Quill Active Autumn2012 Issue v8.indd - The Royal Borough of ...

ContentsPlease note that your expression of wish will only be valid ifthe proportions listed overleaf total 100%.I understand that this notice may be cancelled or varied, inwriting, at any time and that the administering authorityis not bound by the notice, that it has absolute discretionwhen making payment and that it may be disregarded incertain circumstances.Your signatureDateFull nameEmployerNational Insurance NumberHome AddressPostcodeYour completed form should be returned to:Royal County of Berkshire Pension Fund, Minster Court,22-30 York Road, Maidenhead SL6 1SF.2012 Pension Review Meeting 4Berkshire Pensions Fair 2012 5My pension ONLINE 6Your annual benefit statement 2012 8Fund Accounts 10Pension Fund Membership 11Investments 12New-look LGPS 14Pension and Lump sum – do you 16know your options?Competition time 19Making your wishes known 20Connect with us 2322(Please retain a copy for your files.)Contact us 2422 26"3Quill Active Autumn2012 Issue v8.indd 6-7 25/10/2012 10:20

2012 Pensions Review MeetingWe invite you to attend our 2012 Pension Review meetingon Tuesday 27th November 2012, which is being held inReading.Where? The Victoria Hall, Reading Town HallWhen? Tuesday 27th November 201211:00am until 12:15pmThe meeting is open to all members of the Royal Countyof Berkshire Pension Fund. In attendance will be NickGreenwood, Pension Fund Manager, Kevin Taylor, PensionAdministration Manager and Alison Hamilton representingour actuary Barnett Waddingham who will be providingan actuarial update of the Fund.This will be a great opportunity to find out about thelatest pension news and how the Berkshire Pension Fundwill be affected under the new 2014 regulations.The meeting will commence at 11am, with a view tofinishing at approximately 12.15pm. Light refreshmentswill be provided. To assist us with planning the meeting,we would be grateful if you could confirm yourattendance by completing the reply slip opposite. Pleasenote that spaces are limited and priority will be given tomembers who have indicated their attendance.4"Pensions Meeting attendance requestFull Name:Address:Daytime Tel No:Email:Please return this reply slip to Joanne Brazier, Royal Countyof Berkshire Pension Fund, Minster Court, 22-30 York Road,Maidenhead, Berkshire, SL6 1SF. Alternatively you can confirm yourattendance by email at joanne.brazier@rbwm.gov.uk.All attendance requests will be confirmed by return email or post."Local Government Pension SchemeExpression of Wish FormBeneficiary of Death GrantIn the event of my death I wish the administering authority for the Local Government Pension Scheme to makepayment of any lump sum death grant to which entitlement may arise by virtue of my membership of the Scheme to thebeneficiary(ies) listed below:DeclarationChosen beneficiary(ies) Relationship Proportion (%) Address of beneficiary(ies)25 21Quill Active Autumn2012 Issue v8.indd 9 25/10/2012 10:20

Making your wishes knownIf you die before your reach retirement age a deathgrant is payable to your loved ones as a tax-freelump sum.If you were to die in service the amount of lump sumpayable is equal to three times your final annual payno matter how long you have been a member of theScheme. If you are a part-time employee the payfigure used is the actual pay you receive.Why do I need to make a nomination?By completing an expression of wish form you areable to state to whom you would like your death grantto be paid if the worst should happen. It also enablesus to pay the benefits to your loved ones withoutdelay. You can choose one person (such as a husband,wife, partner, other family member or friend), anumber of people (such as your children), or even anorganisation (such as a charity), or a combination ofany of the above. If you haven’t already completeda form or wish to change your existing nomination,you can complete and return the form opposite.Alternatively you can download our factsheet‘Expression of wish for payment of death grant’ fromwww.berkshirepensions.org.uk.20Please note that the administering authority hasabsolute discretion in making payment of the deathgrant and will want to honour your wishes, so alwaysconsider those who will and those who will not benefit.Any such expression of wish will be disregardedby the administering authority if at the time ofyour death.• The chosen beneficiary (ies) has died; or• The chosen beneficiary was, but is no longer,your husband or wife; or• The administering authority considers that thecircumstances are such that it would not bereasonable to make payment to the chosenbeneficiary (ies).If you die within 10 years of the date of yourretirement (providing this is before the age of75) a death grant is payable equal to 10 times theannual pension in payment minus the amount ofpension already paid up to the date of death.Royal County of Berkshire Pension Fair 2012To coincide with our meeting (see opposite) we areholding a Pensions Fair on Tuesday 27th November 2012Where?When?The Waterhouse Chamber,Reading Town Hall10:30am until 3:00pmThe Pensions Fair will be open to all members of theFund and will run from 10.30am until 3.00pm. Entry isfree and no appointment is necessary. Representativeswill be in attendance from:Berkshire Pension Fund – Pension Team, answeringqueries on all aspects of the Local Government PensionScheme.Berkshire Pension Fund – Payroll Team, offeringguidance on any tax or income queries for memberswho are in receipt of a Berkshire pension.Prudential, offering advice on how to increase yourpension entitlement through Additional VoluntaryContributions.Age UK Berkshire, providing free informationand guidance on general pension matters.A comprehensive range of literature from theseorganisations will also be available. Directions toReading Town Hall are available by contacting uson 0845 602 7237 or you can email us atinfo@berkshirepensions.org.uk.Details are also available via our website atwww.berkshirepensions.org.ukAll are welcome to attend andwe look forward to seeing you there.5Quill Active Autumn2012 Issue v8.indd 11 25/10/2012 10:20

Brand new for 20126My pension ONLINEThe Royal County of Berkshire Pension Fund hasfurther developed its service by introducing a newfacility known as ‘my pension ONLINE’.What is ‘my pension ONLINE’?This is an internet based application which enablesyou to securely access and update your own pensiondetails online via the Royal County of BerkshirePension Fund website from the comfort of your ownhome or workplace.Our new facility has been introduced to improve thelevel of service provided whilst reducing printing andpostage costs.What will ‘my pension ONLINE’ allowme to do?Through simple navigation and easy to use screens,you can perform your very own benefit calculationsfrom the data held on your pension record, so that youcan actively plan for your retirement.You are able to perform as many calculations as youwish and in future not have to wait for your annualbenefit statement to arrive before finding out whatyou can expect to receive when you retire. You arealso able to view and update your personal details,which includes changing your death grant expressionof wish, if need be.In Summary you can…PPPPPView and update your personal details;View financial details;Perform benefit calculations;Access all relevant forms;Access all publications, such as your AnnualBenefit Statements, Scheme Guides, Newslettersand Factsheets."Competition timeIn our Spring edition of The Quill we invited our readersto try our Sudoku competition. Thank you to everyonewho entered. The lucky winner was Haylie Moore fromThatcham, congratulations!For another chance to win a £25 Marks & Spencer gift voucher,kindly donated by our in-house AVC providers, Prudential, whynot have a go at our word search competition opposite?Please send your entry to Joanne Brazier, Royal County ofBerkshire Pension Fund, Minster Court, 22-30 York Road,Maidenhead, SL6 1SF, to reach us by 31st December 2012.The winner will be drawn at random from the correct entriesreceived. Good luck!Please note this competition is not open to members of theadministration or investments pension teams.Full NameAddressPostcodeTelephone numberMGTJVQCAFOTXTMW2012 has been a year of celebrations, see if you canfind the following words in the grid:RTOQUOQIODYSNFUWIVYOBRFLWPVARECONCERTDIAMONDFIREWORKSGOLDJGVODEIOBOCEEVAHPQEWOGLRQCTGQZOAFORLSTEURYATQJUBILEELONDONOLYMPICSPAGEANTGTROYYSGDEPUPAFQKOUVMVLCEXRMCDQUEENRIVERROYALSPORTSGRIKPGNANAQFDDERTINIOHZDFBTJXCZGWGCPDGREBSAKMQTCRSYNALYMHVXNOITARBELECWLXZN RO PD UN RO OL YD AI LA MM EO XN YD EI PA K19Quill Active Autumn2012 Issue v8.indd 13 25/10/2012 10:20

