THE DELPHI DIESEL SYSTEMS PENSION SCHEME

Transcription

1 Registration Number THE DELPHI DIESEL SYSTEMS PENSION SCHEME Report and Accounts For the Year Ended 31 December 2007

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3 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 16 Net Assets Statement 17 Notes to the Financial Statements Independent Auditors Statement about Contributions 23 Summary of Contributions 24 Members Information 25 Appendix: The GM (UK) Common Investment Pool Report & Accounts for the year ended 31 December 2007

4 THE DELPHI DIESEL SYSTEMS PENSION SCHEME TRUSTEE and ADVISERS Principal Employer Delphi Diesel Systems Limited Trustee Delphi Diesel Systems Pension Trustees Limited Directors of the Trustee Employee Representatives T. Brind, D. McLellan, A. Shepherd (Vice Chairman), P. Wilson Company Representatives A. C. Evans, (Chairman), S. Coppock, D. Friday, S. Gregory, C. Palmer (appointed 8 November 2007), Ms. J. Lumsden (resigned 9 March 2007) Secretary to the Scheme Marion McDonald Actuary S. Gupta Watson Wyatt LLP Registered Auditors PricewaterhouseCoopers LLP Investment Manager GM Asset Management (UK) Ltd Solicitors CMS Cameron McKenna (resigned 28 April 2008) Slaughter and May LLP (appointed 28 April 2008) Bankers Lloyds TSB Bank Plc Investment Consultants Watson Wyatt LLP Scheme Administration General Motors UK Limited (renamed from Vauxhall Motors Ltd 16 April 2008) 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 Delphi Diesel Systems Pension Scheme (the Scheme ) present their annual report together with the investment report, actuarial statements and certificates, summary of contributions, compliance statement and financial statements for the year ended 31 December Key Highlights During the year, the assets of the Scheme increased by 13.9 million, due to the increase in market value of investments ( 11.3 million) and the excess of contributions over the payment of benefits ( 2.9million), and by the end of the year they stood at million. The Scheme s overall investment return for 2007 was 5.0%, 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 scheme membership increased by 215 to 3,922 members. Employee members increased by 9 to 2,631 while pensioner members and deferred members increased by 123 and 83 members respectively. Constitution of the Scheme The Scheme was established on 7 January 2000 under, and is governed by, a Trust Deed and Rules, as amended. It is a registered pension scheme under the Finance Act The Scheme is contracted-out of the Second State Pension (S2P). The Trust Deed and Rules sets out the Scheme benefits in detail and specifies the investment powers of the Trustee. The closed section of the Scheme is a defined benefit pension arrangement where earnings levels and length of service determine pensions. The new employee section is a defined benefit pension arrangement with a defined contribution underpin. The Scheme is contributory and provides retirement and dependants pensions. The Scheme also provides death benefits, before and after retirement, and discretionary ill-health pensions. All new employees automatically become members of the Scheme to ensure they are immediately covered for the Scheme s risk benefit package. Employees must confirm their membership by completing a membership form. Service after 6 April 1997 is contracted out using the reference scheme test basis introduced by the Pensions Act 1995 (the Pensions Act ) which requires the Scheme actuary to certify that the Scheme 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. The level of contributions to the Scheme with effect from the valuation as at 31 December 2005, is determined by agreement between the Trustee of the Scheme and the Principal Company, Delphi Diesel Systems Limited (the "Company) and, in default of agreement, by the Pensions Regulator, in accordance with the requirement of the Pensions Act The cost of providing benefits not covered by members contributions is provided by the participating companies. Subject to certain exceptions, for additional benefits required to be granted by law, the Company is required by the Trust Deed to make good any deficit were the Scheme ever to be terminated and the benefits payable will be determined in accordance with the Scheme Rules and overriding legislation. Scheme Advisers There are written agreements in place between the Trustee and each of the Scheme advisers listed on page 1 and also with the Principal Employer. There were no changes in Scheme advisers during the year. 2

6 Report of the Trustee for the year ended 31 December 2007 (cont d) Management of the Scheme The Trustee of the Scheme, Delphi Diesel Systems Pension Trustees Limited, was appointed and may be removed by the Company. The Scheme rules contain provisions for the appointment and removal of the Trustee. The names of the current Trustee Directors are included on page 1. Five are company appointed directors and four are employee directors who are nominated by the Trade Unions. The Company must approve all appointments and replacements. Mr C. Palmer was appointed as a Company nominated director on 8 November 2007 to replace Ms J. Lumsden who resigned on 9 March To conform to the provisions of the Pensions Act 2004, the Trustee is in the process of finalising the consultation for the appointment of member nominated directors. The Trustee met on 6 occasions during the year. The US operations of the Company s ultimate parent undertaking, Delphi Corporation ( Delphi ) remain in Chapter 11 bankruptcy status, as per the voluntary petitions for business reorganisation filed on 8 October The non-us operations of Delphi, including the Company, were not included in the filing and have continued their normal business operations and are not subject to Chapter 11 requirements. During the last two years Delphi has made significant progress in resolving the legacy issues, and currently expects to emerge from Chapter 11 during 2008/2009. The Trustee has been advised that the Company remains committed to the Plan, continues to meet its obligations under the schedule of contributions, has no plans to reduce pension payments, cease contributions, or close the Plan. 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 they are 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 Scheme 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 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 Scheme 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 investment managers and custodian. 3

7 Report of the Trustee for the year ended 31 December 2007 (cont d) Actuarial Valuation The Trustee must obtain an actuarial valuation of the Scheme at least once every three years, to determine the funding level and to provide the basis for it to agree the contribution schedule with the employer. The Scheme Actuary carried out the triennial valuation of the Scheme as at 31 December 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. This was the first valuation since the Pensions Act 2004 introduced new requirements for the funding of Pensions Schemes; the Pensions Regulator has published a new code of practice on funding and guidance on how it will monitor funding discussions. The Pensions Protection Fund (PPF) has also been created and the Scheme has now to consider the additional levies as part of its cost structure. 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 5.8% for past service and 6.4% for future service, pay increases at 3.7% per annum, price inflation at 2.7% per annum and increases to pensions in payment (in excess of the guaranteed minimum pension in payment) of 2.7%. Assets were assumed to achieve returns of 7.2% per year during the recovery period. The Trustee agreed to use updated mortality tables to reflect general UK trends towards increased longevity. At 1 January 2006, the market value of the assets of the Scheme, excluding AVC s, was million. This was sufficient to cover 91% of the benefits that had accrued to members. This is a shortfall of 19.8 million relative to the Technical Provisions, i.e., the levels of assets agreed by the Trustee and the Company as being appropriate to meet member benefits. The actuary is also required to show what the position would be on a solvency basis with assets used to buy annuities from an insurance company and on this basis the statutory estimate of solvency ratio was 46%. The Company had been contributing at a rate of 16.4% of pensionable pay from 1 January 2004 to the end of March From April, and backdated to January 2007, the Company agreed to pay contributions at the calculated rate to cover the accrual of future benefits which is 13.4% of pensionable pay. In addition, to address the shortfall, the Company agreed to pay 100,000 in 2007, 200,000 in 2008, and higher figures in future years through The Company will also pay the scheme s annual PPF levy as and when it falls due up to a capped figure of 700,000 in 2007/8 and increasing thereafter. If the levy is more than the capped figure, then the balance will still be paid into the Scheme providing the total of Company contributions and levy has not exceeded 8.5million in 2007 and rising in future years. The latest schedule of contributions is shown on pages 12 and 13. The financial position of the Scheme and the level of contributions required will be reviewed at the next actuarial valuation which will be carried out as at 31 December

8 Report of the Trustee for the year ended 31 December 2007 (cont d) Scheme Membership Employee members Number at 1 January ,622 Add Employees joining during the year 331 Less Employees leaving during the year: Retirements (111) Early leavers with deferred pensions (103) Early leavers with refunds (102) Deaths and terminated pensions (6) (322) Number at 31 December ,631 Pensioner members Number at 1 January Add New pensioners during the year 111 New dependent pensioners 9 Deferred pensions into payment Less Deaths and terminations (6) Number at 31 December Deferred members Number at 1 January Add Leavers during the year 103 Less Deferred pensions into payment (9) Transfers out (9) Deaths and terminations (2) (20) Number at 31 December Total membership at 31 December ,922 AVC Providers Since inception, the Scheme has operated an Additional Voluntary Contribution ( AVC ) scheme. Individual members are able to invest additional contributions either in a with-profits insurance policy run by the Prudential Corporation or in a choice of unit-linked funds operated by Fidelity Pensions Management. Further details are set out in the notes to the financial statements. 5

9 Report of the Trustee for the year ended 31 December 2007 (cont d) At 31 December (2006: 379) members were making additional voluntary contributions to the Prudential Corporation in order to secure greater pension benefits. A further 225 were still members of the Scheme but either chose not to make voluntary contributions or were deferred members. At the same date 175 (2006: 148) members made AVC contributions to the range of unit-linked funds run by Fidelity Pensions Management. Of these, 52 chose not to contribute during A further 59 members are now deferred members. Pension Increases The guaranteed rate of increase of pensions in the course of payment, for service before 31 January 2008, is the lower rate of 5% or the RPI: for service thereafter the cap is reduced to 3.75% p.a. In April 2007, the eligible members received an increase on that part of their pension in excess of the GMP of 4.4 %. The Scheme 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%. Transfer Values Cash equivalents paid during the Scheme 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 Scheme 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 Scheme generally, or queries relating to members' own benefits, should be made to the Scheme 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. 6

10 Investment Report The Scheme 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 Scheme and is administered by a corporate trustee, GM Investment Trustees Limited ( GMITL ), which appoints independent investment managers to manage the investments. The Trustee has entered into a contract with a GMITL holding company, GM Asset Management (UK) Limited ( GMAM (UK) ), to manage the investments. Copies of the Statement of Investment Principles ( SIP ) are available on request from the Scheme administrators. Investment Objectives The Trustee wishes to ensure that the Scheme can meet its obligations to the beneficiaries while recognising the cost implications to the participating companies of pursuing excessively conservative investment strategies. The Trustee defined the investment objectives in the SIP, in consultation with the Company, prior to conducting the asset-liability study. These were: 1. The acquisition of suitable assets of appropriate liquidity which will generate income and capital growth to meet, together with new contributions from members and the Company, the cost of current and future benefits which the Scheme provides, as set out in the Trust Deed and Rules. 2. To limit the risk of the assets failing to meet the liabilities over the long term. 3. To minimise the long term costs of the Scheme by maximising the return on the assets whilst having regard to the objective shown under 2. Asset Allocation The most recent asset/liability study was carried out in 2007 by Watson Wyatt, the investment consultants to the Scheme, which resulted in a reallocation from equities to alternative investments and these were implemented on 1 December The following asset allocations have been in place throughout Asset Allocation Jan- Nov 2007 % Asset Allocation Dec 2007 UK Equities International Equities Emerging Market Equities 3 3 UK Index-Linked Bonds 5 5 UK Fixed Interest Bonds 5 5 UK Corporate Bonds 5 5 International Hedged Fixed Interest 5 5 Property Alternative Investments

11 Investment Report (Continued) The Trustee has signed an investment management agreement with GMAM (UK), covering GMAM (UK) s role in controlling the asset allocation for the Scheme, and aiming to add value through tactical asset allocation. At year end an update to the Statement of Investment Principles reflecting this change was under review but had not yet been signed. As required, additional contributions to the Scheme 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, GMAM (UK) tries to match any transactions with other pension plans in the CIP. Employer-Related Investments At 31 December 2006, the Scheme held no employer-related investments. Custody Appropriate steps have been taken to safeguard the assets of the Scheme. 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 Scheme are held by the Company. Investment Performance During 2007 the Scheme produced overall returns of 5.0% before fees, (2006: 12.5%) which was slightly below the Scheme benchmark return of 5.2% (2006: 11.7%). Three year returns of 12.8% ( %) per annum were 0.3% ahead of the benchmark, and 5 year returns of 13.4% were 0.1% below 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 % Scheme returns Benchmark Outperformance (0.2) 0.3 (0.1) Market reports and detailed analysis of the CIP performance are set out in the report and financial statements of the CIP. 8

12 Statement of Trustee's Responsibilities The financial statements are the responsibility of the Trustee. Pension scheme regulations requires the Trustee to make available to scheme members, beneficiaries and certain other parties, audited financial statements for each scheme 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 Scheme during the Scheme year and of the amount and disposition at the end of the Scheme year of its assets and liabilities, other than liabilities to pay pensions and benefits after the end of the Scheme 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 Scheme 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 Scheme 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 Scheme and for monitoring whether contributions are made to the Scheme 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 Scheme and to prevent and detect fraud and other irregularities, including the maintenance of an appropriate system of internal control. Delphi Diesel Systems Pension Trustees Limited A.C. Evans Director July 2008 A. Shepherd Director 9

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 Scheme: The Delphi Diesel Systems Pension Scheme Calculation of technical provisions I certify that, in my opinion, the calculation of the Scheme s technical provisions as at 1 January 2006 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 Scheme and set out in the Statement of Funding Principles dated 21 March Signature: Sanjay Gupta Date: 21 March 2007 Name: Sanjay Gupta Qualification: Fellow of the Institute of Actuaries Address: Watson Wyatt Limited 3 Falcon Gate Shire Park Welwyn Garden City Hertfordshire AL7 1TW Name of employer: Watson Wyatt Limited 10

14 Report of the Actuary (cont d) Delphi Diesel Systems Pension Scheme Actuary's certification of Schedule of Contributions 1. Adequacy of rates of contributions I certify that, in my opinion, the rates of contributions shown in this schedule of contributions are such that the statutory funding objective can be expected to be met by the end of the period specified in the recovery plan dated 21 March Adherence to statement of funding principles I hereby certify that, in my opinion, this schedule of contributions is consistent with the Statement of Funding Principles dated 21 March 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. Sanjay Gupta Fellow of the Institute of Actuaries Date 21 March Watson Wyatt Limited 3 Falcon Gate Shire Park Welwyn Garden City Hertfordshire AL7 1TW Authorised and regulated by the Financial Services Authority 11

15 Report of the Actuary (cont d) Delphi Diesel Systems Pension Scheme Schedule of Contributions This schedule of contributions has been prepared by the Trustees, after obtaining advice from the Scheme Actuary, Sanjay Gupta. It specifies the rates and due dates of employer and employee contributions from 1 January 2007 and the likely expenses to be incurred by the Scheme. All contributions are subject to review following the next scheduled actuarial valuation currently due at 31 December Name of employer Delphi Diesel Systems Limited 2. Rates of contribution 2.1 Active members will contribute at the following rates of Pensionable Pay: Open Section members: 3.0% of Pensionable Pay Closed Section contributory members: 4.5% of Pensionable Pay All other members contribute at the rates specified in the Rules. Additional Voluntary Contributions can be paid in addition to the above rates 2.2 The employer will contribute at a rate of 13.4% of Pensionable Pay from 1 January 2007 in respect of future accrual of benefits, the provision of death benefits and the expenses of administering the Scheme. As the employer has paid contributions at a rate of 16.4% of Pensionable Pay for January, February and March 2007, the contribution payable in April 2007 will be 13.4% of Pensionable Pay less an amount equal to 3.0% of Pensionable Pay over the months for January, February and March In addition, the employer will pay: 100,000 by 31 December ,000 by 31 December ,000 by 31 December ,000 by 31 December ,000 by 31 December ,000,000 by 31 December ,000,000 by 31 December The employer will provide additional funding to meet the scheme s annual levy payable to the Pension Protection Fund. The employer will pay the levies in full provided the levy falls within the cap as set out below. If the levy for any year is above the cap shown, the Scheme will meet the balance of the Levy. Caps for future levies will be agreed as required. A cap of 700,000 for the 2007/08 PPF levy A cap of 800,000 for the 2008/09 PPF levy A cap of 850,000 for the 2009/10 PPF levy A cap of 900,000 for the 2010/11 and 2011/12 PPF levies 12

16 Report of the Actuary (cont d) 2.5 From time to time, higher contributions than those set out in 2.2, 2.3 and 2.4 may be paid. In particular the employer has agreed to provide additional funding of the difference between the annual PPF caps set out above and the PPF levy from the same year, provided that the total level of pension contributions and PPF levy to the Scheme remains within the total company budget for the relevant year as set out below: million million million million million 3. Due dates for payment Notes: Member contributions: to be paid into the Scheme no later than the 19 th of each month after that in which they are deducted from earnings. Employer contributions: except where specified in 2.3, to be paid into the Scheme no later than the 19th of each month after that to which they relate; 1 This schedule does not cover the employer's commitment to pay across to the Trustee any additional voluntary contributions made by members. 2 The above contributions include an allowance for investment charges, fees in respect of professional advisors, lump sum death benefits and other expenses met by the Trustee which are paid from the resources of the Scheme as and when they fall due. Agreed on behalf of the Trustees, Delphi Diesel Systems Pension Trustees Limited Agreed on behalf of Delphi Diesel Systems Limited.Andy C. Evans.....Jeff Parsons.... (Capacity) Trustee (Capacity) Director Date: 19/3/07 Date: 21/3/07 Date of Schedule (for reference purposes): 21 March

