2013 edition

Connectionfor members of the defined benefitsection of the ITV Pension Scheme ROUNDUP SCHEME Pension news updates HEALTH CHECK Find out about our actuarial funding valuation 8 things you should know to help you plan your pension

WHO’S LOOKING AFTER YOUR BENEFITS? Send us your email address Help us enhance how we to contact with your queries, interact with you by sending us and, if you’ve paid additional your email address. We can then contributions (AVCs), details start working on sending you about your AVCs via the My information by email about your Pension section of the site. savings, together with news and We’ll be adding new content features that may help you with over the coming year, to help your pension and retirement you consider your options as planning. Please visit you approach retirement. This www.itv-pensions.com and means you can find out about add your email address. your pension and get answers The Trustees are in the process to your questions whenever it of updating the ITV Pensions suits you, rather than waiting website. Currently, you’ll to phone the Pensions find various forms in Department during the Library section, Visit office hours. details of who www.itv- pensions.com and add your email address

2 A message from Max

Welcome to this year’s edition of Connection. I took over as Chairman of the ITV Pension Scheme in January 2013 from Graham Parrott and I would like to take this opportunity to thank Graham, on behalf of the Trustees and members, for his commitment and service to the Scheme. During his 20 years as Chairman, Graham steered the Scheme through very significant changes, including the merger of 6 pension schemes when ITV was formed, and a series of major deals to strengthen the Scheme and make your benefits more secure. As well as wishing Graham all the best for the future, I would like to welcome 2 new faces to the Trustee Board that looks after your benefits: Kate Stross and Andy Whitaker who were appointed Trustees on 1 July 2013. Find out about them and the other members of our Board on pages 6 and 7. Looking after the benefits you’ve built up is of paramount importance to us. As well as ensuring that the Scheme’s £3 billion of assets are invested appropriately, we carry out regular financial healthchecks to Inside see whether there is enough money building up in the Scheme to cover members’ benefits. This enables the Trustees to address any shortfall 4 8 things you with ITV. You can read about both aspects of running the Scheme on should know pages 10 and 11. While the Trustee Board is responsible for looking after your benefits, 6 Who’s looking after your benefits? you have a role to play too. Getting the income you want in retirement takes planning. Once a year we send you a personal statement (unless 8 An account of you’re a deferred member over age 55) showing how your pension is the year building up. This is a good time to sense check your savings. Take a look at pages 4 and 5 for some pointers of what you need to know and how 9 Investing the to find out if you don’t. Scheme In this era of fast electronic communication, we would like to enhance how we interact with you, but to do this we need your email address if 10 Scheme Healthcheck you have one. Find out opposite where to send your details so we can keep them on file. 12 Roundup Thanks for taking the time to read this edition of Connection – I hope you find it helpful and informative. 14 Good housekeeping Kind regards Max Graesser Max Graesser On behalf of the Trustees

3 8 things you should know and how to find out if you don’t Pensions don’t happen by themselves. Here are 8 things you should know to help you plan your 3 pension and make the most of the Scheme. When you’d normally 1 Your potential income receive your when you retire. pension. Do you know what income in retirement your pension is likely to provide? If not, why leave it to The date you’d normally chance? If we send you a benefit statement, check start to receive your pension this; it shows the value of the pension you’ve built depends on the option It’s all up in the Scheme and, if you’re an active member, about you you choose or chose in the Your 2013 pension statement It’s important to save for when you’re no longer working. During the time you were with your employer you made a good start by past, as well as when you how much pension you might be able to build up building up benefits in the ITV Pension Scheme. Each year we’ll usually send you a personalised statement to help you keep track of these benefits until you start to receive them. The Trustees of the ITV Pension Scheme hope you find this statement useful and that it’ll help you when making your retirement plans. If you have any questions built up your pension. Check by the time you retire. about your statement, turn to the back page for details of who to contact. your benefit statement for a reminder of when your pension would normally start to be paid. How your pension is 2 building up. If you’re an active member, you can 4 choose the rate at which your pension builds up. This is expressed as a fraction How much of your pensionable earnings: 50ths, It’s all 60ths, or 68ths. So, for example, if you State pension about you Your 2013 pension statement It’s important to save for when you’re no longer working. During the time you were chose 50ths, you’d build up a 50th of with your employer you made a good start by building up benefits in the ITV Pension Scheme. Each year we’ll usually send you a personalised statement to help you keep track of these benefits until you start to receive them. The Trustees of the ITV Pension Scheme hope you you might get. find this statement useful and that it’ll help you when making your retirement plans. If you have any questions your pensionable earnings for each year about your statement, turn to the back page for details of who to contact. of membership. You can change this Find out on the Government’s website build-up rate once a year. Keep a look out for www.gov.uk/calculate-state- the Your Choice form we send you each year. pension

4 When you can claim Don’t 5 your State pension. be average The average person Unless you were born before October can expect to receive 1954, your State pension won’t be paid an annual income of until you’re at least 66, and probably just over £6,000 a year not until you’re 68 or older. Find out on when they retire.

the Government’s site www.gov.uk/ Office of National Statistics calculate-state-pension

Keeping Where all your pensions are. track with If you’ve built up pensions with other employers, make sure you keep in touch with them so they can My Pension 6 pay your pension when it’s due. If you’ve lost track of If you’re paying old company pensions, The Pensions Tracing Service additional contributions can help you track them down. (AVCs) to boost your www.gov.uk/find-lost-pension pension, remember that you can keep track of them by logging on to My Pension at 8 www.itv-pensions.com > £ Who will receive My Pension > DB section. 7 benefits when You’ll need your member you die. ID and PIN, so if you’ve forgotten these, please Tell us your wishes – get in touch with the Benefits complete a Nomination Form and keep it up to date. Pensions Department by payable This lets the Trustees know calling 01772 884488 or who you’d like to receive any emailing enquiries@ to your benefits payable. For tax itv-pensions.com dependants. reasons, the Trustees can’t be bound to follow your wishes, When you die, your spouse but they’ll always take them or financial dependants may into account when deciding be entitled to a pension how to pay the lump sum. You based on the value of your can get a new form online own pension. Your benefit at www.itv-pensions.com > statement will explain. Library > DB section > Forms

5 Who’s looking after your benefits? Managing the Scheme is a big undertaking with operational issues to deal with, strategy to set, budgets to meet, legal obligations to adhere to, and over 27,000 members to look after, not to mention total assets of nearly £3 billion to invest.

his task falls to the Board changes created a vacancy for a many qualified people to choose of 9 Trustee Directors. Company-appointed Trustee, which from, the Selection Panel chose a T 4 Trustees are nominated is still to be filled, and 3 vacancies for shortlist of 9 candidates to attend by the members and 5 are member-nominated Trustees. a selection day. After considering appointed by the Company. There the candidates’ skills and the needs In April, the Trustees wrote to have been a number of changes on of the Board, Kate Stross and Andy members inviting them to seek the Board this year, with Graham Whitaker were appointed as new nomination from colleagues for the Parrott stepping down as Chairman member-nominated Trustees and 3 vacancies for member-nominated and Michael Bailey and Ralph Jones Ralph Jones was reappointed for a Trustees. For the first time deferred coming to the end of their tenure second term. With Max Graesser’s members of the Scheme were as member-nominated Trustees. In appointment as Chairman from included in the invite and the addition, Sarah Woodward resigned January 2013, this is how the Board response was very positive. With so as a Trustee in July 2012. These is shaping up.

REAPPOINTED

NEW ROLE

Max Graesser Clive Jones Ralph Jones William Medlicott (Chairman) Appointment: Appointed Appointment: Nominated Appointment: Appointed Appointment: Appointed by ITV by members by ITV by ITV Status: Former employee Status: Pensioner of the Status: Active member of Status: Pensioner of the ITV role: CEO, News and Scheme the Scheme Scheme Regions ITV plc, Carlton ITV role: Managing Editor ITV role: Finance Director, ITV role: Operations Television, Central at The Lab ITV Broadcasting Director, ITV plc Television and London Committees: Sits on Committees: Chairs the Committees: Chairs the News Network the DC and Investment Investment Committee DC Committee, and sits Committees: Chairs the Committees Other roles: Trustee of on the Audit & Operations Audit & Operations Other roles: Runs publisher St Bart’s charity Committee Committee, and sits on Reinkarnation Likely to be found: Messing Other roles: Operations and the DC Committee Likely to be found: Walking about in rowing boats Change Consultant Other roles: Chairman, in the Yorkshire Dales Likely to be found: Messing Disasters Emergency about in boats Committee Likely to be found: Supporting Welsh rugby or at the theatre 6 Looking after the Scheme: at a glance 6 Audit & 2 Operations strategy Committee days meetings 4 7 Member- =516 DC Committee nominated meetings trustees hours spent by Trustees on Board and One more Committee business place to fill in the year There is currently a vacancy on the board 5 for a Company- 7 appointed Trustee. Company- ITV has been working Board appointed meetings to find the most Trustees suitable candidate 8 and hopes to be able Investment to announce the Committee name of the Trustee meetings shortly.

NEW APPOINTMENT

NEW APPOINTMENT Robin Paxton Sue Slee Kate Stross Andy Whitaker Appointment: Nominated Appointment: Appointed Appointment: Nominated Appointment: Nominated by members by ITV by members by members Status: Pensioner of the Status: Pensioner of the Status: Deferred member Status: Active member of Scheme Scheme of the Scheme the Scheme ITV role: Managing Director ITV role: Director of HR, ITV role: Finance and ITV role: Programme of London Weekend ITV Channels and Shared Development Director of Director, Archive Television Broadcasting Services ITV Network Transformation Project Committees: Sits on the Committees: Sits on Committees: Sits on the Committees: Sits on Investment Committee the Audit & Operations Investment Committee the Audit & Operations Other roles: Chairman, Committee Other roles: Trustee, Ofcom Committee Headlong Theatre, other Other roles: Independent ITC Pension Scheme Other roles: Previously COO at non-exec directorships, HR and Change Likely to be found: In the ITV Breakfast and FD at GMTV board mentor. Management Consultant theatre, concert hall or Likely to be found: Coaching Likely to be found: At the Likely to be found: Trying garden Tunbridge Wells Hockey theatre or on the ski to keep fit by swimming Club or pitch side supporting slopes 40 laps every morning my family in their sporting endeavours

7 > + - + = £2.840bn £0.136bn £0.150bn £0.093bn £2.919bn

the value of the the money the money that the increase in the value of the DB section at that came in, went out, including value of the assets DB section 31 December including special pensions and during the year at 31 December 2011 contributions from other benefits paid 2012 ITV of £61.7m and to members of investment income £131.988m of £63.587m An account of the year Your benefits are paid The Scheme value was £79 million l investment performance, which out of the money higher at the end of the year than it resulted in the Scheme’s assets had been at the start. This was due being worth almost £93 million that’s building up in largely to 3 factors: more at the end of the year than the Scheme. Here’s a they had been at the start. l the significant contributions summary of how the that ITV made to the Scheme of Of particular importance for the Scheme’s value changed almost £62 million; Scheme’s financial position is not only ITV’s continued support of during 2012 and its key l the income the Scheme earned on the Scheme but also the Scheme’s items of income and its investments (such as interest investment strategy. Take a look payments and dividends) which expenditure. at the article opposite to find out was around £63 million; more about how the Scheme’s and assets of £2.919 billion are invested.

How much is enough? A key question the Trustees focus on is whether there is enough money in the Scheme to pay the benefits of all members when they are due. To help understand what these numbers mean and how the Scheme is shaping up financially, take a look at pages 10 and 11.

8 Investing the Scheme Everyone wants their savings and investments to grow, and the Scheme is no exception. But when it comes to investing £3 billion, it’s not as simple as that.

There are many different types of Here’s how the Scheme’s assets are invested assets and many different ways of investing money to consider. • Bonds (active)** 62.7% Generally, the more potential there • Hedge funds*** 3.1% is for growth, the more risk there Reinsurance*** 2.1% is that the value of the asset could • Property*** 1.8% go down as well as up. Likewise, the • more stable an investment is, the • Infrastructure*** 1.7% less likely it is to deliver high rates of • Emerging market growth. debt *** 2.3% Other*** 3.8% The Trustee Board reviews the • Shares* 22.5% investment strategy every year • but, in broad terms, the Board aims Here’s how the shares are invested by business sector to balance achieving the highest and region investment terms possible with the need to maintain the security of members’ benefits. Consumer Consumer One of the ways it does this is Financials Industrials services goods Technology to invest the Scheme’s funds in 23% 14% 12% 11% 9% different types of asset, in different business sectors (banking, oil and gas, technology etc), and in different regions around the Oil and gas Healthcare Basic materials Telecoms Utilities world to spread the investment 8% 8% 6% 3% 1% risk. To do this, the Trustees have appointed over 40 managers who have specialist knowledge about particular aspects of investment. 16% These charts on the right show how 42% 14% 8% 7% the Scheme’s assets are invested. Need more information? If you’d like to find out more about Emerging markets 7% the Scheme’s investments, ask the Pensions Department for a copy The remaining amounts are held as cash. * Traditional assets that have historically produced growth over the long term. of the Statement of Investment ** Traditional assets that have historically reduced investment risk whilst producing steady Principles, which explains how the returns over the medium term. Trustees invest the Scheme’s assets. *** Alternative assets that aim to spread the risk and produce good growth over the long term.

9 £

SCHEME HEALTHCHECK Every 3 years, an independent expert appointed by the Scheme, known as the Scheme Actuary, carries out a formal review of the financial health of each section of the Scheme. This is known as an actuarial funding valuation.

he valuation provides as at 1 January 2011 showed that the shortfall the Trustees with would have been ITV’S had increased to a clear view of the sufficient to CONTRIBUTIONS £24 million – which

Scheme’s financial fund 87% of FOR“ BENEFITS meant that 84%

T health and is an the benefits of the benefits BUILDING UP IN important check to see whether due at that due at the date THE FUTURE ARE“ enough money is building up in the date. This is AROUND were funded. This Scheme to cover members’ benefits. equivalent to a £5 MILLION is due mainly to a funding shortfall change in the price Based on the assumptions agreed A YEAR of £17 million. of government bonds specifically for the Scheme about (gilts), although the effect factors such as the future rate In between the of this was partly offset by the of inflation, investment returns 3-yearly valuations, the extra contributions made by ITV and life expectancy, the Scheme Actuary reviews Scheme funding. and an increase in the value of the Actuary calculated that the money The latest review, which looked Scheme’s assets. built up in Section B of the Scheme at Section B as at 1 January 2013,

10 Addressing the These payments are set out in shortfall a document called a ‘Recovery IN Plan’. This shows how the FACTS As part of the valuation, the shortfall in funding will be Trustees agree with ITV the met and covers the period to FIGURES contributions needed to help March 2021. protect members’ benefits and ensure that benefits can be paid A ‘what if..?’ view when they are due – perhaps the By law, the Scheme Actuary also most important responsibility of has to look at the position if ITV the Trustee Board. was to go out of business or the £1.75m l Contributions: ITV’s Scheme ceased to exist. This type additional contributions contributions for benefits of valuation is called a ‘full solvency currently being paid each building up in the future for valuation’. year by ITV to improve DB members are around In this scenario, ITV would be funding £0.2 million a year. ITV also expected to pay enough money makes contributions to meet into the Scheme so the benefits the cost of administering the that had built up could be provided Scheme. These are recorded in a by an insurance company. Since 87% document called the ‘Schedule insurers take a very cautious percentage of of Contributions’ and are commercial view, the cost of benefits covered reviewed and updated at least securing pensions in this way is each time an actuarial funding more expensive than providing valuation is carried out. them through the Scheme. On l Additional contributions: ITV £116m this basis, the actuary estimated is currently making additional that the Scheme’s assets would value of Section B’s payments of at least £1.75 million have been sufficient to fund about assets at each year to the Scheme. 72% of the benefits built up; an 1 January 2011 estimated shortfall of around £45 million as at 1 January 2011. Although it’s unlikely that ITV £133m would wind-up the Scheme value of Section B’s with insufficient money to fund members’ benefits liabilities (benefits due) in this way, if this did at 1 January 2011 happen when ITV was insolvent, the Scheme could apply to the Government-run £17m shortfall between Pension Protection Fund (PPF) for compensation. Section B’s assets and Further information liabilities is available on the PPF website at www. pensionprotectionfund. org.uk.

11 Roundup A quick round up of some of the changes in the wider world of pensions GETTING THE UK SAVING Auto-enrolment is a Government initiative to get more people saving for retirement. Since it was introduced in October 2012, over a million UK workers have been enrolled automatically into a pension scheme. It’s being introduced gradually with larger employers going first.

olleagues at ITV who are eligible have started being enrolled in a C separate pension scheme – the ITV ITV

Auto-enrolment Pension Plan. “WILL BE The first colleagues were COMMUNICATING auto-enrolled at the end of TO EMPLOYEES “ May 2013 after a 3-month WHO ARE postponement period. ITV will ELIGIBLE IN DUE be inviting members of the COURSE Auto-enrolment Plan to join the ITV Pension Scheme once they meet certain qualifying conditions. So from March 2014, the number of active members of the DC section of the Scheme may start to increase. This is good news as more members create economies of scale and the opportunity to secure more competitive terms for the Scheme.

“...people really value the chance to save into a workplace pension as they know they will also get money from their employer and the taxman too.” STEVE WEBB, PENSIONS MINISTER

12 STATE DON’T GET PENSIONS CAUGHT one for all… OUT These changes to tax rules could From April 2016, the State pension is changing. Instead of the current affect you. 2-part pension, which consists of the basic State pension and an earnings-related pension (the State second pension), the Government is Are you a high earner? Have you built introducing the Universal State Pension. This is designed to be fairer for up a large amount of pension? If the everyone, with people retiring from April 2016 receiving a flat-rate State answer is ‘yes’, then read on. pension of £144 a week (provided they’ve built up sufficient National Pensions are a tax-efficient way of Insurance contributions). saving, but HMRC places allowances If you’ve built up significant State second on the amount you can contribute and pension in the past, there are measures in FROM build up overall and still get tax relief.

place to make sure you don’t lose out. APRIL 2016, From 6 April 2014, these allowances are

“ reducing. To find out more visit THE STATE www.gov.uk/ “ government/policies/making-the- PENSION IS The Annual Allowance is the amount of state-pension-simpler-and-fairer CHANGING tax-free contributions and/or benefits you can build up each tax year. The Allowance will reduce from £50,000 to £40,000. …but probably not until you’re older The Lifetime Allowance is the total value of the pension benefits you can build By 2046, you’ll have to wait until you’re 68 to get your hands on up tax efficiently over your lifetime; this your State pension. The good news is that we’re all living longer, but includes pension benefits you’ve built up this means that State pensions have to be paid for longer, with the away from ITV but excludes any State Government (and ultimately the tax payer) footing the bill. So the benefits and any pension you receive that Government is planning to increase gradually the age at which State you haven’t built up yourself (for example, pensions are paid (SPA – State pension age). Here’s a rough guide. a spouse’s pension). It will reduce from £1.5 million to £1.25 million. by 2018 2018 to 2020 2034 to 2036 2044 to 2046 Any pension savings you have over these allowances will be subject to tax. SPA will increase SPA will increase SPA will increase SPA will increase If you think you may be affected by to age 65, for to age 66, for to age 67, for to age 68, for these changes, you should speak to an women born after both men and both men and both men and 6 December 1953 women women women impartial financial adviser as there are measures you can take to reduce the impact. You can find the name of a local impartial financial adviser by visiting Calculate your State pension age using the calculator at www.moneyadviceservice.org.uk/en/ www.gov.uk/calculate-state-pension categories/financial-help-and-advice

13 Good housekeeping If you need to contact us If you have a question about your pension benefits or need more information, get in touch with the Pensions Department: Call: 01772 884488 Email: [email protected] Write to: ITV Pensions Department, 35 Winckley Square, Preston, Lancashire PR1 3JQ

ITV-pensions.com For information about the Scheme, take a look at the ITV Pensions website at www.itv-pensions.com You don’t need a logon or password, unless you want to access details about any additional contributions (AVCs) you’ve built up. So start surfing. Want to know more? If you’d like to find out more about the Scheme, Don’t lose out ask the Pensions Department for a copy of the Scheme’s Change of name? Moving home? Keep your details on our Report and Accounts. records up to date. You’ll find a Change of information form on the ITV Pensions website. From the home page, select Library > DB section > Forms

14 15 Every effort has been made to ensure this newsletter is accurate. If there is any conflict between it and the Trust Deed and Rules of the Scheme, then the Trust Deed and Rules will take priority.

DECEMBER 2013