions Act which requires the Plan Actuary to certify that the Plan is expected to provide pensions for at least 90% of contributing members, which are at least as good as those under a reference scheme set out in the Pensions Act. The level of contributions to the Plan, is determined by agreement between the Trustee of the Plan and the Principal Company, Delco Electronics Overseas Corporation (the "Company ), and, in default of agreement, by the Pensions Regulator, in accordance with the requirement of the Pensions Act Subject to certain exceptions, for additional benefits required to be granted by law, the Company is required by the Trust Deed to make good any deficit were the Plan ever to be terminated and the benefits payable will be determined in accordance with the Plan Rules and overriding legislation. Plan Advisers There are written agreements in place between the Trustee and each of the Plan advisers listed on page 1 and also with the Company. There were no changes in Plan advisers during the year. Management of the Plan The Trustee of the Plan is DEOC Pension Trustees Limited (the Trustee ). The Trustee of the Plan was appointed and may be removed by the Company. The Plan rules contain provisions for the appointment and removal of the Trustee. The names of the current Trustee Directors are included on page 1. The Trustee met on 15 occasions during the year. Risk Management The Trustee has overall responsibility for internal controls and risk management. They are committed to identifying, evaluating and managing risk and to implementing and maintaining control procedures to reduce significant risks to an acceptable level. In order to meet this responsibility the Trustee has adopted a risk policy. The objective of this policy is to limit the exposure of the Trustee and the assets that they are responsible for safeguarding, to business, financial, operational, compliance and other risks where possible. 2

6 Report of the Trustee for the year ended 31 December 2008 (cont d) The Trustee has created a Risk Register. The purpose of the Risk Register is: to highlight the scope of risk to which the Plan is exposed from the Trustee s perspective; to rank those risks in terms of likelihood and impact; and to identify management actions that are either currently being taken, or that are believed should be taken, in order to mitigate the identified risks. Trustee Training The Pensions Act 2004 requires trustee directors to have knowledge and understanding of pensions legislation, investments, the plan s trust deed and rules, their statement of investment principles, the statement of funding principles and other documentation which sets out administration policy in relation to the Plan. A training log has been established by the Trustee and each director is responsible for reporting to the Plan secretary which module of the Pension Regulator s toolkit they have completed and which additional training programmes they have attended. During the year Trustee Directors have attended specialist training courses offered by the Plan advisors and investment managers. Actuarial Valuation The Trustee must obtain an actuarial valuation of the Plan at least once every three years, to determine the funding level and to provide the basis for it to agree the contribution schedule with the employer. The results of a valuation form the basis for decisions about contributions to the Plan for future service benefits. The actuary works out if the assets currently in the Plan are sufficient to pay the past service benefits that have already accrued. To do this, he uses many assumptions and these are agreed between the Trustee and the Company. If there is a shortfall in the Plan for the past service benefits, the Trustee negotiates with the Company to agree a plan to achieve a fully funded status. The previous valuation at 1 January 2006 revealed a shortfall of 30.7m on an ongoing basis, the assets covering about 57% of the liabilities. Following discussion of these results, the Company changed its contributions from 12.6% of Pensionable Pay to 21.9%, effective from 1 January 2007, plus Pension Protection Fund Levies, subject to annual limits ( 2.8m p.a. for , 2.9m for 2011, 3.0m p.a. for 2012 onwards). Following submission of the 2006 valuation, the Pensions Regulator asked the Trustee to revisit the funding arrangements. After consultation with the Company, it was agreed to bring the next full valuation forward from 1 January 2009 to 1 January In the event, the January 2008 valuation reported a shortfall of just over 32.2m, equal to a funding ratio of 79.9%. As the key output from the valuation discussions, the Company will pay 2.8m in 2008, 2009 and 2010, 2.9m in 2011 and 3.0m p.a. thereafter. The actuary estimates that these contributions together with expected investment returns will correct the ongoing basis shortfall over a period of about 17 years. The Company has also raised the possibility of reductions to benefits for future service and the actuary will review the valuation if these are agreed. The principal assumptions underlying the valuation were: the discount rate, which took into account the ability to actually achieve a higher return than gilts, was set at 5%, pay increases at 3.5% per annum, price inflation at 3% per annum and increases to pensions in payment (in excess of the guaranteed minimum pension in payment) of 2.7% pa. Assets were assumed to achieve returns of 6.5% per year. Mortality assumptions have been revised upwards with 65 year old males assumed to live to 86.2 (previously 84.4); females are assumed to live to 85.5 years (previously 87.1 years.) # Vikas the key actuarial assumptions need to be disclosed here please. 3

7 Report of the Trustee for the year ended 31 December 2008 (cont d) Plan Membership Employee members Number at 1 January Add Adjustment to opening balance (1) Less Employees leaving during the year Retirements (3) Early leavers with deferred pensions (4) Early leavers with refunds (1) Transfers Out (1) (9) Number at 31 December Pensioner members Number at 1 January ,092 Adjustment to opening balance (1) Add New pensioners during the year 3 New dependent pensioners 13 Deferred pensions into payment 8 24 Less Deaths and terminated pensions (32) Number at 31 December ,083 Deferred members Number at 1 January Add Leavers during the year 4 Less Transfers out (4) Deaths and terminations (2) Deferred pensions into payment (8) (14) Number at 31 December Total membership at 31 December ,902 4

8 Report of the Trustee for the year ended 31 December 2008 (cont d) Pension Increases The guaranteed rate of increase of pensions in the course of payment, for members who left active service prior to 1 October 1991, is the lower of 3% or one half of the rise in the RPI. This guarantee to increase benefits has been extended until the payment in April The guaranteed rate of increase of pensions in the course of payment, for service from 30 September 1991 to 31 December 2007, is the lower rate of 5% or the RPI; for service thereafter the cap is reduced to 3.75%. The Plan is also required to increase GMP rights accrued after 5 April 1988 once they are in payment. The increase must be in line with the increase in RPI (as measured in September) to a maximum of 3%. In 2008 pensions in payment increased by 2% for members who left service prior to 1 st October 1991, 4% for members retiring between 1 st October 1991 and 31 st December 2007 and 3.75% for service from 1 st January The GMP was increased by 3%. Transfer Values Regulations were published in April 2008 which moved responsibility for the calculation of transfer values from the actuary to the Trustee. Unfortunately, although the regulations became effective on 1 October, 2008, guidance on the calculation of transfer values was not published by the Regulator until 29 September. As soon as the regulations were published, the Trustee immediately started to review the method and assumptions used, based on advice from the actuary. As the calculation of transfer values is now Plan specific, each of the pension plans requires its own calculations. Administration set up a process to work through the applications in date received order, giving priority to those requiring them for divorce purposes. Review of Financial Development of the Plan Due to Plan administrative delays and the Trustee s on-going assessment of the employer covenant, financial statements, and therefore a statement from the auditor, were not obtained within seven months of the Plan's year end. In all other material respects, the financial statements have been prepared and audited in accordance with regulations made under section 41(1) and (6) of the Pensions Act The Plan has also adopted the revised Statement of Recommended Practice, Financial Reports of Pension Schemes (May 2007) in this report and accounts. Further Information Further details of investment performance are included in the investment report. Requests for additional information about the Plan generally, or queries relating to members' own benefits, should be made to the Plan administrators, whose address appears on page 1 of this report. Further information for members is included in members information at the back of this annual report. The US subsidiaries and operations of the Company s ultimate parent undertaking, Delphi Corporation ( Delphi ) remain in Chapter 11 bankruptcy status, as per the voluntary petitions for business reorganisation filed in October The Company is a branch of Delphi, and named in the protection proceedings. During the last three years Delphi has made significant progress in resolving the legacy issues and implementing its transformation plan however, as of the date of this report, Delphi and its non-us subsidiaries and operations remain in Chapter 11 reorganisation. The Trustee has been advised that the Company remains committed to the Plan, continues to meet its obligations under the schedule of contributions, and has no plans to reduce pension payments, cease contributions, or close the Plan. 5

