THE VAUXHALL MOTORS LIMITED PENSION PLAN

Transcription

1 Registration Number THE VAUXHALL MOTORS LIMITED 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 2-9 Investment Report 7-8 Statement of Trustee s Responsibilities 9 Report of the Actuary Schedule of Contributions Independent Auditors Report Fund Account 17 Net Assets Statement 18 Notes to the Financial Statements Independent Auditors Statement about Contributions 28 Summary of Contributions 29 Members Information Appendix: The GM (UK) Common Investment Pool Report & Accounts for the year ended 31 December 2008

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4 TRUSTEE AND ADVISERS Participating Companies General Motors UK Limited Vauxhall Recreation Club GMOC Administrative Services Corporation Vauxhall Motors Sports and Social Club IBC Vehicles Limited Arinso People Services Limited Trustee GM (U.K.) Pension Trustees Limited Directors of the Trustee Employee Nominated I. Bruce, P. Fildes, J Kennedy, G. Taylor (Chairman), C. Weatherston G. Weaver, A.C. Lines Company Nominated R. Assinder (Vice Chairman, appointed 1 August 2008), P Croxford (appointed 1 April 2008) L. Davies, J. Fulcher (resigned 1 August 2008), M. Johnson (resigned 1 November 2008) S. Mallows, P. Millward, R Molyneux (Chairman, resigned 13 May 2009), D. Marnoch (resigned 1 April 2008), J Mackerness (appointed 1 November 2008) Secretary to the Plan D. P. Mount Actuary G. Thompson Hewitt Associates Limited Registered Auditors PricewaterhouseCoopers LLP Investment Manager Promark Investment Trustees Limited (formerly named GM Investment Trustees Limited) Solicitors Slaughter and May LLP Bankers Lloyds TSB Bank plc Investment Consultants The Frank Russell Company 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 Vauxhall Motors Limited Pension Plan (the Plan ) presents its annual report together with the investment report, actuarial statements and certificates, summary of contributions 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 contractedout 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 the State Second Pension; 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. 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 principal company General Motors (UK) Limited (the Company ). There were no changes in Plan advisers during the year. Management of the Plan The Trustee of the Plan, GM (U.K.) Pension Trustees Limited (the Trustee ), 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 13 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 it is responsible for safeguarding, to business, financial, operational, compliance and other risks where possible. 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. 2

6 Report of the Trustee for the year ended 31 December 2008 (cont d) Trustee Training The Pensions Act 2004 requires trustees to have knowledge and understanding of pensions legislation, investments, the scheme 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 scheme. 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 legal advisors, actuaries, investment manager, custodian and auditor. 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 Schedule of Contributions with the employer. The last actuarial valuation of the Plan was carried out as at 1 January The results of the 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. In the event, the most recent valuation reported a shortfall of just over 600m, equal to a funding ratio of 67.7%. However, it should be noted that due to the current economic and other uncertainties, the Trustee decided to use more prudent assumptions for the valuation, essentially making the funding target harder to reach. The result shows that over 200m of the shortfall was due to this change in the assumptions. The Trustee and the Company agreed that the Company will continue to pay contributions to the Plan at the rate of 33m per year but that these will increase at twice the annual increase in the RPI. In addition, the Company will pay the annual levy due to the Pension Protection Fund and additional contributions if the Company s borrowings from GM reduce substantially due to operational reasons. Based on the January 2008 valuation, the actuary estimates that the Plan will reach fully funded status over a period of 13 years During the year, employees contributed at a rate of 8% of pensionable pay. 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% per annum, pay increases at 3.4% per annum, price inflation at 3.4% per annum and increases to pensions in payment (in excess of the guaranteed minimum pension in payment) of 2.4% per annum. 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 83.6); females are assumed to live to 87.3 years (previously 86.2 years.) The next valuation of the Plan will be carried out as of 1 January

7 Report of the Trustee for the year ended 31 December 2008 (cont d) Plan Membership Employee members Number at 1 January ,990 Add Adjustment 1 Employees joining during the year 51 Less Employees leaving during the year Retirements (83) Deaths (1) Transfers out (1) Early leavers with deferred pensions (61) Early leavers with refunds (5) (151) Number at 31 December ,891 Pensioner members Number at 1 January ,208 Add New pensioners during the year 83 New dependent pensioners 79 Deferred pensions into payment Less Deaths and terminated pensions (126) Number at 31 December ,266 Deferred members Number at 1 January ,734 Adjustment to opening balance (5) Add Leavers during the year 61 Less Transfers out (22) Deaths and terminations (7) Deferred pensions into payment (22) (51) Number at 31 December ,739 Total membership at 31 December ,896 4

8 Report of the Trustee for the year ended 31 December 2008 (cont d) Pension Increases The guaranteed rate of annual increase of pensions in the course of payment, for service before 31 December 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 31 December 1991 to 5 April 2006, is the lower rate of 5% or the RPI; for service thereafter the cap is reduced to 2.5% p.a. In 2008 pensions in payment increased by X% for members who left service before 31 December 1991, X% for members who left service between 31 December 1991 and 5 April 1996, and X% for members who left service since 5 April 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 Trustee has been notified that: On 1 June 2009, General Motors Corporation ( GM Corp ) announced that it had filed voluntarily petitions for relief under Chapter 11 of the United States Bankruptcy Code to provide protection from creditors whilst it undertakes a restructuring of its businesses. Restructuring plans include the sale of substantially all of the global assets of GM Corp to a new holding company General Motors Company ( GMC ), for which court approval was received on 6 July 2009, and a capital restructuring, whereby it is intended that a significant proportion of the outstanding debt owed by GM Corp will be exchanged for equity in GMC. This restructuring is not yet complete. In addition, the amount of funding that can be provided by GM Corp to entities outside of the USA, including the Plan s principal employers and the Company, is severely restricted as a result of agreements between GM Corp and the US government. 5

9 Report of the Trustee for the year ended 31 December 2008 (cont d) GMC s Europe operations ( GME ), including the Company, are not included in the Chapter 11 filing or court supervised process and they continue normal operations, but are severely restricted in the availability of funding they may receive from GMC. GME has, therefore, been seeking its own sources of financing to fund its operations. On 1 June 2009, GME reached an agreement to secure approval for 1.5 billion of bridge financing from the German Government and entered into a nonbinding memorandum of understanding to partner with Magna International Inc for certain of GME s European operations. Under the agreement, the shares of [GM Automotive UK and its subsidiaries, including the Company], were transferred to the ownership of Adam Opel GmbH ( Adam Opel ), a former fellow subsidiary of GM Corp. The majority of Adam Opel s shares (65%) were put into an independent trust (the balance to remain with GMC), while negotiations with Magna proceed. Agreement is expected to be reached in the near future. The directors of the Company have assumed that the restructuring of GM Corp and the sale of the GM Automotive UK and Adam Opel businesses will complete successfully and that the operations of the Company will continue on a going concern basis. However, at the date of approval of the Plan s report and accounts, neither event has concluded. In the event that either of these processes does not complete, the Company may be unable to continue as a going concern. Nevertheless, after making enquiries, and considering the material uncertainties described above, the directors of the Company currently have a reasonable expectation that the Company will be able to secure adequate resources to continue in operational existence for the foreseeable future. The Trustee has been advised that the Company currently remains committed to the Plan, it continues to meet its obligations under the schedule of contributions, and has no plans to reduce pension payments, cease contributions or close the Plan. 6

10 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. 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 participating companies of pursuing excessively conservative investment strategies. The objectives of the Plan, as set out in the SIP, are defined as: wishing to maximise the long-term return on investments subject to, in its opinion, an acceptably low likelihood of failing to achieve an ongoing 100% funding level. 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 2006 and the following strategic asset allocation has been in place since that date. Asset Allocation % UK Equities 16 International Equities 37 Emerging Market Equities 2 UK Index-Linked Bonds 5 International Hedged Fixed Interest Bonds 20 Property 15 Alternative Investments The Trustee has signed an investment management agreement with PITL, covering PITL s role in controlling the asset allocation for the Plan, and aiming to add value through tactical asset allocation. 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 liquidated from the PFPV s. Wherever possible, PITL tries to match any transactions with other pension plans in the CIP. 7

11 Report of the Trustee for the year ended 31 December 2008 (cont d) Employer-Related Investments On 2 January 2007 the Trustee agreed a new 5 year lease on a full insuring and repairing basis with General Motors UK Limited (GM (UK)) on the Technical Centre, a property occupied by the Company. This lease was structured as a bond, based on an underlying value of 6.0 million and yielding 11% per year at an annual rent of 660,000. This replaced the 15 year lease agreed on 31 December 1991 when the Company simultaneously sold the freehold of the property for 5.79 million and entered into a leaseback transaction with the Trustee of the Plan. The Plan has an option to sell the property back to GM (UK) at the end of 2011 for 6 million. GM (UK) also has an option to buy the property back at a 7% premium on either 1 st July 2009 or at expiry of the lease by giving six months notice. GM (UK) did not exercise this option on 1 st July The property represents 0.6% of the total Plan value at 31 December 2008, (2007: 0.5%) and the investment complies with all restrictions prescribed by regulations. The Company on behalf of the Plan holds the documents of title. Further details are set out in the notes to the financial statements. In addition, the Plan owns within the International Bond PFPV 25,000 (2007: 57,000) of bonds issued by General Motors Corporation; this represents <0.1% of the Plan value (2007: <0.1%). 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, markets were negative and the Plan s overall return (via its combination of assets in the CIP and the self-investment in the Technical Centre) was (24.90)% before fees, a shortfall of 3.7% against the benchmark. The three year and five year annualised returns of (4.10)% and 3.50% were 1.40% and 0.90% negative, 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) 3 1 year years 5 years 1 year 3 years 5 years % % % % % % Plan returns (24.90) (4.10) Benchmark (21.20) (2.70) Out/(under)- performance (3.70) (1.40) (0.90) (0.30) 0.20 (0.10) 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 30 June 2009, the Plan s return to date in 2009 was approximately 1.4% compared to a benchmark of 0.7%. 8

12 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 requires 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 Plans (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 Plan 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: GM (U.K.) Pension Trustees Limited Signature: Name (Trustee Director):

13 Report of the Actuary ACTUARY S CERTIFICATION OF TECHNICAL PROVISIONS ACTUARIAL CERTIFICATE GIVEN FOR THE PURPOSES OF REGULATION 7(4) (a) OF THE OCCUPATIONAL PENSION SCHEMES (SCHEME FUNDING) REGULATIONS 2005 Name of Plan: Vauxhall Motors Limited 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 trustees of the Plan and set out in the Statement of Funding Principles dated 28 May Signature Date 28 May 2009 Name Gerard Thompson FIA Qualification Fellow of the Institute of Actuaries Address Parkside House Ashley Road Espom Surrey KT18 5BS Name of Employer Hewitt Associates Limited 10

14 Report of the Actuary (cont d) ACTUARIAL CERTIFICATE GIVEN FOR THE PURPOSES OF SECTION 57 (1) (b) OF THE PENSIONS ACT 1995 (OCCASIONAL OR PERIODIC CERTIFICATION OF CONTRIBUTIONS) Name of scheme: The Vauxhall Motors Limited 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 could have been expected on 1 January 2008 to be met by the end of the period specified in the recovery plan dated 28 May 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 28 May 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 to be wound up. Signature Date 1 June 2009 Name Gerard Thompson Qualification Fellow of the Institute of Actuaries Address Parkside House Name of employer Hewitt Associates Limited Ashley Road Epsom Surrey KT18 5BS 11

15 Schedule of Contributions Introduction The Vauxhall Motors Limited Pension Plan Schedule of Contributions This schedule of contributions is required by Section 227 of the Pensions Act It comes into effect on the date of certification of this schedule by the Scheme Actuary and covers the period to 31 December The Plan s Trustee is responsible for preparing a revised schedule no later than 31 March This schedule covers contributions to the Plan from all employers who participate in the Plan from time to time. Employer Contributions The participating employers will pay total contributions to the Plan as follows: Type Period Amount Regular PPF levies Members in Pensionable Salary Sacrifice Service Members in Pensionable Salary Sacrifice Service opting for 1/70ths accrual Members in Pensionable Salary Sacrifice Service opting for 1/60ths accrual Associate members in Salary Sacrifice Service "Profit share" The period commencing with the date of certification of this schedule by the Scheme Actuary and ending on 31 December The period commencing with the date of certification of this schedule by the Scheme Actuary and ending on 31 December The period commencing with the date of certification of this schedule by the Scheme Actuary and ending on 31 May 2010 or, if earlier, the end of short term working (1). The period commencing on 1 June 2010 or, if earlier, the end of short term working, and ending on 31 December 2020 (1). The period commencing on 1 June 2010 or, if earlier, the end of short term working, and ending on 31 December 2020 (1). The period commencing with the date of certification of this schedule by the Scheme Actuary and ending on 31 December The period commencing with 1 June 2009 and ending 31 December M p.a. payable monthly, increasing annually at twice the increase in RPI, subject to a maximum annual increase of 10%. Amount fixed by the PPF Board Top Tier members Middle Tier members Basic Tier Member Top Tier members Middle Tier members Basic Tier Member Top Tier members Middle Tier members Basic Tier Member 0.4% of Pay 8% of Pensionable Pay and 8% of the LEL 8% of Pensionable Pay and 2% of the LEL 8% of Pensionable Pay 8% of Pensionable Pay and 8% of the LEL 8% of Pensionable Pay and 2% of the LEL 8% of Pensionable Pay 10% of Pensionable Pay and 10% of the LEL 10% of Pensionable Pay and 2.5% of the LEL 10% of Pensionable Pay 10M for each 100M by which the Company's indebtedness to General Motors reduces. Further details of this are set out in the agreement dated 13 May 2009 between the Trustee and the Company Note (1) Or some later date as determined by the Company, but not later than 31 May 2010.

