TO MEMBERS 2020 FROM THE TRUSTEE OF THE HILTON UK PENSION PLAN
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Report TO MEMBERS 2020 FROM THE TRUSTEE OF THE HILTON UK PENSION PLAN
CONTENTS
Welcome
A MESSAGE FROM THE CHAIR OF THE TRUSTEE BOARD,
3
MARY NELL THOMPSON.
Money matters 4
GIVING A SUMMARY OF THE PLAN’S ACCOUNTS AND
AN UPDATE ON ITS FINANCIAL WELLBEING.
Investment update 7
AN UPDATE ON THE PERFORMANCE OF THE PLAN’S INVESTMENTS.
Finding help 8
A LIST OF TRUSTED RESOURCES FOR FINDING HELP OR ADVICE.
In the news 10
FIND OUT MORE ABOUT RECENT DEVELOPMENTS AND HOW
THEY MIGHT AFFECT YOU.
The team 11
THE PEOPLE BEHIND THE SCENES WORKING ON YOUR BEHALF.
2
Welcome
WELCOME TO OUR LATEST EDITION OF REPORT TO MEMBERS,
UPDATING YOU ON THE PLAN’S FINANCES AND THE WORLD OF
PENSIONS. WE HOPE YOU FIND IT INTERESTING AND USEFUL.
First and foremost, I would like to send my useful? Could we improve any other aspects
personal best wishes to each and every one of our communications with you, such as any
of you in these difficult times. The COVID-19 correspondence you have had with our Plan
pandemic has touched almost every aspect administrator? Giving feedback is easy: simply
of our lives and the hospitality industry will be email us at hukpp@hymans.co.uk or click
feeling the effects of the current crisis for some on the ‘Contact us’ tab on the Plan’s website
time to come. www.hiltonukpensions.co.uk.
We would like to reassure you that the payment I would like to draw your attention to page 10 of
of your pensions and the security of your future this Report, where we address the increased risk
benefits remains our utmost priority as a Trustee of pension scams in the current environment.
Board, and we have been working collaboratively We don’t want you to become a victim of fraud,
with the Company and the Plan’s advisers to so please do read our advice on how to become
minimise any impact of the pandemic on the ‘scam smart’. It is worth noting that all genuine
Plan. The Plan’s administrators and all of their communications from the Plan will come with the
advisers have strong business continuity plans in Hilton logo or a logo from the Plan’s administrators,
place and the ongoing management of the Plan, Hymans Robertson. You can also sign up for access
including the payment of pensions, is continuing to details of your benefits on the Plan’s website by
as usual from our ‘home offices’. going to www.hiltonukpensions.co.uk and clicking
on ‘Register’.
One of the advantages of Plan membership
is all the risk is taken on by the Company and Finally, I would like to share with you that John
the Trustee. We have had another busy year of Burns FIA, your Plan Actuary, has recently retired
improvements to the Plan behind-the-scenes. from XPS Pensions. On behalf of the whole
The Plan has completed its triennial actuarial Trustee Board, we would like to thank John for his
valuation in which we agreed with the Company, valued advice and continued support and wish
a revised timetable of contribution payments him the very best for his retirement. The Trustee
into the Plan. Following completion of the Board has appointed Lisa Whitby FIA, also of XPS
valuation, we also took the opportunity to review Pensions, as his successor. We are also sad to
the Plan’s long-term investment strategy and see Fred Schacknies leave Hilton and his role as
implemented changes which reduce the level of Chair of the Plan’s Investment sub-committee
risk whilst retaining the same expected level of (ISC). Fred’s enthusiasm and insights have been
return. See inside for further details on the Plan’s invaluable in developing our current investment
financial wellbeing, accounts and the positive strategy. Justin Wallace, Hilton’s Director
changes that have been made to the Plan’s for Financial Risk Management, will soon be
investment strategy. stepping in as a Company representative on the
ISC, bringing with him 18 years of experience in
We are always looking to improve, and it would financial markets. We look forward to welcoming
help us a great deal if you could take some time both Lisa and Justin to the Plan.
to give us your feedback on our communications
with you. Pensions can be a complicated matter, The Plan is very fortunate to have such a strong
and we work hard to make our communications team of Trustees and advisers working together
interesting and engaging, keeping you informed at this time, and always, for the benefit of
and helping you to understand what’s going on its members.
in the pensions world that could have an impact
on you. Do you find our Report to Members Mary Nell Thompson
Chair – Trustee Board
3
MoneyMATTERS
ACCOUNTS
When you retire, the payments VALUE AT 31 DECEMBER 2018 £272,721,870
you receive from the Hilton
UK Pension Plan (the Plan) will Payments received
depend on your membership
history and pensionable pay. Company contributions £7,052,661
It is up to the Trustee Board Other income £93.480
and the Company to make sure
there is enough money in the Total received £7,146,141
Plan to meet this commitment
to all Plan members. Payments made
Here is a summary of Benefits paid to members (£9,751,758)
the Plan’s accounts as at Leavers (£1,600,418)
31 December 2019.
Administration expenses (£1,779,948)
Total paid out during the year (£13,132,124)
Net returns on investments £44,311,803
VALUE AT 31 DECEMBER 2019 £311,047,690
OUR MEMBERS as at 31 December
2018
288 1,295 1,990
2019
258 1,327 1,927
Current Pensioners, including Members who are no longer
employees spouses and dependants working for the Company,
but haven’t retired
4FULL VALUATION FINANCIAL WELL-BEING
31 DECEMBER 2018
The Trustee Board and the Company have been working with
Shortfall the Plan’s actuary, John Burns FIA of XPS Pensions Group, to
£350m £39.4m understand the Plan’s financial wellbeing and we can now publish
£300m the results.
£250m LAST FULL VALUATION OF THE PLAN AS AT 31 DECEMBER 2018
£200m Value of the Plan’s investments: £272.7 .million
Assets Liabilities Estimated costs of providing benefits: £312.1 million
£150m
£272.7m £312.1m
Shortfall: £39.4 .million
£100m
Funding level: 87%
£50m
£0m In other words, the Plan had 87% of the money it needed at that time
to meet its commitments in full.
LATEST POSITION The previous full valuation of the Plan, carried out as at 31 December
31 DECEMBER 2019 2015, had revealed a shortfall of £23.4m and a funding level of 92%.
Shortfall A number of events had a negative impact on the funding level of
£350m £19.4m the Plan between the 2015 and 2018 valuations. The estimated cost
£300m of providing retirement benefits increased over the period as a
result of:
£250m
• a fall in investment yields; and
£200m
Assets Liabilities • updating the life expectancy assumptions used to reflect the
£150m £313.1m £332.5m results of a longevity analysis carried out for the Plan.
£100m
This was offset, to some extent, by higher than expected returns on
£50m the Plan’s investments and the additional contributions paid by the
Company over the period to repay the shortfall in funding (known as
£0m
deficit reduction contributions).
PAYING OFF THE SHORTFALL
The Trustee Board has agreed a formal recovery plan with the
Company which includes a commitment to pay a total of £31.9 million
into the Plan, in annual instalments, through to 31 December 2024.
This recovery plan was agreed in November 2019 and incorporated
allowance for some of the improvements in the funding level since
the valuation date.
5HOW HAS THIS PROGRESSED SINCE THE WHAT PROTECTIONS ARE IN PLACE?
LAST FULL VALUATION?
As long as the Company continues to
Full valuations are undertaken every three support the Plan, your benefits are expected
years and so annual checks are carried out to be paid in full when they become due. If
in between. The last annual check as at the Company is unable to support the Plan,
31 December 2019 showed the following results: several things could happen which we explain
simply as part of our annual reporting to you.
Value of the Plan’s £313.1 million
investments: 1. The Plan could continue with reduced
reliance on future support from the Company
Estimated costs of £332.5 million If this happened pensions would still be paid,
providing benefits: but the Trustee Board would immediately
Shortfall: £19.4 million review its investment and funding strategies
and operating budget.
Funding level: 94%.
2. The Plan could wind up
The results show that over the period from If a pension scheme winds up, the trustees
31 December 2018 to 31 December 2019, must secure members’ benefits by buying
the Plan’s funding position improved from an insurance policy. If the Plan had wound up
a shortfall of £39.4 million to a shortfall of on 31 December 2018, it would have cost the
around £19.4 million. This improvement was Trustee Board £543.6 million to secure this
due to a combination of: insurance policy. As the Plan’s investments at
• deficit reduction contributions paid by the the same date were valued at £272.7 million,
Company; the Company would have had to make up
the difference.
• a small reduction in expected future
inflation rates; and 3. T
he Pension Protection Fund (PPF) could
step in
• a significant increase in the value of the
The PPF may step in where a company
Plan’s assets.
goes out of business and doesn’t have the
These were in part offset by an increase in money to pay the benefits promised. There’s
the estimated cost of providing retirement more information on the PPF’s website at
benefits over the same period. This was www.ppf.co.uk.
mainly due to lower prevailing investment
There’s a binding agreement in place
yields which reduced the discount rates used
between the Company and the Trustee
to value members’ benefits.
Board which aims to make the Plan self-
The outbreak of COVID-19 has had a sufficient by 31 December 2034. This will
significant impact on global investment mean the Plan is much less likely to need to
markets, as well as the Plan’s assets, leading rely on financial support from the Company
to volatility in the funding position since the in future. As part of this agreement the
start of the year. Company could be required to pay extra
contributions to meet the agreed target.
The Trustee Board, with support from the The agreement allows for the deadline for
Company, takes a long-term view to pension reaching the target to be extended by five
scheme funding rather than focusing on years to 31 December 2039 if needed.
short-term volatility. However, the Trustee
Board is keeping the situation under close We’re happy to confirm, that the Company
review and is working with its advisers to has not taken any payments out of the Plan
monitor the position, and to ensure the in the last 12 months, and that The Pensions
security of Plan members’ benefits. Regulator has not intervened to change the
way that benefits build up, how valuations
are calculated, or the way the funding
6
shortfall is met.Investment
UPDATE
Following the finalisation of the The reduction in risk in the new
actuarial valuation of the Plan’s strategy is largely due to:
liabilities, the Trustee Board
• The long-term and stable
carried out a review of the Plan’s
revenue provided by the
investment strategy in August
Infrastructure asset class,
2019. As a result of this review,
which replaces the Diversified
the Trustee Board decided to
Growth mandate.
maintain the overall expected
return, while reducing the level • Increasing the Plan’s hedge
of risk for the portfolio, which we within the LDI mandate means
show on the left. the Plan is better protected
against movements in interest
The key changes to the Plan’s
rates and inflation, therefore
investment strategy include:
15% Direct Lending
achieving a more stable
• A 10% allocation to funding level.
10% Absolute Return Bonds Infrastructure Equity and a 10%
Despite the significant market
allocation to Infrastructure
Debt, funded through a full downturn in Q1 2020 due to the
15% Property impact of COVID-19, the Plan’s
disinvestment from the
Diversified Growth mandate. funding level had only worsened
10% Infrastructure Equity by around 4% during this period.
• An increase in the Plan’s By contrast, equity markets had
10% Infrastructure Debt hedging level through the fallen by approximately 23% in
Liability Driven Investment
the same period.
Liability Driven (LDI) mandate.
25%
Investments The Plan’s Synthetic Equity
mandate suffered the worst
2% Liquidity
during Q1, however the gains in
the Plan’s LDI mandate were able
13% Synthetic Equity
to offset a significant portion of
these losses.
7FINDING HELP
YOU CAN
trust
HERE ARE SOME TRUSTED
RESOURCES TO HELP YOU
IF YOU ARE LOOKING FOR
A FINANCIAL ADVISER,
OR WANT TO CHECK THE
CREDENTIALS OF A FIRM
YOU ARE THINKING
OF APPOINTING.
Some organisations are experiencing high
volumes of calls, and struggling with sickness
levels, or staff adjusting to home working, so
wait times may be longer than normal. Please
use email rather than the telephone if you can.
FINANCIAL CONDUCT
AUTHORITY (FCA)
The FCA regulates all financial advisers and
maintains a directory of authorised firms.
You can find the FCA’s directory of authorised
financial advisers listed on its website in the
‘Know your rights’ link under the ‘Consumer’
tab. There is also a dedicated area supporting
consumers during the COVID-19 pandemic
– click on the links in the green box on the
home page.
Website: www.fca.org.uk
Email: consumer.queries@fca.org.uk
Telephone: 0800 111 6768 (freephone)
or 0300 500 8082 Monday to Friday,
8am to 6pm and Saturday 9am to 1pm.
The number to call if you live overseas is:
+44 207 066 1000.
If you use next generation text relay, please
ring (18001) 0207 066 1000.
8THE PENSIONS ADVISORY SERVICE (TPAS)
A government backed organisation, TPAS can help you with any questions you have
about your pension, either generally, or more specifically because of COVID-19.
Website: www.pensionsadvisoryservice.org.uk
Telephone: 0800 011 3797.
If you are calling from overseas, the number to ring is +44 207 932 5780.
TPAS also has a webchat facility and details are available on their website.
VOUCHEDFOR
This website helps you to search for qualified financial advisers, accountants, and solicitors
and allows you to read client reviews. Every adviser on VouchedFor’s register is vetted and
continually monitored. VouchedFor’s website also has some tips to help you if you have
not used a financial adviser before.
Website: www.vouchedfor.co.uk
Email: enquiries@vouchedfor.co.uk
Telephone: 0203 111 0580
THE MONEY ADVICE SERVICE
Set up by government, MAS offers give free and impartial guidance on all money matters.
The MAS website has a link into the FCA’s directory of authorised financial advisers,
along with help choosing an adviser and understanding the advice process. Choose the
‘Financial Advice’ link under the ‘Pensions & Retirement’ tab on the yellow bar on the
home page.
Website: www.moneyadviceservice.co.uk
As an alternative to email, MAS offers a WhatsApp service. Add +44 7701 342744 to your
WhatsApp and send a message.
Telephone: 0800 138 7777 Monday to Friday, 8am to 6pm
The Typetalk number, for those with hearing loss or who are deaf, is (18001) 0800 915 4622.
WWW.HILTONUKPENSIONS.CO.UK
For trusted information about the Plan and your options, go to our own Plan website. You
can view and model your benefits, view your pension payslip, and request quotations and
information. You can also find Plan documents and up to date news and information.
9IN THE
News PROTECT YOUR PENSION SAVINGS
BUDGET 2020 The coronavirus (COVID-19) emergency is a challenging time
– CHANGES TO for us all, and everyone on the Trustee Board sends our best
PENSION TAXATION wishes to all Plan members and their families.
FOR HIGH EARNERS
Sadly, organised criminals are taking advantage of the
The government has a limit
concerns and anxieties some pension savers have about the
on the amount of money
security of their benefits. The Financial Conduct Authority
you can save towards
(FCA), who is responsible for authorising financial advisers,
retirement in a tax efficient
has said that protecting consumers against serious and
way, which is known as
organised crime is a top priority because, on average, a
the Annual Allowance. For
scammed pension saver loses 22 years of pension savings
most members, the Annual
which is typically three times their annual earnings. *
Allowance for 2020/2021, is
£40,000 a year and the Plan The Pensions Regulator has expressed its own concerns
administrator will write to you that scammers could target savers to lure them to
if your benefits in the Plan ‘safe havens’.
exceed this.
PROTECTING YOUR HARD-EARNED PENSION SAVINGS
The Annual Allowance • Ignore all unsolicited emails, texts and social media posts
becomes less generous for about moving your pension. These messages typically
people earning more than include words like ‘savings advance’ ‘cash incentive’ ‘bonus’
£110,000 a year but in his ‘free pension review’ etc. If it sounds too good to be true, it
probably is.
March budget, the Chancellor
of the Exchequer, Rishi Sunak, • Never disclose any personal information such as your
announced the government’s name, contact details or bank details over the telephone.
intention to increase this
• Your bank or building society will NEVER ask you to click
income cap from £110,000
on a link to confirm your bank or personal details.
a year to £150,000 a year.
• A professional financial adviser will never rush you into
Please speak to your financial
making a decision.
adviser if you think you may
be affected by the Annual • Unless you have the Trustee Board’s agreement to
Allowance, or you can check take ill-health early retirement, any attempt to access
out the government’s your benefits before age 55 will result in cash from your
guidance on its website: benefits in the fraudsters’ hands and a large tax bill for
www.gov.uk. Type ‘Tapered you. There are no “loopholes”.
Annual Allowance’ in the More information on how to be ‘scam smart’ is on the FCA’s
search bar. website. Type www.fca.org.uk/scamsmart into your browser.
*Financial Conduct Authority Business Plan 2020/21.
10THE
team
HERE’S A REMINDER OF THE
TEAM WORKING BEHIND THE
THE PLAN’S TRUSTEE BOARD
COMPANY APPOINTED
TRUSTEES
Mary Nell Thompson (Chair)
Kay Harriman
MEMBER NOMINATED
TRUSTEES
Karl Turner
Christopher Newbery
SCENES TO MAKE SURE THE Michael Shepherd Eric Brown
PLAN IS RUN EFFICIENTLY,
AND BENEFITS ARE PAID
ON TIME. OUR ADVISERS
The Trustee Board works with a team of expert
Since our last Report to Members, there advisers to help us carry out our duties.
has been a change to our investment
PLAN ACTUARY
advisers. Towards the end of 2019, ISIO
John Burns, FIA of XPS Pensions (retired on
acquired KPMG’s pensions arm as part of a
31 May 2020, and replaced by Lisa Whitby FIA). Lisa
management buyout. Happily, the people the
is a Data Controller for the purposes of the General
Trustee Board work with on a day to day basis
Data Protection Regulations . A copy of XPS’ privacy
have moved across to the new organisation.
notice can be viewed at www.xpsgroup.com/legal-
regulatory/your-privacy by scrolling down to the
PLAN ADMINISTRATOR
“Scheme Actuary for pension schemes” section.
The Plan administrator is Hymans Robertson
who can help you with any general questions CUSTODIAN
you have about your Plan benefits. In line State Street Custodial Services (Ireland) Limited
with government guidelines, the team is
AUDITOR
currently working from home. The team
Ernst & Young LLP
has implemented plans to ensure they fully
support all member services, including SECRETARY TO THE TRUSTEE BOARD
paying pensions and setting up new benefits. Hymans Robertson LLP
You can find out more on their website
www.hymans.co.uk/information/coronavirus INVESTMENT ADVISER
ISIO (formerly KPMG pensions arm)
To ensure a prompt reply, if you can, please
BANKER
contact the Plan administrator by email,
Barclays Bank
rather than in writing, even if you’ve already
been in contact by post. LEGAL ADVISER
Email: hukpp@hymans.co.uk Linklaters LLP
11COPIES OF ANY OF THE FOLLOWING DOCUMENTS ARE AVAILABLE ON REQUEST FROM THE PLAN ADMINISTRATORS HYMANS ROBERTSON: Schedule of Contributions showing how much money is being paid into the Plan. Statement of Investment Principles outlining the Trustee Board’s investment strategy. Annual Report and Accounts which is the full report detailing the Plan’s income and expenditure. The Hilton UK Pension Plan Booklet giving details of how the Plan works. The full Actuarial Valuation Report, a financial review of the Plan prepared every three years.
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