2014 TALISMAN SINOPEC PENSION & LIFE SCHEME
Measuring the Scheme s financial position For each year that you are in active membership of the Scheme, you earn benefits that are linked to your salary. The benefits you and other members (including those who have left the Company, or have retired) have earned to date are known as the Scheme s accrued benefits. To meet the cost of providing the accrued benefits, the Company and the members pay contributions to the Scheme which are then invested. The contributions and investments are known as the Scheme s assets. They are held in a communal fund, rather than separate funds for each individual (other than funds relating to Additional Voluntary Contributions, which are invested in individual member accounts). The Trustee is required to obtain regular updates of the Scheme s financial position from the Scheme Actuary, a qualified professional appointed by the Trustee. The Trustee asks the Scheme Actuary to compare the value of the Scheme s liabilities to its assets: If the value of the assets is less than the value of the liabilities, it is said to have a shortfall ; If the value of the Scheme s assets is more than the value of its liabilities, it is said to be in surplus. The Trustee carries out an in-depth look at the Scheme s finances at least once every three years. The Scheme Actuary completes this Actuarial Valuation. The financial position of the Scheme is also checked regularly in between the full actuarial valuations. The latest Actuarial Valuation was carried out as at 31 March 2012 and it showed that: The value of the liabilities was 128.6 million The assets were valued at 112.6 million This means that there was a shortfall of 16.0 million at that date. Changes to the funding of the Scheme since the last Summary Funding Statement However, the latest Actuarial Report carried out on 31 March 2014 showed the funding position had improved, with an estimated surplus of 5.3 million identified at this date. This was primarily due to higher than assumed investment returns, as well as deficit reduction contributions paid in over the year. Paying for future pensions The combined rate of contributions paid to the Scheme by the Company and the active members to provide for future benefit build-up is currently 40.9% of basic salary. This was agreed at the formal actuarial valuation as at 31 March 2012. As a result of the shortfall evident within the Scheme at the 2012 valuation, the Company agreed to pay more into the Scheme. A deficit repair plan to improve the financial position of the Scheme was agreed between the Company and the Trustee. As part of this, the Company has contributed an additional 2.95 million to the Scheme in July 2013 as well as contributions of 0.575 million in September 2013, December 2013 and March 2014. The Company has also agreed with the Trustee to make further additional deficit contributions totalling 2.3 million a year in each year from 1 April 2014 until 31 March 2017. More information Some Frequently Asked Questions are shown in this document. Scheme documents which will give you more information about the Scheme are also listed. You can ask for a copy of these at any time. If you have any other questions, or would like any more information, please contact: Pension & Benefits Specialist Talisman Sinopec Energy UK Limited 163 Holburn Street Aberdeen AB10 6BZ Tel: 01224 353127 hrbenefits@talisman-sinopec.com Yours sincerely Zahir Fazal On behalf of the Trustee Directors The last Summary Funding Statement issued to you in September 2013 reported an estimated deficit of 19.2 million as at 31 March 2013.
Summary Funding Statement The Trustee provides information on the financial position of the Scheme each year to help you understand more about how your pension is paid for, and to tell you about the Scheme s ability to pay the benefits that have been promised. Executive Summary The Scheme had a funding shortfall of 16.0 million as at 31 March 2012. The financial position had deteriorated at 31 March 2013 with a deficit of 19.2 million being disclosed at this date. Since then, however, the financial position of the Scheme has improved with a surplus of 5.3 million being disclosed at 31 March 2014. In July 2013, the Company made a contribution of 2.95 million to the Scheme to help improve the financial position. The Company has also paid further additional contributions of 0.575 million in September 2013, December 2013, and March 2014. The Company has also agreed to pay additional deficit contributions of 2.3 million a year in each year from 1 April 2014 until 31 March 2017. These contributions will cease if the Trustee s quarterly monitoring of the funding position improves to such an extent so that the value of the assets is 110% of the value of the liabilities. It is important that you read the Statement and the enclosed Frequently Asked Questions carefully. The Frequently Asked Questions form part of the Statement. There is nothing you need to do as a result of receiving this Statement. The details it provides are for your information and should help you to keep track of the financial health of the Scheme from year to year.
Frequently Asked Questions How are the Scheme s assets invested? The assets are currently broadly split as follows: Government Bonds 5% Diversified Growth Funds 35% Corporate Bonds 15% Is my pension guaranteed? UK Equities 10% Global Equities 20% Low Volatility Global Equities 15% The aim is to have enough money in the Scheme to meet the cost of pensions now and in the future. All benefits you have accrued to date in the Scheme are safe provided the Company remains in business and continues to pay for the Scheme. If the Company goes out of business, or decides to stop the Scheme, we will ask the Company to pay more money into the Scheme so that we can buy all the benefits with an insurance company. This is known as the Scheme being wound up. Is there enough money in the Scheme to provide my benefits if the Scheme were to wind up now? When we undertake an actuarial valuation, we also check whether there is enough money in the Scheme to provide members benefits in full with an insurance company. (This is known as the solvency position.) The actuarial valuation at 31 March 2012 showed that the Scheme s assets could not have paid for all benefits of all members to be provided by an insurance company if the Scheme had wound up at that date. As at 31 March 2012, the value of the solvency liabilities was 162.7 million. The assets were valued at 112.6 million. This means that there was a shortfall of 50.1 million. The fact that the solvency position is shown in this statement does not mean that the Company is thinking of winding up the Scheme. In fact, our relationship with the Company continues to be very positive and they have given assurances that they have no intention of stopping the Scheme at this time. It is merely included because you have a right to be given this information, and it may help you get a better understanding of the financial security of your benefits. We will check the solvency position of the Scheme again at the next actuarial valuation as at 31 March 2015. If the Scheme were to wind up and could not pay for all the benefits, what would happen to my benefits? If the Scheme were to be wound up and there was not enough money to buy all the benefits with an insurer, even after the Company had been required to strengthen the financial position, then you are unlikely to receive the full benefits you were expecting. The Government set up the Pension Protection Fund (PPF) to help members in this situation. The PPF pays benefits to members of eligible UK pension schemes when there is a qualifying insolvency event in relation to the employer and the Scheme does not have enough money to cover the cost of buying benefits at the PPF level for members with an insurer. The benefits paid by PPF are set down in legislation, and may be less than that provided by the Scheme, depending on your age and when your benefits were earned. Currently, the PPF will provide 100% of your
Further information pension if you are 65 or over and 90% of your pension (subject to a cap of around 36,400) if you are under age 65. Pension increases payable by the PPF are generally lower than those paid by the Scheme. For instance, pension accrued prior to 6 April 1997 in the Scheme would not receive any pension increases on their pension. Further information and guidance is available on the PPF website at www.pensionprotectionfund.org.uk or you can write to the Pension Protection Fund at Renaissance, 12 Dingwall Road, Croydon, Surrey, CR0 2NA. Can I leave the Scheme before I am due to retire? If you are an active member, you can leave the Scheme before you reach retirement; your pension will be calculated under Scheme Rules based on your service and salary at your date of leaving. You can leave your benefits in the Scheme to be paid at normal retirement date, or you can transfer them to another pension arrangement. Similarly, if you have already left your employment with the Company and became a deferred member of the Scheme, you may be able to transfer your benefits to another pension arrangement prior to retirement. If you are thinking of leaving the Scheme for any reason, you should consult a professional advisor, such as an independent financial advisor, before taking any action. The law prevents us from providing you with financial advice. If you want to find out more about the Scheme you can request copies of the following documents by emailing HRBENEFITS@talisman-sinopec. com: The Statement of Funding Principles Explains how we plan to make sure enough money is paid into the Scheme to provide the benefits that members have built up. The Statement of Investment Principles Explains how we invest the money paid into the Scheme. The Schedule of Contributions Shows how much money is being paid into the Scheme. The Annual Report and Accounts of the Scheme Shows the Scheme s income and expenditure. The Formal Actuarial Valuation Report as at 31 March 2012 Contains the details of the Scheme Actuary s financial check of the Scheme as at that date. Actuarial Reports as at 31 March 2013 Contains an update of the Scheme s funding position since the 31 March 2012 Actuarial Valuation. Actuarial Reports as at 31 March 2014 Contains an update of the Scheme s funding position since the 31 March 2013 Actuarial Valuation. Scheme Information Booklet Explains how the Scheme works. We are working on an updated booklet, and this will be made available in due course. The Summary Funding Statement will be published annually on the following website: http://www.talisman-sinopec.com/en/about-us/ talisman-sinopec-pension-and-life-scheme September 2014