Penfriend Autumn 2007 Welcome to Penfriend, the newsletter for Lothian Pension Fund retired members. This edition Gives you a summary of our annual report; Explains a change in our investment strategy; Tells you about our performance; and Reveals the results of our latest survey. We also tell you how you can give your views through your new Pensioner Representative. How do you get your pension payslip? Ever wondered exactly what goes on behind the scenes to get your payslip to you each month? The City of Edinburgh Council payroll section works with us at Lothian Pension Fund to make sure that the amount of pension paid and the account it is going to are right. We send the data to the Council’s information technology (IT) partner. They were chosen in a competitive tendering process by the Council’s e-Government section in 2001. They carry out all of the City of Edinburgh Council’s IT work, making it more cost effective than using different suppliers. The IT partner works with a sub-contractor to print and post payslips to pensioners. Both BT and the sub-contractor comply with all relevant legislation, including the Data Protection Act, to make sure information is safe and confidential. The system is similar to how a bank would post your bank statement to you every month. Pensions increase Your Lothian Pension Fund pension increases each April based on the retail price index at the end of the previous September. The spring issue of Penfriend will explain exactly how pensions increase is paid. The Department for Work and Pensions will confirm the retail prices index increase in March 2008. The increase for 2008 will probably be in the region of 3.9%. Your voice In March 2007 we set up a new Consultative Panel with member and employer representatives to comment on pensions issues. The Panel will meet with the Pensions and Trusts Committee – the quasi ‘trustees’ of the Fund. City of Edinburgh Council local councillors choose the ‘trustees’ from among themselves. You can contact the pensioner representative on the Consultative Panel below with your opinions and suggestions. He has been appointed by trade unions, but will represent everyone getting a pension from Lothian Pension Fund. Pensioner Representative Owen Murdoch 1 Ladeside Road Blackburn West Lothian EH47 7JW Tel: 01506 632032 Email: firstname.lastname@example.org You can read more about how the Consultative Panel is chosen and how the Committee operates in the policy documents in the ‘publications’ section of our website. Or contact us if you would like printed copies. National Fraud Initiative Lothian Pension Fund is taking part in an exercise to ensure that public money is being spent properly. We have to protect the public funds we administer. To do so, we can share information with Audit Scotland, in order to prevent and detect fraud. This will ensure that: no pensions are being paid to people who are no are longer entitled to them; pension income is being declared when they apply for housing benefit; people who go back to work when receiving a pension are receiving the correct amount of pension. Information will only be shared for these purposes: your details are completely safe. If we have overpaid a pension because a death has not been reported, we will ask for the overpayment to be repaid. Your opinions Our latest customer survey showed some encouraging results. What you said Typical comments What we will do 97% felt that the ‘I look forward to reading We will continue to produce Penfriend newsletter Penfriend.’ Penfriend twice a year. was a good idea. ‘Communication to me seems to have improved recently, through the newsletter.’ 74% felt they always ‘Basic info such as contact info We will continue to include knew who to contact – very clear.’ contact information in all of an increase of 31%. our publications and letters. 85% thought our ‘Normally helpful if calling. Very We have changed our information was prompt prompt with written administration teams to deal and 95% said it was communications.’ with more key tasks quickly. always accurate. 86% said staff were always helpful. 37% were aware of our ‘Just spent some time on the We include all key website – an increase of website, seems comprehensive information in Penfriend, 19%. and clear.’ which is posted to retired ‘Why is it taken for granted that members twice a year. we all have access to the Contact us if you would like websites, when many do not.’ printed copies of any other publications. Some of you asked for ‘Audio tape would be useful.’ Please give us your name information to be and address if you would like provided in other information in another format formats. and we will try to provide it. Some of you suggested ‘If you ask people to return a Our survey included a improvements to the questionnaire, you should FREEPOST address, but survey. enclose an addressed envelope.’ next year we will include a pre-addressed envelope. We will also add an option to reply online. Some members have ‘Is there any way that the Pension HM Revenue and Customs contacted us to ask if we Fund can arrange to have does not allow the deduction can take National National Insurance Contributions of National Insurance from a Insurance contributions deducted from the pensionable registered pension, so we are off their pension. amount.’ sorry we cannot do this. The full results of the survey are available on our website at www.lpf.org.uk in the ‘pensioners’ section. We’ll be repeating the survey with a sample of pensioners next year to make sure we are on track and that our service is improving. Thank you for your input. Abatement It used to be the case that if you started working again for an employer which was part of the Local Government Pension Scheme, your new pay plus your Lothian Pension Fund pension could not be more than your pay when you first retired. This meant that some re-employed retired members had their pensions reduced. This policy was called ‘abatement’. On 11 October, the Pensions and Trusts Committee of the City of Edinburgh Council decided to end abatement. This means that retired members starting or continuing in work after 11 October 2007 will not have their pension reduced. However, the Committee has no discretion over the awarding of compensatory added years, which may still be reduced. We will be writing to all pensioners previously affected by abatement to let them know of the change. Nomination of a beneficiary You can nominate someone to get a death grant if you die within five years of retiring. This is in addition to a spouse’s, civil partner’s or dependants’ pensions. Contact us if you would like to update your nomination form, or download one from our website. Annual Report 2006/07 The following information is a summary of our Annual Report and Accounts 2006/07. You can download a full copy from our website, www.lpf.org.uk, or contact us to request a printed copy. Investment and accounts Lothian Pension Fund’s investments increased 7.8% in 2006/07, which is 0.5% more than it was aiming for. Over the last three years, the Fund has grown 15.1%. Over ten years, it has grown 8.1%, significantly ahead of increases in inflation and average earnings. Over 2006/07, Lothian Pension Fund received £147 million in employee and employer contributions and transfers in from other schemes. Its investments made £197 million. It paid out £97.6 million in benefits and other expenditure. Overall, at 31 March 2007 the Fund had £2,975.7 million, an increase of £246 million over the year. The Fund completed its move to a new investment benchmark – the split in different types of investment that we aim for. The main changes were: 10% reduction to the allocation of quoted equities (from 75% to 65%). Equities are stocks and shares. 5% increase in alternative assets, including private equity, commodities and activism funds. This chart shows the changes in the benchmark. 40 35 30 25 Old benchmark % 20 New Benchmark % 15 10 5 0 es s s es ty sh s st itie ti nd er ui ti se Ca ui qu eq Bo op as eq le Pr as ive UK ba se at lo er rn G ov te Al al on gi Re Within the allocation to equities, we have reduced our investments in UK equities in favour of overseas equities. This will open up wider global markets where the allocation between market sectors is different, and provide more opportunities to invest in faster growing economies. Other changes to the investment strategy include: 2% increase in cash. This reflects the decision to manage the higher exposure to foreign currency risk as we increase the overseas equity allocation. The additional cash will act as a buffer for the active currency overlay mandates. 2% increase to property to allow more opportunity to diversify into overseas property. As the changes were significant, a transition manager was used to put the changes in place over the year. Independent advice Lothian Pension Fund cannot give investment advice. You should consult an independent financial adviser before making any major financial decisions. Find a qualified adviser at www.mylocaladviser.co.uk or contact the Financial Services Authority, tel: 020 7066 1000. Our performance In the 2006/07 financial year, 77.20% of key tasks were completed in target. Key tasks include processing retirals and the payment of dependants’ benefits within five working days. Key tasks not completed within target are treated as a priority. Work Completed 3000 2500 2000 Task Out Target 1500 In Target 1000 500 0 6 07 07 06 6 6 07 07 07 em 2 0 0 00 00 20 20 20 20 20 20 r2 r2 y ry r er ch ay ril be be be ar ua ob Ap M ar nu m m br M ct e e Ja Fe O ov pt ec Se N D Month We monitor levels of telephone calls received and aim to answer them within seven seconds. In the 2006/07 financial year we answered over 29,600 calls. Number of calls received Calls answered within Target 4000 3000 2000 Out Target In Target 1000 0 b e 06 ch 7 Ap 00 7 o b 006 ry 7 ay 7 07 6 be 6 0 0 0 00 em 00 em 2 0 20 br 2 0 20 20 2 r2 ov er 2 Ja r 2 r y ri l be ar ua ar M nu em M ct Fe pt O ec Se N D Month Complaints In the 2006/07 financial year we responded to 21 complaints. This represents just 0.08% of tasks completed. All of these were resolved at the first level of the complaints procedure. Most complaints relate to the statutory regulations we must apply, rather than to the service we provide. We are working to publicise the regulations clearly, so that members know what to expect. Contact Lothian Pension Fund Waverley Court Level 3/3 4 East Market Street Edinburgh EH8 8BG Issue Contact Telephone Email How pension benefits are Our pensions administration 0131 email@example.com calculated team 529 4638 A change in your Our pensions administration 0131 firstname.lastname@example.org circumstances – for team 529 4638 example to notify a marriage or death Your tax code, what Payroll services 0131 529 4739 Bureau.services@ appears on your payslip or edinburgh.gov.uk a change in address or bank account The National Fraud Carole Thomson, Assistant 0131 529 4660 Carole.thomson@ Initiative Pensions Manager edinburgh.gov.uk This newsletter Ruth Fry, Communications 0131 Ruth.fry@ Officer 529 4510 edinburgh.gov.uk Other formats If you would like to receive Pension News in Braille, large print, computer formats or a community language, please contact us.