9 Report of the Trustee for the year ended 31 December 2008 (cont d) Investment Report The Plan participates in The GM (UK) Common Investment Pool ( CIP ) the generic name for ten Pension Fund Pooling Vehicles ( PFPV s) and one Property Unit Trust ( PUT ). The CIP holds investments on behalf of the Plan and is administered by a corporate trustee, Promark Investment Trustees Limited ( PITL ) (formerly named GM Investment Trustees Limited), which appoints independent investment managers to manage the investments. The Trustee has entered into a contract with a PITL holding company, Promark Global Advisors Limited ( PGAL ), to manage the investments. Details of investments and a financial review are set out in the report and financial statements of the CIP which form an integral part hereof. As required under section 35 of the Pensions Act 1995, copies of the Statement of Investment Principles ( SIP ) are available on request from the Plan administrators. Investment Objectives The Trustee wishes to ensure that the Plan can meet its obligations to the beneficiaries while recognising the cost implications to the Company of pursuing excessively conservative investment strategies. During the year, following consultation with the Company, the Trustee reviewed the objectives set out in the SIP, as part of the process of conducting a new asset-liability study. These objectives were revised to: wishing to maximise long-term returns on investments subject to, in its opinion, an acceptably low likelihood of failing to achieve an ongoing 100% funding level in 10 years time. Asset Allocation It is current policy for an asset/liability study to be conducted on a triennial basis. The most recent study was completed in 2007, following the actuarial valuation. The strategic asset allocation was amended in December 2007 to reflect the new policy: Asset allocation UK Equities 15 International Equities 33 Emerging Market Equities 2 UK Index-Linked Bonds 10 UK Corporate Bonds 10 International Hedged Fixed Interest 10 Property 15 Alternative Investments % The Trustee has signed an investment management agreement with PGAL, covering PGAL s role in controlling the asset allocation for the Plan, and formalising its role in aiming to add value through tactical asset allocation. At year end an update to the Statement of Investment Principles reflecting this change was under review but had not yet been signed. 6

10 Report of the Trustee for the year ended 31 December 2008 (cont d) Investment Report (continued) As required, additional contributions to the Plan are invested in new units in the various PFPV s, or if cash is required to pay pensions or other benefits, units are sold in the PFPV s. Wherever possible, PGAL tries to match any transactions with other pension plans in the CIP. Employer-Related Investments At 31 December 2008, the Plan held no employer-related investments. Custody Appropriate steps have been taken to safeguard the assets of the Plan. Details of the custody arrangements for the majority of the assets which are held in the CIP are set out in the report and financial statements of the CIP. Documents of title to the other assets of the Plan are held by the Company. Investment Performance During 2008, the Plan achieved an overall return before fees of (23.50%) underperforming against the benchmark by 3.10%. The three and five year annualised returns were (3.80%) and 3.40%, which was 1.10% and 0.80% adverse, respectively, to the benchmark. Total Rates of return For Periods ended 31/12/2008 (annualised) Total Rates of return For Periods ended 31/12/2007 (annualised) 1 year 3 years 5 years 1 year 3 years 5 years % % % % % % Plan returns (23.50) (3.80) Benchmark (20.40) (2.70) Out/(under)- performance (3.10) (1.10) (0.80) (0.40) 0.30 (0.20) Market reports and detailed analysis of the CIP performance are set out in the report and financial statements of the CIP. Since the year end, the value of investments in the global market place has fluctuated considerably due the current economic environment. This has also had a significant impact on the total rates of return in the value of the Plan s investments in the CIP. Based on the latest available unaudited management data, as of 31 May 2009, the Plan s return to date in 2009 was approximately 0.9% compared to a benchmark of 1.20%. 7

11 Report of the Trustee for the year ended 31 December 2008 (cont d) Statement of Trustee's Responsibilities The financial statements are the responsibility of the Trustee. Pension scheme regulations require the Trustee to make available to plan members, beneficiaries and certain other parties, audited financial statements for each plan year which: show a true and fair view, in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), of the financial transactions of the plan during the plan year and of the amount and disposition at the end of the plan year of its assets and liabilities, other than liabilities to pay pensions and benefits after the end of the plan year, and contain the information specified in the Schedule to the Occupational Pension Schemes (Requirement to obtain Audited Accounts and a Statement from the Auditor) Regulations 1996, including a statement whether the financial statements have been prepared in accordance with the Statement of Recommended Practice Financial Reports of Pension Schemes. The Trustee has supervised the preparation of the financial statements and has agreed suitable accounting policies, to be applied consistently, making any estimates and judgements on a prudent and reasonable basis. The Trustee is also responsible for making available certain other information about the Plan in the form of an Annual Report. The Trustee is responsible under pensions legislation for ensuring that there is prepared, maintained and from time to time revised a schedule of contributions showing the rates of contributions (other than voluntary contributions) payable towards the scheme by or on behalf of the employer and the active members of the plan and the dates on or before which such contributions are to be paid. The Trustee is also responsible for keeping records in respect of contributions received in respect of any active member of the plan and for monitoring whether contributions are made to the plan by the employer in accordance with the schedule of contributions. Where breaches of the schedule occur, the Trustee is required by the Pensions Acts 1995 and 2004 to consider making reports to the Pensions Regulator and to members. The Trustee also has a general responsibility for ensuring that adequate accounting records are kept and for taking such steps as are reasonably open to it to safeguard the assets of the plan and to prevent and detect fraud and other irregularities, including the maintenance of an appropriate system of internal control. Trustee: DEOC Pension Trustees Limited Signature: Name (Trustee Director): September

12 Report of the Actuary ACTUARY S CERTIFICATION OF TECHNICAL PROVISION ACTUARIAL CERTIFICATE GIVEN FOR THE PURPOSES OF REGULATION 7(4) (a) OF THE OCCUPATIONAL PENSION SCHEMES (SCHEME FUNDING) REGULATIONS 2005 Name of Plan: The Delco Electronics Overseas Corporation Pension Plan Calculation of technical provisions I certify that, in my opinion, the calculation of the Plan s technical provisions as at 1 January 2008 is made in accordance with regulations under section 222 of the Pensions Act The calculation uses a method and assumptions determined by the Trustee of the Plan and set out in the Statement of Funding Principles dated 25 March Signature Date 27 March 2009 Name Gerard Thompson Qualification Fellow of the Institute of Actuaries Address Parkside House Ashley Road Epsom Surrey KT18 5BS Name of Employer Hewitt Associates Limited 9

13 Report of the Actuary (cont d) Actuarial Certifcation of the Schedule of Contributions Name of Plan: The Delco Electronics Overseas Corporation Pension Plan Adequacy of rates of contributions 1. I certify that, in my opinion, the rates of contributions shown in this schedule of contributions are such that the statutory funding objective can be expected to be met by the end of the period specified in the recovery plan dated 1 April Adherence to statement of funding principles 2. I hereby certify that, in my opinion, this schedule of contributions is consistent with the Statement of Funding Principles dated 25 March The certification of the adequacy of the rates of contributions for the purpose of securing that the statutory funding objective can be expected to be met is not a certification of their adequacy for the purpose of securing the scheme's liabilities by the purchase of annuities, if the scheme were wound up. Signature: Date: Name: Gerard Thompson Qualification: Fellow of the Institute of Actuaries Address: Parkside House Ashley Road Epsom Surrey KT18 5BS Name of employer: Hewitt Associates Limited 10

14 Schedule of Contributions THE DELCO ELECTRONICS OVERSEAS CORPORATION PENSION PLAN SCHEDULE OF CONTRIBUTIONS FOR THE PERIOD 1 JANUARY 2008 TO 31 DECEMBER 2024 This schedule of contributions has been prepared by the Trustees to satisfy the requirements of Section 227 of the Pensions Act 2004, after obtaining the advice of Gerard Thompson, the Scheme Actuary, and after obtaining the agreement of the Employer. 1. Employer contributions The total annual amounts payable to the Plan by Delco Electronics Overseas Corporation will be: From 1 January 2009 to 31 December 2010 For 2011 From M 2.90M 3.00M Of these totals, 22.3% of Pensionable Pay is in respect of future accrual of benefits, and lump sum death in service benefits, including 0.5% of Pensionable Pay in respect of expenses. These contributions are payable in equal monthly instalments and are to be paid to the Plan on or before the 19 th of the calendar month following that to which the payment relates. 2. Expenses The contributions above are inclusive of an estimate for the Pension Protection Fund levy (2008/09 levy estimated as 544,000), plus other expenses. 3. Additional employer payments The Employer will pay additional amounts, on top of the amounts set out above, as advised by the Actuary to be required to cover the cost of early retirements under a separation programme by such date as the Trustee and the Employer agree. The date of receipt will be taken as the date on which the contributions become available for the Trustees to use. In respect of augmentations granted, the relevant employer will pay additional amounts to cover the costs of benefit augmentations within one month of the later of the date of granting the augmentation and the date on which the Trustees receive details of the costs from the Scheme Actuary. 4. Contributions by active members 4% of Pensionable Pay plus 2% of the Lower Earnings Limit (LEL) by Middle Tier members and 8% of the LEL by Top Tier members These contributions are to be deducted from pay by the employer and paid to the Plan on or before the 19 th of the calendar month following deduction. These amounts do not include members Additional Voluntary Contributions. 11

15 Schedule of Contributions (cont d) 5. Definition of Pensionable Pay Base Pay (as defined for pension purposes) above the LEL. Signed on behalf of the Trustees of the Delco Electronics Overseas Corporation Pension Plan Name: Position Gordon John Rigby Chairman of Trustees Date 30 th March 2009 Signed on behalf of Delco Electronics Overseas Corporation Name: Position Jeffrey Parsons Vice President Date 1 st April

16 Independent Auditors Report to the Trustee of The Delco Electronics Overseas Corporation Pension Plan We have audited the financial statements of The Delco Electronics Overseas Corporation Pension Plan for the year ended 31 December 2008 which comprise the Fund Account, the Net Assets Statement and the related notes. These financial statements have been prepared under the accounting policies set out therein. Respective responsibilities of Trustee and Auditors The Trustee s responsibilities for obtaining an Annual Report and audited financial statements prepared in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice) are set out in the statement of Trustee s responsibilities. Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements and International Standards on Auditing (UK and Ireland). This report, including the opinion, has been prepared for and only for the Trustee as a body in accordance with Section 41 of the Pensions Act 1995 and for no other purpose. We do not, in giving this opinion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing. We report to you our opinion as to whether the financial statements give a true and fair view and contain the information required by the relevant legislation. We also report to you if, in our opinion, we have not received all the information and explanations we require for our audit. We read the other information contained in the annual report and consider whether it is consistent with the audited financial statements. This other information comprises all of that set out in the contents page. We consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the financial statements. Our responsibilities do not extend to any other information. Basis of audit opinion We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by or on behalf of the Trustee in the preparation of the financial statements, and of whether the accounting policies are appropriate to the Plan's circumstances, consistently applied and adequately disclosed. We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements. 13

17 Independent Auditors Report to the Trustee of The Delco Electronics Overseas Corporation Pension Plan (cont d) Opinion In our opinion: the financial statements give a true and fair view, in accordance with United Kingdom Generally Accepted Accounting Practice, of the financial transactions of the Plan during the year ended 31 December 2008, and of the amount and disposition at that date of its assets and liabilities, other than the liabilities to pay pensions and benefits after the end of the year, and the financial statements contain the information specified in Regulation 3 of, and the Schedule to, the Occupational Pension Schemes (Requirement to obtain Audited Accounts and a Statement from the Auditor) Regulations PricewaterhouseCoopers LLP Chartered Accountants and Registered Auditors London September

18 Fund account for the year ended 31 December 2008 Notes Year Ended Year Ended 31-Dec Dec-07 '000 '000 Contributions and benefits Contributions receivable 3 3,728 2,886 Transfers in 0 3 Other income 0 1 3,728 2,890 Benefits payable 4 6,763 9,402 Leavers Administrative expenses ,549 10,020 Net (withdrawals)/additions from dealings with members (3,821) (7,130) Returns on investments Change in market value of investments 8 (29,999) 5,693 Investment management expenses 7 (126) (144) Net returns on investments (30,125) 5,549 Net increase / (decrease) in the fund during the year (33,946) (1,581) Net assets of the Plan At 1 January 133, ,432 At 31 December 99, ,851 15

19 Net assets statement as at 31 December 2008 Notes 31-Dec Dec-07 '000 '000 Investments Pooled investment vehicles 8, 9 94, ,043 AVC investments 10 5,474 5, , ,778 Current assets Current liabilities 12 (455) (3,811) Net Current Assets / (Liabilities) (173) (2,927) Net assets of the Plan at 31 December 99, ,851 The financial statements summarise the transactions of the Plan and deal with the net assets at the disposal of the Trustee. They do not take account of obligations to pay pensions and benefits which fall due after the end of the Plan year. The actuarial position of the Plan, which does take account of such obligations, is dealt with in the Report of the Actuary, included in the annual report on pages 9 to 12 and in the Report of the Trustee on page 3, and these financial statements should be read in conjunction with them. The financial statements on pages 15 to 22 were approved by the Trustee on 2009 and are signed on their behalf by: September The Trustee: DEOC Pension Trustees Limited Signature: Name (Trustee Director): Directors Director 16