17 Independent Auditors Report to the Trustee of The Delphi Diesel Systems Pension Scheme We have audited the financial statements of The Delphi Diesel Systems Pension Scheme for the year 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 Scheme'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. 14

18 Independent Auditors Report to the Trustee of The Delphi Diesel Systems Pension Scheme (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 Scheme 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

19 Fund account for the year ended 31 December 2007 Notes Year Ended 31 December 2007 Year Ended 31 December 2006 Contributions and benefits Contributions receivable 2 11,326 12,226 Transfers in ,391 12,278 Benefits payable 4 7,759 5,295 Leavers Administrative expenses ,454 6,059 Net additions from dealings with members 2,937 6,219 Returns on investments Change in market value of investments 7 11,259 24,476 Investment management expenses 8 (260) (224) Net returns on investments 10,999 24,252 Net increase in the fund during the year 13,936 30,471 Net assets of the Scheme At 1 January 240, ,025 At 31 December 254, ,496 16

20 Net assets statement as at 31 December 2007 Notes 31 December December 2006 Investments Pooled investment vehicles 7, 9 244, ,109 AVC investments 10 9,847 9, , ,497 Current Assets Current Liabilities 12 (878) (704) Net current assets/(liabilities) 50 (1) Net assets of the Scheme At 31 December 254, ,496 The financial statements on pages 16 to 22 were approved by the Trustee on signed on their behalf by: July 2008 and are The Trustee A. C. Evans ) A. Shepherd ) ) Directors 17

21 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 Scheme 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 Scheme, which does take account of such obligations, is in the actuarial valuation section of the trustee report on pages 3 and 4 and the report of the actuary on pages and the financial statements should be read in conjunction with it. The financial statements have been prepared on the accruals basis of accounting. Contributions and benefits Employer and employee normal contributions are accounted for in the period to which the corresponding wages and salaries relate. Employer special contributions are paid in accordance with the requirements of the schedule of contributions in force. Contributions and benefits are brought into account on the accruals basis as amounts receivable and payable during the year. Investments Investments in unitised funds represent the Scheme'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. The unitised funds 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 unit linked AVC funds offered by Fidelity Pensions Management are Open Ended Investment Company ( OEIC ) funds which are valued at mid-price Net Asset Value. 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 Scheme are paid by the Scheme, but investment and other related expenses are paid by the appropriate PFPV s and are borne by the Scheme in proportion to its share therein. 18

22 Notes to the financial statements for the year ended 31 December 2007 (cont d) 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. Contributions receivable Employer Normal 8,722 9,719 Augmentations Members Normal 1,753 1,735 Additional voluntary contributions Transfers in 11,326 12, Transfers In from affiliated Delphi Plans Individual transfers in from other schemes Benefits payable Pensions 4,645 3,480 Commutations and lump sum retirement benefits 2,678 1,483 Lump sum death benefits Payments to and on account of leavers 7,759 5, Refunds to members leaving service Payments for members joining state scheme Individual transfers out to other schemes

23 Notes to the financial statements for the year ended 31 December 2007 (cont d) 6. Administrative expenses General Motors UK Ltd administration charges Other administration and processing charges 3 2 Actuarial fees Audit fees 7 7 Legal and other professional fees 25 7 Pensions regulator /PPF Levy Miscellaneous expense Investments Investments in The GM Value at Purchases Sales Change in Value at (UK) Common Investment Pool at cost Proceeds Market value Pooled investment vehicles: UK Equity PFPV 63, (16,844) 2,786 49,810 International Equity PFPV 81, (7,854) 5,073 78,861 Emerging Market Equity PFPV 9,094 - (3,583) 2,603 8,114 Index-Linked Bonds PFPV 10,522 1, ,930 UK Bonds PFPV 10,175 1,830 (1) ,605 International Bonds PFPV 10,935 1,300 (427) ,468 Property Unit Trust 34, (497) (2,222) 32,795 Corporate Bonds PFPV 10,255 1, ,475 Alternative Investments PFPV - 24, ,187 Cash PFPV 850 4,310 (4,900) Pooled investment vehicles 231,109 36,725 (34,106) 10, ,535 AVC investments - Prudential 7, (611) 315 7,573 -Fidelity 1, (35) 137 2,274 AVC investments 9, (646) 452 9, ,497 37,378 (34,752) 11, ,382 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 professional fees. The Investment Manager, GM Asset Management (UK) Limited, and GM Investment Trustees Limited, the operator of the GM (UK) Common Investment Pool, are both registered in the UK. 20

24 Notes to the financial statements for the year ended 31 December 2007 (cont d) 8. Investment management expenses Investment management fees Performance measurement fees Investment management fees cover GM Asset Management (UK) Limited s overlay investment management fee. 9. Pooled Investment Vehicles Investment in the PFPV s/put comprising the CIP at market value Units 31 December 2007 Price Value UK Equity PFPV 21,726, ,809,427 International Equity PFPV 37,617, ,860,29 Emerging Markets Equity PFPV 1,512, ,114,360 Index-Linked Bonds PFPV 5,537, ,930,231 UK Bonds PFPV 6,458, ,605,590 International Bonds PFPV 5,571, ,467,578 Property Unit Trust 8,600, ,794,609 Corporate Bonds PFPV 9,027, ,475,315 Alternative Investments PFPV 23,663, ,186,825 Cash PFPV 290, , ,534,747 The investment in the CIP represents the Scheme s share of each of the PFPV s, calculated in accordance with the provisions of the Trust Deed. At 31 December 2007 the Scheme held 11.20% (2006 : 10.97%) of the total investment in the CIP. 10. 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. 21

25 Notes to the financial statements for the year ended 31 December 2007 (cont d) The aggregate amount of AVC investment is as follows: Prudential Corporation 7,573 7,401 Fidelity Pensions Management 2,274 1, Current assets 9,847 9, Cash at bank 5 2 Contributions receivable-employees Contributions receivable-employers AVC contributions receivable 9 2 Accrued receivable re AVC lump sums 45 - Accrued receivable re Transfers in 20 - Prepaid expense pensions regulator/ppf levy All contributions due to the Plan relate to the month of December 2007 and were paid in full to the Plan within the timescale required by the Schedule of Contributions then in force. 12. Current liabilities Pensions and PAYE payable (56) (53) Lump sums payable (126) (84) Death benefit payable (226) (74) AVC benefits payable (45) - Refund of contributions (1) - Payable for members joining state scheme (79) (9) PPF Levy accrued (217) (304) Accrued expenses (128) (180) (878) (704) 13. Related party transactions The majority of administration expenses are initially paid by the principal Company, Delphi Automotive Systems UK Limited and then recharged to the Pension Scheme excluding VAT. The principal charges are actuarial, legal, audit, pension administration and investment management charges. Total cost for 2007 was 485,000 (2006 : 480,000) and of this, at year end 124,000 (2006: 6,000)was outstanding and included in current liabilities. 22

26 Independent Auditors' Statement about Contributions to The Trustee of The Delphi Diesel Systems Pension Scheme We have examined the Summary of Contributions to The Delphi Diesel Systems Pension Scheme 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 Scheme 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 Scheme 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 Scheme 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 Scheme Except for the late payment of contributions disclosed more fully in the Summary of Contributions, in our opinion, the contributions payable to the Scheme 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 21 March PricewaterhouseCoopers LLP Chartered Accountants and Registered Auditors London July

27 Summary of Contributions payable in the year During the year ended 31 December 2007, the contributions payable to the Scheme by the Employer and Employee were as follows: Required by the schedule of contributions Employee Employer Normal contributions 1,753 8,722 Total 1,753 8,722 Other contributions payable AVC s Augmentations of individual members benefits Total (as per Fund Account) 2,349 8,977 During the year the following contributions were paid later than the date stipulated in the schedule of contributions: Employer contributions of in respect of March 2007 and due by 19 April 2007 were paid on 25 April 2007 Employee contributions of 64, in respect of October 2007 and due by 19 November 2007 were paid on 23 November 2007 Signed on behalf of the Trustee: A. C. Evans A. Shepherd Director Director July

28 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 Scheme 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 Schemes who have problems concerning their Scheme 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: