Pensions Post Pension Plan - Ladbrokes Pension Plan

 
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Pensions Post Pension Plan - Ladbrokes Pension Plan
January 2018

Pension Plan

               Pensions Post
                From the Ladbrokes Pension
                    Plan (the Plan) Trustees

                  What’s inside?
                    Focusing on your pension   4
                    The Plan’s accounts        7
                    Investment update          8
                    Pension news               9
                    Useful information         10
Pensions Post Pension Plan - Ladbrokes Pension Plan
Welcome to your latest
    edition of Pensions Post
    The newsletter is our first one following the merger of
    Ladbrokes and Gala Coral in November 2016. It has been
    a time of great change and excitement at the Company as
    plans are formed for the future of the merged business.
    As a consequence of the corporate changes, there has also
    been considerable change on the Trustee Board. Since
    the last newsletter there has been a number of trustee
    resignations and we would like to express our sincere
    thanks to Adrian Bushnell, Charlie McAulay, Liz Cockburn
    and Chris Lynch for the commitment and professionalism
    they brought to the board over varying lengths of time.
    Their contribution has been instrumental in helping us to get
    the Plan into good shape.
    The professional chair of the Plan, HR Trustees Limited,
    stood down as a Trustee from 26 October 2017 and thanks
    are extended to Mark Fletcher and Kevin Kenneally for all the
    work that was completed while Chair of Trustees of the Plan.
    The corporate strategy of the merged company is to have
    a single Trustee board across both the Ladbrokes and
    Gala Coral pension schemes. Therefore going forward the
    Trustee of the Plan will be a corporate trustee called the
    Ladbrokes Coral Group Pension Trustee Limited.
    Previously, this company was called Gala Coral Pension
    Trustee Limited and the Directors continue as Directors of
    Ladbrokes Coral Group Pension Trustee Limited with Paul
    Plowright joining as a Director from 26 October 2017.

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Pensions Post Pension Plan - Ladbrokes Pension Plan
The Trustee Directors are:
Company-nominated
                                                         Since the last Pensions Post we
Stephen Carlisle                                         have had a number of updates on
Chair, Independent Trustee                               the funding position, including the
(Capital Cranfield Pension Trustees Limited)             completion of the 2016 triennial
Stephen Carlisle was appointed as the Chairman of        valuation, and these are included
the Trustee board from December 2012. He has been        on page 5.
a pension scheme Trustee since 1996 and the board        The Plan’s investment strategy
benefits from his extensive knowledge of pension         maintains an appropriate balance
scheme investment policy, funding and governance.        between return-seeking assets
Stephen is a Professional Trustee at Capital Cranfield   and lower risk assets that match
Pension Trustees Limited and holds the position of       the projected pension payments.
chairman on a number of pension trustee boards.          You can find out more about the
Jim Noakes                                               investment strategy on page 8.
Jim is Head of Strategic Development for the             The coming year promises to be
Compliance Operations team in Woking which               an interesting time due to Brexit
supports the Ladbrokes Coral Digital Division. He        and the outcome of this year’s
chaired the Trustee board of the Coral Pension Plan      general election which may limit
prior to the merger in 2008. Following the merger        the amount of pensions legislation
of the Gala and Coral Plans he was appointed as          that will be introduced. There will
a company-nominated director.                            also be some changes due to the
                                                         introduction of the General Data
Simon Reynolds
                                                         Protection Regulation (GDPR)
Simon is the Retail Compliance Director for
                                                         from May 2018 and this is looked
Ladbrokes Coral and is based in Stratford. Simon
                                                         at in greater detail on page 9.
joined the Company in 1992 and started as a
company-nominated director in 2011.

Neal Young
Neal was Group HR Director for the Gala Coral Group
and led the merger of the Coral and Gala plans and
has extensive knowledge of those schemes. Neal
is also Chairman of Trustees for an independent
Gibraltar based pension scheme. Neal has over 20
years’ main board experience with a number of large
Leisure, Gaming, Education & Catering companies.
Neal was appointed as a company-nominated
director in 2008.