16 Schedule of Contributions (cont d) Short-term working may cease on different dates from site to site. The participating employers will ensure that the Trustee receives these contributions within 19 days of the end of the calendar month to which the contributions relate. The date of receipt will be taken as the date on which the contributions become available for the Trustee to use. Employer's contributions in respect of Member's Notional AVCs for these Members in Pensionable Salary Sacrifice are payable in addition. Defined Contributions GMUK may introduce a Defined Contributions ("DC") Section to the Plan during 2009/2010. Any company contributions (net of salary sacrificed to member contributions) to a DC Section of the Plan should be taken into account in the schedule of contributions (i.e. would reduce the contributions to the Defined Benefit ("DB") Section of the Plan by the same amount). This would apply for new starters or existing employees who opt to join a DC Section. It will not be possible to be an active member of both the existing DB Section of the Plan and a new DC Section. Payments to cover early retirements The participating employers will pay any additional amounts as advised by the Scheme Actuary to be required to cover the costs of early retirements under age 62 by the end of January in the year immediately following the calendar year ending during which the retirements occur. The date of receipt will be taken as the date on which the contributions become available for the Trustee to use. Payments to cover augmentations and other discretionary benefits The participating employers will pay any additional amounts as advised by the Scheme Actuary to be required to cover the costs of augmentations and other discretionary benefits. The payments will be due by one month after the later of the effective date of the benefit being agreed and the date the cost is notified to the employer. The date of receipt will be taken as the date on which the contributions become available for the Trustee to use. Employee Contributions Employees who are active members of the Plan and not in Pensionable Salary Sacrifice Service will contribute to the Plan as follows: Category Period Amount All members Members opting for 1/70ths accrual Members opting for 1/60ths accrual The period commencing with the date of certification of this schedule by the Scheme Actuary and ending on 31 May 2010 or, if earlier, the end of short term working (1). The period commencing on 1 June 2010 or, if earlier, the end of short term working, and ending on 31 December 2020 (1). The period commencing on 1 June 2010 or, if earlier, the end of short term working, and ending on 31 December 2020 (1). Top Tier members Middle Tier members Basic Tier Member Top Tier members Middle Tier members Basic Tier Member Top Tier members Middle Tier members Basic Tier Member 8% of Pensionable Pay and 8% of the LEL 8% of Pensionable Pay and 2% of the LEL 8% of Pensionable Pay 8% of Pensionable Pay and 8% of the LEL 8% of Pensionable Pay and 2% of the LEL 8% of Pensionable Pay 10% of Pensionable Pay and 10% of the LEL 10% of Pensionable Pay and 2.5% of the LEL 10% of Pensionable Pay 13

17 Schedule of Contributions (cont d) Associate members The period commencing on the date of certification of this schedule by the Scheme Actuary and ending on 31 December % of Pay Signed on behalf of the Plan s Trustee Signature: Name: R. Assinder Capacity: Treasurer Date: 20/08/2009 Signed by General Motors UK Limited on behalf of the Participating Employers Signature: Name: S A Mallows Capacity: Trustee Date: 20/08/

18 Independent Auditors Report to the Trustee of The Vauxhall Motors Limited Pension Plan We have audited the financial statements of The Vauxhall Motors Limited 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. 15

19 Independent Auditors Report to the Trustee of The Vauxhall Motors Limited 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

20 Fund account for the year ended 31 December 2008 Notes Year Ended Year Ended 31-Dec Dec-07 Contributions and benefits '000 '000 Contributions receivable 3 63,345 56,358 Transfers in Other income ,112 56,871 Benefits payable 5 64,967 62,705 Leavers 6 2,027 2,309 Administrative expenses 7 8,803 2,139 75,797 67,153 Net (withdrawals)/additions from dealings with members (11,685) (10,282) Returns on investments Investment income Change in market value of investments 10 (318,603) 57,396 Investment management expenses 9 (455) (484) Net returns on investments (318,397) 57,575 Net increase in the fund during the year (330,082) 47,293 Net assets of the Plan At 1 January 1,308,487 1,261,194 At 31 December 978,405 1,308,487 17

