There continue to be changes within the trustee board and at the Association’s last AGM earlier this year  Andy Jones, Finance Manager at Milford Haven and Linda Henry, Group Personnel Manager at Associated British Ports, were appointed as alternate port trustees.

Richard Williamson, a Boston pilot, also retired as a trustee on 30 September (See facing page).  Richard became an alternate trustee in June 1998 and a full trustee in May 2002.  In February 2003 Richard took on the role of Deputy Chairman and became the Fund’s Chairman in February 2006.  Richard had the unenviable task of taking the P.N.P.F. through one of its most difficult periods leading up to the first court hearing.  In February 2009 Richard reverted to the role of Deputy Chairman and continued to contribute a great deal of his time and energy to resolving the issues facing the P.N.P.F.  I know his hard work is very much appreciated by myself and the other trustees. At his last trustee meeting the Chairperson of the trustees, Heather McQuire, presented Richard with a painting of the Liverpool pilot boat no.1  (for those of you who do not know Richard was apprenticed in Liverpool).  Richard is leaving the U.K. for warmer climes and we all wish him well for the next phase of his life in Italy.

Additional Voluntary Contributions

Those members who continue to contribute to the existing A.V.C. scheme should have received their 2010/11 benefit statements from Loretta, if you have not done so please contact Loretta, in writing, requesting a duplicate.

Summary Funding Statement 2011

The 2011 Summary Funding Statement was sent out to all members on 21 September 2011.  It has not changed significantly from the 2010 statement as until the judgement is received from the pending appeal hearing the trustees are unable to finalise the 2007 and 2010 triennial valuations.

Benefit Statements as at 31.12.2011

When you receive your annual benefit statement in 2012 you will see a number of changes in the information it contains.  To reflect the changes in the Annual Allowance (see my letter of 9 December 2010 to all active members) the benefit statement will show the amount of annual allowance used and will include any A.V.C.s you may of paid during the Payment Input Period.  Going forward the “carried forward” of unused allowance for the previous three tax years will also be included.

Tyne’s Appeal Hearing

We have been advised by Hogan Lovells that Tyne’s appeal is due to be heard week commencing 14 November and should last 3 days.  We then have to wait for the judgement to be handed down and given how close Christmas will be then this may not be received until 2012.

Suspended Pensions

This is a plea for information.  We have had to suspend three pensions in payment as we are unable to ascertain the whereabouts of a Mr. J. S. Emberton (ex Manchester pilot), Mr. M. J. Parkin (ex Wisbech pilot) and a Mrs. M. Campbell (an Ipswich widow).  If anyone can give us any information on our three missing members I would very much appreciate it.

Auto-Enrolment

It is less then a year before the biggest pension reforms since the Old Age Act 1908 (another reason for me to retire!) come into force, yet apathetic employers are dragging their feet with only 7% of the larger firms making any plans for auto-enrolment.  Only a quarter of employers have budgeted for the cost of auto-enrolment with larger employers expecting between 12-17% of their employees to opt-out.  Smaller employers expect the opt-out rate to be higher with between 33-39% opting-out.

Early Access to Pensions

It now appears the government will look again at introducing early access to pensions if large numbers of workers opt-out of auto-enrolment due to be introduced in a phased process in October 2012, especially if lack of access is the main reason for the opt-outs.

This plan was shelved in April following yet another government consultation as it was felt it would add to the complexity already facing providers with the introduction of the auto-enrolment regime.

Working Beyond Age 65

A recent study carried out on 1000 employees over the age of 60 revealed 26% intended to work beyond 65 with a third of these wanting to continue working after age 65 to enhance their retirement savings.  The last decade has seen a doubling in the number of people over the age of 60 who are carrying on working and the number is expected to increase as the abolition of the default retirement age of 65 is phased in.

Inflation

A recent survey shows that pensioners fear that inflation and government tinkering with the pensions system will impact their retirement incomes.  To combat inflation respondents to the survey said they would draw on savings, investments and even consider selling their property and downsizing.  I have all this to look forward to!

Well this will be my last article for the Pilot Magazine and I will miss this tenuous contact with my members.  As it is the last quarter in 2011 I don’t think it is too early to wish you all a very good Christmas and a happy and healthy 2012. To celebrate my retirement Tom and I are sailing off into the sunset and taking a cruise up the west coast of South America and finishing in Florida.  At midnight on the 31st of December I will raise my glass to all of you who have been so patient and kind during my time with the P.N.P.F.  As we say where I come from : y’all take care.                Debbie Marten

Retirements

May 2011 to July 2011

P. N. Bush          Falmouth

R. Casson         Lancaster

J. D. Gray         Humber

J. S. MacGregor         Poole

*********

Pensioners Deceased

May 2011 to July 2011

P. W. Brown     London-North

A. F. Esson     Aberdeen

J. M Estill     PLA

D. R. Godfrey     London-South

J. F. Males     London–South

J. G. Mitchell     Clyde

J. Sanderson     PLA

N. Sigley     Manchester

O. Walton     Harwich

The Secretariat

Trustees

There has been a change to the Deputy Chairman of the P.N.P.F. since my last article.  On 2 June 2011 the Association appointed Bill Bean, PLA Pensions Manager, Deputy Chairman of the P.N.P.F.  I have also heard, but not been advised in writing, that at the Association’s AGM held on 5 July 2011 two new alternate trustees were appointed.  They are Andy Jones from Milford Haven and Caroline Marrison-Gill from Peel Ports.

Association alternate trustees do not always last long so watch this space.  One that did was Richard Pugh, Finance Director at Milford Haven, and I am very sorry to say that at the AGM mentioned above, he resigned as an alternate trustee as he will be retiring from Milford Haven later in the year.

Expression of Wish Forms

It has been a while since I mentioned Expression of Wish forms, but if your personal circumstances have changed you may wish to change the beneficiary on your Expression of Wish form.  If you do require a new form just contact the Secretariat and we will get one off to you.

2010 Valuation

The actuaries are currently carrying out the 2010 triennial valuation of the P.N.P.F. and it is hoped that once the legal proceedings finally finish that both the 2007 and the 2010 valuation can be finalised and signed off by the trustees and a recovery plan put in place.

Legal Proceedings

Members should be receiving a letter from the Chairman about the current position of the legal proceedings.  I can say that we now have an appeals hearing date which is the week commencing 14 November 2011.

Flat-rate Pensions

The government believe that their plans for reform for the state pension will make it fairer for the self-employed, women and low earners.  The reforms should reduce complexity and the need to rely on means-tested benefits.  A simpler state pension should lift millions out of poverty without hitting the taxpayer’s pocket.  Recent research by the Pensions Policy Institute predicts nearly 7 million pensioners will be an average of £23 per week better off by 2034.

Retirement Planning

A recent report indicates that half of workers over 30 are failing to save adequately for retirement and a fifth are not saving anything.  There appears to be a disconnect between the desire to be secure in retirement and implementing an achievable financial plan.  The level of people failing to put enough money away for later life has been broadly unchanged over the last five years.

Research indicates the average income people wanted for a comfortable retirement was £24,300, but at current saving rates this is unattainable.  An additional £58 per month would be sufficient to provide most people with an adequate income.

Care-focused Annuities

The Dilnot report published on 4 July 2011 called for a change in legislation to allow pension payments to vary according to people’s care needs.  The paper suggests a change from fixed annuities so that retirees can chose a smaller initial payment which could then be increased to pay for care when certain “pre-defined” needs arise.  This is an opportunity for Insurance companies to designed new products to fit a niche market.  One possible new product could be an ‘immediate needs’ type of annuity to cover the cost of care when it arises.

Find a Fisherman

Aviva has committed £500,000 to its Find a Fisherman campaign.  The company is trying to track down fishermen who are owed money from five poorly administered pension schemes before it closes the schemes for good in 12 months time.  The schemes were set up in the 1960s, but many members left during the cut back on fleets in the 1970s.  Aviva have found 5350 members but a further 6000 remain unfound.  Any surplus funds will be distributed among the identified scheme members.

DWP Bereavement Service

The Department of Work and Pensions has introduced a new streamline service that will allow bereaved relatives to check their eligibility for financial help with funeral costs and other benefits with just one phone call. Later in 2011 they hope to expand the service to cover several government agencies and departments so that notification of death need only be done once for tax affairs, passports and driving licences. The main number to call is:

0845-606-0265.

Debbie Marten :

The Secretariat

On 31 March 2011, Richard Williamson, Boston pilot, stepped down as Deputy Chairman of the P.N.P.F. and Joe Wilson, Tees pilot, will be replacing him in this role.  Richard will continue in his role as a Trustee Director until his retirement from pilotage later this year.

Independent Trustee/Chairman

At the end of March 2011 the Chairman’s, Heather McGuire, consultancy contract was terminated by Associated British Ports.  In order to retain Heather on the Board, the trustees resolved to amend the Company’s articles of association to allow the appointment of an independent trustee/chairman.  At an Extraordinary General Meeting held on 24 March 2011 the shareholders of the P.N.P.F. Trust Company limited unanimously adopted the trustees’ proposal and Heather McGuire was appointed to the role of independent professional trustee and chairman with effect from 1 April 2011.

Rule Changes

At their February 2011 quarterly meeting the trustees agreed to adopt a new Rule 9(4) which authorises the trustees to seek information from the Participating Bodies to assist in the formulation of a recovery plan when the results of the 2010 annual valuation are finalised.

Retail Price Index/Consumer Price Index (RPI/CPI)

The government has implemented legislation that changes the index used for statutory pension increases from RPI to CPI.  Although this will not affect increases awarded to pensions in payment it does affect increases awarded to deferred pensions from 2011.

Annual Allowance

From 6 April 2011 the government has substantially reduced the annual allowance (the amount you can build up in a pension scheme without paying tax on it).  It has been reduced from £255,000 to £50,000.  This allowance applies to benefits earned under all registered pension schemes.  To administer the new requirements the trustees have decided to set up a uniform Pensions Input Period (PIP), which will run from 6 April to 5 April.  This will have an impact on the annual benefit statements you will receive from 2012.  The benefit statement will include a figure for the annual gross pension accrued to 5 April, as well as the amount of annual allowance used during the PIP.  This information should help you complete your tax returns.

Legal Proceedings

Justice Warren presided over the hearing. during January and February 2010 and a judgment was handed down on 28 June 2010.  Various parties have now commenced appeals on certain issues and the hearing of these appeals is due to commence on 16 May for 5 days.  All through the course of these proceedings and subsequent appeals the trustees have kept the Pensions Regulator informed.

2010 Benefit Statements

We are currently in the process of running off the 2010 benefit statements and these will still be in the old format, ie as at 31 December 2010.  The new format will take effect from 2012.  The 2010 statements should be sent out in the next week or two.

Budget 2011

On 23 March 2011 the Chancellor presented his budget for the year and listed below are what happened on the pensions from.

Contracting-out

For defined benefit (final salary) pension schemes contracting-out will be scrapped as part of the move to a single-tier state pension.  There are concerns within the industry that the abolition of contracting-out may lead to more employers closing their schemes to existing members.

State Pension Reform

The Chancellor confirmed that the government would implement a single-tier state pension.  The proposed system would still be flat-rate and would continue to be based on contributions.  The pension would be about £140 pw, but would not apply to people who retire before the reforms are implemented.

Merger of Income Tax and National Insurance

It was announced that the government would consult on the merger of income tax and national insurance contributions to make it “fit for the modern age.”  Pensioners will not pay more tax as a result of the merger.  Within the industry there are concerns that the merger will lead to an end to the current procedure for obtaining tax relief on contributions.

State Pension Age

The Chancellor confirmed that the government wants to put in place a more automatic method of increasing the state pension age based on regular reviews of longevity.  It will reach 66 in 2020 and 68 by 2048.

Pensions Tax Relief on Contributions

The Budget confirmed the move to reduce the annual allowance for tax-free pension contributions to £50,000 and confirmed the lifetime allowance would be reduced to £1.5m from the 2012/13 tax year.

Public Service Commission

The Treasury has backed Lord Hutton’s recommendations for public sector pension reform and the Chancellor confirmed there would be no “cherry picking” of his proposals.  He said there should be similar changes to the pensions of MPs.  Lord Hutton recommended the phasing out of final salary schemes in favour of cheaper career average schemes by 2015.

Debbie Marten

debbie@pnpf.co.uk

RETIREMENTS

November 2010 to January 2011

D. A. White Dart

D. McLindon Plymouth

I am pleased to say that there have been no changes within the Secretariat,

Changes to Trustees

At the end of August Sandy Morrison, our longest serving trustee, resigned from the board and Bob Baker, Chief Harbour Master at Forth Ports, stepped up to fill the vacancy.  At their AGM the Association appointed two new Alternate Trustees, Val Milne – Group Pensions Manager at ABP and Tony Fitzpatrick, HR Manager at Peel Ports – Mersey (Liverpool)

Pension Increases

The Government has changed the statutory rate of pension increase from the Retail Price Index (RPI) to the Consumer Price Index (CPI), this does not affect our pensions in payment but may affect deferred pensions coming into payment on or after 1 January 2011.  Therefore from 1 January 2011 the pre 1997 service element of your pension will increase by the guaranteed amount of 3% and the post 1997 service element of your pension will be increased by 4.6% September’s RPI.  P.N.P.F. pensioners and widows should be receiving a letter from Loretta confirming details.

Progress of Appeal

We now know that Tees is appealing the Judgment handed down on 28 June 2010 which has resulted in a number of cross appeals from some of the other representative parties.  When everything has been finalised we will be sending out a communication to all our members updating them on the current position.  The Court of Appeal should hear the appeals before the end of May 2011

State Pension Age

The Government plans to increase the state pension age to 66. The increase in the women’s state pension age is due to be accelerated in 2016 so that it reaches 65 by November 2018.  Both the male and female pension age will then increase to 66 by April 2020, six years earlier than planned.  The Government estimates that this will affect about 5.1 million people.

Data Verification

In the first half of 2010 the Pensions Regulator (tPR) published a guidance on the need for pension schemes to maintain high-quality standards of data.  The data was broken down into two categories, Common Data (applicable to all schemes) and Conditional data (scheme specific).  We have recently carried out a data verification exercise and although we scored reasonably well on our common data it could be improved.  The exercise has revealed that some members’ data is incomplete so in the new year we will be contacting those members and asking them to confirm the missing data in order that we may update our records.

New Restriction on Tax Relief

Following the Emergency Budget in June 2010 the Government issued a policy statement setting out details of its “high pension input” taxation proposals.  It is proposed that from April 2011 the Annual Allowance, currently £255,000, will be reduced to £50,000 and any excess benefit may give rise to a tax charge payable by the member. This applies to total pension contributions, ie from the employer and the employee, and to all pension arrangements to which an individual belongs.  In conjunction with these changes the Government is also proposing to reduce the Lifetime Allowance to £1.5m (currently £1.8m).  The change in the annual allowance will affect very high earners and earners with long service.

A factor of 16 will be used to measure the value of the defined benefit pension accrued over the year, so to give a simplified example where inflation is zero the Annual Allowance is exceeded if a member’s accrued pension increases by more then £3,125 pa (£50,00016)

There are mitigating factors such as the ability to carry over surplus allowances for a period of 3 years and an adjustment for consumer price inflation.

For P.N.P.F. members an exercise will be carried out to see who may be affected by the April 2011 changes when the 2010 benefit statements are run in early 2011.  It is also proposed to amend the benefit statement to show the amount of the annual allowance used.

Spending Review

In the Chancellor’s spending review it was announced that structural changes would be made to public service pensions and increased member contributions from 2012.

The pensions saving credit is to be frozen.

Funding of £1.5 billion is to be made available for victims of the Equitable Life fiasco.

Finally, I would like to take this opportunity to wish you all a very Merry Christmas and a healthy and Happy New Year.

Debbie Marten :  debbie@pnpf.co.uk

The Secretariat

Benefit Statements 2009:The benefit statements for 2009 were sent out during the first quarter of 2010 (a bit better than last year!) and there were no significant changes that need to be mentioned.

Tax Code Changes : Pensioners and widows should be receiving their 2010/11 tax code changes.  If you have not received a notification then in all probability your tax code has not changed.  For some reason HMR&C has been advising pensioners and widows to check that we are not deducting national insurance contributions (NICs) from their pensions.  Why they have this bee in their bonnet is beyond me as a pensions payroll is by definition only subject to income tax deductions, so just ignore this bit of scaremongering.

A.V.C.s Benefit Statements: Loretta is in the process of checking the 2009 annual A.V.C. benefit statements received from our A.V.C. providers and these should be sent out to you in the near future.  If in receipt you have any queries please contact Loretta at Loretta@pnpf.co.uk.

P60s: As I write Loretta is busy stuffing the 2009/10 P60s into envelopes due to be sent out to all pensioners and widows in the next week or two.

Trustee Annual Report & Accounts 2009: The annual accounts for 2009 are in the process of being audited by our auditors, PKF, and it is hoped to have these as well as the Trustee’s annual report signed off at the May 2010 quarterly meeting.  I will then arrange for them to be printed and sent out to members, hopefully during the month of June.

Expatriate Pensioners: The campaign to treat all expats state pensions equitably has received another blow as the European Court has ruled against uprating the U.K.’s state pension for all expatriate pensioners regardless of their country of residence.  Around 500,000 U.K. pensioners who have spent years paying their national insurance contributions do not receive annual increases to their basic state pension.  Whether they get the increase or not  depends on which overseas country they have decided to reside in.

2010 Budget Special: On 24 March 2010 the Chancellor presented his 2010 budget and although not earth-shattering it did affect some aspects of pension provision.

Restrictions on pension’s tax relief: The budget confirmed the government’s intention to restrict tax relief on pension contributions for high earners.  Individuals with income above a floor of £130,000 are potentially liable.  The restriction on tax relief will be assessed through an individual’s self-assessment tax return and dealt with through a recovery charge. It is expected that this change will affect around 300,000 taxpayers and could undermine the U.K.’s long established approach to pensions taxation by creating uncertainty as to whether it “pays to save” in a pension.

Lifetime and Annual Allowance: The lifetime and annual allowances are to be frozen at their 2010/11 level of £1.8m and £255,000 respectively.  Both are due to remain at these levels until at least the 2015/16 tax year.

Default Retirement Age: The default retirement age of 65 is to be reviewed but no changes will be made before April 2011.

Trivial Pensions: Further consideration is to be given to simplifying rules on commuting trivial pensions by allowing couples to combine their pension pots to achieve better value when purchasing an annuity.

Pension Policies: One of the worst kept secrets has been confirmed and the general election date is to be 6 May 2010.  So what are the pensions’ policies of the political parties?

Conservatives – the Tories have confirmed support for auto-enrolment; restoring the link between state pensions and average earnings; ending the requirement to purchase an annuity at age 75; capping public sector pensions above £50,000; bringing forward the date at which the State pension age starts to rise to 66 to 2016 for men and 2020 for women and reversing the affects of the abolition of the dividend tax credit for pension schemes.

Liberal Democrats – the LibDems want to merge the basic state pension and state second pension into one; make the National Employment Savings Trust (NEST) more attractive to the general public by making it more flexible and restoring the earnings-link to State pensions which would include the abolition of contracting out.

Labour -  their manifesto pledge is to raise basic state pension in line with earnings rather than prices by 2012 subject to affordability and fiscal position, but by 2015 at the latest, getting rid of the default retirement age of 65 and  introducing more flexibility to make it easier for companies to run good pension schemes.

Debbie Marten

I cannot believe another year has come and gone and that it is 2010 already.  May I take this opportunity to wish you and yours a healthy and happy new year.

The Secretariat Alternate Trustees

The last quarter of 2009 saw the appointment of a new Alternate Trustee Director.  The Association has appointed Captain Robert Baker, Chief Harbour Master of Forth Ports plc.

Benefit Statements 2009

We are currently in the process of obtaining and confirming year end earnings for active members and should be in a position to send out benefit statements by the end of February.

2010 Pension Increases and Calendars

Just before Christmas all pensioners and widows were sent letters confirming the percentage increase they would be receiving from 1 January 2010, as well as a calendar for the year.  If you have not received yours please let us know at the Secretariat and we will put another in the post.

Pensions Payroll

Although it should not affect pensions in payment, just to let you know, we are doing a parallel run during the January payroll as we are changing our BACs provider and bringing the BACs transmission in-house.  The parallel run should highlight any teething problems so we should be fine when flying solo in February.

Overseas Pensions Payments

The Bank of Scotland has decided to terminate its overseas payment facility (probably due to cost cuts) from 1 January 2010.  So we had to look around for another provider that would not cost an arm and a leg.  No mean feat with so few overseas payments.  The good news is Loretta has found one, the bad news is they could not take us on until March.  This means we are paying January and February by cheque, unless requested to pay into a U.K. bank account.  Apologies for any inconvenience this may cause.

Expression of Wish Forms

Just a brief reminder that active members whose personal circumstances may have changed should review the contents of their Expression of Wish form as they may wish to make a new one.  If so, please let the Secretariat know and a new form will be sent to you for completion.

Pensions 2010

So what can we look forward to in 2010 for pensions on a legal and regulatory front?

Personal Accounts

2010 will be a year of law-making in respect of personal accounts.  Areas likely to be covered are employers’ duties and automatic enrolment, the establishment of a personal accounts scheme as well as a scheme administrator.

State Pensions

There will be changes to the State pension system, in particular, the number of ‘qualifying years’, ie number of years the full National Insurance contribution was paid, required to obtain a full Basic State Pension will drop from 44 years for men, 39 years for women to 30 years for both sexes.

Minimum Pension Age

From 6 April 2010 the earliest age from which a member of a pension scheme may take a pension (other than on ill health grounds), without higher tax charges applying, will rise from age 50 to 55.

Default Retirement Age

The government has announced that 2010 will see a review of the ‘default retirement age’ of 65.  It is expected that this age will either be raised or abolished.

Pre Budget Pledges

Public Sector Pensions

The full liability in respect of the unfunded public sector pensions will be calculated and disclosed for the first time in the 2009/10 ‘Whole Government Accounts’.  These schemes will have employer contributions capped to limit the liability to us, the taxpayers, and high earners are expected to pay more.  In theory, these reforms will save £1bn. a year.

The State Pension

The state pension will rise by 2.5% in April compared to a September Retail Price Index inflation of -1.4%.  Do you think the Government is trying to buy the ‘grey’ voters?

Tax Relief

Individuals who earn more that £130,000 and pay pension contributions of more than £20,000 pa will now be caught by the restrictions on pension tax relief.

In Brief

Equitable Life

Equitable Life will reverse last year’s cuts in policy values and award with-profit holders a 3.5% interim bonus due to improvement in investment returns during the second half of 2009.

Centenarians

The number of people over the age of 100 is set to almost double from 12,000 to 20,000 over the next ten years.  By 2050 the number could soar to 280,000 when the total number of pensioners will be around 16 million compared to 12 million today.

Branding

The Personal Accounts Delivery Authority has renamed personal accounts, following nine months of research.  They will now be known as the National Employment Savings Trust (NEST).  Let us hope these live up to their new name.

Debbie Marten

The Secretariat

Annual Accounts 2009

We finally managed to get the Trustee’s Annual Report & Accounts for 2009 out to members around the middle of August.  If you have not received a copy, but would like one please let either Loretta or me know.

Additional Voluntary Contributions

Loretta has sent out the additional voluntary contributions renewal to those few members still contributing to the A.V.C.s scheme.  The next step is the annual A.V.C.s benefit statement which we are currently awaiting receipt from Equitable Life and Aviva (aka Norwich Union).

Summary Funding Statement

All of you should have received a copy of the annual funding statement sent out in September.  This has resulted in numerous telephone calls to the Secretariat and pilot trustees from worried members.  I realise that it made less than palatable reading but it contained information that we are required to tell you by statute.  One pensioner even told me it looked like an obituary notice, for which I apologise but my colour copier went on the blink halfway through printing them and I could only use the black print setting as I was up against a deadline.

Change of Address

We have had several instances of returned correspondence and would like to remind members that we are not psychic and if you are changing address please write and tell us your new address.

Early Access to Pensions Lump Sum

In Setting pensions free, the LibDem MP, Steve Webb, presents an argument for extending early access to pensions savings.  He would like members to have the option to take the tax free cash sum early, to clear mortgage arrears, put down a deposit on a house or for a large capital purchase.  This more flexible approach could provide a significant boost to the economy and may even increase the total amount saved.

Expat Pensioners and Widows

If an appeal to the European Court for Human Rights succeeds over 500,000 expatriate pensioners and widows could see their state pension double.  At present expats living in countries where the U.K. does not have a reciprocal social security agreements, such as Australia, South Africa, Hong Kong and Canada have had their state pension frozen.

If the appeal to the Grand Chamber is successful, those affected pensioners could see their weekly rate double to £82.05 a week depending on their level of national insurance contribution.  A decision on the appeal should be made by March 2010.

The countries that the U.K. has social security agreements with are: Barbados, Bermuda, Bosnia-Herzegovina, Croatia, Israel, Jamaica, Jersey and Guernsey, Mauritius, Montenegro, Philippines, Serbia, Turkey, USA (whew!) and the former Yugoslav Republic of Macedonia.

News in a Nutshell

Total PPF Levy fixed for 2010/11

The Pension Protection Fund (PPF) has announced that the total levy for 2010/11 will be £700m, increased in line with wages inflation.

Consultation on Future of MPs’ Pensions

The Senior Salaries Review Board has published a consultation paper on MPs’ pension as a first step to reducing costs.

Pension Deficits at all-time High

The FTSE 100 companies with defined benefit (final salary) pension schemes had a combined deficit of £96bn at mid-July 2009.

Chadwick’s Interim Report

Sir John Chadwick has issued an interim report indicating a more flexible approach will be taken to determine the relative losses of Equitable Life’s policyholders.  They will no longer need to demonstrate that they relied on flawed government information.

Ombudsman Overcomes Case Backlog

The Pensions Ombudsman has managed to reduce his backlog of cases in 2008/09 by around 90% according to his report and accounts for 2008/09.

TPAS copes with Maladministration

In 2008/09 The Pensions Advisory Service (TPAS) saw a rise in the number of complaints of about 10%.  The main reason for the increase was a 59% rise in complaints about maladministration.

Regulators New Statement on Economy

The Pensions Regulator (tPR) has issued a third statement setting out its position on the current economic volatility.  TPR indicates that it will view favourably flexible approaches in setting recovery plans to reduce deficits.

A Costly Affair

I had to include this item as it appeals to my sense of humour.

According to an extramarital dating website cheating husbands and wives spend massively more on their love affairs that they do on the pensions.  According to the website cheaters spend on average £3500 a year or £291 a month on maintaining the affair, including hotels, phone calls and flowers which is five times more than the average £59 a month spent on pensions (source: Halifax 2009).

It is amazing the articles you can discover in turgid pensions magazines.

Debbie Marten

debbie@pnpf.co.uk

Retirements

May 2009 to July 2009

D. Barnicoat Falmouth

June

G. H. R. Duff Yarmouth

May

S. D. Wood Liverpool

June

Pensioner Deaths

May 2009 to July 2009

L. E. Fane Ipswich

F. I. Forsaith Shoreham

J. J. Frankish London South

J. Hamilton Clyde

T. D. Hettle London T.H.

R. D. McGlashan Forth

E. T. Milford S. E. Wales

A. J. Moore Harwich

P. A. Roberts Dover

J. S. Robertson Clyde

W. G. Wilcox Liverpool

E. F. Williams S. E. Wales

The Secretariat

Things have been relatively quiet in the Secretariat over the last quarter, well as quiet as possible under the circumstances, so there is not much to report.

Annual Report & Accounts 2008

I must apologise to members about the delay in getting the 2008 Trustee Annual Report and Accounts out to you, but a change in the audit team meant a new approach was adopted and PKF refused to sign off the accounts until the last t was crossed and i dotted.  You will have them by the end of summer – I promise.

Ill-Health Rule

The trustees have agreed to expand the ill-health rule to allow them the discretion to reduce an ill-health pension (currently they can only suspend ill-health pensions).

I am hopeful that this will be the last change for the rest of the year and that I will be able to send the Rules off to be reprinted in the not too distant future.

Budget 2009

This year’s budget on 22 April 2009 introduced a range of measures, some of which take effect from 2010-11 and others from 2011-12.  Fiscal tightening was expected, but major changes to the pension’s tax regime for higher earners were never anticipated.

The vast majority of pension scheme members will not be affected by the new provisions, the government believes only 1.5% of pension savers will be.  However, for members earning more than £150,000 pa its impact could be both immediate and in the longer term serious.

The Budget announced that from 6 April 2011 tax relief on pension contributions would be restricted for members with an income of at least £150,000.  When the new regime is in operation, members affected will be entitled to retain no more than basic-rate tax relief (20%) on pension savings.  Some tapering is expected with the restriction in basic rate tax relief applying in full to individuals with income of £180,000, or over.

Transitional anti-avoidance provisions, effective 22 April 2009 to prevent “front-loading” of benefit accrual to obtain the full tax relief at 40% in advance of the 2011/12 changes were also announced.

These restrictions apply not only to money purchase arrangements, but to final salary arrangements as well.

It is a move designed to boost Treasury revenues, but has triggered fears that it could be a precursor to further reductions in pensions tax relief.

Although the changes will only affect a small number of people they are most likely to be senior managers who influence the employer’s pension policy.

default Retirement Age

The government’s review of the default retirement age, which allows employers to force workers to retire at age 65, has been brought forward from 2011 to next year, in response to “changing demographic and economic circumstances”.  There has been mixed response to this action as the Confederation of British Industry (CBI) believes that a default retirement age assists staff in determining when it is right to retire and allows firms to plan ahead with more confidence.  Whereas the TUC welcomed the early review but said that employers should not force workers into working longer by inadequate pension provision.

Trivial Commutation

Finally, under much delayed regulations pension pots up to the value of £2000 can now be taken as a lump sum at retirement, regardless of the member’s other pension provision.  Previously members who had overall pension pots amounting to £17,500 were forced to find an accumulative annuity.  These provisions will not apply to personal or stakeholder pensions.

Debbie Marten

debbie@pnpf.co.uk

Retirements

February 2009 to April 2009

G. Turner Tees

March

Pensioner Deaths

February 2009 to April 2009

J. P. Baines Manchester

W. V. Fry Manchester

J. H. Law Manchester

C. A. Rhodes Medway

K. N. Taylor Liverpool

PNPF COURT CASE

PNPF court case

This topic was the subject of a special debate at the Interim Delegates Conference in May. Chairman of the Trustees, Richard Williamson (Boston), referred delegates to the report contained within the conference pack (available to members on request) but explained that due to the litigation process he had been unable to include specific details. The Court hearing has been set for 18^th January 2010 and a “deliberation” will be made within three months of the hearing. Richard explained that the hearing and subsequent deliberation would not conclude the issues but would represent the beginning of what was sure to be a long process in determining liabilities for the fund deficit. Because of the complexities of the hearing, a sub committee had been set up to trawl through the vast amount of documentation going back as far as the 1970’s when the new Pilotage Act was first mentioned. In a highly unusual, but welcome development, all available documentation has been placed  on the solicitors’ (Lovells) website to which all members have access upon application.

Due to these court proceedings it had not been possible to complete the Triennial Valuation and consequently the PNPF had met with the regulator to explain the situation. The outcome of the meeting was that the regulator was satisfied that the legal action was necessary and in the interests of both members and pensioners.

Following the presentation Joe Wilson announced that Richard was now standing down from Chairman of the PNPF Trustees to become Vice Chairman and paid tribute to the phenomenal amount of time and effort that Richard had put in on behalf of fund members and pensioners during his time as Chairman, especially bearing in mind that the Trustees were about the only part of the court proceedings not receiving any remuneration!

JCB

The Secretariat

February saw the end of Richard Williamson’s three year term as Chairman of the P.N.P.F. and I am sure he could not hand over the reins fast enough as it certainly had not been the easiest three years for the Fund.  Mrs. Heather McGuire took over as Chairman of the P.N.P.F. on 12 February and Richard Williamson is now the Deputy Chairman.

Benefit Statements 2008

We have delayed issuing the annual benefit statements to the active members of the Fund until we have all the 2008 pensionable earnings information confirmed.  At the time of writing this article there are still two districts outstanding but we hope to be sending them out this month.

Tax Code Changes

Some of you will have received notification of your 2009/10 tax code changes recently.  No matter what the notification says there is no need to ring the Secretariat to update us as we download the information direct from HMR&C’s website.  If you have a query on the calculation of your tax code the HMR&C telephone number to ring is 0845 300 0627, quoting reference 951 PI 74.

Deferred Pensions

From 6 April 2009 there will be a reduction in the rate of required revaluation of the deferred pensions of members who leave the scheme before reaching their normal retirement date.  The maximum inflation protection (LPI) for deferred pensions will be reduced from 5% to 2.5%.  This only applies to the portion of the deferred pension attributable to pensionable service accrued after 6 April 2009.

A.V.C.s Benefit Statements

The annual statements in respect of your A.V.C.s investments have been sent out to all members who have investments with either, Equitable Life, Clerical Medical or Norwich Union.  If youany queries Loretta is more than happy to deal with them.

Trustee Annual Report & Accounts 2008

As I write the 2008 annual accounts are being audited by PKF.  We hope that the final version will be signed off at the Trustees’ quarterly meeting in May and a printed copy sent out to all active members and pensioners during the month of June.

Equitable Life

In response to the publication of the Parliamentary Ombudsman’s report on the regulatory failure in respect of Equitable Life the Chief Secretary to the Treasury agreed that there had been maladministration in areas and that an ex gratia payment would be made to those who had suffered “disproportionally”.  A former Appeal Court judge is to advise the government on the payouts.  Unfortunately all celebrations are put on hold as the payment of compensation looks set to be delayed, possibly for years, as the process of getting data and assessing relative losses will be very slow, cumbersome and complex.  The resulting compensation payment may be miniscule.

The Public Sector GMP Error

In December 2008 the House of Commons were advised of an error in the payment of some public sector pension entitlements.  It appears that since 1978 inaccurate data resulted in higher annual pension increases being paid than should have been.   The five public sector schemes affected are the NHS, Teachers, Armed Forces, Judicial and Civil Service pension schemes.  An estimated 95,000 people are affected across the five schemes or 5% of the total number of pensioners within those schemes.  The overpayment is estimated at £126m.  The government has been advised that there is not a cost-effective method for recovering these monies, but correct pension payments will be effected from April 2009.  If this had happened in the private sector legislation requires scheme administrators to pursue any overpayment of more than £250 or face a minimum 40% unauthorised surcharge levied by HM Revenue & Customs on the member.

“Pension Apartheid”

The media coverage of the overpayment of public sector pensioners has succeeded in highlighting the disparity between public and private pensions.  In response to mounting pressure the three main parties came out in support of a review to look at ways of cutting down the costs of MPs pensions.

The Conservatives say they would move all new MPs into a defined contribution pension scheme if it won the next election as well as scrapping future accrual into the MPs’ final salary scheme.  It would also bring public sector schemes in line with cheaper arrangements in the private sector.  Why should judges who only contribute 2% of their salary to their pension be given overly generous pensions from the taxpayers’ pocket when private sector employees are being forced to buy annuities from pension ‘pots’ that have fallen in value as a result of the recession and falling stock markets?

Benefits of Deflation

Pundits are predicting that rapidly falling inflation risks tipping over into deflation, but this could prove beneficial to the country’s pensioners.  The latest Retail Price Index (RPI) inflation figures show headline inflation fell from 3% to 0.9% in December, thanks largely to falls in mortgage rates and the cut in VAT to 15%.  The high levels of inflation seen over the past year have had a negative impact on pensioners, but with deflation the falling food and energy prices could help increase pensioner spending power.

Debbie Marten

Happy New Year to you all.  I am sure 2009 will present a challenge to us all.

The Secretariat

I am pleased to report that there have been no changes within the Secretariat and Loretta is fast approaching her first full year with the P.N.P.F.

Alternate Trustees

The last quarter of 2008 saw the resignation of Peter McArthur, a Manchester pilot, as an Alternate Trustee of the P.N.P.F.  To date no member has put himself forward to fill the vacancy.

Benefit Statements 2008

We are currently in the process of obtaining and confirming year end earnings for active members and should be in a position to send out benefit statements by the end of February. 

2009 Pension Increases and Calendars

Just before Christmas all pensioners and widows were sent letters confirming the percentage increase they would be receiving from 1 January 2008, as well as a calendar for the year.  If you have not received yours please let us know at the Secretariat and we will put another in the post.

Rule Changes

During the course of 2008 the Trustees made four changes to the P.N.P.F. Rules, which are summarised below:

Rule 11(2) – “A” Members.  The Trustees have adopted an upper age limit of 55 for new joiners.

Rule 18(6) (7)(8)(9) – Basic Meaning of Pensionable Service.  The Trustees have introduced part-time membership of the P.N.P.F. for employed pilots (new Rule 18(6)&(7)) and self-employed pilots (new Rule 18(8)&(9)).  This Rule also details the adjustments that will be made when calculating the benefits to reflect the part-time membership.

Rule 44(4) – Transfers.  The Trustees have agreed to give members the option of transferring out their additional voluntary contributions to another registered pension arrangement.

Rule 49(4) – Pension Sharing.  The Trustees have amended this rule which now allows ex spouses to retain a Pension Credit in the P.N.P.F.

The Rules are due to be reprinted shortly and an amended version will be sent out to all active members in due course.

Member Communications

I, like all of you, attempt to do my best to be environmentally friendly and so I must apologise for the number of trees that have been felled during 2008 to provide the member communications you have been inundated with in respect of the legal proceedings.  I cannot see this changing in 2009 as we must be seen by the court as endeavouring to keep all concerned appraised of the situation.

Fund’s Solicitor

Last year I advised you of Andrew White’s retirement and the appointment of our new solicitor at Mayer Brown.  The Trustees have decided to amalgamate the litigation and day to day legal admin under one roof and Claire Southern at Lovells is now the Fund’s solicitor.

 Pre Budget Report (PBR)

In his November Pre Budget Report the chancellor announced a number of changes to savings, pensions and taxation to be implemented over the next three years.

The main pension related announcements were:-

•  State pensioners entitled to the Christmas bonus will be paid £60 in the new year, which equates to bringing forward the April increase to the state pension to January.

•  The level of the full basic state pension will rise in line with prices by £4.55 per week to £95.25 per week in April 2009.

•  In April 2009 the age related tax allowance will be raised in line with prices to £9490 for 65 – 74 year olds and £9640 for people age 75 and over.  The government has estimated that by April 2010 only 40% of pensioners over the age of 65 will be paying income tax.

•  The lifetime allowance and annual allowance will be frozen from 2011/12 to 2015/16 at the 2011/12 values of £1.8m and £255,000 respectively.

• The government will be launching a campaign to get an estimated 1.5m individuals on low incomes, particularly pensioners, to register to receive interest on their bank or building society accounts tax free and to claim back any overpaid tax.

• High earners get dealt a blow in the PBR in that from 2010/11 the basic personal allowance for income tax will be reduced for gross incomes above £100,000 per year.  Those earning at least £100,000 per year would see their personal allowance reduced by at least 50% and no personal allowance would be available for incomes of £140,000 or more per year.

• From 2011/12 the rate of income tax on earnings above £150,000 will be 45%.

Negative Retail Price Index (RPI) Inflation

The government’s economic estimate for September 2009 is that inflation, as measured by the Retail Price Index, will be negative.  The basic state pension is increased by the September RPI or 2.5%, whichever is greater.  This means that in 2010/11 there will be an even larger real terms benefit for state pensioners.  So its not all doom and gloom!

Debbie Marten

Debbie@pnpf.co.uk