Following the above changes, the full Trustee board looking after members interests is: Member Nominated. Paul Jackson Rachel Potarzycka

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1 Chairman s Letter PENSIONS news Electrocomponents Pension Scheme Newsletter JANUARY 2016 Member Nominated Directors (Trustees) (MNTD) The Triennial MNTD election took place during the summer of Five nominations were received for the two roles and following the elections Steve Hanson and Phil Harris-Bridge received the most votes. Steve and Phil have therefore been chosen by the members to represent them for the next three years. Steve will continue with his existing membership of the board and Phil Harris-Bridge joined the board with effect from 26 October Phil worked at Electrocomponents for 16 years until his retirement in 2012 and previously served as a Company appointed Trustee from 2009 to Phil believes his extensive knowledge of the Company and his previous experience as a trustee will assist him to seek to protect, develop and maximise the Scheme s benefits for future and existing pensioners. John Adams stood down with effect from 25 October 2015 and thanks are expressed to him for the time, contribution and dedication he has given to the Scheme and interests of the members over the 9 years that he has been a Trustee. Following the above changes, the full Trustee board looking after members interests is: Company Appointed Jeff Hewitt (Chair) Edward Dowler Paul Jackson Rachel Potarzycka Member Nominated Steve Hanson Phil Harris-Bridge We would like to thank all the members who voted in the election. We received a total of 1,810 votes and we are delighted to see how many members are engaged in the running of the Scheme. This newsletter aims to keep you up to date with information about the Scheme and wider world of UK Pensions; we hope you find this issue helpful and informative and welcome any feedback on how we can improve our communications or suggestions for items to be included in future newsletters. The last 12 months have been extremely busy; on the Defined Benefit side we have been working with the Company on a long term strategy to fund the Scheme and take some risk out of the investments and I am pleased to report we have made significant progress. This will assist us with further securing the long term future of the Scheme. On the Defined Contribution side we have been bedding in the new flexibilities announced by the Chancellor in his 2014 budget speech and looking forward we will be putting in place a plan to ensure we comply with the increasing amount of governance required for DC pension schemes. Details of the outcome of the Member Nominated Director (Trustee) elections are given on this page and I would like to pass on my thanks to all members who expressed interest in the two vacancies and congratulations to the successful applicants. Sincere thanks are given to John Adams for his valuable contribution whilst serving as a Member Nominated Director (Trustee) to the Scheme over the last 9 years. Finally we have also launched our new website (see page 2 for details). Please take time to visit the site which provides lots of useful information for members. Jeff Hewitt Chair of the Trustees

2 New Pension Website In 2015, we launched o ur new pension website Please remember to log on to the site which contains lots of useful information about the Scheme and pensions in general including: A planning tool to give an indication of your own retirement benefits Up to date fund value (DC) and benefits statements News items and updates on legislation changes Ability to change contributions and investments online (DC) It is written in easy to understand terminology; not technical jargon. We hope you find the site useful and we would welcome feedback. Please also login to ensure your contact details, including address and mobile phone number are up to date. Pension Scams Members are reminded to remain alert to potential scams which include offers to liberate pension benefits before the age of 55 or exceptional higher returns on investments for transferring out benefits. Changes to Pension Team Hannah Absolom is taking some time out for maternity leave to welcome the latest addition to her family and, until October 2016, Rod Tanner has been appointed to the role of Interim Head of Group Pensions. Lyne Booth has joined the team as Interim Deputy Pensions Manager. Rod can be contacted by at rod.tanner@rs-components.com and Lyne at lyne.booth@rs-components.com Consequences of these scams can be high tax charges or even the loss of your entire pension benefits. If you are approached by an individual or company to liberate or transfer benefits please ensure the person contacting you is approved and regulated by the Financial Conduct Authority this can easily be checked by accessing their website at Remember, never be pressured to make a decision in respect of your pension benefits and if it sounds too good to be true, it probably is! If you have any doubts you can also contact the Pensions Advisory Service at or the Pensions Regulator at Changes to Annual Allowance and Lifetime Allowance The Chancellor made a number of announcements during his July Budget speech that may affect people paying into a pension scheme, including reductions to the Lifetime Allowance (LTA) i.e. the total amount of tax relieved savings an individual can have over their lifetime and the Annual Allowance i.e. the amount of UK tax relieved pension contributions in a tax year. We have already sent communications to members we believe may be affected by these changes but if you have any concerns please contact a member of the pensions team.

3 Defined (DB) Benefit Section Focus New State Pension and Ending of Contracting Out In April 2016, contracting out will end which means both the Company and members of the Defined Benefit section of the Scheme will pay national insurance contributions at the standard rate rather than the current reduced rate. Under contracting out the State Second Pension (previously known as SERPS) was paid by the Scheme rather than the Government. From 6 April 2016, a new flat rate State Pension will be introduced and apply to everyone who meets the Government s eligibility criteria when they reach State Pension Age from that date onwards; the new full State Pension will be per week for those that qualify for the full amount. Further information on the new state pensions can be found by going to Investment Performance At 30 September 2015, the DB section had assets of over 421m which were invested in the following asset classes (figures are m): The money that is paid into the Defined Benefit section of the Electrocomponents Pension Scheme is pooled and invested by the Trustees, who use this pool of money (the assets) to pay all the benefits that have been promised to members. All of the Pension Scheme s assets are independent of and held separately from the Company Equity (LGIM) Diversified Growth Funds (Standard Life/Baillie Gifford/Black Rock) LDI (LGIM) Corporate Bonds (AXA) Index Linked Gilts (LGIM) A more detailed breakdown of the scheme s investment can be a found in the scheme s annual report & accounts which is now available on How did the investments perform? The graph below shows the investment performance for the three year period to 30 September All returns are net of investment fees: LGIM UK Equity LGIM Overseas Equity LGIM Emerging Markets Standard Life Gars BlackRock DDG Baillie Gifford DGF* Axa Smart Beta* LGIM Index Linked Gilts LGIM LDI -10.0% -5.0% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% Returns (%) Benchmark (%) *Assets invested in fund for less than 3 years Long Term Funding Plan Since the last formal valuation in 2013 the deficit (the shortfall between the money required to pay out the benefits as they fall due and the assets of the Scheme) has continued to increase, largely due to low interest rates. The Trustees have therefore been working with the Company to agree a long term strategy to fund the Scheme and reduce the amount of the risk in the investments. This will involve a commitment by the Company to pay in contributions to reduce any deficit and in addition to pay in a high enough contribution so that the fund can be invested in less risky assets. This will assist with securing the long term future of the Scheme. For further information on the deficit please see the Summary Funding Statement (included within the Pension Scheme Financial Statement for the year ending 31 March 2015) on the pension website

4 Defined Contribution Section (DC) Focus Have you considered increasing your contributions? The most important factor in determining how much benefit you receive at retirement is how much you and the Company contribute to the Scheme. If you were auto enrolled into the Scheme you will currently only be paying 1% contributions with the Company also paying 1%. Increasing your contributions could mean you have more income in retirement and the more you pay, the more the Company pays see table below. You Pay Company Pays 1.0% 1.0% 2.0% 3.5% 4.0% 7.0% 6.0% 10.5% Log into the Pension Planner on for help with your planning process In addition If you pay at least 2% contributions you will be entitled to higher death-in-service benefits and ill-health early retirement benefits. Most members of the Scheme pay their contributions via salary sacrifice which effectively means that you get both full tax and national insurance relief on your contributions making it a very tax efficient form of saving for your retirement. The earlier you start planning and taking action to save for your retirement the better chance you have of achieving the outcome you want at retirement. Investment Performance for the 12 months ending 30 September 2015 (net of fees) How well is your pension performing? The other key factors in determining the amount of benefit you receive at retirement is the investment performance. The graphs to the right show the investment performance of the funds over the last 12 months and over the last 3 years. The funds in which your pension contributions are invested can have a significant impact on your final pension and the Scheme Trustees strongly recommend you to take independent financial advice prior to making any investment decisions and suggest that you review your investments on a regular basis. EPS Pre-Retirement Fund * EPS Equity Fund EPS Managed Bond Fund EPS Managed Equity Fund EPS Diversified Fund EPS Managed Cash Fund EPS Higher Potential Growth EPS Medium Potential Growth EPS Lower Potential Growth -6.00% -4.00% -2.00% 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% Fund (%) Benchmark (%) Investment Performance for the three years ending 30 September 2015 (net of fees) EPS Pre-Retirement Fund * EPS Equity Fund EPS Managed Bond Fund EPS Managed Equity Fund EPS Diversified Fund EPS Managed Cash Fund EPS Higher Potential Growth EPS Medium Potential Growth EPS Lower Potential Growth Fund (%) Benchmark (%) *EPS Pre-Retirement Fund not introduced until October % 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00%

5 Pension Flexibilities It has been 9 months now since the regulations changed on how DC benefits can be taken from age 55 onwards. DC members now have more flexibility as to how they can access their benefits at retirement including, tax free lump sum, multiple cash lump sums, annuity (life time pension) or draw down (pensions saving remains invested and you choose when and how much you withdraw). With more choice comes more complexity and the need for more help and guidance on retirement. The Government is therefore offering members with DC pensions free and impartial financial guidance on their choices at the point of retirement, this service is called: Pension Wise can be contacted at and they can help if: You re aged 50 or over, and Have a defined contribution pension Unfortunately Pension Wise cannot give guidance if you have a final salary or career average pension but you can still get information from the following organisations: The Pensions Advisory Service at The Money Advice Service at The new flexibilities mean that it is more important than ever that members consider their retirement planning and review their selected retirement age, which can be updated by logging onto or contacting Capita using the contact details below. Capita Contact Details RSPensions@capita.co.uk Call:

6 Keeping in touch If you want to contact us about anything to do with the Scheme, including updating your details, please contact Capita. Capita Contact Details Electrocomponents Group Pension Scheme, Capita, Hartshead House, 2 Cutlers Gate, Sheffield, S4 7TL Please don t forget to let Capita know if you change your address. Continuous Improvement We would welcome your feedback on any areas where our service can be improved so if you have any feedback on the service you have received either from the Pensions Team or Capita (good or bad) please Rod Tanner at rod.tanner@rs-components.com or Lyne Booth at lyne.booth@rs-components.com. Is your Expression of Wish Form up-to-date? Please remember to keep your Expression of Wish Form up to date to indicate to the Trustees how you would wish your lump sum death benefits to be paid. The Trustees are not legally bound by the wishes you express on this form but they will take them into account when making a decision about who should receive the payment. If your circumstances change, for example if you marry, divorce or have children, you should consider completing a new Expression of Wish Form. Even if your circumstances have not changed it is a good idea to complete a new form regularly so the Trustees know that your wishes are up to date. If you are an active member of the Scheme then please complete the online form which can be found on the Company s intranet site (click on Life Assurance Nomination/Expression of Wish Form which can be found under the A - Z of the HR Site). If you are a former member of the Scheme or a pensioner, we still need to have an up-to-date copy of the form. The form can be requested from Capita using the contact details in the Keeping in Touch section.