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Autumn 2014 / for active members / fund report
West Yorkshire Pension Fund
N
E
W
S
L
E
T
2014
T
E
R
annual
meeting
7 November 2014
Could you represent your fellow members?
See page 5
Book
now!
Annual
meeting
See page 2
2014
fund report
See page 10
PLUS
• Handy fold-out factcard (p.15)
• What if I’m on strike? (p.8)
• Pension liberation fraud alert
2
Annual
Book now for our 2014
We’d like to invite you to our 2014 annual meeting at which our
director, Rodney Barton, and our external investment advisers
will present a summary of the fund’s performance over the year.
Councillor Malcolm Slater, chair of the West Yorkshire Pension Fund
Joint Advisory Group and our Investment Advisory Panel, will chair
the meeting. After the presentations our panel of senior managers will
answer your questions. Our guest speaker this year is from Bradford
District Credit Union.
When and where
The meeting starts at 11.00am on Friday 7 November 2014 at The Bradford
Hotel in central Bradford (formerly the Hilton), which is two minutes walk from
Bradford’s main bus and train interchange and has an NCP car park next door.
How to book
Book online at www.wypf.org.uk/meeting or phone 01274 434999.
We’ll send you more information about the meeting once you’ve booked.
Places are limited and it’s first-come, first-served so please book early.
Meeting
Our guest speaker at this year’s
annual meeting will be Andrew Bowker
(pictured below) from the Bradford
District Credit Union who will talk about
how credit unions
benefit members and
local communities alike.
Credit unions are notfor-profit co-operatives
that offer ethical
financial services like
insurance, loans and
savings accounts to local
people. To join a credit union, members must
usually live or work in the local area.
Credit unions are a form of community
banking that offers low-interest loans to
members and returns a proportion of any
surplus to its members as a dividend. Credit
unions are owned and democratically
controlled by members.
Book online
www.wypf.org/meeting
8
(
Book by phone
01274 434999
If you book by phone,
please have your WYPF
member number or
your National Insurance
number handy so we can
help you quickly.
3
4
WYPF and Lincolnshire
join forces in new
five‑year agreement
West Yorkshire Pension Fund
We begin a new venture in 2015 as we take on the administration of
the Lincolnshire local government pension scheme in a shared-service
arrangement.
We were selected from several competitors to provide shared-service
pension administration and payroll service for members of the Lincolnshire
local government and firefighters’ pension schemes from 1 April 2015.
The agreement will run for five years, after which it will be reviewed, and
can be renewed.
West Yorkshire Pension Fund Business Development Manager Yunus Gajra
said of the agreement, ‘Through this partnership we are confident that we
can reduce costs for both funds through economies of scale and efficiency.’
5
Could you represent
your fellow members?
Would you like to represent
WYPF’s ‘active’ members –
members like you who are still
working and saving for their
retirement – on our committees?
They oversee the way our
investments are managed and
consider pensions issues both
locally and nationally.
If you’d like us to consider you for
the positions on the committees,
please contact us to express your
interest by 30 September 2014.
Contact details
Email yunus.gajra@bradford.gov.uk
or
Write to
Yunus Gajra
Business Development Manager
West Yorkshire Pension Fund
PO Box 67
Bradford
BD1 1UP
We’ll send you more information
after 30 September so you can
decide whether to apply formally
to take on this important role.
Tribute paid to a
long‑serving
member
Ian Greenwood, Deputy Chair of our
Investment Advisory Panel, has paid
tribute to Councillor Clive Fox who
died in April 2014. Mr Greenwood
said, ‘Clive was the longest serving
member of both West Yorkshire
Pension Fund’s Investment Advisory
Panel and Joint Advisory Group and
was always thoughtful, considered,
whilst on occasions appropriately
challenging. He was a thoroughly
decent man who I considered a
friend. The Fund is poorer for his loss.
We will miss him. Our thoughts are
with his family.’
6
Paying
Want a bigger pension?
APCs
Additional pension contributions
Pay APCs and you can buy up to
£6,500 of extra inflation-proofed
pension on top of your regular
WYPF pension.
year from your normal pension age to
start a contract.
You can spread the cost by paying
monthly through your salary (you
must pay at least £10 a month).
Yes, if you prefer, you can make a
one‑off payment through your payroll
or direct to us. You still get tax relief,
but if you pay us directly you will need
to arrange this yourself with HMRC.
Your employer deducts APCs from
your pay before tax, just like your
usual pension contributions, so you
get tax relief on them if you pay tax.
Every year we add the extra pension
you buy to your pension account.
Can I spread the cost?
You can pay in as little as one year,
but it’s possible to pay over a longer
period and you could even spread the
cost right up to your normal pension
age. You will have to be at least one
How do I find out more?
Can I pay in one go?
Can I stop paying?
Yes, you can stop paying at any time.
We’ll credit you with just the extra
pension you bought up to the time
you stop.
What if I take my pension early?
If you decide to take your pension
early, or retire early because of
redundancy or business efficiency,
you’ll get less extra pension.
If you’re interested in paying extra, the first step is to get a quote so you can
see what it costs. You can do this online at www.wypf.org.uk/payingextra
Extra
AVCs
7
There are two ways you
can pay extra to give
you a bigger pension
when you retire. Choose
between APCs and AVCs.
Additional voluntary contributions
Pay AVCs with our providers Scottish
Widows or Prudential and your money
is invested and managed separately
from your WYPF pension. You can
often choose the kind of investments
you want your money invested in.
AVCs are flexible. You can change
the amount you pay, or stop paying
whenever you like. They’re tax
efficient too – deducted from your
pay before tax, just like your normal
contributions, so you get tax relief if
you pay tax.
You can pay up to 100% of your pay
into AVCs with WYPF (50% if you
started paying before 1 April 2014).
What can I do with my AVC
fund when I retire?
Buy an annuity
That’s a pension from an insurance
company, bank or building society of
your choice.
Top up your WYPF pension
Use some or all of your AVC fund to
get more inflation-proofed pension
and great dependants’ benefits.
Take AVCs as cash
Take up to 25% of your AVC fund
as a tax-free cash lump sum (or up
to 100% if you started paying AVCs
before 1 April 2014).
AVCs are not guaranteed and
the value of your investment
can go down as well as up.
How do I find out more?
Go to www.wypf.org.uk/payingextra where you’ll find much more about
AVCs and links to our AVC providers’ websites.
8
What happens to
my pension when
I’m on strike?
Because you don’t get paid when
you’re on strike, you don’t pay
anything towards your pension. One
or two days probably won’t make
too much difference to your pension,
but you can plug the gap by paying
to cover any pension you lose.
What difference does it
make to my pension?
It reduces the amount of pension that
we credit to your pension account.
If you were a member before April
2014 it may slightly reduce the pay
figure we use to work out that part
of your pension, which could make a
difference if you’re due to retire soon.
It could also mean you have to work
longer (the length of the strike)
to meet the 85 year rule, if that’s
something that applies to you.
How do I buy back lost pension
when I’ve been on strike?
You buy back lost pension by paying
additional pension contributions, or
APCs (also see page 6 for more about
APCs). It’s usually cheapest to do this
straight after the strike, but you can
do it any time, even many years later,
if you want to. Your employer will not
contribute to the cost of this.
Here’s what to do.
1
2
3
Ask your employer how much
pay you lost when you were on
strike.
You’ll need to know that so you
can then use our modeller at
www.wypf.org.uk/strike to
find out how much it will cost
you to buy the lost pension.
If you want to go ahead, print
the form and send it to your
employer along with the
details of your lost pay from
your employer. You can pay the
cost all at once, or, if it’s more
than £10 a month, you can pay
monthly through your salary.
Need some help with this? Phone us
on 01274 434999.
9
Life cover when you have
other jobs or pensions
A look at how your membership affects what we pay if you die
One of the many benefits of being in
the LGPS (that’s the Local Government
Pension Scheme)
is the life cover you
automatically get as
a member, including
a one‑off lump-sum
death grant.
It’s worth remembering that if you’ve
been on reduced pay on long-term
sick, we would base your death
grant on the pay you normally
get, not the reduced amount you
actually got while you were sick.
If you’re working and
paying into the LGPS,
the death grant we pay if you die
is usually three times your pay. But
if you have other jobs or pensions,
it might be different, though it will
always be at least that much. See the
table below for some examples.
You don’t have to nominate anyone,
but it’s really easy to do, helps us
pay the money more quickly and can
help avoid inheritance tax.
Have you nominated anyone yet?
Go to www.wypf.org.uk/deathgrant
for a form now. Or phone us on
01274 433999 and we’ll send you
one in the post.
A few examples
You pay into the LGPS in two jobs and
your second job is with us or with
another LGPS pension fund
Two lump sums
You pay into the LGPS but also have
deferred benefits with us or with any
LGPS pension fund
One lump sum, whichever is greatest
You pay into the LGPS with us and
you’re getting an LGPS pension at the
same time
One lump sum, whichever is greatest
You’re getting two LGPS pensions but
not currently paying into the LGPS
Two lump sums
10
Fund report 2014
Introduction by our Director, Rodney Barton
Investment markets again made positive
progress and our assets rose from £9.94
billion to £10.37 billion in 2013/14 – a rise
of 4.3%. We continued our high weighting
to equity investment, the asset class with
the best long‑term returns. In fact all
asset classes made positive contributions,
though the strong pound reduced the
value of our overseas investments. We
keep a watchful eye on market conditions
through quarterly reviews to make sure
our investment decisions take account of
future expected returns and volatility.
LGPS2014, the new career-average
pension scheme, began on 1 April 2014.
We have worked hard to prepare our
systems and support employers in
getting ready for the new scheme.
We continue to engage with the
government on public pension proposals,
and are involved in several government
working groups set up to improve
pension administration arrangements.
We are meeting the challenge of
public sector structural and budget
changes by investing in computer
systems that simplify our services
and provide ‘self service’ web access
for members and employers, and we
engage in shared services partnerships
that allow us to share our high‑quality
services and low cost-base.
This summary gives a flavour of our
draft Report and Accounts, which we will
publish on wypf.org.uk in October 2014.
Performance
Our investment return was 4.8% in 2013/14, 0.7% below the return for the fund-specific
benchmark of 5.5% and the average return for all local authority pension funds of 6.4%.
This positioned us in the 75th percentile of the local authority universe. Our long-term
performance continues to be good (see the chart below), and is demonstrated by the
improvement in the funding level at the latest valuation from 93% to 96%.
Our total cost per member of £25.59 for 2013/14 is the lowest for all LGPS funds.
Investment returns
West Yorkshire
Pension Fund
Local government
average
6.7%
7.5%
3 years
12.1% 12.7%
5 years
8.4%
7.8%
10 years
7.8%
7.2%
20 years
8.7%
8.2%
25 years
11
Fund account
£m
Opening assets of the fund at 1 April 2013
9,940.3
Investment and income
Net return on investments
479.7
Income received (including contributions and transfers in)
413.3
Benefits
Benefits paid (including administrative expenses of £4.4m)
Closing net assets of the fund at 31 March 2014
- 461.1
10,372.3
Closing net assets made up of:
Market value of fund investment portfolio
10,310.4
Net current assets (debtors, overdraft and creditors)
61.9
Total (closing assets of WYPF fund at 31 March 2014)
10,372.3
Ten biggest equity holdings at 31 March 2014
Company
1
2
3
4
5
6
7
8
9
10
Market value £m
Percentage of total fund
BP
207.1
2.0
HSBC
196.0
1.9
Royal Dutch Shell A
171.5
1.7
GlaxoSmithKline
149.1
1.5
British American Tobacco
116.3
1.1
Vodafone
98.5
1.0
Rio Tinto
94.5
0.9
AstraZeneca
93.6
0.9
Diageo
83.1
0.8
Quellos
82.3
0.8
8,938.0
87.4
10,230.0
100
Other investments
Total market value of investments
12
Analysis of investments held at 31 March 2014
United Kingdom
Book cost
£m
Market value
£m
%
Quoted
Fixed interest
Index linked
Public-sector bonds
384.9
390.9
3.8
Corporate bonds
305.5
334.6
3.3
Public sector
389.2
486.6
4.8
31.6
51.7
0.5
1,914.9
3,672.4
35.9
201.3
294.4
2.9
Corporate
Ordinary and convertible shares (equities)
Unit trusts
Property
38.3
137.6
1.3
215.7
260.4
2.5
29.1
29.7
0.3
Cash deposits
319.0
319.0
3.1
Private equity
121.6
169.2
1.7
3,951.1
6,146.5
60.1
136.8
87.1
0.9
Corporate bonds
81.6
126.7
1.2
Public sector
64.2
60.3
0.6
0.0
0.0
0.0
1,961.3
2,908.0
28.5
33.8
28.6
0.3
166.3
440.8
4.3
42.4
45.6
0.4
259.5
361.2
3.5
14.9
25.2
0.2
Sub total foreign
2,760.8
4,083.5
39.9
Total
6,711.9
10,230.0
100
Other
Fund of hedge funds
Unquoted
Fixed interest corporate bonds,
ordinary and convertible shares
Sub total UK
Foreign
Quoted
Fixed interest
Index linked
Public-sector bonds
Corporate
Ordinary and convertible shares (equities)
Unit trusts
Property
Other
Unquoted
Fixed interest corporate bonds
Private equity
Unit trusts
13
15
More than 255,000 members and beneficiaries from 367 employers are part of WYPF
Membership trends
Membership
Active members
Beneficiaries
Current pensioners (including widows
and children’s pensions in payment)
Deferred members:
Deferred pensioners
Undecided leavers
Frozen refunds
Totals
31 March 2014 31 March 2013
92,047
90,919
75,529
72,666
75,481
8,266
72,270
2,426
8,257
255,313
246,538
2014
2013
16,231
10,951
3,990
Joiners and leavers
Joiners
Employees/councillors joining with
no previous membership
Employees with transfers from:
Other local-government funds
114
34
Other pension schemes
207
151
16,552
11,136
2,285
2,187
97
100
Members leaving with entitlement to deferred
benefits, pension transfer rights, or a refund
11,584
5,958
Total leavers
13,966
8,245
Total joiners
Leavers
Members awarded immediate
retirement benefits
Benefits awarded on ‘death in service’
We have re-stated the 31 March 2013 numbers because of changes after the 2012/13 financial statements were finalised.
Your 2014/15 cut-out-and-fold fact card
Don’t let your
pension become
prey to pension
liberation fraud
Predators
stalk
your
pension
Companies are singling out savers like you and claiming that
they can help you cash in your pension early. If you agree to this
you could face a tax bill of more than half your pension savings.
The Pensions Advisory Service has launched
an attention-grabbing new campaign to warn
members of pension schemes about the dangers
of pension liberation fraud, which is when
companies claim they can help you cash in your
pension early. What they don’t tell you is that you
could end up with a tax bill of more than half your
savings as a result.
‘Pension loans’ or cash incentives are being used
alongside misleading information to entice savers
as the number of pension scams increases. This
activity is known as ‘pension liberation fraud’ and it’s on the increase in the UK.
Don’t let your pension become prey.
For most people, promises of early cash will be bogus and are likely to result in
serious tax consequences.
Tax charges of over half the value of your pension could fall on you for taking
an ‘unauthorised payment’ from your pension fund in this way. In addition, fees
deducted from your pension for the transfer are unlikely to be recovered. Such
fees tend to be very high and could be 20% or more of your pension savings.
C O N T R I B U T I O N S
How much do I pay?
Your pay
5.5%
5.8%
6.5%
6.8%
8.5%
9.9%
10.5%
11.4%
12.5%
Contribution rate
From 1 April 2014 to 31 March 2015
Up to £13,500
£13,501 to £21,000
£21,001 to £34,000
£34,001 to £43,000
£43,001 to £60,000
£60,001 to £85,000
£85,001 to £100,000
£100,001 to £150,000
More than £150,000
5 0 / 5 0
S E C T I O N
Can I pay less for a while?
A L L O W A N C E S
Annual allowance
Lifetime allowance
£40,000
£1.25m
HMRC allowances 2014/15
How much can I pay in before tax?
T A X
Go 50/50 and you can pay half your regular
pension contributions for a while and continue
to build up some pension, while still getting the
full protection of the pension scheme’s generous
death benefits. But think carefully – you will get
half the pension for the contributions you pay
while you’re in the 50/50 section.
T H E
Your employer decides your contribution rate
by matching your actual pensionable pay to the
appropriate ‘band’ in the table above. The bands
increase every year by the Consumer Price Index.
Fact Card here
O L D
S C H E M E
N E W
S C H E M E
1/160th
A lump sum of three times your
pensionable pay
Trade £1 of pension for £12 lump sum
65
No
Final salary
Your pay – excluding
non‑contractual overtime and nonpensionable additional hours
1/60th
How is my pension
enhanced if I retire
because of ill health?
Build up rate for survivor
benefits
What death grant is paid if
I die ‘in service’?
Can I trade pension
for lump sum?
What’s my normal pension
age?
Can I reduce my
contributions?
Revaluation rate based on
What pay counts towards
my pension?
What’s the build up rate?
CPI (Consumer Price Index)
Tier 1: enhancement to
normal pension age
Tier 2: 25% enhancement to
normal pension age
Tier 3: temporary payment of pension
for up to three years
1/160th
A lump sum of at least three times
your pensionable pay
Trade £1 of pension for £12 lump sum
Your state pension age (minimum 65)
Yes – you can pay 50% contributions
to get 50% pension
Consumer Price Index (CPI)
Your actual pay – including noncontractual overtime and additional
hours if you’re part time
1/49th
LGPS 2014
Tier 1: enhancement to
normal pension age
Tier 2: 25% enhancement to
normal pension age
Tier 3: temporary payment of
pension for up to three years
What are pensions
increased by once
in payment?
Two years
Old a nd new
C O M P A R E D
CPI (Retail Price Index for pre‑2011
increases)
How long do I have to be
in the scheme before I’m
entitled to a pension?
LGPS 2008
Three months
E X T R A
Find out more at:
www.pru.co.uk/localgovavc
www.scottishwidows.co.uk/westyorkshire
With additional voluntary contributions
you can buy extra pension and lump sum at
retirement. You pay a percentage of your
salary or a set amount through one of our
AVC providers. AVCs are flexible – you can
change your payments, take a break, or stop
paying at any time.
AVCs
APCs
Buy up to £6,500 of guaranteed extra
yearly pension for yourself in the LGPS with
additional pension contributions. You can
either pay regular monthly contributions
or a one-off lump sum, and the pension you
buy is fully inflation-proofed, both before
and after retirement.
Find out more – ask us for a quote
There are two ways to pay extra
and get a bigger pension.
How can I get a bigger pension?
P A Y I N G
WYPF
PO Box 67
Bradford
BD1 1UP
memberfactcard april 2014
@WYPF_LGPS
facebook.com/westyorkshirepensionfund
See www.wypf.org.uk for more about
the information covered in this leaflet
We are here
Or call in to our offices on Hall Ings, Bradford
(opposite Telegraph and Argus).
Phone 01274 434999
Fax
01274 723228
Email wypf@bradford.gov.uk
Opening times
Monday to Friday 8.45am to 4.30pm
T O U C H
If you die while you’re paying in, we’ll pay
a death grant of at least three years’ pay to
those you leave behind. Just make sure you
tell us who should get the money by filling
in a death grant ‘expression of wish’ form.
You can get one from our website.
I N
How to contact us
B E N E F I T S
What does my family get if I die?
D E A T H
West Yorkshire Pension Fund
2014/15
FACT
CARD
West Yorkshire Pension Fund
member