DC Choice Update Autumn 2009 Edition

Transcription

1 DC Choice Update Autumn 2009 Edition In this edition: 02 New Chairman / Member Nominated Trustee Directors (MNDs) / New Look Website 03 Annual Accounts Change in Minimum Pension Age 06 State Retirement Pensions / Transition of DC Choice to BlackRock 07 Monitor Your Investments 08 Keeping in Touch

2 Introducing our New Chairman Trevor Jones decided to retire from his position as Chairman of the Mitchells & Butlers Pension Plans with effect from 1 June. Trevor had been a Director of the Plans for 14 years and served as Chairman since During his Chairmanship Trevor was instrumental in changing the funding and investment strategy of the Plans in response to the numerous challenges the Plans have faced. We would like to take this opportunity to thank Trevor for his service and wish him a long and happy retirement. Trevor will be replaced as Chairman by Mike Bramley. Mike who retired in April from Mitchells & Butlers plc needs little introduction having served the Company with distinction for 31 years. Among his numerous other roles Mike was a Director of the Plans between 1998 and Mike is delighted to have been appointed as Chairman and is looking forward to working with the Plan Board again. Member Nominated Trustee Directors (MNDs) In June 2008 Andy Gordon and Rita Mitchell were appointed as your active Member Nominated Directors. An active MND position became vacant when Andy Gordon retired from the Company. Letters were issued to all active members in April inviting them to apply for this position. The MND Selection Panel met in May to interview the applicants. Following assessment against a common set of criteria the Selection Panel recommended, and the Trustee Board agreed, to appoint Tim Éclair-Heath without holding a ballot of active members. Tim has also been appointed to represent the Plan on the Common Investment Fund (CIF) Committee. Tim has been employed by the Company for 11 years in various roles: he has been a trainer with Harvester, Implementation Manager in Food Development and for the last three years he has been working on the development of a stock management solution. He has recently joined the Service Productivity Project team, focusing on how Mitchells & Butlers can best use technology to support and grow its business. As a Member Nominated Director Tim is looking forward to learning more about pensions and playing his part in representing members. New Look Website Have you seen our new look website? To make it easier to find the information you are looking for the website now has separate sections for Defined Contribution (DC) and Defined Benefits (DB) members. The website covers a wide range of topics, for example: Active members can find information relating to their benefits. Deferred members can find out what happens when they get to retirement age. Why not take a look and let us know what you think? You can visit our new look website at or through the Mitchells & Butlers intranet. 02

3 Annual Accounts The Annual Report for the Mitchells & Butlers Pension Plan for the year ended 31 March 2009 is available on the pension website or on request from the Pensions department, Mitchells & Butlers plc, 27 Fleet Street, Birmingham B3 1JP. An extract from the Chairman s Report is included below: The year to 31 March 2009 saw extraordinary economic and market conditions, which presented significant challenges for both the Plan Trustee and the Company. The failures within the banking system came to a head in the final quarter of 2008, with the collapse of Lehman Brothers, the US investment bank, causing panic in equity markets and triggering a deep recession throughout the major world economies. This resulted in unprecedented levels of government support being provided in an attempt to stimulate global growth, including the virtual nationalisation of some of the world s major banks. Interest rates fell to all time lows in the US and UK, and this was followed by quantitative easing, where the governments bought back bonds. It is too early to see whether these measures will have the desired effect. As a result, equity and property market returns were sharply negative in the year, as were the returns made on corporate bonds, and as a result most members suffered negative investment returns. Towards the end of the year, the Trustee Directors decided to change the investment services provider for the DC Section. As a result BlackRock Asset Management, having previously provided administrative services from their Peterborough office, were appointed to provide a bundled administration and investment service. Thankfully, given all of the activity on the investment and administration fronts, the amount of new legislation introduced during the year which affected the Plans was relatively small. The following provides a summary of the report, as it relates to DC Choice members. Assets The total value of DC Choice at 31 March 2009 was 5,141,000, an increase of 149,000 during the year. This increase in funds is broken down in the chart opposite ,519 The increase in the fund value was the result of member and Company contributions. The latter include 484,000 made under NICwise scheme, and 2.5% of active DC Choice members salaries to meet the costs of life assurance, incapacity benefits and administrative and investment charges. Investment returns for the year were negative by 1,231,000, after investment management costs of 21,000. (1,231) (164) (210) (18) 14 Company Contributions Members' Contributions Transfers in Administrative expenses Leavers Benefits payable Return on investments (1,500) (1,000) (500) ,000 1,500 2,000 '000 03

4 How members invest For the majority of the financial year, there were no changes to the funds available to members, which were invested via Investment Solutions. These comprised 10 index tracking funds managed by Legal & General Investment Management, and 6 actively managed funds. Whilst performance of the index tracking funds was in line with benchmark, the Trustee Directors became concerned with the poor performance of the actively managed funds, and following advice from the investment consultant undertook a review of alternative investment service providers, which resulted in BlackRock Asset Management (BlackRock) being appointed to provide a bundled investment and administrative service. With effect from 10 March 2009, investments in Investment Solutions funds were transferred to equivalent BlackRock funds. 10 index tracking funds continued to be managed by Legal & General Investment Management, whilst BlackRock manage the following actively managed funds; DC Balance Growth Fund a multi asset class fund, 50:50 Global Growth Fund investing in UK and global equities UK Growth Fund investing in UK equities Sterling Bond Fund investing in UK government and corporate bonds DC Property Fund investing in UK property A sixth actively managed fund, an overseas equity fund, is managed by Newton Investment Management. Whilst all funds had some investments in them at the year end, most DC Section members invest via the default LifeStyle option in the Index-Tracking Global Equity Fund, before switching to bonds and cash as retirement draws closer. As a result, 91.5% of DC Choice funds were invested in that fund at the year end, with 96% of DC choice funds invested in equities. At 31 March 2009, only 1.9% of total investments were held in actively managed funds (i.e. those where the manager is attempting to outperform the index). DC Section members held AVC (Additional Voluntary Contribution) investments of 247,000 at the year end. How did investments perform? The annual return made by each of the Investment Solution funds during the year ended 31 March 2009 is shown below: % Index Tracking UK Long-dated Gilt 4.0% Cash -2.8% Index Tracking Index-linked Gilt -10.7% Index Tracking Japan -14.1% Index Tracking US equity -18.7% Active All Stock UK Corporate bonds -19.6% Index Tracking World (ex UK) equity -20.1% Active Property -21.7% Index Tracking Pacific ex Japan equity -22.1% Active Global ex UK equity -24.5% Index Tracking Global equity -25.9% Active Global equity -29.2% Index Tracking UK equity -29.9% Active UK equity -30.7% Index Tracking Continental Europe equity -40.0% -30.0% -20.0% -10.0% 0.0% 10.0% 20.0% 30.0%

5 The performance of active managers was generally disappointing during the year. Whilst the property fund beat benchmark returns by 4.4%, the active equity funds made returns of between 0.6% and 2.4% below their benchmarks, and the corporate bond fund fell short by 12.3%. The equity and corporate bond funds had also underperformed their benchmarks over a 3 year period to 31 March Plan membership Members 31 March New Members -74 Leavers -6 Retirements 828 Members 31 March 2009 Plan membership increased by 84 during the year to 828. This includes 198 members (145 last year) who are no longer contributing, but whose funds remain within the Plan Change in Minimum Pension Age Minimum pension age is the earliest age at which members can normally retire from a UK approved pension scheme and receive a pension. This age limit does not apply to ill-health retirements. Legislation increases the minimum pension age from 50 to 55 with effect from 6 April Members of pension schemes who meet specific criteria are entitled to a protected minimum pension age and will therefore maintain their minimum pension age of 50. What is my minimum pension age? Active members who joined the Plan before 6 April 2006 have a protected minimum pension age and may receive their pension from age 50, provided they meet certain conditions on retirement. An active member is a member of the Plan who is currently in Pensionable Employment. For all other members of the Plan the new minimum pension age will apply and they will not be able to receive their pension until age 55. I am over 50, but under 55 and wish to receive my pension before 6 April What do I need to do? A member aged 50 to 55 who does not have a protected minimum pension age and wishes to receive their pension before the new legislation applies must have received their first pension payment before 6 April If the new minimum pension age applies to you, you are aged between 50 and 55 on 5 April 2010 and wish to receive your pension before the new legislation comes into force you must apply to the Administrator for your benefits by 30 November There is no guarantee that requests received after this date will be processed prior to the 5 April 2010 deadline. The Administrator, BlackRock, may be contacted at Mitchells & Butlers Pensions, BlackRock Pensions Administration Centre, PO Box 704, Peterborough PE1 1WL Telephone: uk.ops@blackrockpensions.co.uk 05

