Rolls-Royce Retirement Savings Trust TRUSTEE REPORT · [email protected] 0345 604 0803...

Rolls-Royce Retirement Savings Trust

TRUSTEE REPORTOctober 2019

Welcome to our Trustee Report for the current year. It’s been redesigned to help you better understand how the Trust works – especially after all the changes we introduced last year. It also covers the key points from the Trustee’s formal Annual Report and Accounts and keeps you informed of the latest pension developments.

CHAIR’S WELCOME

Remember, you can find more about the Trust at any time by registering for the Aviva My Money website. There’s a wealth of information to help you manage your account and plan for your future. If you’re an active member of the Trust, you can access the My Money website directly through the Company’s TotalReward Portal without having to log in again. We tell you more about the website on page 8 of this report.

After the significant changes to the Trust on 1 May 2018, which were implemented as part of the Company’s Total Reward consultation, the Trustee reviewed the investment strategy with the help of its appointed professional advisers. Several changes were subsequently implemented during January 2019, with the main aim of improving retirement outcomes for you,

the members of the Trust. You can read about these changes on page 5 of this report.

So, as you can see, the past 12 months have certainly been a busy time for your Trustee Directors. You can find out who’s on the Trustee Board and who advises them on pages 18 an 19.

I hope you find this report useful and informative, but if there are any other specific subjects you’d like to see included in future reports, please feel free to email your thoughts and ideas to the Rolls-Royce in-house Pension Team at [email protected]

Ian Farnsworth Chair of the Trustee

02 TRUSTEE REPORT 2019

CONTENTSChair’s Statement 04

Reviewing our investment options 05

Your new investment options 06

Get to know Aviva’s online services 08

Transferring in former NEST benefits 10

Main Section contributions 11

Paying Additional

Voluntary Contributions 12

TotalReward – your benefits,

delivered in a new way 13

Membership & financials 14

Financial highlights 15

Pension scams – protect yourself 16

Retirement in focus 17

Management of the Trust 18

Further information 20

HELP FOR VISUALLY IMPAIRED MEMBERSThis report and other Trust documents are available on request in braille or large print. If you require or know of someone who would benefit from this, please contact the Pension Team.

03


Every year, the Trustee Board is required to share certain information with members by issuing a Chair’s Statement. The Statement demonstrates how the Trustee applies robust governance and explains how the Trust provides value to you.

This year’s Statement is available to view within the latest formal Trustee’s Annual Report and Financial Statements. If you would like a copy of the full Chair’s Statement, please email your request to [email protected]

In brief, the Chair’s Statement:

describes how we approached the task of reviewing the Trust’s investment options and why we decided to structure the default investment options in the way we did.

describes how we monitor and review the Trust’s administration services and ensure that core financial transactions are processed efficiently.

confirms the charges and transaction costs for the range of funds available for you to choose from, including an illustrative example to show the effect over time that these charges can have on your retirement income.

CHAIR’S STATEMENT

confirms our view that the Trust continues to provide good value – both in those areas where you meet some/all of the costs (through the Annual Management Charge) and also where the related costs are met solely by Rolls-Royce (e.g. governance).

confirms the process by which the Trustee Directors maintain appropriate levels of pensions knowledge and understanding.

In response to new regulations introduced this year, the Trustee will also be publishing these details on a separate, open website (i.e. you don’t need to log in to see this information) at https://vfm.aviva.co.uk/rolls-royce

05

During the year, the Board of Trustees and their investment advisers reviewed the Trust’s investment strategy. Their aim was to help members enjoy a better outcome at retirement, as a result of having improved investment options.

REVIEWING OUR INVESTMENT OPTIONS

The following changes were implemented in January 2019 in co-operation with Aviva, the Trust’s investment manager, who helped transfer members’ investments into new funds via the Aviva My Money platform. We’ve summarised the main changes here:

Default investment strategy

Three new predetermined investment programmes were introduced. These investment programmes replaced the existing six investment programmes. Members were automatically transferred to one of the new investment programmes.

Two of the new investment programmes were designated as default investment programmes. Depending on which section of the Trust you’re in, your contributions will be invested in one of these default investment programmes if you do not make an investment decision.

New investment funds The number of self-select investment funds available to members was increased from seven to 16. The new investment funds include an ethical fund and a Shariah-compliant fund.

Your investment options are set out in more detail on the next page.

How your retirement savings are invested can make a big difference to the value of your benefits at retirement. You can choose to invest your retirement savings in an investment programme (where it all happens automatically) or in individual funds (where you make an active choice to invest or disinvest from certain funds).

YOUR NEW INVESTMENT OPTIONS

If you don’t make a decision about your investments, your contributions will be invested in the relevant default investment programme (which depends on which section of the Trust you are in).

Investment programmesIf you choose an investment programme, your retirement savings will be invested for you, all the way up to the date you expect to retire (this is known as your ‘investment programme end date’).

The investment programmes aim to grow your retirement savings in the early years of saving – although there is a risk they may lose value. Then, as you approach your investment programme end date, your investments gradually move into more defensive and cautious fund choices.

There are currently three different default investment programmes to choose from, each designed to target a different way to access your retirement savings:


07

Drawdown: for members who would like to receive their benefits in a flexible way when they retire (also known as ‘income drawdown’).1

Your investment programme end date should match up to when you’re planning to retire, because that tells the investment manager, Aviva, when to start moving your retirement savings into investments that are a better match with your retirement plans. As you get closer to retirement, this process aims to ‘lock in’ any gains you’ve built up over the years and protect your retirement savings from sudden changes in financial market conditions. You can review and change your chosen investment programme end date using the Aviva My Money website, at avivamymoney.co.uk

Individual funds If you would like to design and manage your own investment programme, you can invest your retirement savings in a range of ‘self-select’ investment funds. You can download factsheets for the available funds and change your fund selection using the Aviva My Money website, at avivamymoney.co.uk

Find out more about Aviva’s online services on the next page.

2 Cash: for members who would like to take their retirement savings as a single, taxable cash lump sum payment.

3 Annuity: for members who would like to use their retirement savings to buy an insurance product called an ‘annuity’, which would provide a guaranteed income for life.

07

The best way to keep up to date with your retirement savings account is to register for Aviva’s online services, known as My Money. By registering, you can learn more about your benefits, including accessing your up-to-date fund values and changing your investments.

GET TO KNOW AVIVA’S ONLINE SERVICES08 TRUSTEE REPORT 2019

Here’s what you can do online through My Money:

See your current fund value – updated daily.

Use Aviva’s range of interactive modelling tools, including a projection tool that estimates what you’re on track to receive at retirement.

View your investment choices and check how your investments are performing.

Change your investment choices online.

Nominate who you would like to be paid your retirement savings account if you die.

Update your personal details and communication preferences.

View your annual benefit statement.

See how much has been paid into the Trust by you and the Company.

Multiple accountsAviva recently reviewed its online tools and we’re pleased to say they’re planning some improvements during the coming year. One of these will ensure that members with multiple accounts will be able to view all of these under one login. In the meantime, you should be aware that you will have separate accounts at Aviva for your Top-up, AVCs and ex-GPPP funds. If you have more than one account, contact Aviva if you need login details so that you can see all of your funds online.

CONTACT AVIVA [email protected]

0345 604 0803

If you haven’t yet registered for Aviva’s My Money, it’s easy: simply call the helpline on 0345 604 0803 between 8am and 5.30pm Monday to Friday and they can set it up then and there.

A wealth of informationAs well as My Money, you also have access to e-community, a communication centre, where you can find scheme literature, articles, learning modules and videos. There’s something to suit everyone to help you plan for your future. If you haven’t yet registered for e-community, you can do so by visiting avivamicrosite.co.uk/rollsroyce/ecommunityjsp and following the on-screen instructions.

09

If you have a pension pot sitting in NEST (the National Employment Savings Trust), it is still possible to transfer this into the Trust on an individual basis. You will need your individual NEST login to transfer it to the Trust – please contact NEST rather than Rolls-Royce if you experience any technical difficulties or need to reset your password.

Once logged-in, please select ‘Take your money out’, followed by ‘Transfer your NEST Retirement pot’ and finally ‘Send me a pack’ should you wish to proceed.

The transfer-out information pack will be sent to your NEST account mailbox within 48 hours. If you have selected paper rather than email communication, a pack will be posted within four working days. Then, simply follow the relevant online or written instructions from NEST (which should cover a comparison between the two arrangements and the risks involved) and the subsequent discharge process and your NEST pot will be transferred into your Rolls-Royce Retirement Savings Trust account with Aviva. This will be invested in the same way as your ongoing contributions.

TRANSFERRING IN FORMER NEST BENEFITS


CONTACT NEST Phone: 0300 020 0090

Email: [email protected]

Website: nestpensions.org.uk

If you have misplaced your welcome letter and booklet, then go to the NEST website and select ‘Log in’, followed by ‘Set up an online NEST account’, then ‘Being enrolled by your employer’ and finally ‘I don’t have my NEST ID’.

You will then be asked to input four key pieces of data – your surname, date of birth, National Insurance number and gender.

11

If you are contributing to the Main Section of the Trust, you pay a ‘core’ contribution and your employer adds their contribution. During the transition period, which lasts until May 2020, ‘core’ contributions and employer contributions will differ depending on which section of the Trust you were in prior to 1 May 2018.

The option to choose your own ‘core’ contribution will be introduced for the first time from 1 May 2020 (or once you have completed three years’ service – if you were hired after 1 May 2018). At that stage you’ll be able to choose your own ‘core’ contribution, which will be double matched by the employer (capped at 12%).

For members of the Top-up Section of the Trust, there have been no changes to the contribution structure and this, therefore, remains as 5% employee and 10% employer.

MAIN SECTION CONTRIBUTIONS

CORE DESIGN YOU PAY COMPANY PAYS TOTAL INVESTMENT

Minimum 3% 6% 9%

4% 8% 12%

5% 10% 15%

Maximum 6% 12% 18%

(EXCLUDING TOP-UP AND AVCS)


If you’re a member of either the Main Section of the Rolls-Royce Retirement Savings Trust or the Rolls-Royce UK Pension Fund (the Company’s ‘Final Salary’ pension arrangement), it is possible to build up extra benefits at retirement by making Additional Voluntary Contributions (AVCs) to the Trust.

These voluntary contributions are not matched by the Company, but there are plenty of reasons to consider paying in more:

PAYING ADDITIONAL VOLUNTARY CONTRIBUTIONS

The size of your

pension pot depends on

How much was paid in

How well your investments did

How much was taken out as charges

+ - If you want to increase how much you pay into the Trust, you’ll need to log in to the TotalReward Portal. Any change that you make on the portal will be actioned for the next available payroll run (providing the change is made before payroll cut-off).

1

If you’re in the Company’s Final Salary pension fund, you can use your AVCs to offset the reduction which is applied to your Final Salary pension if you want to retire early or to increase the amount of tax-free cash that you receive when your benefits are taken without reducing your benefits from the Final Salary pension arrangement.

3

In a pension scheme like ours, the more you pay in, the better off you’re likely to be at retirement.

2 Extra contributions are especially useful if you had a break in employment – for example, if you stopped working when you had children or if a former employer didn’t offer a pension.

13

The Company has now launched a TotalReward Portal for active Company employees.

TotalReward is a new UK site that runs from most internet-ready devices. For the first time, in one place, you can see a personalised view of everything you get by working for Rolls-Royce, along with some interesting statistics on the value of your benefits to put you in the know.

As we all need different things from our reward package at different stages of our lives, you can also choose from a whole range of benefits that save you money, give you peace of mind, and help you spread the cost. So, whether you want to invest more in your retirement savings, or get discounted tickets for the cinema and days out – it’s all there for you. An added benefit of the portal for members of the Trust is the ability to securely access your Aviva account directly from the portal without the need to log in. This makes it even easier for you to keep track of your retirement savings in the Trust.

To access the TotalReward Portal, visit rolls-royce.com/totalreward and once you have registered, follow the Quick Links heading at the top of the homepage to access My Money directly.

TOTALREWARD – YOUR BENEFITS, DELIVERED IN A NEW WAY


675

1,282

2,605

DEFERRED MEMBERS

12,378

3,860

2,687

ACTIVE MEMBERS

There are several membership categories in the Trust. We have some members that have all of their retirement benefits held in the Trust, whilst others are members of the Rolls-Royce UK Pension Fund (the Company’s Final Salary pension arrangement) and use the Trust for either Top-up benefits or for paying Additional Voluntary Contributions.

There were 4,806 new members during the year. This included 39 members who rejoined the Trust.

The current membership is shown below:

MEMBERSHIP & FINANCIALS

ACTIVE MEMBERS

DEFERRED MEMBERS

2019: 18,925 2018: 14,960

2019: 4,562 2018: 4,218

Main Section

Top-up

AVC

15

MEMBERSHIP & FINANCIALS FINANCIAL HIGHLIGHTS£333M

£422M

On 5 April 2018, the total assets held in the Trust amounted to:

On 5 April 2019, the total assets held in the Trust amounted to:

£0 £100M £200M £300M £400M £500M

Further information is available in the Trustee’s formal Annual Report and Financial Statements. If you would like a copy, please email your request to [email protected].


People have lost their entire retirement savings by falling for scams where they’re promised high or guaranteed returns, or that they can get hold of their pension earlier than normal without any problems.

PENSION SCAMS – PROTECT YOURSELF

Very often, these scammers seem totally believable. They may have high quality marketing materials, a great website and knowledgeable salespeople, and it may be hard to tell they’re fake. Here are some of the warning signs:

They contact you out of the blue (pensions cold-calling is illegal now, so it’s best just to hang up).

They promise high or guaranteed investment returns.

They offer you a ‘free’ pensions review.

They claim you can get hold of the money in your pension before age 55 (they don’t tell you that you’ll have to pay 55% tax).

They say you need to act quickly!

If you suspect a scam, report it:

Call the Financial Conduct Authority’s (FCA) Consumer Helpline on 0800 111 6768 or use the reporting form at www.fca.org.uk

Call Action Fraud on 0300 123 2040 or go to www.actionfraud.police.uk

You can find out more about how to avoid being scammed at: www.fca.org.uk/scamsmart

Nomination Form – have you completed yours?The Nomination Form tells the Trustee who you want to receive the benefits that are payable from the Trust when you die. These payments are made at the Trustee’s complete discretion, but your wishes will be taken into consideration when making a decision. It’s important that you nominate someone and make sure you update the details whenever your circumstances change.

You can update your Nomination Form online through the My Money service (see page 8).

Under current legislation, when you retire, you’ll be able to use your account in the following ways:

RETIREMENT IN FOCUS

The option of paid-for retirement advice If you’re an active member in the Main Section, aged 55+ and with at least three years of service, you’re entitled to one piece of personal retirement advice funded by the Company. WPS Advisory Ltd are now available to help you navigate through the various options at retirement, so you can make the right decision for your particular circumstances.

If your financial situation is complex, or you need additional advice, you would face additional costs but WPS would make you aware of these before proceeding. You may be able to pay for any subsequent financial advice direct from your pension account – subject to HMRC limits – and Aviva will be able to tell you more about this.

DID YOU KNOW? Over the course of a 40-year career with Rolls-Royce, the average member paying into the Trust could expect to build up retirement savings worth £400,000. Deciding how to use that money to provide security for you and your family in your retirement is complicated and requires specialist support.

CashYou can take some or all of your account as cash.

Drawdown You can invest your account with a drawdown provider and withdraw money whenever you like, with no restrictions on the amount you can drawdown.

Annuity You can use your account to buy an annuity at retirement.

A combination of 1-3 You can also choose a combination of these options. Aviva will provide you with full details of your options when you come to retire.

Under each of the above options you can take up to 25% of your account as tax-free cash. The balance will be taxed at your marginal rate of income tax (for example 20%, 40% or 45%). If you’re a Scottish taxpayer, you might pay a slightly different rate of tax depending on your earnings.

17

1

2

3

4

To find out more about your options at retirement and how they work, the Government has set up a free and impartial guidance service called Pension Wise. You can set up a face-to-face meeting with a Pension Wise specialist or speak with someone over the phone, if you need help understanding your options at retirement. This service is available for pension savers aged 50+.

Website: pensionwise.gov.uk Telephone: 0800 138 3944


MANAGEMENT OF THE TRUSTBoard of TrusteesThe Trust is run in the best interests of all its members by an independent Trustee company, called the Rolls-Royce Retirement Savings Trust Limited. The assets of this company are completely separate from Rolls-Royce.

The Trustee company has a Board of seven Trustee Directors, who are assisted by a group of professional advisers.

The Trustee Board is made up of a Chairman plus three Directors appointed by the Company and three nominated by the members (called ‘Member-nominated Directors’). The current composition of the Trustee Board is as follows:

Company-appointed Trustee DirectorsIan Farnsworth (Chair) – Pensions Consultant, Rolls-Royce plc, Derby. Teresa Waine – Internal Audit Manager, Rolls-Royce plc, Derby. Rebecca Hodgson – Senior People Partner, Rolls-Royce plc, Derby. Alan Partridge – Head of Materials, Rolls-Royce plc, Derby. Member-nominated Trustee DirectorsGordon Frew – Inspector, FFE Trent Inspection, Rolls-Royce plc, Inchinnan. Matthew Hill – Patent Attorney, Rolls-Royce plc, Derby. Mark Porter – Works Convenor, Rolls-Royce plc, Barnoldswick.

19

Professionals engaged by the TrustAdviser – Rolls-Royce plc Pensions Department Investment Consultant – Mercer Legal Advisers – Gowling WLG Investment Managers – Aviva Administrators – Aviva Auditors – KPMG LLP Life Assurance Providers – Met Life and Aviva Secretary to the Trustee – Richard Hill, Pensions Specialist, Rolls-Royce plc, Derby

The Trustee Directors monitor and review the performance of the administration team and the team is also audited externally by KPMG LLP, as part of its annual audit, and internally as part of Rolls-Royce plc’s business assurance activities.

Formal documentsIf you want to see any of the Trust’s formal documents, these are available on request.

Internal Disputes Resolution ProcedureThe Trustee Directors have an Internal Dispute Resolution Procedure available to members. This procedure is in line with statutory requirements. In the event of a member wishing to make a complaint, the first point of contact for all disputes is:

The Secretary to the Trustee Rolls-Royce Pensions (JH-19) PO Box 31 Derby DE24 8BJ

Any complaints must be sent in writing.

The Trust has various documents available for members to view.

The Member Guide, in particular, provides useful information on the benefits, including details of your life cover and your retirement options.

The Investment Guide tells you about your investment choices in the Trust and the level of risk associated with each of your fund choices.

You can find these documents and other information by registering for Aviva’s secure website, My Money (see page 8).

Alternatively, you can contact Aviva, the Trust’s administrators, if you’d like more information about your retirement savings.

Tel: 0345 604 0803

Email: [email protected]

FURTHER INFORMATION20 TRUSTEE REPORT 2019

90

77

36

Rolls-Royce Retirement Savings Trust TRUSTEE REPORT · [email protected] 0345 604 0803...

Documents

Transcript of Rolls-Royce Retirement Savings Trust TRUSTEE REPORT · [email protected] 0345 604 0803...