21 Net assets statement as at 31 December 2008 Notes 31-Dec Dec-07 Investments '000 '000 Pooled investment vehicles 10, ,082 1,250,248 Properties 12 6,450 6,000 AVC investments 13 49,193 50, ,725 1,306,544 Current assets 14 14,800 6,741 Current liabilities 15 (10,120) (4,798) Net Current Assets 4,680 1,943 Net assets of the Plan at 31 December 978,405 1,308,487 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 10 to 14 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 17 to 27 were approved by the Trustee on 2009 and are signed on their behalf by: The Trustee: GM (U.K.) Pension Trustees Limited Name: Signature (Trustee Director): 18

22 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 ). This is the first set of Plan financial statements that have adopted and presented under the revised SORP. 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 or, in the absence of an agreement, on a receipt basis. Employers contributions in respect of Section 75 debts are accounted for in accordance with the agreement. The debt has been recognised in full with provisions for the recoverability and time value of money. 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 the 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 pooled 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. 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. 19

23 Notes to the financial statements for the Year ended 31 December 2008 (cont d) Valuation of AVC s with the Prudential Corporation is provided by Prudential and this includes the capital value of policies in payment, but excludes terminal bonuses. 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. Property The property is independently, professionally valued on an annual basis at open market value by CB Richard Ellis, Chartered Surveyors. Rental income has been accounted for on an accruals basis. 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 and accounted for on an accruals basis. Investment management expenses Investment management fees are accounted for on an accruals basis. Acquisition costs are included in the purchase cost of investments. Investment and other related expenses are paid by the appropriate PFPV s and are borne by the Plan in proportion to its share therein. 20

24 Notes to the financial statements for the Year ended 31 December 2008 (cont d) 3. Contributions receivable Participating companies Normal 23,102 31,659 Deficit 6,000 6,000 Section 75 debt funding 9,400 - Augmentations 3,371 5,393 PPF Levy 9,748 1,842 Members Normal 9,197 9,045 Additional voluntary contributions 2,527 2,419 63,345 56,358 Deficit contributions are being made by the employer are being made for 12 years on the advice of the Plan s actuary. Employers augmentations are paid in respect of certain benefits to individuals. 4. Transfers in Transfers in from General Motors (UK) affiliated pension schemes Individual transfers in from other schemes

25 Notes to the financial statements for the Year ended 31 December 2008 (cont d) 5. Benefits payable Pensions 59,633 57,644 Commutations and lump sum retirement benefits 5,200 4,465 Lump sum death benefits ,967 62, Payments to and on account of leavers Refunds to members leaving service 7 51 Payments for members joining state scheme 8 (3) Individual transfers out to other schemes 2,012 2,261 2,027 2, Administrative expenses General Motors UK Ltd administration charges Other administration and processing charges Actuarial fees Audit fees Legal and other professional fees Pensions regulator /PPF levy 7,806 1,410 Miscellaneous expenses ,803 2,139 22

26 Notes to the financial statements for the Year ended 31 December 2008 (cont d) 8. Investment income Net rents from properties Interest on cash deposits Investment management expenses Investment management fees Promark Investment Trustees Ltd Investment consultancy fees 7 7 Performance measurement fees

27 Notes to the financial statements for the Year ended 31 December 2008 (cont d) 10. 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 206,925 7,085 (4,332) (60,871) 148,807 International Equity PFPV 459,461 67,874 (833) (193,943) 332,559 Emerging Market Equity PFPV 27, (8,504) 19,352 Index-Linked Bonds PFPV 64, (17,708) 1,482 48,488 International Bonds PFPV 250, (62,271) (5,135) 183,033 Property Unit Trust 166,264 0 (2,049) (43,466) 120,749 TAA PFPV 4, (2,730) 2,240 Cash PFPV ,913 (20,821) 114 2,014 Alternative Investments PFPV 69,249 0 (2,201) (6,208) 60,840 Pooled investment vehicles 1,250,248 97,310 (110,215) (319,261) 918,082 Property 6, ,450 AVC s - Prudential 44,528 2,078 (3,750) 1,408 44,264 AVC s - Fidelity 5, (125) (1,200) 4,929 NB: 2,564 in AVC Investments above differs from that disclosed in note 3 due to timing differences with regard to contribution payments. AVC purchases include normal contributions of 2,532,000 and transfers in of 32,000. All contributions were invested at year end. 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. Promark Investment Trustees Limited (formerly named GM Investment Trustees Limited), the operator of The GM (UK) Common Investment Pool, is 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 30 June 2009, the aggregate value of the Plan s investment in the pooled investment vehicles was approximately 929 million valued on a mid-price basis. 24

28 Notes to the financial statements for the year ended 31 December 2008 (cont d) 11. 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 92,657, ,807,489 International Equity PFPV 266,012, ,559,677 Emerging Markets Equity PFPV 5,192, ,351,727 Index-Linked Bonds PFPV 20,013, ,487,650 International Bonds PFPV 82,835, ,032,821 Property Unit Trust 43,016, ,749,498 TAA PFPV 1,470, ,240,145 Alternative Investments PFPV 65,533, ,839,727 Cash PFPV 2,013, ,013, ,082,425 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 56.31% (2007: 57.26%) of the total aggregate investment in the CIP. 12. Properties Technical Centre, Luton, UK 6,450 6,000 On 2 January 2007, the Trustee agreed a new 5 year lease with General Motors UK Limited (GM (UK)), of the building adjacent to Griffin House, Luton, Bedfordshire, known as the Technical Centre, occupied by GM (UK), based on an underlying value of 6 million. This lease, on a full insuring and repairing basis, was structured as a bond at an annual rent of 660,000. This replaced the 15 year sublease agreed on 31 December 1991 when GM (UK) simultaneously sold the leasehold of the property for 5.79 million and entered into a leaseback transaction with the Trustee of the Plan. The Plan has an option to sell the property back to GM (UK) at the end of 2011 for 6 million. GM (UK) also has an option to buy the property back at a 7% premium on either 1 st July 2009 or at expiry of the lease by giving six months notice. GM (UK) did not exercise this option on 1 st July

29 Notes to the financial statements for the year ended 31 December 2008 (cont d) During the year ended 31 December 2008 rental income of 660,000 (2007: 660,000) was received from GM (UK) (note 8). Rent is paid in June and December each year in arrears representing an 11% per annum return on the base price. The investment represents 0.6% (2007: 0.5%) of the total Plan value at 31 December At 31 December 2008, the property was independently valued by CB Richard Ellis at 6.45 million. 13. AVC investments The Trustee holds assets invested separately from the main fund in the form of 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 investment is as follows: Prudential Corporation 44,264 44,528 Fidelity Pensions Management 4,929 5,768 49,193 50, Current assets Contributions receivable employers 13,119 5,172 Contributions receivable employees AVC contributions receivable - 5 Accrued receivables lump sums Accrued receivables other Transfers receivable - 94 Prepaid expense Pension regulator/ppf levies - 7 Cash balances ,800 6,741 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. 26

30 Notes to the financial statements for the year ended 31 December 2008 (cont d) 15. Current liabilities Pensions and PAYE payable (607) (598) Lump sums payable (1,350) (1,792) Death benefits payable (44) (11) Refund of contributions payable 0 (2) AVC benefits payable 0 (640) Payable re Members joining State Scheme (4) (16) VAT payable (49) (58) Accrued expenses (8,066) (1,681) (10,120) (4,798) 16. Related party transactions All pensions administration cost is incurred by General Motors UK Limited and then recharged to the Plan. Costs include salaries and benefits of the Pension Administration department, including external systems support, allocated costs for office space and overheads, and direct costs of IT equipment, general office systems software and specific mainframe computer database and pension payroll systems. Total cost for 2008 was 362,000 (2007: 395,000) (note 7) and of this 34,000 (2007: 45,000) was outstanding at year end and included in current liabilities. All internal investment costs are incurred by Promark Investment Trustees Limited (PITL) and recharged to the Plan. Costs include the allocated share of salaries and benefits of the Pension Investment department including costs for office space and overheads, and direct costs of IT equipment, general office systems software. PITL also incurs costs relating to Investment consultancy, rental of Bloomberg screens, investment accounting and performance measurement for the Plan. Total cost for 2008 was 445,000 (2007: 474,000) (note 9) and of this 61,000 (2007: 102,000) was outstanding at year end and included in current liabilities. External investment management charges, including custody, investment accounting and performance measurement are all allocated to the pooled funds within the CIP. 27