WELCOME
Welcome to the Trustee’s newsletter for 2020. This year has been extremely busy for us, managing both the Trustee Board and the pension department through the pandemic.
We’ve adapted well to a virtual world, with both the Board and the department managing to continue to provide business as usual. In case you missed the original announcements posted on the website about our approach to managing the Fund during the crisis, here are the links again:
Rolls-Royce Pensions Covid-19 announcement
Trustee Covid-19 announcement
WHO MANAGES THE FUND
The Fund is managed by a corporate Trustee company, called Rolls-Royce UK Pension Fund Trustees Limited, whose Board of Trustee Directors is assisted by a group of professional advisers.
Read more
The Trustee runs the Fund in the interests of all its members and has responsibility for its governance and administration.
The Trustee Board is made up of:
- five Company-Nominated Trustee Directors (one of whom is nominated and selected by the Company’s Central Negotiation Committee (CNC))
- four Member-Nominated Trustee Directors, and
- a Chair, elected by the company
One of our active Member-Nominated Trustee Directors is due to leave the Fund under the current restructuring activity, so we are looking for someone to take on this important role (see the next item in this newsletter if you are interested in applying).
The current composition of the Trustee Board is as follows:
Company-Nominated Trustee Directors
Liz Airey (Chair)
Jo Durkan – Assistant Treasurer, Rolls-Royce plc
Iain Foster – Strategy Development Executive, Rolls-Royce plc
Will Mansfield – Former Group Chief Accountant, Rolls-Royce plc
Mark McIntosh – Programme Executive, Overhaul Services, Rolls-Royce plc
Steve Jones – Convenor, Bristol Defence, Rolls-Royce plc (CNC nominee)
Member-Nominated Trustee Directors
Paul Butler – Pensioner
Craig Gibson – Deferred member
Stuart Hedley – Manufacturing Engineer & Senior Union Rep, Solihull, Rolls-Royce plc
Mark Porter – Chair of UK Council & Works Convenor, Barnoldswick, Rolls-Royce plc
A vacancy exists for a Member-Nominated Director – please see the next item in this newsletter for more information.
Secretary to the Trustee – Caroline Veitch, Rolls-Royce plc, Derby
Formal documents
If you want to see any of the Fund’s formal documents, these are available on request.
COULD YOU HELP RUN THE FUND?
We’re looking for a member to join the Trustee Board as a Member-Nominated Trustee Director. You don’t need to be a pensions expert but you must be willing to learn. Could it be you?
Read moreAs a result of the current restructuring activity, there will be a vacancy on the Trustee Board for a Member-Nominated Trustee Director.
Trustee Directors generally serve a four-year term and at the end of that term can put themselves up for re-election alongside other members.
To carry out the role effectively, Trustee Directors need to be aware of pensions legislation, trust law and general good practice. The Pensions Regulator has published a code of practice that sets out key areas of focus which helps Trustee Directors meet their legal obligations whilst also ensuring that the Fund is well run and more likely to deliver good member outcomes.
The code sets out the standards the Regulator expects the Trustee Directors to meet when complying with the law. Each of the code’s sections are supported by a guide that sets out practical guidance on how to meet the standards; these standards are reviewed annually to ensure ongoing compliance and to identify any areas that require reviewing, for example, where there has been new guidance or legislation published. This is supplemented with the Trustee toolkit, which is an online learning programme from the Pensions Regulator and which all of the Trustee Directors must complete within six months of being appointed.
The Trustee Directors meet at least four times each year (sometimes more if required) to monitor the running of the Fund alongside their advisers and take action, as required. The Fund is also audited both internally and externally on an annual basis; these audits cover the general running and management of the Fund, including the role of the administrators and appointed advisers.
You can also find more information about the role of a Trustee Director and what is expected of you by accessing the information on the Pensions Regulator’s website.
If you think you may be interested in applying for this important role, please email the Trustee Secretary by 30 November 2020 to ask for more information
IMPROVEMENTS TO MEMBER WEBSITE
We have continued to make a number of improvements to the pension member website – including setting up our very own YouTube channel.
Read moreWe’ve added some new videos to the website, to help you understand your benefits and options. They’re available to view on the new Rolls-Royce Pensions YouTube channel:
We’ve continued to make improvements to the pension member website. These include more detailed retirement statements and bridging pension information, and improvements to the way we check your identity when you first set up your pension online. Take a look at: https://www.rolls-roycepensions.com/Homepage
Remember to make sure your profile is 100% complete and up to date, including not only your personal details but also your nominated beneficiaries. Reviewing this information is especially important if your personal circumstances have changed or simply if you haven’t reviewed the details for some time.
FEEDBACK WANTED
We hope you like the new format of this year’s report. Send your feedback to:
[email protected]VALUATION UPDATE
2020 is an actuarial valuation year for the Fund… although this year is a little different as the Scheme Actuary will have to assess the impact of Covid-19 on our funding level.
Read moreAn actuarial valuation provides a snapshot of the Fund on a particular date – in our case, 31 March 2020. By the end of February, investors were already spooked by the virus, and global stock markets recorded their largest one-week declines since the 2008 financial crisis.
Although this doesn’t directly affect your pension (because the amount you get is not linked to investment returns), it does affect the Fund’s overall assets and thus its funding level. However, early indications are that the impact was minimised to a large extent by the Trustee’s investment strategy, which succeeded in protecting the Fund from the worst of the market volatility. The Trustee will assess the position with the Scheme Actuary and the valuation results are expected to be announced at the end of 2020/early 2021.
ROLLS-ROYCE DEFERS ITS PENSION CONTRIBUTIONS
The Trustee agreed that the Company could defer its Quarter 1, Quarter 2 and Quarter 3 employer contributions, in light of the current difficult economic conditions.
Read moreEarlier this year, the Pensions Regulator said it would allow companies to request a deferral of their pension contributions from their scheme trustee. The Trustee discussed the Company’s request with its advisers and has agreed to the deferral, under certain conditions. This deferral is currently set to last until 31 December 2020, at which point the deferred payments will become due (or earlier, if certain events are triggered). The Trustee will continue to keep this under review and is working with its advisers on future scenario planning.
THE COMPANY'S PENSIONS REVIEW
The Company has launched a strategic review, with the aim of closing the Fund to future accrual by 31 December 2020.
ON THE ROAD TO RESPONSIBLE INVESTMENT
Responsible Investment (RI) has been on the Trustee’s agenda for some time and has progressed well this year.
Read moreThe Fund has over £9 billion of assets. The Trustee has been considering how to invest that money in a way that not only protects members’ benefits but also creates value and promotes sustainable growth. As a first step, the Trustee has therefore agreed:
- To produce an annual RI report to help improve the Fund’s approach to Responsible Investment;
- To adopt the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD) which will require an annual TCFD statement; and
- To analyse the potential impact of climate change on the Fund across different scenarios.
Responsible Investment is fundamental to the Trustee’s investment beliefs, and much more progress will be made in this area as the market develops.
BRIDGING PENSION UPDATE
2020 saw the introduction of a new ‘bridging pension’ option, designed initially to help those members affected by the redundancy programme earlier this year, but which will soon be made available to all other active members (and, we hope, to deferred members in due course).
Read the FAQs hereKEEP YOUR PENSION SAFE
Pension transfers remain a popular option for members, but it’s important to take proper financial advice to protect your pension from scammers.
Read moreIf you’re considering transferring your pension out of the Rolls-Royce UK Pension Fund, you’ll be required to take financial advice in the vast majority of situations.
To help with this, the Trustee has appointed WPS Advisory to support you when making a decision about your pension. They are the Trustee’s preferred provider of independent financial advice.
Of course, you can use your own financial adviser, but please be careful when choosing an adviser. The Company has publicly announced a large redundancy exercise and sadly, we’ve seen in the past that there are rogue advisory firms who will seek to take advantage of this. We’re aware of financial advisers with websites trying to create an impression that they have an association with Rolls-Royce. More worryingly, we’re also hearing that members are receiving bogus calls claiming to be from the Rolls-Royce pensions team about discussing a possible transfer out.
You can read the Trustee’s announcement which warns members to watch out for these sorts of scams, and lists details of financial advisers who have already been reported to the Pensions Regulator and Financial Conduct Authority. The Pensions Regulator provides some tips on how to avoid a pension scam, here. We have also provided information on the pension member website about financial advice and reported scams, to help you keep your pension safe.
Please take every precaution when transferring your benefits away from the Fund. To make sure you’re getting the right advice, please use the services provided by WPS Advisory, as they are recommended by both the Trustee and the Company.
FACTS AND FIGURES
We’ve pulled together a summary of the Trust’s latest report and financial statements, but you can see the full document here.
Read moreThe Fund’s annual accounts are audited by KPMG LLP, the independent auditor. The table below contains a summary of the Fund’s accounts for the year ended 31 March 2020. Please scroll across for the 2019 figures, if using a tablet or mobile device.
From the accounts
|
|
2020
£’000
|
2019
£’000
|
|---|---|---|
|
What was paid in
|
|
|
|
Your contributions
|
2,491
|
2,548
|
|
Company contributions
|
168,722*
|
141,701*
|
|
Total contributions
|
171,213
|
144,249
|
|---|---|---|
|
Transfers in
|
981
|
451
|
|
Other income
|
500
|
146 |
|
Total
|
172,694
|
144,846
|
|---|---|---|
|
What was paid out
|
|
|
|
Benefits to members and dependants
|
(271,075)
|
(364,005)
|
|
Transfers
|
(5,100,752)**
|
(247,094)
|
|
Other
|
(680)
|
(440)
|
|
Administrative expenses
|
(5,413)
|
(4,788)
|
|
Total
|
(5,377,920)
|
(616,327)
|
|---|---|---|
|
How investments performed
|
|
|
|
Investment income
|
307,789
|
192,945
|
|
Change in market value of investments
|
552,215
|
495,681
|
|
Investment management fees
|
(11,174)
|
(13,222)
|
|
Taxation
|
(57)
|
7
|
|
Total
|
848,773
|
675,411
|
|---|---|---|
|
|
|
|
The wider picture
|
Balance at the start of the Fund’s financial year
|
13,692,017
|
13,488,087
|
|---|---|---|
|
Add what was paid in
|
172,694
|
144,846
|
|
Take away what was paid out
|
(5,377,920)
|
(616,327)
|
|
Take into account investment returns
|
848,773
|
675,411
|
|
Balance at the end of the Fund’s financial year
|
9,335,564
|
13,692,017
|
|---|---|---|
|
|
|
|
*The Company contributions include PaySave contributions of £27.2 million (2019 £29.1 million). PaySave contributions are contributions relating to employee salary sacrifice arrangements. Employees in the salary sacrifice arrangement accept a reduced salary and do not pay employee pension contributions, with the employer then paying the pension contributions that would otherwise have been due from the employees.
**Includes the bulk annuity premium paid to LGAS in respect of the pensioner insurance agreement.
Who’s in the Fund?
The Fund is closed to new members. The membership summary below is as at 31 March 2020.
Total 41,908
KEEP IN TOUCH
The Scheme website at www.rolls-roycepensions.com/Homepage has a lot of information about your pension. If you can’t find the information you’re looking for, please contact us at [email protected]
