…With Your Pension News
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March 2016 Your Scheme: intouch a helping hand for life after work …with your pension news 2 Welcome Keeping you in touch with... 4 our new investment adviser 6 the membership numbers 7 the Summary Funding Statement 2015 10 pension increases 12 your Trustees 14 your tax affairs 15 changes to your benefits 17 our plans to go green 18 your news and social events 27 your pensioner representatives 28 your Scheme contacts For members of the Taylor Wimpey Pension Scheme Welcome Welcome to intouch This process has taken most of the last year and it will result in some changes to our – your newsletter for portfolio, including the appointment of new the Taylor Wimpey managers during 2016. As part of this we have reviewed our hedging of interest Pension Scheme. rates and inflation and stepped up our hedging levels with Insight, who manage A key focus for the Trustees for 2015 this on our behalf. has been the investment of the More details about Redington can be found Scheme’s assets and on 1 April 2015, on page 4 and further details of the changes after a thorough selection process, to the Scheme’s investments will be detailed the Trustees appointed Redington Ltd in our Report & Accounts for 2015 and in a as the Scheme’s new investment future edition of intouch. Our Statement of consultant. With Redington’s guidance Investment Principles will also be amended and that of our Actuary, we have in due course to reflect the changes. reviewed our long-term financial goals including an appropriate level of risk and, as a result, amended our long- term investment strategy to match. 2 Your Scheme: a helping hand for life after work intouch also includes the Summary Funding The Company continues to announce strong Meanwhile, the Trustees, with the help of Statement for 2015. Since the Trustees financial results and if you wish to read more their advisers make every attempt to ensure completed the Scheme’s most recent Actuarial about this you can access the full year results on that benefits that are transferred out are to Valuation in 2013, UK investment markets have the Taylor Wimpey website by following the link legitimate schemes. experienced a period of significant volatility at: www.taylorwimpey.co.uk/corporate/ I hope you enjoy this edition of intouch and which has led to the deterioration in the funding investor-relations/reporting-centre/2016 as usual we welcome your stories and your level. Although this is disappointing it is not Starting last April and as a result of new comments and, in particular, whether you uncommon to see funding levels fluctuate Government legislation there has been more would like to receive the magazine markedly between valuations. freedom of choice for members of occupational electronically in the future. Because of this the Trustees don’t believe it is pension schemes than ever before. Although appropriate to call for a new valuation of the this has been generally a positive move for many Scheme each time markets and funding levels it has also resulted in an increase in pension change, particularly as the next valuation of the scams. Please be aware that if you are Scheme is due at the end of this year. approached by people offering you choices Anna Edgeworth In the meantime the Trustees will continue to involving your pension benefits which sound Chairman of the Trustees regularly monitor the situation and I am pleased too good to be true then they probably are, and to report that there is an ongoing openness and you may never see your pension savings again. cooperation between the Trustees and the If you are approached you should be very Company on such matters. cautious - see page 16 for further information. Your Scheme: a helping hand for life after work 3 Keeping you intouch with... our new investment adviser As part of our governance consultant, focused on providing providing them with investment and risk arrangements, we regularly investment advice to pension funds and management advice. We specialise in review our advisers to ensure other long-term savings institutions. helping pension schemes build and implement investment strategies to that they continue to be We asked Redington to introduce achieve their funding objectives and meet themselves, in their own words. right for our scheme. their benefit payments as they fall due. ‘Redington was founded in 2006 as an After a thorough review, the Trustees Our single-minded focus on investment independent investment consultancy firm. decided to appoint Redington Limited consulting allows us to offer conflict-free as investment adviser, from 1 April 2015. We are retained advisers to 25 Defined advice that supports clients’ long-term Redington is an independent investment Benefit pension schemes in the UK, goals and objectives. 56 £300 80 21 Clients Billion Assets Employees Awards Over Under Consulting 9 Years 4 Your Scheme: a helping hand for life after work What we have done so far, • Also, we have put in place a dynamic We work alongside the Trustees and the as investment adviser to the de-risking strategy, which sets out how Investment Sub-Committee in areas such Taylor Wimpey Pension Scheme. the Trustees and the Investment as the monitoring and reporting of the Sub-Committee can respond to the Scheme’s funding level and investment • We have put in a place a framework “calls to action” arising from the risk, investment strategy design and to manage investment risk for the framework. The types of action that the manager selection, and also assist in Scheme. The aim of having a framework Committee may take includes divesting the implementation of any changes to that clearly states the Scheme’s from existing investments and investing the strategy.’ objectives and constraints is to provide in new asset classes. a clear context for investment strategy decision-making in a disciplined way, such as setting an appropriate risk budget and allocating assets efficiently. Progress against the framework is monitored regularly and action can be taken where the Scheme goes off-track, improving governance resource allocation and timeliness of decision-making. The framework can also be used to test whether new asset allocation ideas help the Scheme to better achieve its goals. 31 December 2014 Your Scheme: a helping hand for life after work 5 Membership numbers At 31 December 2014, there were 9,824 pensioners and 9,421 deferred members – that’s a total of 19,245 members. By 31 December By 31 December 2015, 2015, there were 9,413 pensioners there were By 31 December deferred 18,282 2015, there were 8,869 members members in total 6 Your Scheme: a helping hand for life after work Highlights from the Summary Funding Statement 2015 Every year we issue a Summary Funding Statement, to tell you Actuarial Valuation 31 December 2013 about the Scheme’s financial position. Here are the highlights. The estimated cost of the benefits: £2,112 million How do you measure the Scheme’s financial position? The assets held in the Scheme: £1,921 million The Scheme Actuary compares the assets held in the Scheme to the estimated cost Shortfall: £191 million of the benefits promised to members and other expenses, both now and in the future. Every three years the Scheme Actuary Another way to look at the Scheme’s financial reviews the Scheme’s financial position, security is to consider the funding level. as part of an Actuarial Valuation. But we This is calculated by dividing the assets also take a snapshot of the position by the estimated cost of the benefits, between valuations. and this was 91% as at 31 December 2013. It is worth noting that the combined shortfall What was the Scheme’s financial of the two previous schemes at their last position at the Actuarial Valuation? valuations was £523 million, so the position The funding position at the date of the most has improved, due mainly to the Company recent Actuarial Valuation is set out here. contributions paid in recent years. Your Scheme: a helping hand for life after work 7 Highlights from the Summary Funding Statement 2015 Cont... What is the Scheme’s latest Since the actuarial valuation at financial position? 31 December 2013, gilt yields have The next valuation of the Scheme We receive annual updates and quarterly fallen, and remained low. This fall in is due at the end of this year, with updates. The most recent quarterly yields is a result of a significant increase results expected during 2017. update was at 31 December 2015. in the prices of gilts. This price increase If gilt yields continue to remain at You can see the results below. has been driven by the Bank of England’s low levels, it is unlikely that the Quantitative Easing programme and shortfall will have reduced also due to other market concerns significantly by then. As at 31 December 2015 over Euro-denominated bonds. Funding level: 86% This reduction in gilt yields has increased What are you doing about Shortfall: £330 million the Scheme’s liabilities, i.e. increased the shortfall? the expected cost of providing benefits A plan has been agreed by the to members. However this increase Trustees and the Company. Under in cost has not been matched by a This is a slight improvement over the this plan, the Company paid £33 million corresponding increase in the assets held position at 31 December 2014, the date during the calendar year 2014, and it by the Scheme, and so has lead to an of the latest annual update. At that point, will pay £18 million for each year from increase to the shortfall in the Scheme.