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 Fund. 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 Scheme. 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 invested see if you can guess what the objects are! • Equitable Life • Part-timers • Using your AVCs at retirement • LPGS Stocktaking Exercise Regards • 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 technology.” 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 Friday. 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: www.lancs-pensions.org.uk 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 on: firstname.lastname@example.org 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- site: www.equitable.co.uk Part-timers 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 package; 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 statements. 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.