Where can I find out more?It is always good to chat to someone aboutyour individual circumstances. You can talk toour appointed AVC provider Prudential on0800 731 0433 about the options above, andhow an AVC could make a difference to you.Lines are open 9am to 6pm, Monday to Friday.The UK based Retirement Specialist Team canchat you through the options above and helpyou with your plan for the future. Please notethey cannot give financial advice. Remember,it helps have a pay slip handy when you call.Alternatively you can find out more or applyto make AVC contributions online at www.pru.co.uk/localgov.And finally…… as AVCs are deducted fromsalary, you must allow time for your payrollto be informed to make deductions. If you’dlike to start the new year knowing that yourretirement plans are on track, your applicationmust be received by Prudential by 9thDecember 2012.Additional Regular ContributionsYou can also ‘buy’ additional pension through the Fundby way of Additional Regular Contributions (ARCs).The amount that you choose to pay is calculated inaccordance with guidance issued by the GovernmentActuary’s Department. You can purchase £250 ofadditional annual pension or multiples thereof up to amaximum of £5,000. You can also choose to provide forsurvivors’ benefits as part of your additional pension,although the amount of your ARCs will be higher if youchoose to do this.To find out more aboutpaying ARCs pleasecontact us on 0845602 7237 or request aquotation by completingour online form atwww.berkshirepensions.org.uk or e-mail us oninfo@berkshirepensions.org.ukHow do I Register?To register, please follow the easy 3 step processby visiting: https://www.mypensiononline.berkshirepensions.org.ukPlease note that you will need to be in receipt of youractivation key from us before following these steps.Activation keys will be issued to members shortly.Step 1If you have not received an activation key by post,please select the ‘sign up’ link and follow the on screeninstructions. You will need to confirm your Surname, NINumber and Date of Birth. To comply with Data Protectionregulations, your activation key will then be sent to yourcurrent postal address within 3 - 5 working days.aStep 2Once you have received your activation key by post, pleaseselect the ‘complete your registration’ link and follow the onscreen instructions. You will need to confirm your Surname,NI Number, Date of Birth and activation key.a187Quill Active Autumn2012 Issue v8.indd 15 25/10/2012 10:20

Step 3To ‘complete your registration’ you will need to choose yourUsername (between 8 & 30 characters long), Password(6 & 12 characters in length and must include at least onenumeric and one uppercase character. Passwords are casesensitive) and two Security Questions and Answers.You are responsible for protecting your username andpassword to prevent viewing of your account fromunauthorised persons. If you suspect either of the abovehave been compromised you will need to amend yoursecurity settings for access immediately.8Your Annual BenefitStatement 2012Over the last couple of years you will have received yourannual benefit statement along with this autumn editionof The Quill. Due to the introduction of ‘my pensionONLINE’ and the fact that many scheme members haveindicated that they no longer wish to receive a papercopy of their annual benefit statement, we have decidedthis year to issue your newsletter prior to making annualbenefit statements available. As you might imagine,we have received many thousands of responses to ourcommunications regarding ‘my pension ONLINE’ and weare still collating these responses.We will, however, shortly besending out activation keys tomembers who have registeredfor ‘my pension ONLINE’ so thatthey can access their annualbenefit statements on line.For members who still wish toreceive a paper version of theirannual benefit statement weare in the process of preparingthese documents for printingand sending out in the postover the next few weeks.Option 2 Keep your full pension and lump sum and get a furthertax-free lump sum by paying AVCsThe scheme rules allow you to pay additional voluntarycontributions, better known as AVCs. These give you the option oftaking the maximum tax free amount permitted by HMRC rules,whilst still keeping your entire LGPS pension.The taxman also helps by giving you tax relief on yourcontributions. For every £100 that goes in your AVC pot, it willcost you £80, with the £20 paid into your AVC pot instead of to thetaxman. If you’re a higher rate taxpayer, for every £100 that goes inyour AVC pot, it will cost you £60, with the £40 paid into your AVCpot instead of to the taxman.As contributions are taken directly from your pay before tax iscalculated, it’s all done automatically for you. They are also flexibleso you can stop, start or top up contribution just by making aphone call.Option 3 A combination of options 1 & 2Or you can retire by using both options. This is done by takingthe AVC pot as a tax free lump sum and also giving up some LGPSpension to take you up to the maximum tax free lump sum allowed.17Quill Active Autumn2012 Issue v8.indd 16-17 25/10/2012 10:20

Your pension and lump sum –do you know your options?Members of the Fund have two options available toincrease their pension benefits – either by buyingadditional annual pension by way of AdditionalRegular Contributions (ARCs) – see page 18, or byjoining the Additional Voluntary Contributions (AVCs)scheme run by Prudential.Knowing your options at retirement could makea big difference to your future lifestyle. Theseconsiderations will also help you to get the level ofincome you need for when the time comes to stopworking.When you retire, you will need to decide whatproportion of your LGPS benefits you wish to take aspension income and what proportion you would liketo take as tax free cash (subject to certain limits).If you would like to take a tax free lump sum (inaddition to any automatic lump sum you may beentitled to), you will need to give up some of yourguaranteed pension to do so, if you became a16member of the LGPS after the 1st April 2008 Option 1below describes this in more detail.Alternatively, you can keep all your guaranteedLGPS benefits and get more tax free cash by makingextra contributions. Option 2 describes how youcan take advantage of this opportunity and how thetaxman helps.Option 1 Give up part of your index-linked pension inexchange for a tax-free lump sum.At retirement, the LGPS allow you to give up some of yourpension income in exchange for a tax-free lump sum. You’llget £12 for every £1 of pension you give up. This providesgreater flexibility but it’s worth remembering that your LGPSpension is guaranteed to be paid out from retirement untilyour death – no matter how long you live. You need to thinkcarefully about whether the lump sum is worth the resultingreduced pension income.Additionally, your LGPS pension is index-linked meaning thatthis part of your retirement income has valuable protectionagainst the effects of inflation.My pension ONLINE - What happens next?You will have received up to 3 communications fromus over the last few months asking you if you wishto register for ‘my pension ONLINE’. If you haveindicated that you do wish to register you will be sentan activation key in due course and your 2012 annualbenefit statement will be made available for you toview, download or print as you wish. If you haveindicated that you wish to register but still also receivecommunications from us in a paper format you will besent an activation key in due course along with a papercopy of your 2012 annual benefit statement.If you have indicated that you do NOT wish to registerwe will still send you an activation key that will be validfor 30 days and which you are still free to use if you wish.You will, however, receive a paper copy of your 2012annual benefit statement and if you choose not to access‘my pension ONLINE’ your option to access the systemwill expire once the 30 day period is up. However, if youchange your mind in the future you can register on-lineat any time and we will send you a new activation key.Otherwise, you will continue to receive a paper copyof your annual benefit statement and newsletter in thepost to your home address every autumn.If you have not responded to any of the letterspreviously sent to you regarding ‘my pension ONLINE’we will assume that you will register in due course andyour annual benefit statement will be made availableon-line for you to obtain. We will not send you a papercopy of your 2012 annual benefit statement or anyfuture statements or newsletters unless you contact usto request that we do so.9Quill Active Autumn2012 Issue v8.indd 18-19 25/10/2012 10:20

Berkshire Pension Fund AccountsWe monitor the financial performance of the Fundagainst its liability to pay pensions to members inrespect of service accrued to date.As at 31 March 2012 the estimated liabilities ofthe Fund were £1.85 billion, assuming that futurepension increases are in line with changes in theConsumer Prices Index. At the same date theFund’s assets were £1.45 billion, resulting in asolvency ratio of 78%.£’000IncomeEmployer contributions 57,387Employee contributions 23,002Transfer values received 10,052Investment Income 19,163Total income 109,604ExpenditureBenefits payable 80,023Payments to and on account of leavers 6,765Fund administration and management costs 4,272Total expenditure 91,060Change in Market Value of Investments (29,704)Net Increase/(Decrease) in Fund during Year (11,160)Balance SheetQuoted investments 72,854Managed funds 1,318,308Current assets 64,173Less current liabilities (2,476)Net assets at 31 March 2012 1,452,859Proposed changes to employee contributionsUnder new scheme proposals employee contribution rates are also set tochange from 1st April 2014. The average member contribution will be as it isnow: 6.5%. The framework will be reviewed prior to implementation in 2014to ensure the average member contribution is no higher than 6.5%,Current employee contributions 2012/2013From To Gross Rate£0.00 £13,500 5.5%£13,501 £15,800 5.8%£15,801 £20,400 5.9%£20,401 £34,000 6.5%£34,001 £45,500 6.8%£45,501 £85,300 7.2%Over £85,300 7.5%Proposed employee contributions 1.4.2014From To Gross Rate£0.00 £13,500 5.5%£13,501 £21,000 5.8%£21,001 £34,000 6.5%£34,001 £43,000 6.8%£43,001 £60,000 8.5%£60,001 £85,000 9.9%£85,001 £100,000 10.5%£100,001 £150,000 11.4%Over £150,000 12.5%How will we calculate your pension under CARE?‘CARE’ schemes work by building up an amount ofpension year on year based on a percentage of yourpensionable pay in each year of scheme membership. Toreflect the effects of inflation, the pension you earn willbe re-valued upwards each year in line with an index.Example: A member earns £20,000 in year 1. Based on theproposed accrual rate of 1/49th their pension in year 1 will be:£20,000 x 1/49 = £408.16Assuming that CPI is 3% this pension will be increased as follows:£408.16 x 1.03 = £420.40This pension will then be increased by CPI every subsequent yearso over 5 years, assuming CPI to be 3% every year, the member’sbenefits will accrue as follows:Year 2 £20,000 x 1/49 = £408.16 + £420.40 x 1.03 = £853.42Year 3 £20,500 x 1/49 = £418.37 + £853.42 x 1.03 = £1,309.94Year 4 £21,000 x 1/49 = £428.57 + £1,309.94 x 1.03 = £1,790.66Year 5 £22,000 x 1/49 = £448.98 + £1,790.66 x 1.03 = £2,306.84Please note that benefits built up to 31st March 2014 will still becalculated using a final salary10 15Quill Active Autumn2012 Issue v8.indd 20-21 25/10/2012 10:20

The new look LGPSIn our Spring 2012 edition of the Quill we reported that a new project was underway with the aim of reaching an agreementon the basic elements of the initial scheme design for the new-look LGPS 2014. The Local Government Association (LGA) andtrade unions announced on 31st May 2012 the outcome of their negotiations on new LGPS proposals (for England and Wales)to take effect from 1st April 2014.The table below shows the main provisions of the proposed new Local Government Pension Scheme (LGPS 2014) formembership from 1st April 2014 compared with those of the current scheme (LGPS 2008). These changes apply only inEngland and Wales (not Scotland or Northern Ireland).14LGPS 2014 LGPS 2008Basis of Pension Career Average Re-valued Earnings (CARE) Final SalaryAccrual Rate 1/49th 1/60thRevaluation Rate Consumer Price Index (CPI) Based on Final SalaryPensionable PayContributions FlexibilityNormal Pension AgePay including non-contractual overtime andadditional hours for part-time staffYes, members can pay 50% contributions for50% of the pension benefitEqual to individual member’s State PensionAge (minimum 65)Pay excluding non-contractual overtime andnon-pensionable additional hoursNoLump Sum Trade Off Trade £1 of pension for £12 lump sum Trade £1 of pension for £12 lump sumDeath in Service Lump Sum 3 x pensionable pay 3 x pensionable payIndexation of Pension in Payment CPI CPI (changed from RPI in September 2010)65Pension FundMembershipAs at 31 March 2012, there were 51,974 members inthe Royal County of Berkshire Pension Fund.Of this, over 19,400 are actively employed by over150 organisations within the Berkshire area, withthis number continuing to increase.The breakdown of membership is reflected below:129391955919476ActiveDeferredRetiredA note about Auto-enrolmentThe Pensions Act 2011 introduced new duties foremployers to provide a pension arrangement for theiremployees to contribute to.Starting from October 2012, employers will enrolworkers into a workplace pension, if they meet thecriteria below. When you pay into your pension, youremployer and the government will contribute too. Youremployer will enrol you into a workplace pension if you:PPPPPare not already in a pension at workare aged 22 or overare under State Pension ageearn more than £8,105.00 a yearwork in the UKThe Berkshire Pension Scheme already automaticallyenrol new employees into the Local GovernmentPension Scheme, so the new regulations may not applyto you. The Berkshire Pension Fund has contactedall of our employers concerning this new legislationand they will be responsible for implementing thesechanges. If these changes affect you your employerwill be contacting you directly. The first employerswithin the Berkshire Pension Fund are due to phasethis in from April 2013.11Quill Active Autumn2012 Issue v8.indd 22-23 25/10/2012 10:20

InvestmentsThe Pension Fund Panel is responsible for setting thestrategic asset allocation for the investment of theFund’s assets (please see chart below).The current asset allocation policy was agreed by thePanel during the financial year 2008/09 and continuedto be deployed during the 2011/12 financial year. Theobjective of the asset allocation is to diversify theFund’s assets across a broad universe of investableassets. With the exception of a small UK equityportfolio the Fund’s assets are managed by externalinvestment managers. Each manager is given a specificbenchmark and a target return objective above thisspecific benchmark.During the year the Fund’s holdings in highyield and emerging market debt funds wereredeemed. This was a result of a review ofthe fundamental value of such holdings whichconcluded that investors were not receivingsufficient reward for the risks from investingin these types of bonds. The fund increasedits exposure to emerging market equitieswhich following sharp falls in the later half of2011 appeared to offer better medium termvalue to investors than had previously beenthe case. In addition further commitments toglobal property funds were made.Global Equities 38%Bonds 17%Absolute Return 18%Property 10%Commodities 10%Infrastructure 4%Cash 3%Who manages the investments?As at 31 March 2012, the Fund employed the followingexternal managers:• Henderson Global Investors – Senior Loans• Invesco – Senior Loans• Blue Bay Asset Management – Global Convertible Bonds• Aviva Investors Global Services – Global Convertible Bondsand Property (both UK and Global ex-UK)• Informed Portfolio Management AB – Global EquityEnhanced Index• William Blair International – Emerging Markets Equity• First State Investments – Emerging Markets Equity• Wellington Management – Emerging Markets Equity• Fidelity International – Emerging Markets Equity• Nomura Asset Management - Emerging MarketsEquity• Morgan Stanley Investment Management –Emerging Markets Equity• BlackRock Investment Management – GlobalSmall Cap Equities• Lyxor Asset Management – Hedge Funds• Securis Investment Partners LLP – Insurance LinkedSecurities• Aspect Capital Limited – Hedge Fund• CF Ruffer – Multi Asset Fund• MacQuarie Capital Funds – Infrastructure• J P Morgan – Infrastructure• Gresham Investment Management LLC – CommoditiesHow did the investments perform?The value of the Fund’s assets grew by 2% in2011/12 but could not keep up with the growthin the value of liabilities of 4.3%, which causedthe unsmoothed solvency level to be reducedto 80% (from 84% as at 31st March 2011). Theannualised investment return over the pastthree years to 31 March 2012 was 13.5% (versus1.0% per annum for the three years to 31March 2011). More performance backgroundcommentary is included in the Investmentsection of the Annual Report.1213Quill Active Autumn2012 Issue v8.indd 24-25 25/10/2012 10:20