Popular Report Welcome. New look website JISC. Employer Covenant. New legislation. Financial overview. Pensions Board

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1 Popular Report 2010 For members of the Vauxhall Motors Limited Pension Plan Welcome New look website JISC Employer Covenant New legislation Financial overview Pensions Board

2 Welcome Welcome to the popular version of the 2010 Annual Report and Accounts. We hope that you will find the information both helpful and interesting. In addition to the financial information, we have included pieces on the new Joint Investment Sub Committee, Employer Covenant and new legislation which will affect some aspects of the Plan and your pensions. If you wish to review the report online, you will be able to access it from Socrates. The full report is nearly 30 pages long, but if you would like to see a printed copy, please contact the Pension Department at the address below: The Pension Department Griffin House Osborne Road Luton LU1 3YT Or team@thepensiondepartment.co.uk More about the Plan, including the Member Booklet, can be found by visiting the pension website at 2

3 New look website If you want a quick overview of your Plan benefits, you will probably find all you need in the Summary of benefits section on the new look pensions website There is more detailed information in the Frequently Asked Questions section. For a more personal look at your benefits, the My pension section includes a modeller to show in principle how your benefits build up. Official terms and phrases are explained by the Jargon buster and the Library has some useful forms. The Useful links section includes links to your Additional Voluntary Contributions arrangement: This site will demonstrate why you should consider an AVC, as well as having an on-line Pension planner and relevant literature. If you are an existing Prudential AVC member, you can use this site to access your current fund value; your username will consist of the code A005 and your National Insurance number (e.g. A005AA123456A). Your password will be your National Insurance Number. Contact Fidelity s Pensions Service Centre via at pensions.service@fil.com for help with your username and PIN. 3

4 Joint Investment Sub Committee It is the Trustee s job to keep track of the Plan and make sure it develops and grows properly. As there is a lot of specialist knowledge and training needed to make more important and complex investment decisions, the Trustee has decided to set up a specialist investment committee together with other GM UK pension trustees. This specialist committee is the Joint Investment Sub Committee (JISC). Decision making on investments stays with each of the Trustee Boards, but the role of the JISC is: to identify and investigate any investment issues or market developments to recommend any changes to long-term strategic asset allocation to make changes to the Plans Statements of Investment Principles if necessary to keep track of the level of asset/liability risk in each Plan to keep track of investment managers to report regularly to the each Trustee on actions the JISC has taken and proposals it is making 4

5 Employer Covenant The Company plays a vital role as pension plan sponsor, basically underwriting any risks to which the scheme is exposed. For that reason, the Employer Covenant the Company s legal obligations to the Plan, and its ability to meet them is crucial to the Trustee. The Trustees regularly review and monitor GMUK s covenant, and how it relates to the pension plan. The following is a summary of GM s financial position based on public communications that have shaped how the Trustee manages it. The successful turnaround of GM s operations in the USA is encouraging. In Europe the turnaround is a bit later but progress has definitely been made and the group is forecasting a return to profitability in the years to come. There are still many challenges, including unfavourable exchange rates and general uncertainty in the economic outlook and obviously it s important to carry on monitoring the progress of GMUK and GME. In 2010, GM reported its first full-year profit since Profits were generated in all regions except Europe - but GME is targeting breakeven before restructuring costs in In June 2010 General Motors announced a decision to fund its investment plans for Europe fully with a $2.6bn loan facility and withdrew applications for government guarantees across Europe. During 2010, GME made good progress on its restructuring, including significant headcount reductions and reaching an agreement with the workforce for labour cost savings. Additionally, GM confirmed the plan first announced in February to invest 11 billion in Opel and Vauxhall future product programmes. Closer to home, GMUK has a negative balance sheet and is expected to report a large loss for It finances its operations through loan facilities provided by Adam Opel and is almost certain to depend on this funding for the foreseeable future. However GMUK is an integral and important unit within GME, with the largest sales in Europe by volume. 5

6 New legislation Abolition of default retirement age The Government has announced that the exemption allowing enforced employee retirement at 65 or over is going to be abolished from October 2011 (with phasing in from 6 April 2011). From April 2011 it has been unlawful to make an employee retire because they have reached a particular age (whether 65 or any other age), unless the employer can justify it as a proportionate means to achieve a legitimate aim. In other words, any dismissal on grounds of age that cannot be justified objectively will constitute age discrimination. Company Retirement Policy The Company has said it will not be advising employees of their right to retire at 65, and that the changes to legislation and Company policy do not change the situation for members of the Pension Plan. If employees want to retire they must put any request for retirement in writing and provide their contractual notice period. 6

7 Financial overview Investment Equities Investments in shares of companies listed on the major stock exchanges of countries in Europe, Asia and America, and in some developing economies in Europe, Asia and South America. Property A combination of UK investment properties including offices, shops and industrial units. The objective is to achieve income and capital returns. Alternative investments Represent a range of different investments that seek to achieve consistently better returns regardless of how the markets move. The types of investments will vary for each market. Bonds These are investments in loans issued by governments and companies around the world. Hedging is a process that removes the movements of foreign currencies when compared to Sterling. This reduces the volatility of overseas investments and ensures that the Plan receives the local market return. 13.5% : UK equities 27% : International equities 4.5% : Emerging market equities 5% : UK index-linked bonds 20% : International hedged fixed interest bonds 15% : Property 10% : Diversified growth 5% : Alternative investments 7

8 Financial overview Membership numbers Total Scheme membership decreased by 107 to 15,707 members. Employee members fell by 387 to 3,407, while pensioner members increased by 117 and deferred members increased by 163. as at December 2010 Income & expenditure Income 000 Company contributions 63,939 Employee contributions 171 AVC contributions 2,018 Transfers in 4 Total 66,132 Expenditure 000 Pensions 63,078 Lump sum commuted pension 9,353 Death benefits 857 Payments to and on account of leavers 2, Pensioners 7,414 7,297 Deferred members 4,886 4,723 Administration expenses 10,376 Other expenses 0 Total 86,029 8 Active members 3,407 3,794 Total 15,707 15,814

9 Financial overview 000 Fund value 1 January ,117,091 Net withdrawals from dealing with members (19,897) Investment income 660 Net returns on investments 125,370 Management expenses (419) Fund value 31 December ,222,805 9

10 Financial overview Investment overview Markets generally overcame a series of events ranging from a sovereign debt crisis in Europe to rising global inflation and modest growth in the major developed economies to give strong returns for the year. Coming on the heels of good returns in 2009, the gains lifted several major equity indices to levels prevailing before the Lehman Brothers bankruptcy in September The Federal Reserve in the USA and other Central Banks around the world injected more liquidity into the markets to try to support the weak global economic recovery. Higher prices, fear of unemployment and a trend away from personal borrowing affected purchases. Bond markets rose against the backdrop of modest economic growth, high unemployment and a housing market that remained relatively weak. All sectors had positive returns with corporate bonds advancing. Government Bonds rallied for most of the year, bringing bond yields to historic lows before they retreated in the last two months as economic data improved. The IPD Annual Property Index recorded a total return for 2010 of 15.1%. The driver of performance was a favourable yield shift, as rental values continued to gently decline. The initial yield from UK property was 6.2%, which is was ahead of the 3.5% offered by gilts and a 2.9% dividend yield on the FTSE All Share at the end of December Most asset classes exceeded their benchmarks during the year, building on the good performance in VML yrs 5 yrs Plan Benchmark Relative

11 Pensions Board Employee Representatives I. Bruce P. Fildes J Kennedy G. Taylor C. Weatherston (Vice Chairman) G. Weaver A.C. Lines (DL) (resigned 14 July 2010) Company Nominated R. Assinder (Chairman) P. Croxford L. Davies S. Mallows (resigned 9 June 2010) P. Millward V.Thomas (resigned 9 June 2010) K.Harvey (appointed 9 June 2010) 11

12 Contact us The Pension Department Griffin House Osborne Road Luton LU1 3YT IMPORTANT Completion of a Nomination Form will greatly assist the Trustee in the payment of your lump sum benefit in the event that you die in service. Forms are available for download from the Pension Website