20 Notes to the financial statements for the year ended 31 December Basis of preparation The financial statements have been prepared in accordance with the Occupational Pension Schemes (Requirement to obtain Audited Accounts and a Statement from the Auditor) Regulations 1996, and in accordance with the Statement of Recommended Practice, Financial Reports of Pension Schemes (revised May 2007) (the revised SORP ). The US subsidiaries and operations of the Company s ultimate parent undertaking, Delphi Corporation ( Delphi ) remain in Chapter 11 bankruptcy status, as per the voluntary petitions for business reorganisation filed in October The Company is a branch of Delphi, and named in the protection proceedings. During the last three years Delphi has made significant progress in resolving the legacy issues and implementing its transformation plan however, as of the date of this report, Delphi and its non-us subsidiaries and operations remain in Chapter 11 reorganisation. The Trustee has been advised that the Company remains committed to the Plan, continues to meet its obligations under the schedule of contributions, and has no plans to reduce pension payments, cease contributions, or close the Plan. 2 Accounting policies Contributions Normal contributions, both from the members and from the employer, are accounted for as they fall due under the schedule of contributions, the Plan rules and the recommendations of the actuary. Employers augmentation contributions from the employer are accounted for in accordance with the agreement under which they are paid, or in the absence of such an agreement, when received. Additional voluntary contributions from the members are accounted for in the month deducted from the payroll. Employers deficit funding contributions are accounted for in accordance with the agreement under which they are being paid for in the absence of an agreement on a receipt basis. The presentation of the information on contributions in the prior year has been reclassified to be consistent with the current year and as required by the revised SORP. Total contributions are unchanged. Benefits Where members can choose whether to take their benefits as a full pension or as a lump sum with reduced pension, retirement benefits are accounted for on an accruals basis on the later of the date of retirement and the date the option is exercised. Other benefits are accounted for on an accruals basis on the date of retirement, death or leaving the Plan as appropriate. Transfers to and from other Plans Transfer values represent the capital sums either receivable in respect of members from other pension plans or payable to the pension plans of new employers for members who have left the Plan. They are accounted for on a cash basis or where Trustee has agreed to accept the liability in advance of receipt of funds on an accruals basis from the date of the agreement. Group transfers, where the Trustee has agreed to accept the liability prior to the receipt, are accounted for in accordance with the agreement. Investments Investments in unitised funds represent the Plan's share of the accumulated fund of the ten Pension Fund Pooling Vehicles (PFPV s) and one Property Unit Trust (PUT), collectively known as The GM (UK) Common Investment Pool (CIP), calculated in accordance with the Trust Deed. The report and accounts includes as an Appendix a copy of the accounts of the CIP. 17

21 Notes to the financial statements for the year ended 31 December 2008 (cont d) In accordance with the revised SORP, units held in the unitised funds are valued at bid net asset value. In the prior year they were valued at mid net asset value. The difference in valuation is immaterial to the financial statements and therefore comparatives have not been restated. As a result, the comparative figures for investments are reported on a mid net asset value basis. The adjustment in valuation from mid to bid in the prior year is included in current year change in market value. Valuation of AVC s with the Prudential Corporation is provided by Prudential and this includes the capital value of policies in payment. The unit linked AVC funds offered by Fidelity Pensions Management are Open Ended Investment Company ( OEIC ) funds and have a single price as valued by the investment manager. Investment income Interest on cash deposits and other investment income have been accounted for on an accruals basis. Administrative expenses The administrative expenses of the Plan are paid by the Plan, but investment and other related expenses are paid by the appropriate PFPV s and are borne by the Plan in proportion to its share therein. Investment management expenses Investment management fees are accounted for on an accrual basis. Acquisition costs are included in the purchase cost of investments. 3 Contributions receivable Participating companies Normal 1,646 1,999 Augmentations Deficit Contributions Other (PPF Levy) Members Normal Additional voluntary contributions ,728 2,886 Deficit contributions are being made by the employer for 17 years on the advice of the Plan s actuary. Employers augmentations are paid in respect of certain benefits to individuals. 18

22 Notes to the financial statements for the year ended 31 December 2008 (cont d) 4 Benefits payable Pensions 6,450 5,622 Commutations and lump sum retirement benefits 312 3,780 Lump sum death benefits 1 0 6,763 9,402 5 Payments to and on account of leavers Refunds to members leaving service 0 3 Payments for members joining state scheme 1 1 Individual transfers out to other schemes Administrative expenses General Motors UK Ltd administration charges Other administration and processing charges 2 2 Actuarial fees Audit fees 6 6 Legal and other professional fees Pensions regulator /PPF levy Investment management expenses Investment management fees Performance measurement fees

23 Notes to the financial statements for the year ended 31 December 2008 (cont d) 8 Investments Investments in The GM (UK) Common Investment Pool Value at Purchases at cost Sales Proceeds Change in Market Value Value at UK Equity PFPV 20, (1,651) (5,600) 13,867 International Equity PFPV 43,338 6,322 (2,831) (17,337) 29,492 Emerging Market Equity PFPV 3,027 0 (160) (881) 1,986 Index-Linked Bonds PFPV 13,137 0 (3,783) 286 9,640 International Bonds PFPV 12, (4,051) (247) 9,105 Property Unit Trust 18,281 0 (225) (4,779) 13,277 TAA PFPV (300) 246 Cash PFPV 88 7,494 (7,531) Corporate Bonds PFPV 12,762 0 (734) (980) 11,048 Alternative Investments PFPV 6,610 0 (162) (597) 5,851 Pooled investment vehicles 131,043 15,083 (21,128) (30,394) 94,604 AVC s - Prudential 5, (871) 416 5,366 AVC s - Fidelity (21) 108 AVC Investments 5, (871) 395 5, ,778 15,298 (21,999) (29,999) 100,078 NB: 215 in AVC Investments above differs from that disclosed in note 3 due to timing differences with regard to contribution payments. The change in market value of investments during the year comprises all increases and decreases in the market value of investments held at any time during the year, including profits and losses realised on sales of investments during the year and investment income received and receivable. The adjustment in the cash PFPV, where the unit value remains constant, recognises the interest on cash deposits in the CIP, partially offset by payment of certain fees. The investment manager, Promark Global Advisors Limited (formerly named GM Asset Management (UK) Limited), and Promark Investment Trustees Limited (formerly named GM Investment Trustees Limited), the operator of The GM (UK) Common Investment Pool, are both registered in the UK. Since the year end, the value of investments in the global market place has fluctuated considerably due the current economic environment. This has also had a significant impact on the value of the Plan s investments in the CIP. Based on the latest available unaudited management data, as of 31 May 2009, the aggregate value of the Plan s investment in the pooled investment vehicles was approximately 93.4 million valued on a mid-price basis. 20

24 Notes to the financial statements for the year ended 31 December 2008 (cont d) 9 Pooled investment vehicles 31-Dec-08 Units Bid Price Value Investment in the PFPV s/put comprising the CIP at market value UK Equity PFPV 8,634, ,866,438 Emerging Markets Equity PFPV 532, ,986,276 International Equity PFPV 23,590, ,492,011 Property Unit Trust 4,729, ,276,620 Index-Linked Bonds PFPV 3,979, ,639,914 International Bonds PFPV 4,120, ,105,093 Corporate Bonds PFPV 8,675, ,047,947 Alternative Investments PFPV 6,302, ,851,266 Futures PFPV 161, ,923 Cash PFPV 91, ,958 94,603,447 The investment in the CIP represents the Plan s share of each of the pooled funds within the CIP calculated in accordance with the provisions of the Trust Deed. In accordance with the revised SORP, units held in the unitised funds at 31 December 2008 are valued at bid net asset value. At 31 December 2008 the Plan held 5.80% (2007: 6.00%) of the total aggregate investment in the CIP. 21

25 Notes to the financial statements for the year ended 31 December 2008 (cont d) 10 AVC Investments The Trustee holds assets invested separately from the main fund in the form of either insurance policies from Prudential Corporation or unit linked funds from Fidelity Pensions Management securing additional benefits on a money purchase basis for those members electing to pay additional voluntary contributions. Members participating in this arrangement each receive an annual statement made up to 31 December confirming the amounts held to their account and the movements in the year. The aggregate amount of AVC investments is as follows: Prudential Corporation 5,366 5,616 Fidelity Pensions Management ,474 5, Current assets Contributions receivable employers Contributions receivable employees AVC contributions receivable Accrued receivables lump sums Cash balances All contributions due to the Plan relate to the month of December 2008 and were paid in full to the Plan within the timescale required by the Schedule of Contributions currently in force. 12 Current liabilities Pensions and PAYE payable (54) (51) Lump sums payable 0 (3,026) AVC benefits payable 0 (431) Accrued expenses (401) (303) (455) (3,811) 13 Related party transactions The majority of administration expenses are initially paid by the principal Delphi company, Delphi Automotive Systems UK Limited and then recharged to the Plan excluding VAT. The principal charges are actuarial, legal, audit, pension administration and investment management charges. Total cost for 2008 was 376,000 (2007: 346,000) and of this at year end 174,000 (2007: 129,000) was outstanding and included in current liabilities. 22

26 Independent Auditors Statement about Contributions to the Trustee of The Delco Electronics Overseas Corporation Pension Plan We have examined the Summary of Contributions to The Delco Electronics Overseas Corporation Pension Plan for the year ended 31 December 2008 which is set out on the following page. Respective responsibilities of Trustee and Auditors The Trustee s responsibilities for ensuring that there is prepared, maintained and from time to time revised a schedule of contributions are set out in the statement of Trustee s responsibilities. Our responsibility is to provide a statement about contributions to the Plan in accordance with relevant legislation and to report our opinion to you. This report, including the statement about contributions, has been prepared for and only for the Plan s Trustee as a body in accordance with Section 41 of the Pensions Act 1995 and for no other purpose. We do not, in giving this statement, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing. Basis of statement about contributions We planned and performed our work so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that contributions reported in the summary of contributions have been paid in accordance with the relevant requirements. For this purpose the work that we carried out included examination, on a test basis, of evidence relevant to the amounts of contributions payable to the Plan and the timing of those payments under the schedule of contributions. Our statement about contributions is required to refer to those breaches of the schedule of contributions which we consider to be material for this statement and which come to our attention in the course of our work. Statement about contributions to the Plan In our opinion, the contributions payable to the Plan required by the schedule of contributions during the year ended 31 December 2008 as reported in the Summary of Contributions on the following page have in all material respects been paid in accordance with the schedule of contributions certified by the Actuary on 11 September PricewaterhouseCoopers LLP Chartered Accountants and Registered Auditors London XX XXXX 2007 September

27 Summary of Contributions During the year ended 31 December 2008, the contributions payable to the Plan by the Employer and Employee were as follows: Required by the schedule of contributions Employee Employer Normal contributions 336 1,646 Augmentations Total 336 2,539 Other contributions payable Deficit Contributions AVCs Total (as per Fund Account) 542 3,186 Signed on behalf of the Trustee (DEOC Pension Trustees Limited): Signature: Name (Trustee Director): September

28 Members Information Pensions Tracing Service Contact details for the Pensions Tracing Service, which can help members trace an old pension s scheme that they have lost contact with, are: Pension Tracing Service, Tyneview Park, Whitley Road, Newcastle, NE98 1BA Telephone: The Pensions Advisory Service Any concern connected with the Plan should be referred to Mr D Mount, Pensions Administration Manager, who will try to resolve the problem as quickly as possible. Members and beneficiaries of occupational pension Schemes who have problems concerning their Scheme which are not satisfied by the information or explanation given by the administrators or the Trustees can consult with the Pensions Advisory Service (TPAS). A local TPAS adviser can usually be contacted through a Citizen's Advice Bureau. Alternatively TPAS can be contacted at: 11 Belgrave Road, London SW1V 1RB Telephone: Pensions Ombudsman In cases where a complaint or dispute cannot be resolved, normally after the intervention of TPAS, an application can be made to the Pensions Ombudsman for him to investigate and determine any complaint or dispute of fact or law involving occupational pension Schemes. The address is: 11 Belgrave Road, London SW1V 1RB Telephone: