GKN Group Pension Scheme 2016 Pensions Newsletter

GKN Group Pension Scheme 2016

www.GKNpensions.co.uk

May 2021

GKN Group Pension Scheme 2016

Pensions Newsletter

GKN Group Pension Scheme 2016

Pensions Newsletter – May 2021

About this Newsletter

This newsletter is issued by the Trustee to all members of the Scheme including pensioners and deferred

pensioners (who left the Company prior to taking their pension) whose addresses are known. If you are interested

in obtaining more information about the Scheme or your own benefits, please contact your Scheme administrator

using the details shown on page 14.

CONTENTS

Message from the Chair of the Trustee 3

News in brief 4

The financial health of your Scheme 5

Investment report 6

Pensions talk

Brexit, COVID-19 and your pension 7

Pension scams 8

Taking control of your retirement 10

Pensions tax allowance update 12

What you need to know about the State Pension 12

Your pension team and further information

Your Trustee Directors 14

Contact information 14

Nomination form 14

Useful resources 15

Contents

GKN Group Pension Scheme 2016

Message from the

Chair of the Trustee

Welcome to the Pensions Newsletter,

for members of the GKN Group Pension

Scheme 2016.

2020 was certainly a year that none of us expected,

and 2021 started on a similar path. The coronavirus

pandemic continues to have a substantial effect on

the global investment markets, but we, along with our

advisors, are still monitoring the situation. Following on

from last year’s newsletter, we can reassure you that

we expect no impact on the ability to pay pensions and

other Scheme benefits.

This year we have included the usual summary of

the Scheme’s membership, the performance of the

Scheme’s investments, and the income and outgoings

from the Scheme over the past year, which can all be

found on pages 5-6. You will also find a two-page

Summary Funding Statement enclosed with this

newsletter, which provides some further information

about the Scheme’s finances.

In the Pensions Talk section of the newsletter, we have

included some topical information that we hope you

find helpful. Now the UK has officially left the EU, we’ve

included some information on page 7 to update you on

any impact of Brexit to your Scheme pension.

It’s so important to look after your retirement savings.

On page 8 you’ll find an article reminding you about

pension scams and what to look out for. In the current

environment, with the coronavirus pandemic, fraudsters

are looking to take advantage of those who may be

going through financial hardship – please be vigilant!

Whether you’ve already retired or you’re on your way

to retirement, there are things to consider including how

to spend your time, relationships with your family and

friends and making sure you have enough income to

fund the life you see for yourself. We have included an

article on page 10 with some useful tips and resources

to help you make the best of your retirement. We have

included an update on the pension tax allowances on

page 12. These may change each year so it’s worth

taking note.

Finally, for members who are yet to retire, we have

included an article on page 12 with everything you need

to know about the State Pension, from claiming it to

finding out how much you’ll get.

We are launching a new pension website for all

GKN Group Pension Scheme members, to help

you understand which scheme/s you are in,

access relevant scheme documents and useful

information and contacts to help you with pension

related matters. This website will be available to

all by the end of April 2021 and you can access

this via www.GKNpensions.co.uk. The website

will also link directly into the L&G website to allow

you to; access any specific information you need,

update your personal details, request retirement

quotes, or simplify your enquiry journey.

I hope you find this newsletter useful and informative.

As always we are keen to hear your feedback, so if you

have any comments or suggestions for topics to cover

in future newsletters, please let us know either by email

(gknmail@mercer.com) or at the address shown on

page 14 of this newsletter.

Andrew McKinnon

Chair of the Trustee

GKN Group Pension Scheme 2016

Scheme report

Over the year to 31 March 2020, the Scheme’s

assets returned 6.3%, against the target benchmark

of 6.7%. Details of which asset classes the Scheme

invests in are set out on page 6.

Brexit, COVID-19

and your pension

Now that the UK has officially left the EU as of

31 December 2020, you may have some questions.

The full impact of Brexit, and the COVID-19

pandemic, on the financial markets is still uncertain;

however, we can assure you that your Scheme

pension benefits remain secure.

Financial health of your Scheme

The last full valuation, which takes place every three

years, looked at the funding position of the Scheme

at 5 April 2019. An annual funding update takes place

at 5 April in the two years between valuations and

the last update was at 5 April 2020. The results of

both the 2019 valuation and the 2020 update can be

seen in the enclosed Summary Funding Statement.

The result of the most recent update showed that the

Scheme was 103% funded at 5 April 2020.

News in Brief

>>>>>>>>>>>>>>>>>>>

Pension scams

Fraudsters will always look for opportunities to

rob people of their hard earned money, including

retirement savings. The coronavirus pandemic is

just another opportunity to do this. It’s so important

to be aware of the ways in which you may receive

fraudulent offers so that you don’t fall for a pension

scam, or any other type of scam. We have included

useful tips of what to look out for and what to do if

you think you have been targeted on page 8.

Taking control of your retirement

You may be someone who can’t wait to retire or

maybe you’ve retired and it isn’t quite what you

thought it would be. Just like everything else in life,

retirement takes some consideration; for example,

what do you want to do with your time, what will

make you most happy, have you got / will you have

enough money to do these things. