THE GENERAL MOTORS RETIREES PENSION PLAN

Transcription

1 Registration Number THE GENERAL MOTORS RETIREES PENSION PLAN Report and Accounts For the Year Ended 31 December 2007

2 C O N T E N T S Trustee and Advisers 1 Report of the Trustee 2-8 Investment Report 5-7 Statement of Trustee s Responsibilities 8 Report of the Actuary 9-11 Schedule of Contributions 12 Independent Auditors Report Fund Account 15 Net Assets Statement 16 Notes to the Financial Statements Independent Auditors Statement about Contributions 24 Summary of Contributions 25 Members Information 26 Appendix: The GM (UK) Common Investment Pool Report & Accounts for the year ended 31 December 2007

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4 TRUSTEE and ADVISERS Participating Company General Motors UK Limited (renamed from Vauxhall Motors Limited 16 April 2008) Trustee GM Retirees Pension Trustees Limited (from 27 March 2007) GM (U.K.) Pension Trustees Limited (to 27 March 2007) Directors of the Trustee Member nominated D. Hayhurst, R. Mumford, R. Woolnough Company-nominated J. Fulcher (Vice Chairman), M.A. Johnson, S. Mallows, R. Molyneux (Chairman, appointed 1 December 2007), K. Ward (Chairman, resigned 1 December 2007), Secretary to the Plan D. P. Mount Actuary G. Thompson Hewitt Associates Limited Registered Auditors PricewaterhouseCoopers LLP Investment Manager 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 2007 The Trustee of The GM Retirees Pension Plan (the Plan ) present their annual report together with the investment report, actuarial statements and certificates, summary of contributions, and financial statements for the year ended 31 December Key Highlights During the year, the assets of the Plan decreased by 7.2 million, mainly due to the payment of benefits, offset by the increase in the market value of investments, and by the end of the year they stood at million. The Plan s overall investment return for 2007 was 7.4%, the fifth consecutive positive year, but the second half of the year was negative as the impact of the US sub-prime liquidity crisis began to be reflected in the markets. Total Plan membership decreased by 576 to 13,621 members. Deferred members fell by 189 to 1,214, while pensioner members declined by 387 to 12,407. 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 Plan under the Finance Act The Plan is contracted-out of the Second State Pension (S2P). The Trust Deed and Rules sets out the Plan benefits in detail and specifies the investment powers of the Trustee. The Plan is closed to active members and, being fully funded, there is no contribution being made by the Company to the Plan. 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 Employer. There were no changes in Plan advisers during the year. Management of the Plan The Trustee of the Plan, GM Retirees Pension Trustees Limited (the Trustee ) is appointed and may be removed by the principal company, General Motors UK Limited (the Company ). GM (U.K.) Pension Trustees Limited has been the trustee of five pension plans, including this Plan, for some years. Following the sale of parts of GM s business, several of the plans required to have their own trustee arrangements. Accordingly on 27 March 2007 three new trustee companies were created and GM Retirees Pension Trustees Limited replaced GM (U.K.) Pension Trustees Limited as trustee of the Plan. In 2007 there were 4 meetings of the Trustee. On 1 March 2007 Mr D. Hayhurst replaced Ms C. Turvey as an employee member. Prior to the restructuring, the Directors of GM (UK) Pension Trustees Limited were: Mr K. G. Ward, Mr J. Parsons, Mr J. Fulcher, Mr M. Johnson On completion of the restructuring, Mr J. Parsons resigned as a director of GM (U.K.) Pension Trustees limited, and the seven members of the Pensions Board of the plan were appointed directors of GM Retirees Pension Trustees Limited. Three of the directors, Mr K. Ward, Mr J. Fulcher and Mr M. Johnson also remained as directors of GM (U.K) Pension Trustees Limited. The names of the current membernominated and Company-nominated Trustee Directors are included on page 1. Mr R. Molyneux replaced Mr K. Ward as a company nominated director and as Chairman, with effect from 1 December

6 Report of the Trustee for the year ended 31 December 2007 (cont d) To conform to the provisions of the Pensions Act 2004, all eligible pensioner members of the pension plan have been consulted by individual notices on the appointment of member nominated Trustee. The outcome of the consultation is that 3 members have been appointed as trustee directors. The Trustee met on 4 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. Trustee Training The Pensions Act 2004 requires trustees to have knowledge and understanding of pensions legislation, investments, the Plans 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 Plan. 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 confirm that the Plan is holding assets which are sufficient to cover the past service ongoing liabilities. The most recent actuarial valuation of the Plan was carried out as at 1 January 2005, using a market-led approach in which the assets are valued at their market value at the date of the valuation, and liabilities are valued using financial assumptions derived from market yields on Fixed Interest and Index-linked Government stock at the valuation date. The principal assumptions underlying the valuation were: the discount rate, for both pre- and postretirement of 5.1% (prior valuation 1/1/2002: 5.5%), price inflation of 2.9% per annum (2.5%) and increases to pensions in payment (in excess of the guaranteed minimum pension in payment) of 1.4% (1.3%). In addition the allowance for death after retirement for spouses and dependants was reduced to reflect mortality experience. At 1 January 2005 the value of the past service liabilities had reduced from million to million as the membership declined. The market value of the assets (including the Eagle Star annuity) had also reduced from 328.1million to million and were sufficient to cover 113% of the past service liabilities. In accordance with the requirements of the Pensions Act, the actuary also produced the annual certificate, showing that the funding ratio on the Minimum Funding Requirement ( MFR ) is 123%. The funding position of the Plan had improved slightly from the prior valuation with investment returns and a favourable adjustment to mortality assumptions more than offsetting the impact of a lower discount rate. 3

7 Report of the Trustee for the year ended 31 December 2007 (cont d) The actuarial statement made for the purposes of Regulation 30 of the Occupational Pension Schemes (Minimum Funding Requirement and Actuarial Valuations) Regulations 1996 is set out on pages 9 and 10. The next actuarial valuation, the first one under the Pensions Act 2004, is scheduled as at 1 January Plan Membership Pensioner members Number at 1 January ,794 Add New dependant pensioners 216 Deferred pensions into payment 167 Transferred in from associated GM Plan 43 Less Deaths and terminated pensions (813) Number at 31 December ,407 Deferred members Number at 1 January ,403 Less Transfers out (1) Deaths and terminations (21) Deferred pensions into payment (167) Number at 31 December ,214 Total membership at 31 December ,621 Pension Increases The guaranteed rate of annual increase of pensions in the course of payment, until the payment in April 2011, is the lower of 3% or one half of the rise in the RPI. In April 2007, in accordance with the recommendations of the Company and with the approval of the Trustee, the eligible members received an increase on that part of their pension, in excess of the GMP, of 2.2% which was one half of the increase in the RPI for the year ended 31 December The Plan is also required to increase GMP rights accrued after 5 April 1988 once they are in payment. The increase must be in line with the increase in RPI (as measured in September) to a maximum of 3%. In April 2007 the increase was 3.0%. 4

8 Report of the Trustee for the year ended 31 December 2007 (cont d) Transfer Values Cash equivalents paid during the Plan year with respect to transfers have been calculated and verified in the manner prescribed by the Pension Schemes Act 1993 and do not include discretionary benefits Review of Financial Development of the Plan The financial statements have been prepared and audited in compliance with regulations made under section 41(1) and (6) Pensions Act 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. 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, GM Investment Trustees Limited ( GMITL ), 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. 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. Bulk Insurance Policy In March 1989, in order to ensure the security of a large proportion of the future level of pension benefits, the Trustee and the Company entered into a bulk insurance (or "Buy-Out") contract with Eagle Star Insurance Company Limited ("Eagle Star"). Under this contract, Eagle Star, (which is now part of Zurich Assurance) have assured until death or transfer substantially all the benefits payable to a closed group of 20,888 pensioners and deferred pensioners (and their beneficiaries) who left service prior to 1 January The Trustee maintains responsibility for administration and payment of the benefits. The contract included an annual indexation of 2.5% (to that portion of pensions in payment in excess of the Guaranteed Minimum Pension) for the five year period ending on 1 April Payments are made by Eagle Star monthly in bulk to the Plan, where they are made up to the actual level of pensions paid to individuals. 5

9 Report of the Trustee for the year ended 31 December 2007 (cont d) Investment Report (cont d) The total consideration paid by the Trustee for the guarantee of future benefits assured was 169.5million. Since inception this contract has provided benefits of million and the Plan's Actuary has calculated that the market value of the contract at 31 December 2007 was 111.0million (2006: million). The decrease from the prior year is due to the payment of benefits, net of an increase in market value due to a lower discount rate. Asset Allocation It is current policy for an asset/liability study to be conducted on a triennial basis. The current strategic asset allocation has been in place since 1 April The asset allocation in place during the year for those assets in excess of the Eagle Star contract was: Asset Allocation UK Equities 12 International Equities 18 Emerging Market Equities 2 UK Index-Linked Bonds 43 International Hedged Fixed Interest Bonds 20 Property % 100 In reviewing the study, the Trustee was satisfied that the investment strategy is appropriate to meet the investment objectives. The Trustee has signed an investment management agreement with GM Investment Trustees Limited ( GMITL ), the investment trustee of the CIP, covering GMITL s role in controlling the asset allocation for the Plan. As cash is required to pay pensions or other benefits, units are liquidated from the PFPV s. Wherever possible, GMITL tries to match any transactions with other pension plans in the CIP. Employer-Related Investments On 2 January 2007 the Trustee agreed a new 5 year lease with General Motors UK Limited on Chalton House, Toddington, a property occupied by the Company. This lease, on a full insuring and repairing basis, was structured as a bond, based on an underlying value of 2.4million and yielding 11% per year. at an annual rent of 264,000. This replaced the 15 year lease agreed on 31 December 1991 when the Company simultaneously sold the leasehold of the property for 2.3 million and entered into a leaseback transaction with the Trustee of the Plan. The Plan has an option to sell the property back to VML at the end of 2011 for 2.4 million. VML also has an option to buy the property back at a 7% premium on either 1st July 2009 or at expiry of the lease by giving six months notice. The property represents 0.8% of the total Plan Value at 31 December 2007, (2006: 0.8%) and the investment complies with all restrictions prescribed by regulations. Further details are set out in the notes to the financial statements. 6

10 Report of the Trustee for the year ended 31 December 2007 (cont d) Investment Report (cont d) In addition, the Plan owns within the International Equity and Bond PFPV s a further 38,000 of shares and bonds issued by General Motors Corporation (2006: 79,000); this represents less than 0.1% of the Plan value (2006:<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 2007, markets were again positive, but increasingly volatile and the Plan s overall return, before fees, (via its combination of assets in the CIP and the self-investment in Chalton House) of 7.4% was 0.2% ahead of the benchmark. Three and five year annualised returns of 9.6% and 10.2% were slightly positive against the benchmark. Total Rates of return for Periods ended 31/12/2007 (annualised) 1 year 3 years 5 years Total Rates of return for Periods ended 31/12/2006 (annualised) 1 year 3 years 5 years % % % % % % Plan returns Benchmark Out/(under) performance (0.1) (0.1) Market reports and detailed analysis of the CIP performance are set out in the report and financial statements of the CIP. 7

11 Report of the Trustee for the year ended 31 December 2007 (cont d) Statement of Trustee's Responsibilities The financial statements are the responsibility of the Trustee. Pension Plan 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 Schemes (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 scheme 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 them 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 Retirees Pension Trustees Limited J. Fulcher S. Mallows Director July 2008 Director 8

12 Report of the Actuary ACTUARIAL STATEMENT MADE FOR THE PURPOSES OF REGULATION 30 OF THE OCCUPATIONAL PENSION SCHEMES (MINIMUM FUNDING REQUIREMENT AND ACTUARIAL VALUATIONS) REGULATIONS 1996 Name of scheme: The General Motors Retirees Pension Plan Effective date of valuation: 1 January Security of prospective rights In my opinion, the resources of the scheme are likely in the normal course of events to meet in full the liabilities of the scheme as they fall due. In giving this opinion, I have assumed that the following amounts will be paid to the scheme: by the members: none by the employer: none, subject to review at future actuarial valuations. I have made assumptions consistent with market values, prospective investment returns and economic conditions at the effective date. However, significant changes in market values of the assets after the effective date may mean that the assumptions and market values on which it is based are no longer appropriate. If you are reading this statement some time after the effective date of the valuation, you should bear in mind that the scheme's funding position could have changed significantly, which could affect the contributions payable after the next valuation. It should also be noted that the actuarial investigation does not include an examination of the Plan's ability to meet future contribution requirements. 2 Summary of methods and assumptions used The value of the past service liabilities has been assessed using the "Projected Unit Method". There was no funding deficit to amortise. Note that the method assumes that the scheme is ongoing and does not consider the position if the scheme were to be discontinued. The main assumptions used in my calculations were: 9

13 Report of the Actuary (cont d) Financial assumptions Price inflation Rate of pension increases Rate of increases of deferred pensions Discount rate Management expenses (other than investment related expenses) 2.9% pa 1.4% pa on pensions in excess of GMPs 2.1% per annum on post 88 GMP pensions subject to statutory revaluations 5.1% per annum 3% of past service liabilities The assets were taken at mid-market value at the valuation date. Further details of the methods and assumptions used are set out in my actuarial valuation report addressed to the Trustees dated 9 December Signature Date 9 December 2005 Name J M Lowes Qualification: Fellow of the Institute of Actuaries Address Parkside House Ashley Road Epsom Surrey KT18 5BS Hewitt Bacon & Woodrow Limited 10

14 Report of the Actuary (cont d) ACTUARIAL CERTIFICATE GIVEN FOR THE PURPOSES OF SECTION 58 OF THE PENSIONS ACT 1995 (CERTIFICATION OF SCHEDULE OF CONTRIBUTIONS) Name of scheme: The General Motors Retirees Pension Plan Adequacy of rates of contributions Adequacy of rates of contributions 1. I hereby certify that, in my opinion, the rates of the contributions payable in accordance with the schedule of contributions dated 12 December 2005 are adequate for the purpose of securing that throughout the period it covers the scheme will meet the minimum funding requirement imposed by section 56(1) of the Pensions Act In forming this opinion I have complied with the requirements imposed by sections 56(3) and 58 of the Pensions Act 1995, the Occupational Pension Schemes (Minimum Funding Requirement and Actuarial Valuations) Regulations 1996 and the mandatory guidelines on minimum funding requirement (GN 27), prepared and published by the Institute of Actuaries and the Faculty of Actuaries, and have made the assumptions prescribed by them. Signature J. M. Lowes Date 9 January 2006 Name J. M. Lowes Qualification Fellow of the Institute of Actuaries Address Parkside House Ashley Road Epsom Surrey KT18 5BS Name of employer Hewitt Bacon & Woodrow Limited Note: The certification of the adequacy of rates of contributions for the purpose of securing the meeting of the minimum funding requirement 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 wound up. 11

15 Report of the Actuary (cont d) Introduction The General Motors Retirees Pension Plan Schedule of Contributions This schedule of contributions is required by Section 58 of the Pensions Act It comes into effect on date of certification and covers the following five year period. The Plan s Trustee is responsible for preparing a revised schedule no later than 25 March Employers This schedule covers contributions to the Plan from all employers who participate in the Plan from time to time. Employer Contributions No employer contributions will be paid. Employee Contributions There are currently no contributing members of the Plan. There is no intention to admit contributing members in future. Hence, no employee contributions will be paid. Signed on behalf of the Employers Signature: Keith Ward Name: Keith G. Ward Capacity: Director Date: 13 December 2005 Signed on behalf of the Plan s Trustees Signature: Glyn Morgan Name: Glyn Morgan Capacity: Trustee Date: 13 December 2005 Date of schedule 12 December

16 Independent Auditors Report to the Trustee of The General Motors Retirees Pension Plan We have audited the financial statements of The General Motors Retirees Pension Plan for the year ended 31 December 2007 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 the Report of the Trustee, the Summary of Contributions, the Report of the Actuary and Members Information. 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. 13

17 Independent Auditors Report to the Trustee of The General Motors Retirees Pension Plan (contd) 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 2007, 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 July

18 Fund Account for the year ended 31 December 2007 Notes Year Ended 31 December 2007 Year Ended 31 December 2006 Contributions and benefits 000 '000 Transfers in Other income 3 3,780 4,770 4,015 5,033 Benefits payable 4 25,343 25,450 Leavers 5-74 Administrative expenses ,849 26,053 Net (withdrawals) from dealings with members (21,834) (21,020) Returns on investments Investment income Change in market value of investments 8 14,394 7,455 Investment management expenses 9 (72) (90) Net returns on investments 14,595 7,670 Net (decrease) in the fund during the year (7,239) (13,350) Net assets of the Plan At 1 January 306, ,868 At 31 December 299, ,518 15

19 Net Assets Statement as at 31 December December December 2006 Notes '000 '000 Investments 8,10 Pooled investment vehicles 180, ,053 Properties 2,400 2,400 Bulk insurance contract 111, ,140 AVC investments 5,425 6, , ,596 Current assets Current liabilities 12 (339) (271) Net Current Liabilities (221) (78) Net assets of the Plan At 31 December 299, ,518 The financial statements on pages 15 to 23 were approved by the Trustee on on their behalf by: July 2008 and are signed The Trustee J. Fulcher ) S. Mallows ) ) Directors 16

20 Notes to the financial statements for the year ended 31 December Accounting policies 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 November 2002). 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 other benefits in the future. The actuarial position of the Plan, which does take account of such obligations, and the report of the actuary is set out on pages 10 to 12 and the financial statements should be read in conjunction with it. The financial statements have been prepared on the accruals basis of accounting. Benefits Benefits are brought into account on the accruals basis as amount payable during the year. Investments The investments in unitised funds represent the Plan s share of the accumulated fund of The GM (UK) Common Investment Pool, (the CIP ) the collective generic name for the ten Pension Fund Pooling Vehicles ( PFPV s ) and the Property Unit Trust ( PUT ), calculated in accordance with the Trust Deed. The units are valued at mid-price Net Asset Value. Valuation of AVC s with the Prudential Corporation is provided by Prudential and this includes the capital value of policies in payment. The Eagle Star contract The Eagle Star bulk insurance contract, which assures the future pension liabilities of certain members of the Plan, is recorded in the Net Assets Statement at market value. The market value is calculated by the actuary, using the actuarial value for discontinuance position method. The interest income in any year is deemed to be the initial yield on the contract applied to the prior period book value less half the yield applied to the actual amounts received. The difference between the total amounts received and interest income is the return of capital for the period. The interest income element is included in the Fund Account, and that portion representing the return of capital is treated as an adjustment to the value of the contract. The unrealised appreciation or depreciation in the market value of the contract is recognised as a movement in the Fund Account. Property The 5 year lease on the Chalton House property has been structured as a bond with the initial and ending capital values the same. As a result the Trustee decided not to revalue the property each year. Under the prior lease the property was independently valued annually by CB Richard Ellis. 17

21 Notes to the financial statements for the year ended 31 December 2007 (cont d) 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, but investment and other related expenses, excluding GMITL expenses, are paid by the appropriate PFPV s and are borne by the Plan in proportion to its share therein. Transfers Transfer values represent the capital sums either received in respect of members from other pension schemes of previous employers, or payable to the pension schemes of new employers for members who have left the scheme, in most cases this is when cash is either received or paid. They take account of transfers where the trustees of the receiving scheme have agreed to accept the liabilities in respect of the transferring members before the year-end, and where the amount of the transfer can be determined with reasonable certainty. 2 Transfers in Transfers in from General Motors (UK) affiliated pension schemes Other income Claims on term insurance contract Income from Eagle Star bulk insurance contract 3,721 4,720 3,780 4,770 18

22 Notes to the financial statements for the year ended 31 December 2007 (cont d) 4 Benefits payable Pensions 24,796 25,220 Commutations and lump sum retirement benefits Lump sum death benefits ,343 25,450 5 Payments to and on account of leavers Individual transfers out to other schemes Administrative expenses General Motors UK Limited administration charges Other administration and processing charges Actuarial fees Audit fees 9 8 Legal and other professional fees Pensions regulator /PPF levy Miscellaneous expenses Investment income Property income Note Interest on cash deposits

23 Notes to the financial statements for the year ended 31 December 2007 (cont d) 8 Change in market value of investments Investments in The GM (UK) Value at Purchases Sales Change in Value at Common Investment Pool At cost Proceeds Market value UK Equity PFPV 21,766 - (1,963) ,795 - International Equity PFPV 33,329 1,000 (5,118) 1,945 31,156 - Emerging Market Equity PFPV 5,000 - (2,263) 1,391 4,128 - Index-Linked Bonds PFPV 75,364 - (570) 6,479 81,273 - International Bonds PFPV 35,194 - (887) 1,899 36,206 - Property Unit Trust 7,239 - (871) (376) 5,992 - TAA PFPV (148) Alternative Investments PFPV Cash PFPV ,710 (11,655) Pooled investment vehicles 179,053 12,710 (23,327) 12, ,655 Property 2, ,400 Bulk insurance contract 119,140 - (10,113) 1, ,020 AVC Investments 6,003 - (760) 182 5, ,596 12,710 (34,200) 14, ,500 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 investment during the year and 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. GM Investment Trustees Limited, the operator of the GM (UK) Common Investment Pool, is registered in the UK. 9 Investment management expenses GM Investment Trustees Limited Investment consultancy fees 8 8 Performance measurement fees

24 Notes to the financial statements for the year ended 31 December 2007 (cont d) 10 Investments Investment in the PFPV s/put comprising the CIP at market value 31 December 2007 Units Price Value UK Equity PFPV 9,070, ,795,358 International Equity PFPV 14,861, ,155,873 Emerging Markets Equity PFPV 769, ,128,361 Index-Linked Bonds PFPV 34,805, ,272,574 International Bonds PFPV 16,180, ,206,385 Property Unit Trust 1,571, ,991,240 TAA PFPV 242, ,860 Alternative Investments PFPV Cash PFPV 285, , ,654,938 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. At 31 December 2007 the Plan held 8.27% (2006: 8.50%) of the total investment in the CIP. Investments - Property UK Leasehold 2,400 2,400 On 2 January 2007 the Trustee agreed a new 5 year lease with General Motors UK Limited, of the building adjacent to the Parts Warehouse, Toddington, Bedfordshire, known as Chalton House, occupied by the Company. This lease, on a full insuring and repairing basis, was structured as a bond at an annual rent of 264,000. This replaced the 15 year sublease agreed on 31 December 1991 when the Company simultaneously sold the leasehold of the property for 2.3 million and entered into a leaseback transaction with the Trustee of the Plan. The Plan has an option to sell the property back to VML at the end of 2011 for 2.4 million. VML 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. During the year ended 31 December 2007 rental income of 264,000 (2006: 302,000) was received from General Motors UK Limited. Rent is paid in June and December each year in arrears representing an 11% per annum return on the base price of 2.4 million. The investment represents 0.8% (2006: 0.8%) of the total Plan value at 31 December

25 Notes to the financial statements for the year ended 31 December 2007 (cont d) Investments - Bulk insurance contract Year Ended 31 December 2007 '000 Year Ended 31 December 2006 '000 Contract market value at 1 January 119, ,700 Receipts under contract to meet benefit payments during the year (13,834) (14,481) Less income element (note 3) 3,721 4,720 (10,113) (9,761) Change in market value (note 8) 1,993 (3,799) Contract market value at 31 December 111, ,140 AVC investments The Trustee holds assets invested separately from the main fund in the form of insurance policies 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 5,425 6, Current assets Cash balances 63 4 Transfers receivable Rental interest receivable Accrued receivables 6 6 Prepaid expense- PPF levy

26 Notes to the financial statements for the year ended 31 December 2007 (cont d) 12. Current liabilities Pensions and PAYE payable (141) (132) Accrued expenses (156) (116) Benefits payable (19) (23) VAT (payable) (23) - (339) (271) 13. 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 2007 was 329,000 (2006: 313,000) and of this 37,000 (2006: 71,000) was outstanding at year end and included in current liabilities. All internal investment costs are incurred by GM Investment Trustees Limited 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. GMITL also incurs costs relating to Investment consultancy, rental of Bloomberg screens, investment accounting and performance measurement for the Plan. Total cost for 2007 was 61,000 (2006: 79,000) and of this 15,000 (2006: 28,000) 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 Common Investment Pool. 23

27 Independent Auditors Statement about Contributions to the Trustee of The General Motors Retirees Pension Plan We have examined the Summary of Contributions to The General Motors Retirees Pension Plan for the year ended 31 December 2007 which is set out on the following page. Respective responsibilities of Trustee and Auditors The Trustee s responsibilities for ensuring that there is prepared, maintained and from time to time revised a schedule of contributions are set out in the statement of Trustee s responsibilities. Our responsibility is to provide a statement about contributions to the Plan in accordance with relevant legislation and to report our opinion to you. This report, including the statement about contributions, has been prepared for and only for the Plan s 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 statement, 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. Basis of statement about contributions We planned and performed our work 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 contributions reported in the attached summary have been paid in accordance with the relevant requirements. For this purpose the work that we carried out included examination, on a test basis, of evidence relevant to the amounts of contributions payable to the Plan and the timing of those payments under the schedule of contributions. Our statement about contributions is required to refer to those breaches of the schedule of contributions which we consider to be material for this statement and which come to our attention in the course of our work. Statement about contributions to the Plan In our opinion, the contributions payable to the Plan required by the schedule of contributions during the year ended 31 December 2007 as reported in the Summary of Contributions on the following page have in all material respects been paid in accordance with the schedule of contributions certified by the Actuary on 9 January PricewaterhouseCoopers LLP Chartered Accountants and Registered Auditors London July

28 Summary of Contributions payable in the year During the year ended 31 December 2007, the contributions payable to the Scheme by the Employer were as follows: Required by the schedule of contributions Employee Employer No contributions required by the Schedule of Contributions Total (as per Fund Account) - - Signed on behalf of the Trustee: J. Fulcher S. Mallows Director Director July

29 Members Information Pensions Tracing Service Contact details for the Pensions Tracing Service, which can help members trace an old pensions scheme that they have lost contact with, are: Pension Tracing Service, Tyneview Park, Whitley Road, Newcastle, NE98 1BA Telephone: The Pensions Advisory Service Any concern connected with the Plan should be referred to Mr D Mount, Pensions Administration Manager, who will try to resolve the problem as quickly as possible. Members and beneficiaries of occupational pension Plans who have problems concerning their Plan which are not satisfied by the information or explanation given by the administrators or the Trustees can consult with the Pensions Advisory Service (TPAS). A local TPAS adviser can usually be contacted through a Citizen's Advice Bureau. Alternatively TPAS can be contacted at: 11 Belgrave Road, London SW1V 1RB Telephone: Pensions Ombudsman In cases where a complaint or dispute cannot be resolved, normally after the intervention of TPAS, an application can be made to the Pensions Ombudsman for him to investigate and determine any complaint or dispute of fact or law involving occupational pension Schemes. The address is: 11 Belgrave Road, London SW1V 1RB Telephone: