Contents. Redrow Staff Pension Scheme Trustees Annual Newsletter Defined Contribution Members November 2010

Transcription

1 Redrow Staff Pension Scheme Trustees Annual Newsletter Defined Contribution Members November 2010 Welcome to the Trustees Annual Newsletter to Members Contents Welcome to the Trustees Annual Newsletter to Members 01 Investments Lifestyle Options The Trustees 02 Financial review 2009/10 07 Scheme membership 03 Website 07 Keeping your details updated Keeping you informed Who helps the Trustees Did you know? Expression of Wish form The aim of the newsletter is to keep you up to date with news about the Redrow Staff Pension Scheme ( the Scheme ) and its financial position. This newsletter covers the Scheme year for the period from 1 July 2009 to 30 June This year we have split the information supplied on the Defined Benefit (DB) and Defined Contribution (DC) sections and this newsletter contains only information in respect of the DC section. If you are also a Member of the DB section you will be sent a separate newsletter in respect of the DB section. During the Scheme year, David Arnold resigned as a Company Appointed Trustee. The Board of Trustees wish to express their thanks for his work as a Trustee. Following David s resignation the Company are taking steps to appoint a new Trustee. The Trustees also express their thanks to Heather Bowness who has been Acting Secretary to the Trustees during Karen Jones maternity leave and who has now taken on the role on a permanent basis. The Trustees wish to thank Karen for all her endeavours and considerable assistance during the seven years she was Secretary to the Scheme and wish her well as she returns to work on a part time basis whilst juggling the demands of being a new mum to twins! The last 12 months have been a challenging period for the economy as a whole and there has been continuing volatility in financial markets around the world. In this newsletter you will find information about the DC Scheme s investment performance as well as details of the opportunities you have to review your investments. Last year we included information on some changes to the investment funds including details relating to the new Lifestyle Option. We have again included information on the investment options that you have on page 4. The investment decisions that you make are of vital importance and can affect the pension that you may receive when you come to retire, so you should consider your options carefully. The Trustees would like to remind you of the importance of keeping your Expression of Wish form up to date. This will help the Trustees to determine who should receive any death benefit which may be payable should you die. Further details can be found on page 8. Later this year we intend to lauch a new pension website which will supply you with access to some really important information on your pension. More information on this exciting development is included on page 7. If you have any questions arising from this newsletter or about the Scheme in general please contact Heather Bowness, who is Secretary to the Trustees, at the address given on page 3 of this newsletter. Alternatively, if you are a Member who is currently employed by Redrow then you may wish to access the pension section of redroweb. Redrow Staff Pension Scheme Trustees Annual Newsletter (DC) November

2 The Trustees Iain Mason Iain was appointed as a Trustee by the Company in 1996 and has been Chair of Trustees since He works for Group Services as Litigation Director and joined the Company in Graham Micklewright Graham has served on the Board of Trustees since 2006 after being elected and subsequently re-elected in 2010 as a Member Nominated Trustee. He started with the Company in 1999 and works as Finance Director for Redrow Homes Midlands Division. Rachel Tranter BESTrustees Rachel sits on the Board representing BESTrustees plc as an Independent Trustee and was appointed in July Rachel is a qualified actuary who acts as an Independent Trustee for a number of pension schemes. Trustees Training Each Trustee of the Redrow Pension Scheme completes an annual review with the Chairman of the Trustees. These reviews appraise the Trustees against the objectives they were set the previous year and define new objectives for the year ahead. Each Trustee has a training plan tailored specifically for them to help them achieve their objectives. The training in which each Trustee partakes is tailored specifically to develop their knowledge and spectrum of skills that are required of the Trustees, both individually and collectively. Every Trustee, along with the Secretary to the Trustees is encouraged to sit and pass the PMI exam Award in Pensions Trusteeship. George Cronin George joined the Board of Trustees in March 2009 after being elected a Member- Nominated Trustee. George has been with Redrow since 2003 and is the Managing Director for Redrow Homes Eastern Division. Scheme Actuary Mark Rogers Mark has been the Scheme Actuary for 4 years and has advised the Trustees since Mark s primary responsibility is to prepare the actuarial valuation every 3 years. Secretary to the Trustees Heather Bowness Heather has taken on the role of Secretary to the Trustees having performed the role for the last year on a temporary basis. For details on how to contact Heather please see the Keeping you informed section on page 3. 2 November 2010 Trustees Annual Newsletter (DC) Redrow Staff Pension Scheme

3 Scheme membership - DC Section Active Members at 1 July Plus new Members 131 Less retirements 2 Leavers with a deferred pension 29 Deaths in service 1 Active Members at 30 June Former employees entitled to a deferred pension at 30 June Total Membership at 30 June Keeping your details updated It is important that you inform the Trustees of any change of address or name. This is to ensure that the Trustees are able to contact you about any benefits that may be due and to keep you updated about the Scheme. How you do this depends on if you are an Active, Deferred or Pensioner Member. If you are an Active Member please inform the Human Resources team so they can update their records, they will also notify the Trustees on your behalf. If you are a Deferred or Pensioner Member you should notify the Scheme Administrators, JLT, whose contact details are to the right on this page. Keeping you informed There are some important documents which may give you an insight into how your Scheme is run. These are: Scheme Rules The Statement of Investment Principles which explains how the Trustees invest the money paid into the Scheme The Schedule of Contributions which shows how much money is being paid into the Scheme The full Annual Report and Accounts (we have only included a summary in this Newsletter) The full report of the Actuarial Valuation which is the Actuary s check of the Scheme s situation as at 30 June 2008 The Staff Pension Scheme Handbook If you are a Member of the Scheme who is currently employed by Redrow and you have access to redroweb you should take the time to visit the pension section. This section of redroweb enables you to access the above mentioned information. If you are not currently employed by Redrow or you do not have access to redroweb you can obtain copies of all these documents from: Heather Bowness, Secretary to the Trustees C/O Redrow Group Services Redrow House St David s Park Flintshire CH5 3RX pensions@redrow.co.uk Your annual benefit statement is included in the correspondence sent with this newsletter. Should you have any questions regarding the information shown, please the Scheme Administrators Jardine Lloyd Thompson at redrowpensions@jltgroup.com or telephone Redrow Staff Pension Scheme Trustees Annual Newsletter (DC) November

4 Investments The DC section offers choice and flexibility with Members having access to a range of investment funds. The funds are held separately to those of the DB section since DC contributions are specifically allocated to individual Members. The DC section s assets are invested with Legal & General. As reported in the November 2009 newsletter, the Redrow L&G prefix for each fund name reflects the fact that the funds are now Redrow-specific. The Scheme s investments are made in accordance with the Statement of Investment Principles, which sets out the funds available to DC section Members. The table below details these funds together with the relevant charges. Funds Asset Class Manager Fund Annual Management Charge (AMC) Equity / Bonds L&G, passive Redrow L&G Growth-Oriented Fund 0.658% Gilts / Corporate Bonds L&G, passive Redrow L&G Fixed Interest Investments Fund 0.650% Cash L&G, active Redrow L&G Cash Fund 0.625% Global Equity L&G, passive Redrow L&G Global Equity Fixed Weights (60:40) Index Fund 0.660% UK Equity L&G, passive Redrow L&G UK Equity Index Fund 0.600% Index-Linked Gilts L&G, passive Redrow L&G Over 5 Year Index-Linked Gilts Index Fund 0.600% Gilts L&G, passive Redrow L&G Over 15 Years Gilts Index Fund 0.600% Corporate Bonds L&G, passive Redrow L&G Over 15 Year Corporate Bond Index Fund 0.650% The term passive as used in the above table refers to passively managed funds - also called tracker funds - these aim to achieve a stated or benchmark index. Passive fund managers generally charge lower fees than active fund managers, who aim to add value by seeking to achieve a higher return than the benchmark index. DC Assets as at 30 June 2010 The chart below shows how the DC Scheme s investments were made up at the end of June % 0.3% 2.2% 1.8% 2.7% Global Equity (60:40) 9,705,090 Over 5 Year Index-Linked Gilts 1,305,253 Growth-Oriented 318,594 UK Equity 208,421 Over 15 Year Gilts 4,645 Over 15 Year Corporates 7,721 Fixed Interest Investments 31,214 Cash 266, % Total 11,847,169 The Scheme s DC section also held cash amounting to 98,524 in the Trustee bank account as at 30 June This cash was mainly in relation to contributions due to be invested and benefits due to be paid. 4 November 2010 Trustees Annual Newsletter (DC) Redrow Staff Pension Scheme

