pension power december 2012 issue 32

powerpension

Don’t get ambushed by the pension cowboys

Preview of new look Local Government Pension Scheme

DECEMBER 2012, ISSUE 32

Hello and welcome to the latest edition of Pension Power, your newsletter from GMPF, your staff pension scheme.

I’m going to start by talking about mobile phones... all will become clear as to why shortly! No doubt many of you have a mobile... in fact I’m sure many of you will have a smart phone, which will let you surf the internet, send emails, shoot videos and perhaps even make the odd phone call! Just think what a far cry these types of phones are from the early mobile phones, which were the size of house bricks - and almost as heavy. My point is that when it comes to technology, we just expect that the newest version of something will be quicker, smarter, cheaper and generally better. When the latest iPhone was released recently, people were camping overnight outside the stores, to be the first to get their hands on the new model. So why is it that when it comes to things like pension schemes, many people react in exactly the opposite way when an ‘upgrade’ comes along?

When news broke that the Government was looking at bringing out ‘new models’ of the various public sector pension schemes, many people feared that the new models would offer a lot less, cost more, and so on. And I’m the first to admit that even some of us here at GMPF were unsure what to expect.

So I am delighted to tell you that if the changes to the LGPS go ahead in line with what we’ve been told so far, we will continue to have an excellent pension scheme. No actual regulations have been published yet, but we don’t expect that things will change drastically between now and 2014.

So please make sure you read the piece on page 16 where we start to look at the proposals in a little

more detail.

But before we get too excited with the new scheme, there’s still plenty to tell you about the current scheme. So on page 6 you’ll

find news of a series of seminars we’re running early next year, together with

our AVC partner, Prudential. We trialled this type of seminar back in February,

with a series of Retirement Planning

Hello and welcome...

2 Pension Power December 2012

Greater Manchester Pension Fund is administered by Tameside MBC and is part of the Local

Government Pension Scheme

Pension Power December 2012 3

sessions, and these proved very popular. So we are expanding the type of session on offer this year, to include both Retirement Planning and Mid Life Planning sessions. Feel free to take your pick based on which one best suits your age!

Also on the subject of technology, I’d like to use this space to promote e-comms (electronic communications). We realise that for some people, there will never be any substitute for reading an ‘old fashioned paper copy’ of something like a newsletter. But as technology advances, things like Pension Power can be read online at our website, thereby reducing printing and postage costs. See page 11 for more about how to sign up for e-comms if you haven’t already.

That’s all from me for now - I hope you find this issue useful.

All the best

Ged Dale, Head of Pensions Administration.

Also in this issue...Report & Accounts

2012

Page 20: See how the Fund’s finances are performing with our summary Annual Report....

Page 4: Make sure YOU don’t get ambushed by the pension cowboys...

4 Pension Power January 2012 4 Pension Power December 2012

Don’t get ambushed by the pensions cowboysYou know the routine... you’ve just sat down to your evening meal - the phone rings, and it’s some company you’ve never heard of trying to persuade you to make a claim for being sold PPI. Well now these less than reputable claims firms have moved onto a new scam called pension liberation. This is where they offer to unlock your pension before retirement, converting it into cash - and it is far from legitimate.

In order to do this, the value of all your benefits has to be transferred from the pension scheme, and paid over to the firm in question. We’ve been paying out transfers to legitimate pension arrangements for years without a problem. But this type of transfer is very different.

So what’s the catch?You would be horrified at some of the fees involved. Members typically wipe 20% to 30% off the value of their pension pot - just to cover the up front fees.

Then further problems can arise with HMRC. Transfer payments like this are called unauthorised payments. This means they are allowed, but result in you having to pay a tax charge. If you forget to tell HMRC about the transfer, they may then charge extra penalties, interest charges, and so on.

And of course the whole point of paying into a pension scheme - especially over many years - is to build up an income which will be paid to you for years, providing you with a guaranteed income in your retirement. Sign over your pension rights, and you lose all this.

So all in all these schemes might look like an easy way of getting your hands on some cash, but you really are paying through the nose for it. On the right is an extract from a real case - these shocking figures demonstrate what actually happened to one of our members...

Don’t get ambushed by the pensions cowboysCash value of GMPF pension: £20,000

Up front commission at 20% £4,000

HMRC tax charge (40% of £20,000) £8,000

HMRC surcharge (15% of £20,000) £3,000

Total charges & fees £15,000

Final value available to member: £5,000

Typical figures:

What to do if you are contactedThe main thing is of course to give the firm a wide berth. And if you want to report them, you can do this through the financial ‘watchdog’ the FSA, the HMRC, or the Pensions Regulator:

FSA helpline: 0845 606 1234 HMRC anti fraud unit: 0115 974 2147 Pensions Regulator: 0845 600 0707


Ambush tacticsAnother of our members took a call from one of these claims firms, and said he might be interested. Within an hour, they had sent a courier with the papers for him to sign! This is just one example of how keen they are to get your business - and proof of the massive profits they are making from such deals.

Why not come and meet us face to face by attending one of our friendly seminars, which we will be running next January, together with our AVC partners Prudential. We will be offering two types of seminars: retirement planning seminars and mid life planning seminars.

These are slightly different to the usual workplace roadshows we run in that you just book a place as an individual member, and come along. So there are no minimum audience numbers, which is especially handy if you work in a small department or for a small organisation.

We also find that people can focus on the business in hand if the session is run away from their workplace, without any distractions. So we will be running the sessions in a choice of two local hotels.

Please see the summaries of each seminar, to decide which is best suited to you, then if you want to book, simply email or phone as shown below.

Please note: we are running these seminars jointly with Prudential, so we are handling the publicity via this newsletter, and they are handling the bookings...

First come first servedThere’s no charge for attending, but places are limited, and must be booked in advance. Also, if you book a place, please do actually attend, or let us know you can’t, so we can offer your place to someone else. Places will be issued on a first come first served basis, so don’t delay - book now!

The venuesWe are using the following 2 venues: Novotel Manchester West, Worsley Brow, Worsley, M28 2YA. This is ideal if you live or work in Salford, Bolton etc, and has plenty of free on site parking.

Mercure Piccadilly Hotel, Portland St, Manchester, M1 4PH. This has excellent public transport links, or if you prefer to drive, has on site parking (charge of £10 applies).

Book now for your free seminar...

How to book...

Send an email marked GMPF and

quoting your name, daytime phone

number and preferred session to

[email protected]

Or call Prudential, Mon-Fri, 9-5, on:

0800 015 4615


BOOKING DEADLINE Wed 9th

Jan

Pension Power January 2012 7

Book now for your free seminar... Who’s it aimed at?This is aimed at anyone in

the 30 plus age group. It’s probably about time you took

stock of your pension situation, but you’re way too young to think about retirement yet!

The agendaIt’s a little bit about everything you might want to know about your local government pension - how we

work out your benefits, the cost to you, ways of topping up, and so on. We’ll also be touching on the 2014 new look pension scheme.

Date, time & venueNovotel Manchester West 16th January 2013, 10am, 2pm & 6pm each day.

Mercure Piccadilly Hotel 23rd January 2013, 10am, 2pm & 6pm each day.

Who’s it aimed at?You’re probably 50 plus, and even if retirement isn’t

staring you in the face, it’s time to start planning for what should be the longest holiday of your life!

The agendaMost of the content will be about your local government pension - things like how we work out your benefits, different ways of retiring,

and what you need to do to get your money on time! But we’ll also look at more general issues such as State pensions and tax in retirement.

Date, time & venueMercure Piccadilly Hotel 17th January 2013, 10am, 2pm & 6pm each day.

Novotel Manchester West 24th January 2013, 10am, 2pm & 6pm each day.

Mid Life Planning Seminar

Retirement Planning Seminar

PS: Whichever session you attend, it will last approximately two hours, and we’ll even throw in coffee & biscuits.



Short contract rule scrapped Until recently, you couldn’t join the LGPS if you had a contract of less than three months – so this ruled out casual staff for example. But to make the rules of the LGPS tie in with a new nationwide scheme of auto enrolment, the three month limit has been removed from the LGPS. So if you have colleagues who couldn’t join for this reason before, they can now. If you’re already a member, this change won’t affect you.

See page 12 for more about auto enrolment in general.

Admitted bodies and deferred membersIf you leave the LGPS before the age you can draw your benefits, the norm is to put your benefits ‘on hold’ in the form of deferred benefits. We then hold on to these benefits and increase them each year in line with prices until you draw them.

If you want to ask to draw them early – for example because of ill health – then that decision would rest with your ex employer. So if you used to work for Manchester City Council, you would ask them. But what happens if you used to work for an admission body and that body has now ceased to exist? The recent changes in the scheme rules mean that such a decision will now rest with whoever runs your pension fund - in your case Tameside MBC.

Fine tuning As you will see on page 18, there is a new look Local Government Pension Scheme heading our way from April 2014. But until then, we still need to make sure the current scheme rules do their job properly. So the Government has just announced some minor changes to the current scheme – you will find them over the next few pages, highlighted by this symbol.

And by the way, most of these apply from October 2012.


The final decision on final payAs you will see later, the days of the final salary pension scheme may be numbered, but we still use final pay to calculate all kinds of benefits – and still will do for many years to come. So what happens if - in your last year - you move between employers within the scheme, and transfer your membership? The rules have been changed to spell out that when this happens, we must use the pay averaged out across both jobs. So if your final year included 6 months in a £20,000 job, and six months in a £24,000 job, we would use the average of £22,000.

Annual allowance chargesThis is one for high earners, or members who have had a big pay increase and have long service...

If you go over the annual allowance, and this results in an annual allowance charge, you can now ask the pension scheme to pay the charge on your behalf (with the cost of this being taken out of your benefits later). This is sometimes called the scheme pays option. It has also been confirmed that annual benefit statements must be issued within 6 months of the year end to which they relate, to enable individuals to provide the necessary information to HMRC. This is something we always aim for, and this year many annual statements started mailing in August (so 5 months after year end). But we did have a delay with some employers who were late sending us their ‘annual summary’ of pensions information – something we need to calculate benefit illustrations.

More about annual allowanceThis is a limit on the amount you can pay into a pension scheme, and still get tax relief.l In personal pensions

(and some staff pension schemes) it is literally based on contributions

l But in schemes like the LGPS, it is based on the amount your benefits grow in the year, and multiplying this by a factor of 16.

Although the annual allowance has come down from £255,000 a year to £50,000, most members will still never come anywhere near hitting it.

To find out more about tax & pensions in general, please visit the HMRC website: www.hmrc.gov.uk/pensionschemes.


Longer deadline for buying extra survivor benefits Do you have a nominated cohabiting partner, and have membership before 6 April 1988? If so you may like to know about a little known facility in the scheme rules which lets you pay extra to make this membership count towards your partner’s pension too. You can buy either the full amount of membership, or a smaller amount, as long as it’s in whole years.

The deadline to sign up for this was 31 March 2011, but this has now been extended to 31 March 2013 (or within 12 months of first nominating a cohabiting partner).

How to payIf you’re interested in this, please get in touch and we’ll work out the cost for you. And by the way, if you do go ahead, you can spread the cost over any time up to your 65th birthday.

Your flexible friendAs you may know the big round of changes to scheme rules in 2008 brought in flexible retirement. This means that when you retire – if your employer agrees – you can draw pension benefits, but carry on working in a reduced capacity (for example on less hours).

The rules also went on to say that members who were allowed to retire in this way could draw all or part of their pension benefits. The new rules we have just had spell out in more detail what this means…

Let’s say you flexibly retire next year, and by then you have 10 years membership which falls before April 2008, and another five years which falls from April 2008…

You would have to take…

l All of your membership before April 2008

l But you could choose to take all or just part of your membership from April 2008

To find out more about flexible retirement where you work, please ask your employer’s pensions or HR section what their policy is. You can also find out more general information on our website or in our Member’s Guide.


That may seem like an odd question, but for years we’ve been producing Pension Power as a paper newsletter, and mailing it to your home address. So if you are still reading Pension Power this way, you may like to know that you can now read it online at www.gmpf.org.uk. We’ve had PDFs of various documents on there for a while, but we have recently changed to an ‘online magazine’ format, and we think it’s much better. Do have a look, and see what you think. We recently published our annual report online this way - the screenshot below shows you how it works....

Slide to zoom in

or out

Go forward or back

a page

Go forward

a page

Use page thumbnails

to skim through document

How are you reading this?

Do we have your email address?If we already have your email address, you should have had a link to the online version (unless you’ve opted out of this facility). If you got the paper version, it means we don’t have a

valid email for you. If you would like to give us your email, you will then be subscribed for email links to the digital Pension Power, plus other email alerts & newsflashes.

Do this by visiting www.gmpf.org.uk and following the link.


What have Nick Hewer from the Apprentice and Dragon’s Den star Theo Paphitis got in common? Answer: They both featured in a series of TV adverts by the Government, to launch its new system of automatic enrolment into workplace pensions from October this year.

The new arrangement is being rolled out across different organisations at different times, with the largest ones going first. So this means that by the time you read this, some local authorities will already be operating the new auto enrolment rules.

What is auto enrolment?It’s about putting people into staff pension schemes automatically - and asking the employer to pay in as well.

Do I need to do anything?Most Pension Power readers are already members of a good workplace pension scheme – the LGPS.

So if you are an existing member there is nothing for you to do.

But if you have colleagues who have never joined, or who decided to opt out for whatever reason, in many cases they will find themselves automatically put back into the LGPS by their employer (or some other scheme if they are not eligible for the LGPS)

If members are put back in to the LGPS, can they opt back out again?Of course they can, but by opting out, they miss out on the main reason for ever having joined the scheme - to build up retirement benefits to enjoy later in life. What’s more...

AUTO ENROLMENT - We’re all in!


Tax & National Insurance: If you pay tax/National Insurance, these both go down as a member... opt out and you miss out on these valuable savings.

You pay in, your employer pays in! Employers typically pay in around twice as much into the pension scheme as you do! Opt out and you miss out on this help with your pension.

Valuable health cover: The scheme offers ill health cover... opt out and you miss out on this valuable benefit.

Redundancy: Many of our employers are having to cut staff numbers. If you are in the Scheme and you are made redundant you have an automatic right to immediate and unreduced benefits if you are 55 or over. Opt out and you miss out on this valuable protection .

Tax free cash! As a member you can take part of your benefits as tax free cash to spend however you like. Opt out and you miss out on this valuable benefit .

High earning opt outsOf note for high earners who have opted-out of the Scheme and have fixed or enhanced protection from the HMRC is that rejoining the Scheme can lead to the protection being cancelled, unless it is followed by opting back out again within three months of rejoining. If you require further information about this, please see the HMRC website: www.hmrc.gov.uk/pensionschemes/pension-savings-la.htm#5

Why the new Government auto enrolment policy?Apparently one in three workers has never been in any kind of company pension scheme. This alarming statistic has prompted the Government to take action in what it describes as “the biggest change in pensions for over a century”.

And just as an aside it was good to hear that the various celebrities who appeared in the adverts gave their services free of charge.


