Communicating with you

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1 ICI Specialty Chemicals Pension Fund 2012 pensions review Welcome to our latest newsletter which focuses on the year up to 31 March 2012 What s inside About AkzoNobel page 2 Membership facts and figures page 2 Planning for retirement page 3 Secretary s Postbag page 3 Financial summary page 4 Investment review page 5 Interested in becoming a Trustee? page 5 Chairman s message page 6 Survey page 7 Communicating with you As more and more of us get online, we are keen to understand whether this form of communication works for you. Tell us what you think by completing our survey online via our website or use the tear-off survey on the back page. Keep us up to date Moved house? Got married or entered into a civil partnership? It is essential that the Trustee keeps up-to-date records for all members so, if things have changed, please contact ICI Pensions Services to make sure we have your latest personal details (contact details on page 6). Find us online Our new website at is proving popular. The website is structured to help meet the needs of pensioners, deferred and active members. There are new features to help you find out more about your benefits and answers to many of the questions you may have. By going online you can: Read the latest Fund news Find the answers to Frequently Asked Questions Subscribe to receive alerts as the website is updated.

2 2 ICI Specialty Chemicals Pension Fund About AkzoNobel As a result of an agreement the Trustee reached with AkzoNobel earlier this year, ICI s obligations to the Fund are now guaranteed by AkzoNobel, so we are sure that you will be interested in learning more about the Group and its latest innovations and achievements. AkzoNobel at a glance in 2011 Mature Europe North America Emerging Europe 38% 20% 7% Asia Pacific 10,400 Latin America 10% 4,300 22,300 Sales by region 2,600 Other countries 3% 1,500 Employees by region 22% 14, , ,200 Revenue (in billions) Employees AkzoNobel is the world s largest paint and coatings company and one of the world s major producers of specialty chemicals. It has three business divisions; Decorative Paints; Perfomance Coatings and Specialty Chemicals, with total annual sales in the year ended 31 December 2011 of 15.7 billion. It employs over 57,200 people worldwide (see map). Headquartered in Amsterdam, AkzoNobel is listed on the Amsterdam Stock Exchange has been a mixed year for AkzoNobel from a trading perspective. During the first half of the year revenues grew by 7% to just over 8.3 billion (largely due to price rises) and volumes were down 2% reflecting weaker demand across a number of markets. The third quarter of the year saw revenues up 6% but volumes declined by 3%. AkzoNobel also reduced the value it ascribes to its decorative paints business by 2.5 billion, reflecting ongoing weakness in its European operations. During 2012 AkzoNobel has featured regularly in the financial press. Demand for new technology and the development of a major agreement within the automotive industry have led to a multimillion Euro expansion at the Group, whilst a number of honours for sustainability have helped cement a reputation of responsible innovation. AkzoNobel has been the official partner and supplier of paint for the McLaren Mercedes Formula 1 team since the takeover of ICI. This year saw AkzoNobel perform well in both global and pan-european sustainability indices, after being ranked first place in the Chemicals sector on the prestigious Dow Jones Sustainability World Index and winning the European Responsible Care award. If you would like to read more about AkzoNobel, why not try their website: Membership facts and figures Fund membership at 31 March 2012 Total Fund membership fell slightly over the year ended 31 March 2012, as shown in the table below. Active membership declined due to people retiring or becoming deferred. We expect the Fund s active membership to continue decreasing and the pensioner population (the average age of which is very low compared with other Defined Benefit (DB) pension schemes) to continue rising as both active and deferred members retire TOTAL 1, , TOTAL 1, ,897 Deferred members Pensioners Active members

3 ICI Specialty Chemicals Pension Fund 3 Secretary s Postbag Planning for retirement 1. Do I need to complete an Expression of Wish form? If you are an active or deferred member, have taken your pension within the last five years, or if you are receiving a serious ill-health or permanent incapacity pension, your dependants or other beneficiaries may be entitled to a lump sum if you were to die before these circumstances change. If this applies to you, you should update your Expression of Wish form if you marry, or divorce, or if your personal circumstances change. Even if you have made a will, you should ensure that your Expression of Wish form is up to date so that the Trustee knows who you would like to receive any lump sum which would be payable on your death. Whilst the Trustee has the discretion to decide who should receive any such lump sum, it is important that it understands your wishes so that they can be taken into account. If you are a pensioner and took your pension more than five years ago the above does not apply and you do not need to complete an Expression of Wish form (unless you are receiving a serious ill-health or permanent incapacity pension, where you should still complete the form). This form provides information to the Trustee in connection with lump-sum death benefits only, not for dependant s pensions that may be payable on your death. 2. I have Additional Voluntary Contributions (AVCs) in the Fund. Is there anything I should be doing about these? You should regularly review the investments you have made via your AVC investment choices to ensure that they remain right for you. Although the Fund no longer accepts new contributions, you can move your AVCs to another arrangement should you wish. For example, you have the option of moving your AVCs to AkzoNobel Benefit Builder and, if you are an active and contributing member of the Fund, you can make new contributions through Benefit Builder. For more information, please contact ICI Pensions Services. If you are considering doing this you may wish to take independent financial advice. 3. Why can t I just telephone the Helpline to update my address or change my bank account details? To protect your security, we ask all members to notify us of a change in address or bank details in writing. In the Library and Forms section of our website you can download forms to notify us of your change of address or bank details. Once completed, send these forms to ICI Pensions Services, who will update your details. When it comes to retirement planning, we re all different. Regardless of when you are planning on retiring, there are a few questions you may wish to ask yourself including: Do I have sources of income in retirement, other than my Fund pension? This could include pensions from other companies, or income from property or savings, so be sure to take these into account. Retirement planning can be complicated and you may wish to consider taking independent financial advice. When will I get my Fund pension? You will be entitled to receive your Fund pension from your normal retirement age (age 65). A retirement pension quotation will be sent to you around six months before your normal retirement age. What if I m thinking about retiring early? Since 2010, members have to be at least age 55 before they take their Fund pension. Some members will also need the consent of the Trustee, or may not be able to take early retirement if their reduced benefits would be insufficient to cover any Guaranteed Minimum Pension. Remember that if you choose to retire early your pension will usually be reduced because it is anticipated that you will be receiving this for a longer period. If you would like an early retirement quotation, contact ICI Pensions Services (contact details on page 6) or the 1HR team if you still work for ICI. Should I take a cash lump sum at retirement? At retirement, under current Rules you may have an opportunity to exchange some of your pension for a cash lump sum (normally up to 25% of the value of your pension). Please consider this carefully as you will only be offered this option at the point at which you retire once you have started to receive your pension it is not possible to choose, or change the amount of, your cash lump sum. If you want to find out more about taking your retirement benefits from the Fund, visit our website at

4 4 ICI Specialty Chemicals Pension Fund Financial summary For the year to 31 March 2012 Money coming in: m Contributions* 11.3 Investment income 1.3 Money going out: m Benefits (pensions and lump sums) 13.0 Payments to, and on account of, leavers 2.9 Total change in the Fund: m Balance of income and expenditure 3.3 Change in market value of investments 51.0 Total m Total m Total m Total assets: million These figures have been extracted from the Fund s Financial Statements for the period ended 31 March 2012, on which an unqualified audit opinion has been given by KPMG LLP. For full details, see the Report of the Trustee and Financial Statements available on our website *Contributions include: contributions from the Fund s active members, a cash payment of 5 million to the Fund following the sale of the National Starch & Chemical (NSC) business in 2010 (see Chairman s message for more information) and a deficit repair contribution of 4.95 million. Challenging economic background The economic environment remains challenging. The crisis in the Eurozone continues with, as yet, no clear resolution in sight. In the UK we dipped back into recession during the year, although we have since recovered slightly. In the USA the recent Presidential Elections inevitably created a degree of uncertainty regarding the future direction of government policy. The banking sector remains under scrutiny following the LIBOR scandal and confidence generally is fragile. These tough conditions look set to continue for the foreseeable future.

5 ICI Specialty Chemicals Pension Fund 5 Investment review In the course of finalising the 2011 actuarial valuation, the Trustee and the Company agreed that the investment strategy should be modified to reflect the fact that an increasing percentage of the Fund s members are pensioners. The target for the level of return-seeking assets in the portfolio, which had stood at 30%, has now been reduced to 28%. Although this target was not agreed until June 2012, the percentage of return-seeking assets already stood at around 28% at 31 March This was due to the combined effect of market movements, which reduced the value of return-seeking assets, whilst increasing the value of gilts and other matching assets. These changes to the market value of investments amounted to a net positive impact on the Fund s total assets of 51 million. Within the return-seeking assets the Trustee sought to further diversify the portfolio by adding a property investment. This investment has the additional benefit of generating income that increases by reference to the Retail Prices Index (RPI) in a similar manner to the Fund s liabilities. How the Fund is invested During the year the Trustee added a property investment to the return seeking asset portfolio. Matching assets Overseas equities UK equities Leveraged loans Property Emerging market securities/high alpha Bonds 2.9% 1.7% 9.1% 2% Interested in becoming a Trustee? We are keen to hear from individuals who are looking for new and varied challenges who may wish to join the Trustee Board, as we currently have a vacancy. 12.1% 72.2% Being a Trustee Director requires energy, enthusiasm and the willingness to get to grips with often complex financial and pensions issues. To find out more about the role and our vacancies, contact ICI Pensions Services (address on page 6). These figures have been extracted from the Report of the Trustee and Financial Statements for the year ended 31 March You can also find general background and insight into being a Trustee Director on the website of the Pensions Regulator at:

6 6 ICI Specialty Chemicals Pension Fund Chairman s message Mike Smith, Chairman ICI SC Pensions Trustee Ltd Pensions Review returns this year with a new design which we hope you will like. The Trustee Board welcomes any comments you may have and we have attached a survey for you to share your views with us has been a busy year for the Fund and has seen a number of significant improvements in its financial security. Earlier this year, I wrote to you to highlight two major developments, the first of which was the agreement reached between the Trustee and ICI Limited (ICI) on the valuation of the Fund s assets and liabilities as at 31 March 2011, and the recovery plan needed to address the resulting deficit of 13 million. The second development was a further agreement between the Trustee, ICI and AkzoNobel on additional measures to increase the security of members benefits following the sale of the National Starch and Chemical (NSC) business by AkzoNobel in 2010 (whereby two NSC companies ceased to participate in the Fund). This agreement resulted in: a cash payment of 5 million being made to the Fund, the provision by Akzo Nobel NV of a guarantee of ICI s obligations to the Fund, and a requirement that ICI arrange for letters of credit to be provided to the Fund on an ongoing basis. These letters can be called upon in certain circumstances (for example if ICI ever became insolvent) and would require the counterparty banks to pay enough cash into the Fund to ensure it was fully funded on a solvency basis (as assessed at the previous December). These new agreements provide significant additional safeguards for members and the Trustee is encouraged by the provision of this support by AkzoNobel. If you would like more information on the outcome of the actuarial valuation, the full actuarial report is available on our website. Enclosed with this edition of Pensions Review is a further Summary Funding Statement, giving you an update on the Fund s financial position as at 31 March You will see that there has been a slight deterioration in the funding level (on an ongoing basis) from 97% to 94% over the year to 31 March This was due to a change in the financial assumptions, reflecting market conditions, which was offset to some extent by: a deficit contribution paid by ICI of 4.95 million, better than assumed investment performance and, the cash payment of 5 million made under the agreement between the Trustee, ICI and AkzoNobel described above. During the year there were two changes to the Trustee Board. Alan Bate, a former senior NSC business manager, joined the Board in June as a Member-Nominated Director (MND) and John Murphy resigned in September after five years as a MND. The Board is very grateful to John for his hard work and commitment. John s departure creates a vacancy on the Board; see page 5 for information about applying to become a Trustee Director. Finally, we are delighted with our new look website as members are now able to find information about their benefits with greater ease than ever before. If you haven t already done so, do take a look at We encourage you to visit the website to answer any questions you have about the Fund. You can also subscribe to receive updates as they happen throughout the year by clicking Sign up for website changes. Help & information If you have a query you may well find the answer on our website. Alternatively, you can contact the Pensions Helpline by: Phone: Writing to: ICI Pensions Services, PO Box 54, Redhill, Surrey RH1 1YX Website:

7 7 ICI Specialty Chemicals Pension Fund Survey As more and more of us get online, we are keen to understand whether this form of communication works for you. It would help us greatly if you could fill in this survey form and return it to us or, alternatively, complete it online. Once completed, please tear off, fold and seal this survey and post it back to us, free of charge. Information about you (please tick): Member status: Active Deferred Pensioner Other Age profile: Under Please answer questions 1 to 6 Please rate the following: Extremely Somewhat Not very Didn t read 1. How useful/interesting did you find the following sections of Pensions Review: About AkzoNobel Planning for your retirement Membership facts and figures Financial summary Investment review Interested in becoming a Trustee? Chairman s message Secretary s Postbag Please answer yes or no to the following: Yes No 2. Do you use the internet? 3a. Have you visited 3b. If you have visited our website, were you able to find the information you were seeking? 4. Would you prefer to access the latest edition of Pensions Review and the annual Summary Funding Statement online rather than receive a copy in the post? If you answered yes, can you please give us your details online through the link on our website homepage Click here to stop receiving Pensions Review and the annual Summary Funding Statement by post at 5. Is there anything else you would like to see added to our website or included in Pensions Review? 6. If you have any other comments on our communications, please include below Complete the survey online You ll find a link to this survey on our home page at Please note that only one survey should be completed per member.

8 fold here Tom Wooldridge Towers Watson Freepost LON High Holborn London WC1V 6TP