5 Fund returns to 30 June 2010 The 12-month returns to 30 June 2010 on the DC funds were as follows: Fund Returns to 30 June 2010 Global Equity (60:40) Index 20.5% UK Equity 20.6% Over 15 Year Gilts Index 7.4% Corporate Bonds Over 15 Year Index 15.1% Over 5 Year Index-Linked Gilts 7.8% Cash -0.1% These returns are all quoted net of the 0.5% administration fee and the L&G management fees. The Redrow L&G Growth-Oriented Fund and the Redrow L&G Fixed Interest Investments Fund were not used for Members assets until September 2009 and November 2009 respectively. As such the 12-month returns to 30 June 2010 are therefore not relevant for these investments. The returns achieved by these funds to 30 June 2010 from the date of introduction were: Fund Returns to 30 June 2010 Growth-Oriented 6.2% Fixed Interest Investments 6.0% Please note the fund names in this table are abbreviated. Lifestyle Options As reported in the November 2009 newsletter, the Trustees introduced a new Lifestyle Option from 1 July It follows the same broad structure as the previous Lifestyle Option, with return-seeking investments being used until 10 years from planned retirement date, and then gradual switching to bonds and cash. The percentage of investments in each fund during your term to retirement for the new Lifestyle Option is shown in the table below. The funds used for the new Lifestyle Option are the Redrow L&G Growth-Oriented Fund, the Redrow L&G Fixed Interest Investments Fund and the Redrow L&G Cash Fund. The Redrow L&G Growth-Oriented Fund comprises 80% Global Equity and 20% Corporate Bonds, with the Corporate Bond element intended to help reduce the overall impact of the stock market s fluctuating investment returns. The Redrow L&G Fixed Interest Investments Fund is made up of a mixture of gilt and corporate bond investments, intended to mirror the mix used by insurers in their prices for annuities with fixed increases (rather than inflation-linked increases), and thus reducing the volatility of the expected initial pension Members purchase at retirement, for those who want fixed increases. Years to retirement Redrow L&G Growth-Oriented Fund % Redrow L&G Fixed Interest Investments Fund % Redrow L&G Cash Fund % Redrow Staff Pension Scheme Trustees Annual Newsletter (DC) November

6 Lifestyle Options continued. We want to remind pre 1 July 2009 Members about two changes from the previous Lifestyle Option so that they can consider whether to move across to the new Lifestyle Option. The Trustees are not advising any Members to make any specific changes, but they do want Members to understand the options available to them. First, in the pre-switching period, the Redrow L&G Growth- Oriented Fund is used instead of the Redrow L&G Global Equity Fixed Weights (60:40) Index Fund. The new Lifestyle Option has a slightly lower expected return, but it also has lower expected volatility. Therefore, those Members willing to accept more investment risk may be happy to remain in the old Lifestyle Option, but those wanting to reduce investment risk may wish to transfer to the new Lifestyle Option (either just for future contributions, or for their accrued fund). Second, the bond fund used in the run-up to retirement has changed from the Redrow L&G Index-Linked Gilts Fund to the Redrow L&G Fixed Interest investments Fund. This was done to take advantage of the legislation which allows the purchase of fixed rate rather than inflation-linked pensions. Members wanting to have pensions with some inflationprotection may be happy to remain in the old Lifestyle Option, but those wanting to have pensions either level or with fixed increases may wish to transfer to the new Lifestyle Option (either just for future contributions, or for their accrued fund). It is possible for post 1 July 2009 Members to opt for the old Lifestyle strategy (rather than the new default strategy) if they prefer it. Alternatively, instead of choosing the old or new Lifestyle strategy, new Members may select individual funds in which to invest from the available range as shown in the first table on page 4. For example, a Member may opt for the lower risk-return Growth-Oriented profile in earlier years, but then target cash returns plus an inflation-linked pension by utilising the Redrow L&G Index- Linked Gilts Fund. As set out earlier this could be relevant for Members wanting to reduce investment risk in the pre-switching period, and wanting inflation-linked pension increases. If a Member chooses to manage their own investments and then decides they want to go into either the new or the old Lifestyle Options at a later date, they can do so. It is important that Members regularly review the way in which their funds are invested and that the choices made continue to reflect their current circumstances, including their target retirement date. If you wish to change your choice of investment funds or Lifestyle strategy, please select the appropriate Form in the pensions section of redroweb, or contact the Scheme Administrators whose details are in the Keeping you informed section on page 3. This pension increases area is a more significant factor than Members might think. Quotations for annuities at retirement will usually show that for a given accrued fund, Members can buy far more of a level pension than they can buy of a pension with fixed increases, and in turn the amount of inflation-linked pension that can be bought is usually smaller than that of a pension with fixed increases. For example, assuming a pension is bought with a 50% spouse s pension by a male Member aged 65, then as of July 2010, an accrued fund of 10,000 would buy a pension of 535 pa with no increases, or a pension of 387 pa with 3% pa increases, or a pension of 329 pa with inflation-protection. (Source: The Exchange Annuity Comparison Service, 12/10/2010) However, a pension with no increases at all will give no protection at all against future inflation. So, Members should not automatically take the quotation that offers the greatest initial pension instead, the Trustees want to encourage Members to think through what pension increases they want to have. 6 November 2010 Trustees Annual Newsletter (DC) Redrow Staff Pension Scheme