Member nominated
John Kerr
John is Property Director of Ladbrokes Coral Group
and has been with the Company since 2004. He was
appointed as a member-nominated director in 2013.

Paul Plowright
Paul is Area Manager for Ladbrokes Coral Group in
the West Midlands. Paul joined Ladbrokes in 1993,
and was previously a member-nominated director for
Ladbrokes Pension Plan from 2003 to 2017.

                                                                                               3
Pensions Post Pension Plan - Ladbrokes Pension Plan
Focusing on your pension
    A recap on how the Plan works
    The Plan is a defined benefit pension arrangement.       What do we mean?
    This means that members’ pensions are based              Plan Actuary
    on service with Ladbrokes and salary before they
                                                             Actuaries are qualified professionals who use
    stop building up benefits in the Plan (or until the
                                                             their knowledge and experience to advise on
    Plan closed to the future accrual of benefits as at
                                                             how long pensions are likely to be paid for, and
    31 August 2015). To pay for the cost of providing
                                                             the costs of providing them.
    these benefits, employee members and their
    employers paid contributions. With the help of           Assets
    our investment advisers, the Trustees invested
                                                             These are all the monies that the Trustees hold
    these contributions in funds, which are expected
                                                             for the Plan. They include investments, such as
    to provide income and to increase in value over
                                                             shares, bonds and bank balances.
    the long term – see investments on page 8. The
    combination of contributions, investment income          Funding target
    and growth is then used to pay the benefits as they      This is the amount of assets that, in the
    fall due. The assets of the Plan are held in a trust     Trustees’ opinion, the Plan should hold in order
    fund out of which all members’ pensions are paid         to pay all pension benefits that have been built
    by the Trustees. The fund is a common fund for all       up to date, having taken the advice of the Plan
    members. Assets are not held in separate funds for       Actuary.
    each individual member.
                                                             Funding position
    How do we work out how                                   The funding position of the Plan is a
    much money is needed to pay                              comparison of the assets and the funding
                                                             target on a specific date.
    pensions?
    The Plan Actuary advises the Trustees on how much        Shortfall
    money is likely to be needed in the Plan to pay          This is where the value of the Plan’s assets is
    for all the pensions as they fall due. This estimate     less than the funding target.
    is called an ‘ongoing valuation’. This valuation is
    usually prepared and reviewed every three years,         Surplus
    with approximate updates each year in between.           This is where the value of the Plan’s assets is
    In preparing this ongoing valuation, the Trustees and    more than the funding target.
    Ladbrokes Coral Group, with the assistance of the
    Plan Actuary, decide upon a number of assumptions
    about what might happen in the future, in particular:
      how long the members are anticipated to live;
      what inflation (future price increases) will be; and
      what investment returns the Plan will earn on
      its assets.
    The Trustees also check how much it would cost
    if the members’ benefits were transferred to an
    insurance company who would then pay the
    pensions. This is called a ‘solvency valuation’ and is
    more conservative than the ongoing valuation.

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Pensions Post Pension Plan - Ladbrokes Pension Plan
What is the Plan’s funding position?
The Plan’s funding position goes up and down over time as market conditions change. The most recent full
valuation undertaken was as at 30 June 2016 with a subsequent funding update as at 30 June 2017.
A summary of the funding positions as at 30 June 2015, 2016 and 2017 are shown in the table below.

                                       30 June 2015                  30 June 2016                  30 June 2017

Funding target                          £363 million                    £380 million                £382 million
Market value of assets                   £367million                    £412 million                £440 million
Surplus                                    £4 million                    £32 million                 £58 million

 million
  £500
                                               £32                                     £58
                 £4
  £400

  £300

  £200                                         £380           £412                     £382        £440
              £363            £367

  £100

     £0
                 30 June 2015                     30 June 2016                           30 June 2017