6 State Retirement Pensions What is State Pension Age (SPA)? The table below shows when you will reach SPA. Gender When were you born? State Pension Age Male Born on or before 5 April Female Born on or before 5 April Female Born on or after 6 April 1950 but Rising from 60 to 65 between 2010 before 6 April 1955 and 2020 Female Born on or after 6 April 1955 but before 6 April Male or Female Born on or after 6 April 1959 Increase from age 65 to 68 What State Pension will I receive? Both you and your employer contribute to the cost of the State Pension by way of National Insurance (NI) contributions. The State provides a two-part pension paid from SPA: The two parts of the State Pension are: The basic State Pension paid to everyone who has a sufficient record of NI contributions. The State Second Pension (S2P) paid to employees who pay full rate NI on earnings between certain levels, reviewed annually by the Government. Further information about State Pensions can be obtained from the Department for Work and Pensions or by visiting their website at Transition of DC Choice to BlackRock In our last edition we informed you about the transfer of the investment management of DC Choice to BlackRock. The transfer of funds went smoothly and all members should have received their BlackRock welcome pack including a closing statement from Investment Solutions and opening statements from BlackRock. Online Service DC Choice accounts in the Mitchells & Butlers Pension Plan are available for you to view online. The online service (see overleaf) allows you to view the current value of your account at BlackRock and the contributions that have been made. If you have any queries BlackRock can be contacted on between 9am and 5pm, Monday to Friday. Members are reminded to monitor their investments on a regular basis to ensure they are saving enough for retirement. 06

7 How to register to access your account online Registering to access your account online is easy. Go to and click on the Member Login button on the bottom right hand side of the page. Choose If you have a pension with us, and want to register for 'Your Pension Online' click here. You will then be asked to enter your account number, surname and a password of your choice. Once you have completed these details, please select register and you will be asked to call the BlackRock helpline ( ) where a member of the team will ask you a few data protection questions before activating your account for you. If you were registered under dc-link you will need to re-register using the same process as detailed above. Monitor Your Investment Saving for your retirement is a long-term commitment and your money is likely to be tied up in investments for quite some time. So whichever investment option you choose, it is important to keep a close eye on your investments. You should monitor your investments on a regular basis to ensure you are saving enough for your retirement. If your investments are not providing the returns you need, you may want to boost your savings by increasing your Core Contributions or by making Additional Voluntary Contributions (AVCs). Your investment returns are detailed on your account statement, which the Administrator will send to you once a year. Fund factsheets are also available to help you monitor your investments. These are produced every quarter. Just call the Helpline ( ) to request the latest fund factsheets for your investment choice. A simpler way to keep a close eye on your investments is to register with BlackRock at You can view the latest fund factsheet and a statement showing the value of your investments over a period of your choice all from your PC. 07

8 Keeping in Touch If you have any questions about the subjects covered in this Update or if you have any general queries about pensions, please contact the DC Choice administration team at: BlackRock Pensions Administration Centre, PO Box 704, Peterborough PE1 1WL Telephone: You can also find lots more information about the Plan and copies of recent newsletters on our website at Don t forget Beneficiary and Partner Nomination Forms Beneficiary and Partner Nomination Forms should be updated every 3 years. Forms are available from the Administrator or the pension website at the address above. More information on whether you need to complete a form has been included in previous editions of Update and can be found on the pension website. Please help us to keep you informed by letting DC Choice know if you change your address