7 Financial Review 2009/10 The information below shows a summary of the Redrow Pension Scheme s DC section. This is taken from the audited full Trustees Report and Accounts for the period 1 July 2009 to 30 June ( s) 2009 ( s) Fund at beginning of period 9,318,651 10,142,379 Contributions and other income Employer normal contributions 1,478, ,555 Members normal contributions 23, ,414 Members additional voluntary contributions 39,477 63,058 Transfers-in individuals from other schemes 119,460 24,578 Life assurance benefits received 195,000 15,000 Total Income 1,855,651 1,540,605 Benefits and other payments Benefits payments 373, ,264 Payments to and on account of leavers 355, ,534 Life assurance premiums 49,421-6,824 Administration expenses 0 2 Total Expenditure 778, ,976 Net return on investments 1,716,768-1,413,176 Transfer to DB section* -170, ,181 Fund at end of period 11,942,394 9,318,651 Please note that the Investment Values shown on page 4 are lesser values to those shown left. The table below explains the differences ( s) Assets displayed in chart on page 4 11,847,169 Bank account balance 98,524 Bank account liabilities -3,299 AVCs 0 Property fund investment accrual for Q Cash holding with investment manager Assets displayed in table to the left 0 11,942,394 * The transfer is in relation to the employer s contributions, which remain in the fund when a Member takes a refund of contributions. Website We are working on a new pension website for Members. This exciting new website will provide you with all the useful information currently on redroweb as well as containing important information on your own pension including details on your most recent contributions, where these contributions were invested and your latest pension fund value. You will also be able to access this website via the internet wherever you are. Watch out for further information on this enhancement to Member communications in the next few weeks. Redrow Staff Pension Scheme Trustees Annual Newsletter (DC) November

8 Who helps the Trustees? The Trustees run the Scheme on the advice of a number of professional advisers with whom they meet regularly. Did you know? That if you have left service and are entitled to a deferred pension you have the option of taking a transfer value to a new employer s scheme or an individual arrangement right up until shortly before you reach Normal Retirement Age. (If you wish to consider a transfer to a new employer please check whether they are prepared to accept this before going ahead). Additional Voluntary Contributions (AVCs) are extra contributions that you can make to increase the pension benefits you receive under the Scheme. You may wish to make AVCs in order to provide: Extra pension for you on retirement Additional financial protection for your dependants In order to make an AVC payment you should download an application from the redroweb. You can choose how much you want to pay up to 100% of your earnings each tax year and receive tax relief on those contributions. This includes Company contributions and all of the other contributions you pay into the Scheme whether via salary sacrifice or AVC arrangements, plus any other pension arrangements during the same period. There are different investments into which you can pay depending on whether you are a DB or DC Member. For further information about the funds available to you refer to redroweb. You have the freedom to adjust the contributions to your changing circumstances as time goes by increasing, reducing, or even stopping them altogether for a while. You can choose to pay in a regular monthly amount, or an occasional lump sum. We recommend that before you make any decisions you take independent financial advice. Visit and also to find your nearest Independent Financial Adviser. Expression of Wish form Your Expression of Wish form helps guide the Trustees when they are deciding who receives any death benefit (full details are on the form). You should have completed a form when you joined the Scheme. Please remember to keep it up to date by filling in a new form whenever your circumstances change, for example if you marry or have any children or anytime you change your mind. If you need to update your form you can download one from the pension section of redroweb or alternatively please contact the Human Resources team who are based at St David s Park or the Scheme Administrators - full contact details on page 3. 8 November 2010 Trustees Annual Newsletter (DC) Redrow Staff Pension Scheme The Trustees regularly review the service that they receive from the Scheme s advisers, to ensure that it is of a high quality and value for money. The Trustees current advisers are: Secretary to the Trustees Heather Bowness (Group HR Manager, Redrow Group Services) Scheme Actuary Mark Rogers of Xafinity Consulting (formerly PricewaterhouseCoopers LLP) Pension Consultants Xafinity Consulting Scheme Administrators JLT Benefit Solutions Ltd Investment Advisers Jagger & Associates Investment Managers Legal & General Assurance (Pensions Management) Limited ING Real Estate Investment Management (UK Funds) Ltd Lawyers Addleshaw Goddard LLP Auditors RSM Tenon Audit Limited (formerly RSM Bentley Jennison) Bankers Royal Bank of Scotland plc Important note The content of this newsletter is for information only and does not give any entitlement to benefit or constitute advice. All benefits are subject to the Scheme Rules and any overriding legislation. In particular there are limits on the maximum benefits and contributions that can be paid without incurring certain tax charges. If you are planning to make any decisions regarding your pension arrangements, we recommend that you take independent financial advice.