                      Funding target           Market value of assets                    Surplus

                                                                                                                   5
How has the Plan’s financial                                Coral Group to pay further contributions to the Plan.
                                                                The next full valuation will be as at 30 June 2019
    position changed between
                                                                and Ladbrokes Coral Group’s contributions will be
    30 June 2016 and 30 June 2017?                              reviewed as part of this.
    The surplus on the ongoing basis as at 30 June 2016
    was £32 million. Between 30 June 2016 and                   How are my benefits protected?
    30 June 2017, the position on the ‘ongoing’ basis
    improved by £26 million, giving a surplus of £58 million.   Pension Protection Fund
                                                                The purpose of the Pension Protection Fund
    The main reasons for the improvement in the
                                                                (‘PPF’) is to ensure that members of defined benefit
    position since the 2016 valuation are favourable
                                                                schemes receive pensions where their company
    investment returns exceeding the increase in the
                                                                goes out of business. The PPF is not intended to
    Plan’s liabilities and the contributions paid by
                                                                replicate a member’s pension, but aims to ensure
    Ladbrokes Coral Group.
                                                                that, in the event of a scheme’s sponsoring employer
                                                                being unable to meet its responsibilities, members
    What if the Plan has to wind up?                            will receive a minimum level of benefits, although this
    Ladbrokes Coral Group and the Trustees do not               minimum may be less than members would have
    intend to wind up the Plan. We do however monitor           otherwise received from the Plan.
    the impact on the Plan should Ladbrokes Coral
                                                                There’s more information about the PPF on their
    Group no longer be able to support the Plan. In this
                                                                website – go to www.pensionsprotectionfund.org.uk
    event, a wind-up of the Plan is likely to begin and the
    responsibility for paying members’ pension benefits         The Pensions Regulator
    would be transferred to an insurance company.
                                                                The Pensions Regulator aims to help protect
    On the more prudent solvency basis the shortfall            members’ benefits. The Regulator acts as a
    was £83 million as at 30 June 2016.                         watchdog, ensuring that employers and trustees
                                                                are fulfilling their responsibilities and schemes are
    It is important to remember that the Trustees’ aim is
                                                                being run effectively. The Pensions Regulator is also
    to continue to pay pensions in full to all members,
                                                                able to help trustees and administrators run their
    even if there is a shortfall in assets. We expect that
                                                                schemes where necessary.
    the Plan’s funding level will go up and down over time
    as the value of the Plan’s investments varies and the       For further details about the Pensions Regulator you
    estimate of how much money is needed changes.               can go to www.thepensionsregulator.gov.uk
    Remember: the valuation as at 30 June 2016
    and the funding update as at 30 June 2017 are
    only snapshots of the Plan’s financial position                Legal notice
    at a particular point in time. The Trustees invest             The Trustees are required to confirm that:
    for the long term and Ladbrokes Coral Group’s                     The Regulator has not imposed any
    contributions are normally set every three years,                 directions on the Plan, modified future
    following each full valuation. The next full valuation            benefits provided by the Plan or imposed
    will be as at 30 June 2019 and Ladbrokes Coral                    a schedule of contributions on the Plan.
    Group’s contributions will be reviewed as part of this.
                                                                      There has not been a payment to
    Company contributions to                                          Ladbrokes plc or Ladbrokes Coral
                                                                      Group out of the Plan funds since we last
    remove the shortfall                                              updated you.
    Between 30 June 2016 and 30 June 2017, Ladbrokes
    Coral Group paid £1.5m into the Plan, as agreed
    under the previous recovery plan. Following the
    30 June 2016 valuation, the Plan was in surplus and
    therefore there is no requirement for Ladbrokes

6
The Plan’s accounts
The Plan’s assets continued to grow over the past year. Here you can see how much money went in and out
of the Plan, so together with the funding update, you can keep an eye on the financial health of the Plan.

                                                                                         Pension Plan
                                                                           1 July 2016          1 July 2015
                                                                       - 30 June 2017       - 30 June 2016

                                                                              (£,000s)             (£,000s)
   Value as at 1 July*                                                        414,649              370,820

   Total income                                                                 2,282                 1,807
   Change in value of investments                                              39,544                56,701
   Total expenditure                                                          (13,179)             (14,679)

   Value as at 30 June*                                                       443,296               414,649

                                                                    * The opening and closing values include AVCs.

Membership
The chart below shows how the line-up of the Plan has changed in the last year:
As at 30 June 2016
Contributing members: 0
                                                                                         Pensioner members
                                                                                         1,614

                                                                                             Deferred members
                                                                                             1,661

As at 30 June 2017
Contributing members: 0
                                                                                            Pensioner members
                                                                                            1,646

                                                                                         Deferred members
                                                                                         1,584

  Want to know more?
  The Plan’s accounts, highlighted above, were audited by BDO LLP, who gave their view that the
  accounts were a fair and true view of the transactions of the Plan. For a full copy of the Report and Financial
  Statements for the year ended 30 June 2017 visit our website at www.ladbrokespensionspost.co.uk

                                                                                                                     7
Investment update
    As a member of the Plan, your pension is based on       As the Plan’s estimated benefit payments vary from
    your salary and the amount of service you have in       time to time, we keep our investment strategy under
    the Plan rather than the performance of investment      review and will update you with any changes in
    markets. However, investment performance does           future issues of Pensions Post.
    have an effect on the Plan’s assets, and if you are
    interested in how the markets have affected the Plan,   An update on our
    you can find out more below.                            investment strategy
                                                            We regularly review the Plan’s investment strategy
    Where our investments are held                          to achieve a suitable balance between cash flow,
    In the charts below you can see a breakdown of          performance and risk and decide how much we
    where the Plan’s assets were invested as at             should invest in the different asset classes to
    30 June 2016 and 30 June 2017.                          achieve this.
                                                            Over the second half of 2016, market interest rates
           Asset allocation as at 30 June 2016              fell causing the LDI portfolio to increase in value
                                                            and distribute cash to the Plan. In light of the larger
                                                            cash holding, the Trustee reviewed the investment
                                   12.5%                    strategy and, following advice from its investment
                         13.4%
                                                            adviser, decided to increase the Plan’s holding in
                                                            DGFs. This increased the investment return expected
                                         12.4%              from the Plan’s assets and was implemented in
                                                            August 2016. There were no other material changes
                  28.4%
                                                            to the Plan’s investment strategy over this period.
                                                            The investment strategy as at 30 June 2017 resulted
                                  33.3%
                                                            in a 35% allocation to lower-risk assets (LDI and
                                                            cash) and a 65% allocation to return-seeking assets
                                                            (Equities and DGFs).

           Asset allocation as at 30 June 2017              How the investments performed
                                                            The Plan’s assets returned 7.5% over the year ended
                                                            30 June 2017, 11.8% pa over the three-year period to
                         14.3%     14%                      30 June 2017, and 10.3% pa over the five-year period
                                                            to 30 June 2017.
                                                            If you want to know more about the Plan’s
                                         14.3%
                 20.6%                                      investments, you can read:
                                                              the latest Statement of Investment Principles; and
                                                              the Report and Financial Statements for the year
                                 36.8%
                                                              ended 30 June on the Plan’s website at:
                                                              www.ladbrokespensionspost.co.uk

           UK Equities              	Liability Driven          Jargon buster
                                      Investment (LDI)
           Overseas Equities                                     Visit the ‘Tools and resources’ page of the
                                    	Cash                           Plan’s website for definitions of some key
         	Diversified Growth
           Funds (DGFs)                                                  pension and investment terms.

8
Pension news
General Data Protection                                   Pension scams:
Regulation (GDPR)                                         be aware of the consequences
The law relating to data protection will change in the    There have been a number of reports of often
UK and European Union on 25 May 2018. We will             unscrupulous operators encouraging members of
update the data protection privacy notice that has        pension schemes to access their pension assets
previously been made available to you in relation to      before they reach age 55 (currently the minimum age
the Plan in advance of this change.                       at which someone can take their pension assets).
                                                          The Government and HM Revenue & Customs
Pensions for same-sex partners                            (HMRC) are concerned about the consequences of
                                                          members participating in liberation activities, and
The Plan provides pensions to same-sex partners
                                                          have taken steps to prevent them.
of deceased members, provided the partner was
married to or in a civil partnership with the member      How could this affect you?
more than six months before the member’s death.           If you choose to release money from your pension
Where any such pension is in payment in relation          before you are aged 55, you face losing up to 70%
to a member who died prior to 13 March 2014,              of your money back to HMRC. This is because you
the amount of the pension is currently reduced            can lose any tax benefits that you gained on your
with respect to service before 5 December 2005.           savings. In addition, the firms offering to release the
However, following a recent judgment by the               funds early often charge high fees on top, leaving
Supreme Court the Plan will now provide a full            you with significantly less money than you thought
pension to eligible same-sex partners in respect of all   you would receive.
of the member’s service.
                                                          Please remember to be cautious if you are
Note that the above is only a summary of the Plan’s       approached by a company or individual offering you
same-sex partner pension provisions and the Plan          a chance to get a ‘loan’, ‘saving advance’ or ‘cash
Rules take precedent to the extent the provisions         back’ from your pension, or access your pension
under it differ from the above summary                    early. You can read more about pension liberation
                                                          on the Pensions Regulator’s website at
Need advice?                                              www.thepensionsregulator.gov.uk/pension-scams
Get pensions wise
The Government has promised that everyone will
receive ‘free, independent guidance’ at retirement,
to help you understand your options. This is being
provided by the Citizens Advice Bureau and The
Pensions Advisory Service.
There will be telephone, face to face, and online
guidance via www.pensionwise.gov.uk. This
guidance will be tailored to you, but it won’t make
any recommendations about specific products.
You can also find your own financial adviser –
although you’ll be responsible for paying for this
advice. See page 10.

                                                                                                                    9
Useful information
     Where can you find more up to
     date pensions information?                                  Keep your details
     You can get more information by visiting the websites       up to date!
     below. Go to:                                               It is important to keep your personal details
                                                                 such as your address up to date, as outdated
     www.ladbrokespensionspost.co.uk for important
                                                                 information may mean that:
     Plan news and resources, and information on matters
     such as pension and death benefits.                            Benefits are not settled as quickly.
     www.gov.uk for Government information and                      Important messages may not reach you as
     public services. There is also a section dedicated to          swiftly as they should.
     pensions and retirement planning, which you can                Delays may lead to financial hardship.
     find at www.gov.uk/plan-retirement-income
                                                                 Make sure you keep in touch with the Plan’s
     www.pensions-ombudsman.org.uk for help with                 developments, by making sure we have your
     complaints and disputes about the way that pension          correct email address. You can tell us of any
     arrangements are run.                                       change to your address by contacting the
     www.pensionsadvisoryservice.org.uk for help with            Ladbrokes Administration Team.
     member and beneficiary pension queries.
     www.thepensionsregulator.gov.uk/individuals.aspx
     for information on the Pensions Regulator, including
                                                               Professional advisers
     a list of pensions resources.                             The Trustees use a number of professional advisers
                                                               for specialist tasks. A full list of the Plan’s advisers is
     www.pensionwise.gov.uk is a free and impartial
                                                               included in the Trustees’ Annual Report and Financial
     service provided by the Government to help you
                                                               Statements 2016, which you can find on the Plan’s
     understand what your retirement choices are.
                                                               website: www.ladbrokespensionspost.co.uk

     Nomination form
     If you die as a contributing or deferred member of the
     Plan, or if you die within five years of taking pension
     benefits from the Plan, your family (spouse, civil
     partner or dependants) may be entitled to benefits
     payable on your death. You should complete a
     nomination form to explain to the Trustees to whom
     you would wish any such death benefits to be paid.
     The Trustees will use their discretion in deciding who
     should receive any benefits payable.
     If your circumstances have changed then you
     may want to update your nomination form. A copy
     of the form is available on the Plan’s website,
     www.ladbrokespensionspost.co.uk

10
Contact details
If you have any questions about the
information shown in Pensions Post,
which you are unable to find an answer
to by visiting the Plan’s website at:
www.ladbrokespensionspost.co.uk or
if you have any queries about your own
Plan benefits, you can contact us by
using the details below:

Ladbrokes Pension Plan
Administration Team
  	The Ladbrokes Administration Team,
    Hymans Robertson LLP,
    One London Wall,
    London, EC2Y 5EA
   ladbrokesadmin@hymans.co.uk
   020 7082 6454

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