Spring 2002 Introduction from the Pensions Services Manager In by dfsiopmhy6


									                   Scheme Talk                                                Spring 2002

Introduction from the Pensions Services Manager
                                     Hello and welcome to the fourth issue of ‘Scheme Talk’, the
                                     newsletter for members of the Lancashire County Pension

                                     First of all, let me introduce myself, my name is Diane Lister
                                     and I have been appointed to the position of Pensions
                                     Services Manager within the Pay Unit with effect from
                                     February 2002.       As well as overall management of the
                                     pensions service, part of my responsibility is communications
                                     for the Pay Unit.
  Diane Lister
                                    Are you worried about your pension? Do you wonder if there
                                    will be enough ‘money in the pot’ when you retire? Want to
know more about the investment routes of the Lancashire County Pension Fund? Then read on,
one of the main features this time is information showing how the money is invested within the
pension fund. Also, there has been a lot of press recently concerning occupational pension
schemes, in this issue we explain the situation in relation to the Local Government Pension

Another main feature in this issue is how to contact us. The Government has a vision for 2005
which talks about electronic service delivery enabling people to be able to access information when
it is convenient to them and “access to the
internet for all citizens.” With this in mind we are
continually looking at how we can improve our
methods of communication and the information
we give to our customers.                                 In this
Finally, I hope you enjoy this edition of ‘Scheme         issue ...
Talk’ and if you wish to comment on this issue,
please complete the comments box attached to
the competition or simply write to us.
comments, good or bad, are welcome. Don’t
                                                All      •   Contacting us

forget to enter the competition, there are some
great prizes available, so why not take a look and
                                                         •   How the fund is
see if you can guess what the objects are!
                                                         •   Equitable Life

                                                         •   Part-timers

                                                         •   Using your AVCs at retirement

                                                         •   LPGS Stocktaking Exercise

                                                         •   Employee Benefit Statements

Pensions Services Manager                                •   Competition
Contacting – us

“E-government is at the heart of the modernisation agenda for local government and
public services. The Government has articulated a vision for 2005, based on
comprehensive electronic service delivery, on universal access to the internet for all
citizens, and for the establishment of an effective business based on broadband

Extract taken from ‘Delivering Electronic Government – A Strategy for
Lancashire County Council’

With this in mind and the needs of our customer, we
are continually striving to ensure information is
available 24 hours a day and that you are able to
contact us at any time, should the need arise.

As you are probably aware, we have a ‘Pensions
Helpdesk’ facility manned from 8.45 in the
morning until 4.45 in the evening Monday to
The helpdesk number is:

(01772) 264864

In the last few months we have updated our telephone technology in order to enable a queuing
facility for our customers. This means instead of hearing the engaged tone during busy spells,
the caller can choose to wait in a queue in order to have their query answered.

This technology also provides us with vital information about the calls we are getting and how
efficiently we are dealing with the queries in order to improve the level of service we offer our
customers. For instance, we have now created various factsheets in order to answer the most
popular queries received by the helpdesk. All these factsheets are available on the web-site,
the address is:


                                            Our web-site is another means of contacting-us; we
                                            have recently changed the look of the web-site so if
                                            you’ve not yet had a look why not take a look now.

                                            Of course, you can e-mail us from the web or direct


                                            We aim to reply to all e-mails within 24 hours, so
                                            even if we are not able to provide a full response to
                                            your query we would at least acknowledge your e-
                                            mail to let you know it is being dealt with.

In the future more people will probably look at the internet for answers to their questions rather
than picking up the telephone, it gives people the flexibility to look at matters in their own time
and at their own speed. We envisage that the use of facilities such as self-service interaction
with the web-site will become more popular as more people ‘get connected’ in their home.

As part of our Best Value process we will continually look to make improvements on how we
can deliver our services.
How the Fund is invested
                                                                         4%    2%   2% 2%

     Schroder Investment Management Limited

     Deutsche Asset Management Limited               24%                                               22%

     Newton Investment Management Limited

     Legal and General Investment Management

     Knight Frank (Direct Property)

     Westport Private Equity Limited (Venue Funds)

     Henderson Investors (Ethical portfolio)

     Cash invested internally
                                                           22%                                   22%

The management of the Fund’s investments is structured so as to provide diversification of
management style and produce an acceptable spread of risk across the portfolio whilst maximising
returns. The current management arrangements are as follows:

66% of the Fund is managed on a ‘Balanced/Active’ basis, i.e. aiming across all asset classes to
outperform a prescribed benchmark (in the case of the Lancashire Fund, 1% above the WM Local
Authority average return over a rolling three year period). Of the 66% of the Fund currently
managed in this manner, 22% is managed by Schroder Investment Management Limited, 22% is
managed by Deutsche Asset Management Limited and 22% is managed by Newton Investment
Management Limited.

24% of the Fund is managed on a passive basis, i.e. aiming to track market or index returns.
Legal and General Investment Management manage this portion of the Fund’s portfolio.

The remainder of the Fund (10%) is managed on a specialist Management basis i.e. a Fund
Manager is appointed in order to concentrate on a particular asset class. 2% of this portion of the
                                              Fund includes cash held internally for the payment of benefits
                         The scheme
                     provides a death in        etc. The Specialist Fund Manager is primarily concerned
                service benefit of two-times
                annual pay, you can nominate
                                                 with stock selection, the asset allocation being determined
                   a beneficiary for this        by the Investment Panel. 4% of the Fund is invested in
                   payment by completing
                     a nomination form.         Direct Property, the Fund Manager being Knight Frank. The
                                               aim of the Property Manager is to outperform the Local
                                             Authority average return by 1% over a rolling three-year basis.
                            This direct property portfolio is also measured against the IPD Small
                             Funds Benchmark return. 2% of the Fund is invested in Venture Funds
                             with the Fund Manager being Westport Private Equity Limited. The aim
                             of the Venture Fund manager is to outperform the Local Authority
                            average return and BVCA returns. 2% of the Fund is invested in a Socially
                           Responsible (Ethical) UK equities portfolio, managed by Henderson
                         Investors. The manager is expected to outperform the FTSE All Share Index
                     over 3 years.

The Fund Managers have full discretion to invest within the policy limits laid down by the Pension
Fund Committee and the Investment Panel.

It is stressed that whilst the investment performance of the Fund affects the amount of employers
contributions, it does not affect your benefits which are governed by statute. (See LGPS
Stocktaking Exercise overleaf.)

* A Statement of Investment Principles is available upon request or from the web-site.
Equitable Life
As I am sure you are aware it has not been a
smooth ride for The Equitable Life Assurance Society
during the last couple of years.
                                                                                     The Occupational Pensions
                                                                                    Advisory Service (OPAS) is
Following on from the court case, Equitable Life                                   available to assist you at any
                                                                                  time with any difficulties that
put forward a Compromise Deal whereby policyholders were asked to                  you fail to resolve in relation
                                                                                      to your pension rights.
give up some rights in exchange for greater certainty and more
investment freedom. Lancashire County Council voted in favour of the
Compromise Deal.

On 28 January the board announced that members voted in favour of the Compromise Deal
and on 4 February the court sanctioned the scheme. This means that the Society will receive
the £250 million from the Halifax which will be applied to uplift with-profits funds as detailed
in the Compromise Deal.

To find out more up-to-date information in relation to Equitable Life, please contact their web-


In the last issue of ‘Scheme Talk’ we updated you
on the position of possible backdating of pension
rights for part-time employees.

To recap, the House of Lords ruled that certain
part-time workers can claim previous membership
of pension funds back to 1976.

However, to qualify for backdating of membership, employees must have made a claim to an
employment tribunal. You should be aware that if your employment ceases a claim must be
made within 6 months of leaving your employment.

It is also understood that contributions for membership will be payable by both the employee
and the employer.

‘Test cases’ are due to be heard by the employment tribunal in June of this year. Following
which amendments to the scheme regulations will need to be made by the Department of
Transport, Local Government and the Regions before any further progress can be made.

                   In order to lodge a claim with the Office of Employment you need to
                      complete the form at the front of their booklet entitled “How to apply to
                        an employment Tribunal” form ITL1. These booklets are available
                         from your local Citizens Advise Bureau or Job Centre.

                         This autumn, once again we will be holding
                       a series of Pensions Days at various locations
                         around the County. We will advertise the
                                 dates nearer to the time.
Using your AVCs at retirement

If you are paying Additional Voluntary Contributions (AVCs), you build up an additional pot of
money for your retirement. When you retire you will receive options on how you may use your
AVC fund, for example to purchase an annuity with an insurance company.

Members who commenced paying AVCs prior to 13 November 2001 may, in certain
circumstances, convert their AVC fund into membership in the scheme (this cannot provide any
additional lump sum). This membership counts towards the 85 year rule*. Following a change
in the regulations, the option to convert their AVC fund is no longer available to any member
who commences paying AVCs from 13 November 2001. The alternative
to an annuity for these members is to provide an additional pension
from the pension scheme, but this will not count towards the 85           If you would like to see a
year rule*.                                                               copy of the pension fund's
                                                                               annual report, you can request
                                                                               a copy by calling the Pensions
For more information about increasing your benefits please                      Helpdesk or by e-mailing us.
contact the Pensions Helpdesk or visit our website.

*85 year rule – your benefits will be reduced if, when you retire, the total
of your age and membership of the scheme do not add up to at least 85.

LGPS Stocktaking Exercise
There has been much in the press recently concerning employers closing their final salary
pension schemes for a cheaper alternative. As can be expected, this has set alarm bells ringing
for people who are fortunate enough to currently be a member of a final salary pension scheme,
like the Local Government Pension Scheme (LGPS.)

As you may be aware, employees in the LGPS pay a fixed pension contribution , generally 6%
of pay and employers pay a varied amount of contribution as set by the actuary at the triennial
valuation of the pension fund. The employer’s rate may go up or down depending on
investment return and performance of the fund.

As with most pension schemes at the moment, the Local Government Pension Scheme is
currently under-going a review. The review is looking at areas such as:

                       Whether the current scheme can be simplified;

                         If it is possible to introduce more flexibility in the current scheme benefit

                            To consider the advantages and disadvantages of introducing a new
                             scheme for new employees from a future date; and

                                 Making an assessment of the current efficiency and quality of
                                   pension administration.

                                    We will endeavour to keep our members informed of any
                                    developments in relation to this exercise and any other
                                    matters effecting members’ pension rights.
   Employee Benefit Statements
   Although it is not yet compulsory for the LGPS to provide
   employee benefit statements to all active members of the
   scheme, we feel it is ‘Best Practice’ to produce these

   Due to the size of this exercise we have decided to do the
   statements as a rolling program over two years. The first
   batch was sent out last year, the second batch are due to be
   sent out in May/June this year and the third and final batch are due to be
   run at the end of this year or the beginning of next year.

   The purpose of these statements is to show you both the current value of your pension
   benefits in the LGPS and also your future benefits based on your current pay but on the future
   service you can achieve at retirement age.

   When you receive your statement please check it carefully and initially if you have a query you
   should direct this via your employer, if your employer is unable to answer your query he will
   forward it to Lancashire Pensions Services for further investigation.

   We hope you find the statements informative and as always value any feedback you may have
   in respect of the statement or any other pension issue.

   Competition                                                               (a)                           (b)
   Thanks to all those who entered last
   year’s competition, we received plenty
   of correct entries and also some rather
   unusual guesses as well!

   Our congratulations go to Mr Holden
   from Chorley and Mrs Tinker from
   Preston who correctly guessed the two
   objects featured were (a) Pizza-cutter
   and (b) Vice.     Both our winners                (a) ________________________________________
   received £25 in store vouchers. Well
   done!                                             (b) ________________________________________

   This years competition follows the same
   lines, we ask you to name the objects in          Name ______________________________________
   the photographs. The first two correct
                                                     Address ____________________________________
   entries drawn from the postbag will
   receive £25 in store vouchers. So come
   on, fill in the form and send it off to the
   address shown.         Entries close 31           ____________________________________________
   August 2002.
                                                     Employer ____________________________________
   Please name the objects (a) and (b)
   below then return the completed cut-              Comments on this newsletter: (optional)
   out to Lancashire Pensions Services, PO
   Box 100, County Hall, Preston PR1 0LD.            ______________________________________________
   Winners will be notified by post.

Important Notice
Please note that whilst we make every effort to ensure that Scheme Talk is accurate, nothing within the newsletter
overrides the provisions of the Local Government Pension Scheme Regulations 1997 and associated legislation.

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