THE DELPHI AUTOMOTIVE SYSTEMS UK PENSION · PDF fileThe Delphi Automotive Systems UK Pension...

THE DELPHI AUTOMOTIVE SYSTEMS UKPENSION PLAN

Report and AccountsFor the Year Ended 31 December 2007

Registration Number 10000399

C O N T E N T S

Trustee and Advisers 1

Report of the Trustee 2 - 9

Investment Report 7 - 8

Statement of Trustee’s Responsibilities 9

Report of the Actuary 10 - 11

Schedule of Contributions 12 - 13

Independent Auditors’ Report 14 - 15

Fund Account 16

Net Assets Statement 17

Notes to the Financial Statements 18 - 22

Independent Auditors’ Statement about Contributions 23

Summary of Contributions 24

Members’ Information 25

Appendix:

The GM (UK) Common Investment Pool Report & Accounts for the year ended31 December 2007

1

THE DELPHI AUTOMOTIVE SYSTEMS UK

PENSION PLANTRUSTEE and ADVISERS

Participating Company

Delphi Automotive Systems UK Limited

Trustee

Delphi Automotive Systems (UK) Pension Trustees Limited (from 27 March 2007)GM (U.K.) Pension Trustees Limited (to 27 March 2007)

Directors of the TrusteeEmployee Representatives

L. Grigg (Vice-Chairman), R. Donovan

Company Representatives

D. Ward, M. Bradshaw, A. Horne (Chairman)

Secretary

M. McDonald

Actuary

Gerard ThompsonHewitt Associates Limited

Solicitors

Slaughter and May LLP

Registered Auditors

PricewaterhouseCoopers LLP

Bankers

Lloyds TSB Bank plc

Investment Manager

GM Asset Management (UK) Limited

Investment Consultants

Watson Wyatt LLP

Plan Administration

General Motors UK Limited(renamed from Vauxhall Motors Limited 16 April 2008)

Griffin House, Osborne RoadLuton, Bedfordshire LU1 3YT

The Delphi Automotive Systems UK Pension Plan

2

Report of the Trustee for the year ended 31 December 2007

The Trustee of The Delphi Automotive Systems Pension Plan (the “Plan”) present their annual reporttogether with the investment report, actuarial statements and certificates, summary of contributions andfinancial statements for the year ended 31 December 2007.

Key Highlights

During the year, the assets of the Plan increased by £2.2 million, due to the increase in market value ofinvestments (£5.2 million) which was partly offset by the excess of benefit payments over contributions (£2.9million), and by the end of the year they stood at £118.8 million.

The Plan’s overall investment return for 2007 was 4.8%, the fifth consecutive positive year, but the secondhalf of the year was negative as the impact of the US sub-prime liquidity crisis began to be reflected in themarkets.

Total scheme membership decreased by 4 to 2,576 members. Employee members fell by 6 to 162 whilepensioner members increased by 19 and deferred members decreased by 17.

Constitution of the Plan

The Plan was established on 31 July 1988 under, and is governed by, a Trust Deed and Rules, as amended itis a registered pension scheme under the Finance Act 2004. The Plan is contracted-out of the Second StatePension (S2P).

The Plan is of the defined benefit type where pensions are determined by earnings levels and length ofservice. The Plan is contributory and provides retirement and dependants’ pensions. The Plan also providesdeath benefits, before and after retirement, and discretionary ill-health pensions.

Membership in the Plan is not compulsory but employees are eligible to become full or associate membersbased on certain scheme criteria. Full members are contracted-out of the State Second Pension; associatemembers are not contracted-out. Service after 6 April 1997 is contracted out using the “reference schemetest” basis introduced by the Pensions Act which requires the Plan Actuary to certify that the Plan isexpected to provide pensions for at least 90% of contributing members, which are at least as good as thoseunder a reference scheme set out in the Pensions Act.

The level of contributions to the Plan with effect from the Plan valuation as at 1 January 2006, is determinedby agreement between the Trustee of the Plan and the Principal Company, Delphi Automotive Systems UKLimited (the "Company"), and, in default of agreement, by the Pensions Regulator, in accordance with therequirement of the Pensions Act 2004. The cost of providing benefits not covered by members’contributions is provided by the participating companies. If the Plan were ever to be terminated, thebenefits payable will be determined in accordance with the Plan Rules and overriding legislation.

Plan Advisers

There are written agreements in place between the Trustee and each of the Plan advisers listed on page 1and also with the Principal Employer. There were no changes in Plan advisers during the year.

Management of the Plan

The Trustee of the Plan, Delphi Automotive Systems (U.K.) Pension Trustees Limited is appointed and maybe removed by the Company.

GM (U.K.) Pension Trustees Limited has been the trustee of five pension plans, including this Plan, for someyears. Following the sale of parts of GM’s business, and with the ending of the opt-out relating to thenomination of member nominated trustees, several of the plans required to have their own trusteearrangements. Accordingly on 27 March 2007 three new trustee companies were created and the trusteeresponsibility for three of the Plans was transferred to these companies. Delphi Automotive Systems (UK)Pension Trustees Limited became the trustee of the Plan.


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Report of the Trustee for the year ended 31 December 2007 (cont’d)

Prior to the restructuring, the Directors of GM (U.K.) Pension Trustees Ltd were:

Mr K. G. Ward, Mr J. Parsons, Mr J. Fulcher, Mr M.A. Johnson

Until the date of restructuring, the Trustee had delegated the administration of the benefits underthe Plan to a Pensions Board of five members, three of whom are company-nominated members andtwo are employee members nominated by the Trade Unions.

On completion of the restructuring Mr J. Parsons resigned as a director of GM (U.K.) Pension Trustees Ltd.and the five members of the Pensions Board of the Plan were appointed directors of the new trustcompany.

The Directors of the new Trustee Company are:

Mr A. Horne, Ms L. Grigg, Ms R. Donovan, Mr D. Ward, Ms M. Bradshaw.

To conform to the provisions of the Pensions Act 2004, all active and eligible pensioner members ofthe pension plan have been consulted by individual notices on the appointment of membernominated Trustees. The outcome of the consultation is that 2 members have been appointed astrustee directors.

The Trustee met on 8 occasions during the year.

The US operations of the Company’s ultimate parent undertaking, Delphi Corporation (“Delphi”)remain in Chapter 11 bankruptcy status, as per the voluntary petitions for business reorganisationfiled on 8 October 2005. The non-US operations of Delphi, including the Company, were not includedin the filing and have continued their normal business operations and are not subject to Chapter 11requirements. During the last two years Delphi has made significant progress in resolving the legacyissues, and currently expects to emerge from Chapter 11 during 2008/2009. The Trustee has beenadvised that the Company remains committed to the Plan, continues to meet its obligations underthe schedule of contributions, has no plans to reduce pension payments, cease contributions, or closethe Plan.

Risk Management

The Trustee has overall responsibility for internal controls and risk management. They are committed toidentifying, evaluating and managing risk and to implementing and maintaining control procedures toreduce significant risks to an acceptable level. In order to meet this responsibility the Trustee has adopteda risk policy. The objective of this policy is to limit the exposure of the Trustee, and the assets that they areresponsible for safeguarding, to business, financial, operational, compliance and other risks wherepossible.

The Trustees have created a Risk Register. The purpose of the Risk Register is:

• to highlight the scope of risk to which the Plan is exposed from the Trustee’s perspective;

• to rank those risks in terms of likelihood and impact; and

• to identify management actions that are either currently being taken, or that are believed should betaken, in order to mitigate the identified risks.

Trustee Training

The Pensions Act 2004 requires trustees to have knowledge and understanding of pensions legislation,investments, the Plan’s trust deed and rules, their statement of investment principles, the statement offunding principles and other documentation which sets out administration policy in relation to the Plan. Atraining log has been established by the Trustee and each director is responsible for reporting to the Plansecretary which module of the Pension Regulator’s toolkit they have completed and which additionaltraining programmes they have attended. During the year Trustee Directors have attended specialisttraining courses offered by external investment managers, and the custodian.


4


Actuarial Valuation

The Trustee must obtain an actuarial valuation of the Plan at least once every three years, to determinethe funding level and to provide the basis for it to agree the contribution schedule with the employer.The Plan Actuary carried out the triennial valuation of the Plan as at 1 January 2006, using a market-ledapproach in which the assets are valued at their market value at the date of the valuation, and liabilitiesare valued using financial assumptions derived from market yields on Fixed Interest and Index-linkedGovernment stock at the valuation date.

This was the first valuation since the Pensions Act 2004 introduced new requirements for the funding ofPensions Schemes; the Pensions Regulator has published a new code of practice on funding andguidance on how it will monitor funding discussions. The Pensions Protection Fund (PPF) has also beencreated and the Plan has now to consider the additional levies as part of its cost structure.

The principal assumptions underlying the valuation were: the discount rate, which took into account theability to actually achieve a higher return than gilts, was set at 5.5%, pay increases at 3.7% per annum,price inflation at 2.7% per annum and increases to pensions in payment (in excess of the guaranteedminimum pension in payment) of 2.7%. Assets were assumed to achieve returns of 6.5% per year.

Mortality assumptions have been revised upwards with 65 year old males assumed to live to 83.6(previously 83.3); females are unchanged at 86.2 years.

At 1 January 2006, the market value of the assets of the Plan, excluding AVC’s, was £107 million. Thiswas sufficient to cover 84% of the benefits that had accrued to members. This is a shortfall of £20.4million relative to the Technical Provisions, i.e., the levels of assets agreed by the Trustee and theCompany as being appropriate to meet member benefits. The actuary is also required to show what theposition would be on a solvency basis with assets used to buy annuities from an insurance company. Onthis basis the liability would be £206.8m, a statutory estimate of solvency ratio of 51.7%.

The Company had been contributing at a rate of 6.9% of pensionable pay plus an annual lump sum of£520,000 each September from 1 April 2005 to the end of March 2007. From April 2007 and backdatedto January 2007, the Company agreed to pay contributions at the calculated rate to cover the accrual offuture benefits which is 19.2% of pensionable pay. In addition, to address the shortfall, the Companyagreed to pay £2,400,000 per year in equal quarterly payments for 3 years, and then at half that rate foranother 3 years. The new schedule of contributions is shown on pages 12 and 13.

The financial position of the Plan and the level of contributions required will be reviewed again at thenext actuarial valuation which will be carried out as at 1 January 2009.


5


Plan Membership

Employee members

Number at 1 January 2007 168

Add Employees joining during the year 13

Less Retirements (4)

Early leavers with deferred pensions (13)

Refunds (2) (19)

Number at 31 December 2007 162

Pensioner members

Number at 1 January 2007 1,045

Adjustment to opening data 2

Add New pensioners during the year 4

New dependent pensioners 10

Deferred pensions into payment 23 37

Less Deaths and terminated pensions (20)

Number at 31 December 2007 1,064

Deferred members

Number at 1 January 2007 1,367

Add Leavers during the year 13

Less

Transfers out (6)

Deaths and terminations (1)

Deferred pensions into payment (23) (30)

Number at 31 December 2007 1,350

Total membership at 31 December 2007 2,576

AVC Providers

Since inception, the Plan has operated an Additional Voluntary Contribution (“AVC”) scheme. Individualmembers are able to invest additional contributions either in a ‘with-profits’ insurance policy run by thePrudential Corporation or in a choice of unit-linked funds operated by Fidelity Pensions Management.Further details are set out in the notes to the financial statements.

At 31 December 2007 19 members (2006: 23) were making additional voluntary contributions to thePrudential Corporation in order to secure greater pension benefits. A further 254 were still members ofthe plan but either chose not to make voluntary contributions or were deferred members.


6


At the same date 8 members (2006: 8) were making AVC contributions to the range of unit-linkedfunds run by Fidelity Pensions Management, although 1 member chose not to make any contributions.A further 21members are now deferred members.

Pension Increases

The guaranteed rate of annual increase of pensions in the course of payment, for service prior to 1October 1991, is the lower of 3% or one half of the rise in the RPI. This guarantee to increase benefitshas been extended until the payment in April 2011. In April 2007, in accordance with therecommendations of the Company and with the approval of the Pensions Board, the eligible membersreceived an increase on that part of their pension, in excess of the GMP, of 2.2%, which was half theincrease in the RPI for the year ended 31 December 2006.

The guaranteed rate of increase of pensions in the course of payment, to those members who retiredbetween 30 September 1991 and 1 January 2008, is the lower rate of 5% or the RPI. For servicethereafter the cap is reduced to 3.75% p.a. In April 2007, the eligible members received an increase onthat part of their pension in excess of the GMP of 4.4%.

The Plan is also required to increase GMP rights accrued after 5 April 1988 once they are in payment.The increase must be in line with the increase in RPI (as measured in September) to a maximum of 3%.In April 2007 the increase was 3.0 %.

Transfer Values

Cash equivalents paid during the Plan year with respect to transfers have been calculated and verifiedin the manner prescribed by the Pension Schemes Act 1993 and do not include discretionary benefits.

Review of Financial Development of the Plan

The financial statements have been prepared and audited in compliance with regulations made undersection 41(1) and (6) Pensions Act 1995.

Further Information

Further details of investment performance are included in the investment report. Requests foradditional information about the Plan generally, or queries relating to members' own benefits, shouldbe made to the Plan administrators, whose address appears on page 1 of this report. Furtherinformation for members is included in members’ information at the back of this annual report.


7


Investment Report

The Plan participates in The GM (UK) Common Investment Pool (“CIP”) the generic name for tenPension Fund Pooling Vehicles (“PFPV’s) and one Property Unit Trust (“PUT”). The CIP holdsinvestments on behalf of the Plan and is administered by a corporate trustee, GM Investment TrusteesLimited (“GMITL”), which appoints independent investment managers to manage the investments.

The Trustee entered into a contract with a GMITL holding company, GM Asset Management (UK)Limited (“GMAM (UK)”), which was formed to manage the investments.

Details of investments and a financial review are set out in the report and financial statements of theCIP which form an integral part hereof.

Copies of the Statement of Investment Principles (“SIP”) are available on request from the Planadministrators.

Investment Objectives

The Trustee wishes to ensure that the Plan can meet its obligations to the beneficiaries whilerecognising the cost implications to the participating companies of pursuing excessively conservativeinvestment strategies.

The Trustee, as part of the process of conducting the most recent asset-liability study during 2007,reviewed the objectives set out in the SIP, in consultation with the Company. These objectives wereconfirmed as: wishing to maximise long-term returns on investments subject to, in its opinion, anacceptably low likelihood of failing to achieve an ongoing 100% funding level within 10 years.

Asset Allocation

It is current policy for an asset/liability study to be conducted on a triennial basis. The most recentstudy was completed in 2007, following the actuarial valuation. The strategic asset allocation wasamended in August 2007 to reflect the new policy:

Asset allocationJan-July 2007

Asset allocationAug-Dec 2007

% %

UK Equities 25 20

International Equities 33 33

Emerging Market Equities 2 2

UK Index-Linked Bonds 10 10

UK Corporate Bonds 5 5

International Hedged Fixed Interest 10 10

Property 15 15

Alternative investments 0 5

100 100

The Trustee has signed an investment management agreement with GMAM (UK), covering GMAM(UK)’s role in controlling the asset allocation for the Plan, and aiming to add value through tacticalasset allocation. At year end an update to the Statement of Investment Principles reflecting this changewas under review but had not yet been signed.

As required, additional contributions to the Plan are invested in new units in the various PFPV’s or ifcash is required to pay pensions or other benefits, units are liquidated from the PFPV’s. Whereverpossible, GMAM (UK) tries to match any transactions with other pension plans in the CIP.


8


Employer-Related Investments

At 31 December 2007, the Plan held no employer-related investments.

Custody

Appropriate steps have been taken to safeguard the assets of the Plan. Details of the custodyarrangements for the majority of the assets which are held in the CIP, are set out in the report andfinancial statements of the CIP. Documents of title to the other assets of the Plan are held by theCompany.

Investment Performance

During 2007, markets were again positive, but increasingly volatile and the Plan’s overall return was4.8% before fees , 0.3% below its customised benchmark. Three and five year annualised returns are12.3% and 12.9% , 0.4% ahead of, and 0.1% below respectively , the benchmark.

Total Rates of return forPeriods ended 31/12/2007

(annualised)

Total Rates of return forPeriods ended 31/12/2006

(annualised)

1 year

%

3 years

%

5 years

%

1 year

%

3 years

%

5 years

%

Plan returns 4.8 12.3 12.9 12.1 14.5 9.0

Benchmark 5.1 11.9 13.0 11.2 14.3 9.0

Outperformance (0.3) 0.4 (0.1) 0.9 0.2 -

Market reports and detailed analysis of the CIP performance are set out in the report and financialstatements of the CIP.


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Statement of Trustee's Responsibilities

The financial statements are the responsibility of the Trustee. Pension scheme regulations requiresthe Trustee to make available to Plan members, beneficiaries and certain other parties, auditedfinancial statements for each plan year which:

• show a true and fair view, in accordance with applicable law and United Kingdom AccountingStandards (United Kingdom Generally Accepted Accounting Practice), of the financialtransactions of the plan during the plan year and of the amount and disposition at the end of theplan year of its assets and liabilities, other than liabilities to pay pensions and benefits after theend of the plan year, and

• contain the information specified in the Schedule to the Occupational Pension Schemes(Requirement to obtain Audited Accounts and a Statement from the Auditor) Regulations 1996,including a statement whether the financial statements have been prepared in accordance withthe Statement of Recommended Practice “Financial Reports of Pension Schemes”.

The Trustee has supervised the preparation of the financial statements and has agreed suitableaccounting policies, to be applied consistently, making any estimates and judgements on a prudentand reasonable basis.

The Trustee is also responsible for making available certain other information about the Plan in theform of an Annual Report.

The Trustee is responsible under pensions legislation for ensuring that there is prepared, maintainedand from time to time revised a schedule of contributions showing the rates of contributions (otherthan voluntary contributions) payable towards the scheme by or on behalf of the employer and theactive members of the plan and the dates on or before which such contributions are to be paid. TheTrustee is also responsible for keeping records in respect of contributions received in respect of anyactive member of the plan and for monitoring whether contributions are made to the plan by theemployer in accordance with the schedule of contributions. Where breaches of the schedule occur,the Trustee is required by the Pensions Acts 1995 and 2004 to consider making reports to thePensions Regulator and to members.

The Trustee also has a general responsibility for ensuring that adequate accounting records are keptand for taking such steps as are reasonably open to them to safeguard the assets of the plan and toprevent and detect fraud and other irregularities, including the maintenance of an appropriatesystem of internal control.

Trustee: Delphi Automotive Systems (U.K.) Pension Trustees Limited

A Horne L Grigg

Director Director

July 2008


10

Report of the Actuary

ACTUARY’S CERTIFICATION OF TECHNICAL PROVISIONS

ACTUARIAL CERTIFICATE GIVEN FOR THE PURPOSES OFREGULATION 7(4)(a) OF THE OCCUPATIONAL PENSION SCHEMES

(SCHEME FUNDING) REGULATIONS 2005

Name of Plan: The DAS UK Pension Plan

Calculation of technical provisions

I certify that, in my opinion, the calculation of the Plan’s technical provisions as at 1 January 2006is made in accordance with regulations under section 222 of the Pensions Act 2004. Thecalculation uses a method and assumptions determined by the trustees of the Plan and set out inthe Statement of Funding Principles dated 26 March 2007.

Signature: Gerard Thompson Date: 28 March 2007

Name: Gerard Thompson Qualification: Fellow of the Institute ofActuaries

Address: Parkside HouseAshley RoadEpsomSurreyKT18 5BS

Name of employer: Hewitt Bacon & Woodrow Ltd


11

Report of the Actuary (cont’d)

ACTUARIAL CERTIFICATE OF THE SCHEDULE OF CONTRIBUTIONS

Name of scheme: Delphi Automotive Systems UK Pension Plan

Adequacy of rates of contributions

1. I certify that, in my opinion, the rates of contributions shown in this schedule of contributions aresuch that the statutory funding objective can be expected to be met by the end of the periodspecified in the recovery plan dated 26 March 2007.

Adherence to statement of funding principles

2. I hereby certify that, in my opinion, this schedule of contributions is consistent with the Statement ofFunding Principles dated 26 March 2007.

The certification of the adequacy of the rates of contributions for the purpose of securing that thestatutory funding objective can be expected to be met is not a certification of their adequacy for thepurpose of securing the scheme's liabilities by the purchase of annuities, if the scheme were woundup.

Signature: Date: 28 March 2007

Name: Gerard Thompson Qualification: FIA

Address: Parkside HouseAshley RoadEPSOMSurreyKT18 5BS

Name of employer: Hewitt Bacon & Woodrow Ltd


12

Schedule of Contributions

DELPHI AUTOMOTIVE SYSTEMS UK PENSION PLANSCHEDULE OF CONTRIBUTIONS FOR THE PERIOD 1 APRIL 2007 TO

31 DECEMBER 2012

This schedule of contributions has been prepared by the Pensions Board to satisfy the requirements ofSection 227 of the Pensions Act 2004, after obtaining the advice of Gerard Thompson the SchemeActuary and after obtaining the agreement of the Employer.

1. Employer contributions

In respect of future accrual of benefits, the provision of death-in-service lump sum benefits and theexpenses of administering the Plan the employer will pay 19.2% of Pensionable Pay, which includes0.6% of Pensionable Pay in respect of expenses. These contributions are to be paid to the Plan on orbefore the 19th of the calendar month following that to which the payment relates.

In respect of the shortfall in funding in accordance with the recovery plan dated 26 March 2007 theemployer will pay:

From 1 January 2007 to 31 December 2009 £2.4M(1) p.a.From 1 January 2010 to 31 December 2012 £1.2M(2) p.a.

(1) or, if less, £3.6M less contributions of 19.2% of Pensionable Pay(2) or, if less, £2.5M less contributions of 19.2% of Pensionable Pay

in equal quarterly instalments in arrears paid towards to Plan on or before the 19th of the calendarmonth following the quarter to which the payment relates.

The limits in (1) and (2) above will be applied in the following way:

• The employer contribution for the first quarter in each calendar year will be no more than onequarter of the annual limit

• The sum of the employer contributions for the first two quarters will be no more than two quartersof the annual limit

• The sum of the employer contributions for the first three quarters will be no more than threequarters of the annual limit

• The sum of the employer contributions for the whole year will be no more than the annual limit.

The increase from 6.9% to 19.2% of Pensionable Pay will be backdated to 1 January 2007 and themake-up payment is payable by 1 June 2007.

2. Expenses

A £0.2M p.a. provision for payment of the Pension Protection Fund levy is included in the contributionrates shown above for 2007. The provision is anticipated to reduce when the funding of the Planimproves.

3. Augmentation payments

The Employer will pay additional amounts as advised by the Actuary to be required to cover the cost ofearly retirements under a separation programme within 19 days of the later of the end of the calendaryear during which the retirements occur and the date the amounts are advised to the Employer. Thedate of receipt will be taken as the date on which the contributions become available for the PensionsBoard to use.


13

Schedule of Contributions (cont’d)

4. Contributions by active members

4% of Pensionable Pay plus2% of the Lower Earnings Limit (LEL) by Middle Tier members and8% of the LEL by Top Tier members

These contributions are to be deducted from pay by the employer and paid to the Plan on or before the19th of the calendar month following deduction.

These amounts do not include members’ Additional Voluntary Contributions.

5. Definition of Pensionable Pay

Base Pay (as defined for pension purposes) above the LEL.

Signed on behalf of the Pensions Board of the Delphi Automotive Systems UK Pension Plan

Name: A. .J. Horne

Position: Chairman of the Pensions Board

Date: 26 March 2007

Signed on behalf of Delphi Automotive Systems UK

Name: J. Parsons

Position: Director

Date: 26 March 2007

A schedule of contributions must be prepared/reviewed within 15 months of each actuarial valuation(18 months if effective date before 30.12.05), or within whichever period is applicable for valuationsinstructed by the Regulator under section 224(1)(b) of the Pensions Act 2004.

Where the Statutory Funding Objective was not met on the effective date of the last valuation thePensions Board must send a copy of the Schedule of Contributions and Recovery Plan together witha summary of valuation information to the Regulator within 10 working days of certification.


14

Independent Auditors’ Report to the Trustee of The Delphi AutomotiveSystems UK Pension Plan

We have audited the financial statements of The Delphi Automotive Systems UK Pension Plan for theyear 31 December 2007 which comprise the Fund Account, the Net Assets Statement and the relatednotes. These financial statements have been prepared under the accounting policies set out therein.

Respective responsibilities of the Trustee and Auditors

The Trustee’s responsibilities for obtaining an Annual Report and audited financial statementsprepared in accordance with applicable law and United Kingdom Accounting Standards (UnitedKingdom Generally Accepted Accounting Practice), are set out in the statement of Trustee’sresponsibilities.

Our responsibility is to audit the financial statements in accordance with relevant legal and regulatoryrequirements and International Standards on Auditing (UK and Ireland). This report, including theopinion, has been prepared for and only for the Trustee as a body in accordance with Section 41 ofthe Pensions Act 1995 and for no other purpose. We do not, in giving this opinion, accept or assumeresponsibility for any other purpose or to any other person to whom this report is shown or into whosehands it may come save where expressly agreed by our prior consent in writing.

We report to you our opinion as to whether the financial statements give a true and fair view andcontain the information required by the relevant legislation. We also report to you if, in our opinion,we have not received all the information and explanations we require for our audit.

We read the other information contained in the annual report and consider whether it is consistentwith the audited financial statements. This other information comprises only the Report of theTrustee, the Summary of Contributions, the Report of the Actuary and Members’ Information. Weconsider the implications for our report if we become aware of any apparent misstatements ormaterial inconsistencies with the financial statements. Our responsibilities do not extend to any otherinformation.

Basis of audit opinion

We conducted our audit in accordance with International Standards on Auditing (UK and Ireland)issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidencerelevant to the amounts and disclosures in the financial statements. It also includes an assessment ofthe significant estimates and judgements made by or on behalf of the Trustee in the preparation ofthe financial statements, and of whether the accounting policies are appropriate to the Plan'scircumstances, consistently applied and adequately disclosed.

We planned and performed our audit so as to obtain all the information and explanations which weconsidered necessary in order to provide us with sufficient evidence to give reasonable assurance thatthe financial statements are free from material misstatement, whether caused by fraud or otherirregularity or error. In forming our opinion we also evaluated the overall adequacy of thepresentation of information in the financial statements.


15

Independent Auditors’ Report to the Trustee of The Delphi AutomotiveSystems UK Pension Plan (cont’d)

Opinion

In our opinion:

• the financial statements give a true and fair view, in accordance with United KingdomGenerally Accepted Accounting Practice, of the financial transactions of the Plan during theyear ended 31 December 2007 and of the amount and disposition at that date of its assetsand liabilities, other than the liabilities to pay pensions and benefits after the end of the year,and

• the financial statements contain the information specified in Regulation 3 of, and the Scheduleto, the Occupational Pension Schemes (Requirement to obtain Audited Accounts and aStatement from the Auditor) Regulations 1996.

PricewaterhouseCoopers LLPChartered Accountants and Registered AuditorsLondon July 2008


16

Fund account for the year ended 31 December 2007

Notes Year Ended

31 December

2007

£'000

Year Ended

31 December

2006

£'000Contributions and benefits

Contributions receivable 2 3,693 1,235

Transfers in 29 12

3,722 1,247

Benefits payable 3 5,965 6,238

Leavers 4 313 253

Administrative expenses 5 317 259

6,595 6,750

Net (withdrawals) from dealings with members (2,873) (5,503)

Returns on investments

Change in market value of investments 6 5,168 12,208

Investment management expenses 7 (127) (115)

Net returns on investments 5,041 12,093

Net increase in the fund during the year 2,168 6,590

Net assets of the Plan

At 1 January 116,613 110,023

At 31 December 118,781 116,613


17

Net assets statement as at 31 December 2007

Notes 31 December2007

£'000

31 December2006

£'000Investments

Pooled investment vehicles 6, 8 115,510 113,963

AVC investments 9 2,795 2,775

118,305 116,738

Current assets 10 768 65

Current liabilities 11 (292) (190)

Net Current Assets/(Liabilities) 476 (125)

Net assets of the Plan

At 31 December 118,781 116,613

The financial statements on pages 16 to 22 were approved by the Trustee on 2008 and aresigned on their behalf by:

The Trustee

A Horne}

} Directors

L. Grigg }


18

Notes to the financial statements for the Year ended 31 December 2007

1. Accounting policies

Basis of preparation

The financial statements have been prepared in accordance with the Occupational Pension Schemes(Requirement to obtain Audited Accounts and a Statement from the Auditor) Regulations 1996, and inaccordance with the Statement of Recommended Practice, “Financial Reports of Pension Schemes”(revised November 2002).

The financial statements summarise the transactions of the Plan and deal with the net assets at thedisposal of the Trustee. They do not take account of obligations to pay pensions and other benefits inthe future. The actuarial position of the Plan, which does take account of such obligations, is in theactuarial valuation section of the trustee report on page 4 and the report of the actuary on pages 10 to11 and the financial statements should be read in conjunction with it.

The financial statements have been prepared on the accruals basis of accounting.

Contributions and benefits

Employer and employee normal contributions are accounted for in the period to which thecorresponding wages and salaries relate. Employer special contributions are paid in accordance withthe requirements of the schedule of contributions in force.

Contributions and benefits are brought into account on the accruals basis as amounts receivable andpayable during the year.

Investments

Investments in unitised funds represent the Plan's share of the accumulated fund of the ten PensionFund Pooling Vehicles (PFPV’s) and one Property Unit Trust (PUT), collectively known as The GM (UK)Common Investment Pool (CIP), calculated in accordance with the Trust Deed. The unitised funds arevalued at mid-price Net Asset Value. Valuation of AVC’s with the Prudential Corporation is provided byPrudential and this includes the capital value of policies in payment. The unit linked AVC funds offeredby Fidelity Pensions Management are Open Ended Investment Company (“OEIC”) funds which arevalued at mid-price Net Asset Value.

Investment income

Interest on cash deposits and other investment income have been accounted for on an accruals basis.

Administrative expenses

The administrative expenses of the Plan are paid by the Plan, but investment and other relatedexpenses are paid by the appropriate PFPV’s and are borne by the Plan in proportion to its sharetherein.


19

Notes to the financial statements for the year ended 31 December 2007 (cont’d)

Transfers

Transfer values represent the capital sums either received in respect of members from other pensionschemes of previous employers, or payable to the pension schemes of new employers for members whohave left the scheme, in most cases this is when cash is either received or paid. They take account oftransfers where the trustees of the receiving scheme have agreed to accept the liabilities in respect ofthe transferring members before the year-end, and where the amount of the transfer can bedetermined with reasonable certainty.

2. Contributions receivable2007 2006

£’000 £’000

Employer

Normal 3,403 879

Augmentations 0 67

Members

Normal 244 244

Additional voluntary contributions 46 45

3,693 1,235

3. Benefits payable2007 2006

£’000 £’000

Pensions 5,681 5,387

Commutations and lump sum retirement benefits 276 851

Lump sum death benefits 8 -

5,965 6,238

4. Payments to and on account of leavers2007 2006

£’000 £’000

Refunds to members leaving service 1 2

Payments for members joining state scheme 3 (6)

Transfers to Delphi affiliated pension plans 20 -

Individual transfers out to other schemes 289 257

313 253


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5. Administrative expenses2007 2006

£’000 £’000

General Motors UK Ltd pension administrationcharges

100 100

Other administration and processing charges 3 2

Actuarial fees 83 85

Audit fees 5 6

Legal and other professional fees 48 18

Pensions regulator/PPF levy 78 48

317 259

6. Investments

Investments in The GM (UK) Value at Purchases Sales Change in Value at

Common Investment Pool 01.01.07 at cost proceeds Marketvalue

31.12.07

£000 £000 £000 £000 £000

UK Equity PFPV 28,044 418 (5,908) 1,168 23,722

International Equity PFPV 38,048 - (2,735) 2,269 37,582

Emerging Market Equity PFPV 3,254 - (1,418) 903 2,739

Index-Linked Bonds PFPV 10,249 680 - 923 11,852

International Bonds PFPV 10,677 209 - 586 11,472

Property Unit Trust 18,369 - (967) (1,077) 16,325

Corporate Bond PFPV 5,270 373 - 115 5,758

Alternative Investments PFPV - 5,900 - 145 6,045

Cash PFPV 52 4,595 (4,653) 21 15

Pooled investment vehicles 113,963 12,175 (15,681 5,053 115,510

AVC’s - Prudential 2,629 411 (135) 105 2,640

AVC’s - Fidelity 146 7 (8) 10 155

AVC Investments 2,775 48 (142) 115 2,795

116,738 12,223 (15,824) 5,168 118,3051AVC purchases include £2,000 transfers in.

The change in market value of investments during the year comprises all increases and decreases inthe market value of investments held at any time during the year, including profits and lossesrealised on sales of investments during the year and investment income received and receivable.The adjustment in the cash PFPV, where the unit value remains constant, recognises the interest oncash deposits in the CIP, partially offset by payment of certain fees.

The investment manager GM Asset Management (UK) Limited and GM Investment TrusteesLimited, the operator of the GM (UK) Common Investment Pool, are both registered in the UK.


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7. Investment management expenses

2007 2006

£’000 £’000

Investment management fees 124 113

Performance measurement fees 3 2

127 115

Investment management fees cover GM Asset Management (UK) Limited’s overlay investmentmanagement fee.

8. Pooled investment vehicles31 December 2007

Units Price

£

Value

£

Investment in the PFPV’s/PUT comprising the CIP atmarket value

UK Equity PFPV 10,347,405 2.292609 23,722,553

International Equity PFPV 17,927,511 2.096363 37,582,572

Emerging Markets Equity PFPV 510,650 5.364431 2,739,346

Index-Linked Bonds PFPV 5,075,678 2.335053 11,851,978

International Bonds PFPV 5,126,741 2.237634 11,471,770

Property Unit Trust 4,281,059 3.813234 16,324,681

Corporate Bonds PFPV 4,166,441 1.381885 5,757,542

Alternative Investments PFPV 5,914,188 1.022120 6,045,010

Cash PFPV 14,595 1.000000 14,595

115,510,047

The investment in the CIP represents the Plan’s share of each of the pooled funds within the CIPcalculated in accordance with the provisions of the Trust Deed.

At 31 December 2007 the Plan held 5.29% (2006: 5.41%) of the total investment in the CIP.

9. AVC investmentsThe Trustee holds assets invested separately from the main fund in the form of insurance policiesfrom Prudential Corporation or unit linked funds from Fidelity Pensions Management securingadditional benefits on a money purchase basis for those members electing to pay additionalvoluntary contributions. Members participating in this arrangement each receive an annualstatement made up to 31 December confirming the amounts held to their account and themovements in the year. The aggregate amount of AVC investment is as follows:

2007 2006

£’000 £’000

Prudential Corporation 2,640 2,629

Fidelity Pensions Management 155 146

2,795 2,775


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10. Current assets

2007 2006

£’000 £’000

Cash at bank 12 2

Contributions receivable - employees 21 19

Contributions receivable - employer 688 28

AVC Contributions receivable 4 4

Lump sums receivable 12 -

Transfers receivable 29 -

Prepaid expense - regulatory fees 2 12768 65

All contributions due to the Plan relate to the month of December 2007 and were paid in full to thePlan within the timescale required by the Schedule of Contributions then in force.

11. Current liabilities

2007 2006

£’000 £’000

Pensions and PAYE payable (54) (54)

Lump sums payable (18) -

Death benefits payable (3) -

AVC benefits payable (12) -

Transfers Payable (20) -

Accrued expenses (185) (136)

(292) (190)

12. Related party transactionsThe majority of administration expenses are initially paid by the principal Company, DelphiAutomotive Systems UK Limited and then recharged to the Pension Plan excluding VAT. Theprincipal charges are actuarial, legal, audit, pension administration and investment managementcharges. At year end £123,000 (2006: £41,000 )was outstanding and included in current liabilities.


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Independent Auditors’ Statement about Contributions to the Trustee of TheDelphi Automotive Systems UK Pension Plan

We have examined the Summary of Contributions to The Delphi Automotive Systems UK PensionPlan for the year ended 31 December 2007 which is set out on the following page.

Respective responsibilities of Trustee and Auditors

The Trustee’s responsibilities for ensuring that there is prepared, maintained and from time to timerevised a schedule of contributions are set out in the statement of Trustee’s responsibilities.

Our responsibility is to provide a statement about contributions to the Plan in accordance withrelevant legislation and to report our opinion to you. This report, including the statement aboutcontributions, has been prepared for and only for the Plan’s Trustee as a body in accordance withSection 41 of the Pensions Act 1995 and for no other purpose. We do not, in giving this statement,accept or assume responsibility for any other purpose or to any other person to whom this report isshown or into whose hands it may come save where expressly agreed by our prior consent in writing.

Basis of statement about contributions

We planned and performed our work so as to obtain all the information and explanations which weconsidered necessary in order to provide us with sufficient evidence to give reasonable assurance thatcontributions reported in the attached summary have been paid in accordance with the relevantrequirements. For this purpose the work that we carried out included examination, on a test basis, ofevidence relevant to the amounts of contributions payable to the Plan and the timing of thosepayments under the schedule of contributions. Our statement about contributions is required to referto those breaches of the schedule of contributions which we consider to be material for this statementand which come to our attention in the course of our work.

Statement about contributions to the Plan

Except for the late payment of contributions disclosed more fully in the Summary of Contributions, inour opinion, the contributions payable to the Plan required by the schedule of contributions duringthe year ended 31 December 2007 as reported in the Summary of Contributions on the followingpage have in all material respects been paid in accordance with the schedules of contributionscertified by the Actuary on 25 March 2005 and 26 March 2007.

PricewaterhouseCoopers LLPChartered Accountants and Registered AuditorsLondon July 2008


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Summary of Contributions payable in the year

During the year ended 31 December 2007, the contributions payable to the Plan by the Employer andEmployee were as follows:

Employee Employer£’000 £’000

Required by the schedule of contributions

Normal contributions 244 3,403

Total 244 3,403

Other contributions payable

AVC’s 46 -

Total (as per Fund Account) 290 3,403

During the year the following contributions were paid later than the date stipulated in the schedule ofcontributions:

• Employer contributions of £152,400.00 in respect of back dating the higher rate ofcontributions from January to March 2007 and due by 1 June 2007 were paid on 15 June2007

Signed on behalf of the Trustee:

A. Horne L. GriggDirector Director July 2008


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Members’ Information

Pensions Tracing Service

Contact details for the Pensions Tracing Service, which can help members trace an old pensions schemethat they have lost contact with , are:

Pension Tracing Service, Tyneview Park, Whitley Road, Newcastle, NE98 1BATelephone: 0845 600 2537

The Pensions Advisory Service

Any concern connected with the Plan should be referred to Mr D Mount, Pensions Administration Manager,who will try to resolve the problem as quickly as possible. Members and beneficiaries of occupationalpension Plans who have problems concerning their Plan which are not satisfied by the information orexplanation given by the administrators or the Trustees can consult with the Pensions Advisory Service(TPAS). A local TPAS adviser can usually be contacted through a Citizen's Advice Bureau. AlternativelyTPAS can be contacted at:

11 Belgrave Road, London SW1V 1RBTelephone: 0845 601 2923

Pensions Ombudsman

In cases where a complaint or dispute cannot be resolved, normally after the intervention of TPAS, anapplication can be made to the Pensions Ombudsman for him to investigate and determine any complaintor dispute of fact or law involving occupational pension Schemes. The address is:

11 Belgrave Road, London SW1V 1RBTelephone: 020 7834 9144.

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