Which nomination is right for you?As a member you have excellent life cover... if you die in service, we will pay out a lump sum and possibly dependants’ benefits too. The procedure for letting us know your wishes is called nomination - so which type of nomination is right for you? In the LGPS there are two types of nomination... lump sum nomination and nominating a cohabiting partner. Before we tell you a little more about these, we need to make it absolutely clear that the two types of nomination are totally separate. So just because you have filled in one type of nomination, it won’t necessarily apply to the other!

Lump sum life coverHow much is it?If you die we will pay out a lump sum equal to three times your yearly pay. So say you’re on £20,000 a year - that’s a lump sum of £60,000. So when you think about the potential figures involved it’s definitely well worth thinking about who you would want it to go to.

Who can you pay it to?We can pay it to anyone you like - a family member, a friend, a charity - the choice is yours. Normally we will follow your wishes based on your nomination form, but in exceptional circumstances, this may not be possible.

Dependants’ pensionsIf you have any of the following dependants, they are automatically entitled to a pension if you die:

l husband/wife/civil partner, and l eligible childrenSo please don’t try to nominate them to get a pension as they are automatically covered.

What about partners?If you are living with a partner long term, we can pay them a pension too - but only if you have filled in a partner’s pensions nomination form.

Other terms & conditions apply - please see our website or literature for more. Please note: we have absolutely no discretion with partners pensions. If you don’t fill in a partners’ pensions nomination form, we are not allowed to pay them a pension!

How much is the pension?That’s hard to say. But if you die in service, it’s a pension based on the membership you would have built up to age 65.

Sandy & Jane live together, but

haven’t formed a civil partnership.

This means Jane won’t automatically

get a pension if Sandy dies, so Sandy

has nominated her as a cohabiting

partner. She has also made a separate nomination to make sure she gets the lump sum too.


Which nomination is right for you?

By the way, the amounts of cover described just apply whilst you are a paying member of the scheme. There may still be some kind of life cover if you leave the scheme (leaving your benefits with us in the form of deferred benefits), and even once you’ve retired, but the figures would be different - please see our website if you need to know more.

Lump sum life coverIs anyone covered automatically?We have the discretion to decide who to pay the lump sum to. So if you don’t fill in a nomination, we will normally use this discretion to pay the lump sum to your husband or wife, your civil partner or your nominated cohabiting partner. So if you are in one of these relationships, you may feel there is no need to make a lump sum nomination. But of course the safest approach is to always let us know your wishes by filling in a form.

Colin is a single parent. His son Jack is automatically covered for a pension for as long as he is a child, so there is no paperwork for Colin to fill in. But if he also wants Jack to get the lump sum he should fill in the lump sum nomination.

Sandy & Jane live together, but

haven’t formed a civil partnership.

This means Jane won’t automatically

get a pension if Sandy dies, so Sandy

has nominated her as a cohabiting

partner. She has also made a separate nomination to make sure she gets the lump sum too.

Want your lump sum to go to your

favourite animal charity? Make sure

you fill in a lump sum nomination

form. Can you nominate them to

get a pension

too? No,

sorry you

can’t.


We hope you know by now that there’s a new look Local Government Pension Scheme heading our way from 2014. Although it’s still a work in progress, with nothing etched in stone, we thought it was time to give you a quick summary of how we expect it to look...The big change is that the scheme will become a career average scheme. This has all the benefits of the current final salary scheme in that:

It is backed by your employer - who pays for most of the costIt offers benefits that aren’t at risk from investmentsIt offers benefits linked to your pay.

The key difference is that rather than looking at your pay at the end of your career - your final pay - to work out your benefits, it looks at your pay each year.

So as each year goes by, you build up a pot of pension benefits linked to your pay for that year. If that’s a good year, say with some overtime in your pay packet, that boosts your benefits for that year too.

When you move onto the next year, the pot of benefits you’ve already built up is carried forward, and grows in line with prices, to make sure it keeps its buying

power. Then of course you build up another pot of benefits based on your pay in that year, and so on down the line.

How big is this pot?That really is the $64,000 question. And the good news is, in the new career average scheme, you will build up a pension of 1/49th of your pay each year. When you think that the current final salary scheme pays out 1/60th per year of your final pay, that’s an improvement for most members!

“Hang on! Surely that’s worse!” you might be thinking. Well not at all...

Imagine you’re at a wedding where you are one of 60 guests. When it’s time to cut the cake, you each get 1/60th. Now imagine if there were only 49 guests... you would each get a bigger slice - you would get 1/49th. So 1/49th is definitely bigger than 1/60th.


Some other features...Over the next couple of pages, you’ll find a few more specifics about the new scheme. Remember, this is all still subject to approval, but we think what’s shown here will be pretty close to the mark...

The cost to youIn the new scheme, the average member contribution will remain the same percentage as it is now, but the pay bands will change. We’ve shown the new table of contributions below...

But dig a little deeper, and we find a very interesting change relating to part timers... Currently the band they fall into is based on their full time equivalent pay. In the new scheme, it will be set by their actual part time pay. This will mean many part timers paying less in the new scheme.

Actual pensionable pay

Cost

Up to £13,500 5.5%£13,501 - £21,000 5.8%£21,001 - £34,000 6.5%£34,001 - £43,000 6.8%£43,001 - £60,000 8.5%£60,001 - £85,000 9.9%£85,001 - £100,000 10.5%£100,001 - £150,000 11.4%More than £150,000 12.5%


The next step...The scheme rules are written by the Government’s Department for Communities & Local Government (DCLG). We are waiting for them to carry out what is known as a statutory consultation. If you are registered for our email alert service, we will let you know when this happens. DCLG are hoping to produce the actual regulations by Spring 2013, to give LGPS funds time to update their websites, booklets, computer systems, and so on.

Retirement ageRetirement age in the scheme will be tied into your State Pension Age, at the time you retire. This is currently 65 for many members, with increases to 66, 67 & 68 being planned.

Protecting earlier benefitsYour benefits before April 2014 will stay as final salary benefits. So they will be based on your membership up to this date plus your actual final pay - however many years later this is!

The 50-50 optionHere’s a chance to pay in half the cost for half the retirement benefits, while keeping the same life cover, etc. A good way of keeping costs down, perhaps when you’re starting out.

The fact widows’ pensions were only free of charge after 1 April 1972 has implications if you are a man who was a member before that date, and you have ever been married. It means your membership before April 1972 will count for less, unless you have paid extra to cover it. The reduction won’t apply if you have told us you are single. But if you have been single then get married, do please remember to let us know.

Remember 1972-when Ziggy first played guitar?

And don’t forget, Pensions Officers or HR teams can call us to arrange employer wide sessions too.

Your Pension - let us help piece it togetherAs well as the larger sessions featured on page 6 & 7, we’re also very happy to come out to your place of work if there are enough of you, to run our ever popular Pensions Roadshow. All you need is a group of 20 or more, a suitable room to run a presentation, and of course permission from your employer.

To find out more call Malcolm or Simon on 0161 301 7275.


20 Pension Power December 2011 20 Pension Power January 2012

This summary report is based on information taken from our full Report & Accounts for the year to 31 March 2012.

It is becoming a stock phrase in starting my introduction, but these continue to be exceptional times, exceptional for LGPS scheme members, their employers and for us as the administering authority.

The UK economy is experiencing a double dip recession. The reductions being sought in public expenditure have an economic impact, and are also having a material impact on scheme members, employers and GMPF. In spite of this, we have had a steady year, and excellent long term returns.

A steady year and excellent long term returns The value of GMPF has increased by £130 million to £11.1 billion with an investment return of 2.4%. This is a disappointing return in absolute terms but broadly in line with the local authority average of 2.6%.

Looking at our longer term performance, over the last 10 years, GMPF’s return has been 6.3% compared to the local authority average of 5.7%. It is this strong investment performance that has supported the funding level. To set this outperformance in context 1% on investment returns now exceeds the total value of employee contributions.

Funding issuesThe 2010 actuarial valuation was concluded in March 2011 resulting in a good outcome with a funding level at 96.4% as a whole. This was amongst the best of LGPS funds and resulted in employer contribution rates being at the lower end of the range.

Since the valuation, investment returns have been a little below the Actuary’s estimate but the main adverse factor for funding levels has been the decline in long term real interest rates as illustrated by index linked gilts giving negative real yields over most durations and the impact this has on valuing liabilities .

Membership changesThe number of employee members has reduced significantly this year and this trend is set to continue. Some of the causes include; pressures on employer budgets leading to retirements, voluntary severance and redundancy; members deciding to opt out, often due to personal financial pressures; and an increase in the number of employers at which the scheme is closed to new members.

With the help of the Actuary, we are looking at the impact of the membership changes on GMPF as a whole and some individual employer case studies. This type of work will become increasingly important for employers and for GMPF as options are examined to manage volatility and maintain affordability.

ConclusionThese are tough times, but GMPF’s excellent long term track record, relatively high funding level and relatively low employer contribution rates put us in a comparatively strong position.

Peter Morris, Director of Pensions

Report & Accounts

2012


Top 20 equity holdings

£206m £203m£236m£273m

£43m£48m £38m £38m

£94m£99m£116m £106m

£72m £69m£81m £65m

£50m£56m £54m£64m

Private Equity: Iglo Group Iglo Group is a European food company that specialises in frozen fish, vegetables and poultry. The group operates under three brands: Birds Eye (UK and Ireland), Iglo (Germany, Austria, Belgium, the Netherlands and other countries) and Findus (Italy). Permira backed the acquisition of Iglo from Unilever in 2006, and since then the business has been transformed to deliver robust earnings growth through various initiatives, including new product development and a strengthened management team.


Management arrangements

Total Main Fund £10,800 million

Externally managed £9,459 million

Securities Portfolio UBS £5,339 million

Securities Portfolio Capital £1,652 million

Securities Portfolio Legal & General £2,449 million

Property Venture Fund GVA £19 million

Internally managed £1,341 million

Cash & Private Equity £791 millionProperty £550 million

GMPF recently purchased a new 37,000 sq ft Sainsbury’s supermarket. This will form part of a new district centre in Chapelford, Warrington, that will provide 2,000 homes. The district centre will ultimately also have additional local shops, a family pub/restaurant, a primary school and a medical centre.

The national coffee shop chain, Costa Coffee, has chosen to launch the first Costa Coffee Metropolitan concept outside London at GMPF’s property on Briggate in Leeds. This investment lies close to one of the main entrances to the new Trinity Shopping Centre .


Benchmark asset allocation

Major asset class split

Bonds/cash split

UK/overseas equity split

Overseas equity split

UK GOV’T BONDS 17.9%

UK CORPORATE BONDS 24.2%

UK INDEX LINKED 11.5%

OVERSEAS GOV’T BONDS 11.5%

OVERSEAS CORPORATE BONDS 3.0%

OVERSEAS INDEX LINKED 5.5%

CASH 26.4%

UK EQUITIES 48%

OVERSEAS EQUITIES 52%

NORTH AMERICA 30.6%

EUROPE 29.1%

JAPAN 17.0%

PACIFIC 12.1%

EMERGING 11.2%

PUBLIC EQUITY 62%

BONDS/CASH 23.5%

PROPERTY 10%

ALTERNATIVE INVESTMENTS 4.5%

24 Pension Power December 2011 24 Pension Power December 2012

How we performedAnd here’s the Fund’s result from the various types of investments - our returns. The graph along side shows our returns from each type of investment, compared with the ‘market’ (in other words average returns for that type of investment). And the graph below compares our returns with other local authority pension funds like us.

Our total fund value was £11.1 billion, comprising £10.8 billion in the main fund and £0.3 billion of index linked and cash assets that we allocated to a small number of specific employers.

INVESTMENT RETURNS Year ended 31 March 2012

GMPF Market

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INTE

REST

UK

CORP

ORA

TE B

ON

DS

OVE

RSEA

S CO

RPO

RATE

BO

ND

S

UK

IND

EX L

INKE

D

OVE

RSEA

S IN

DEX

LIN

KED

PRO

PERT

Y

CASH

/OTH

ER

%

20

15

10

5

0

-5

PENSION FUND RETURNS WM Local Authority Survey -

Financial years to 31 March 2012

25 20 15 10 5 1Duration (years)

*GMPF’s percentile rank within Local Authority funds

GMPF Local Authority Average

0

2

4

6

8

109.0

*2nd *36th*3rd *64th*3rd

%

10

8

6

4

2

0

8.0

9.1 8.3

7.0 6.1 6.3

5.7

3.7 3.2

2.4 2.6

*14th


Net assets statement as at31 March

2011 £000

31 March 2012 £000

2,544,174 UK equities 2,317,210

2,428,792 Overseas equities 2,441,650

542,325 UK fixed interest corporate bonds 709,673

127,497 Overseas fixed interest corporate bonds 177,664

343,403 UK fixed interest government bonds 143,405

197,774 Overseas fixed interest government bonds 175,861

330,082 UK index linked government bonds 385,801

48,632 Overseas index linked government bonds 104,498

339,811 Investment Property 336,264

4,531 Derivative contracts 646

3,203,877 Pooled investment vehicles 3,458,916

855,545 Cash and deposits 889,383

78,569 Other investment assets 222,598

11,045,012 Investment assets 11,363,569

(155) Derivative contract liabilities (72)

(47,218) Other investment liabilities (235,869)

(47,373) Investment liabilities (235,941)

24,799 Current assets 31,371

(10,028) Current liabilities (16,283)

14,771 Net current assets 15,088

11,012,410 Net assets of Fund 11,142,716


How the figures add up...Here you will see how much members and employers paid in, compared with how much was paid out in benefits. After other payments in and out, the amount available for investing was £129 million.

Report & Accounts

2012

You can view the full version of the Report & Accounts for the year to 31 March 2012 on our website at www.gmpf.org.uk.

Income (£ millions)

Employees contributions 111

Employers contributions 300

Transfers in (Individual) 11

Income from investments 267

Total Income 689

Expenditure

Benefits paid out 528

Investment & administration costs 13

Transfers out 19

Total expenditure 560

Money available for investment 129


Win this exclusive GMPF brollySimply answer the following questions - the answers to which can all be found somewhere in this issue...

In the cowboy ambush story, out of an original cash value of £20,000, how much did the member end up with?

What is it called if you leave the LGPS before retirement and put your benefits ‘on hold’?

Which TV dragon features in our auto enrolment article?

Is it possible to nominate a child to receive a pension?

Which of these fractions is bigger.... 1/49th or 1/60th?

The value of GMPF increased to what figure at March 2012?

Which company is number 10 out of our top 20 equity holdings?

Where in Leeds does Costa coffee operate from GMPF owned premises?

1

2

3

45678

Now email your answers, together with your name & daytime phone number to [email protected]. Please mark the subject PPQUIZ. Alternatively, fill in the slip below & mail to GMPF Communications, Concord Suite, Manchester Rd, Droylsden, M43 6SF.

5

6

7

1

2

34 8

Name & NI number:

Closing date 30th January 2013.

Can we help you?Here are the ways you can find out more or get in touch with us. If you do contact us, please quote your National Insurance number.

Please let us know if you move house or if this didn’t come to the right address...

Visit our website to find out more or to contact us by email:

Or call our friendly helpline on:

www.gmpf.org.uk

0161 301 7000Or call in at our offices: GMPF, Concord Suite, Manchester Rd, Droylsden, M43 6SF.

pension power december 2012 issue 32

Documents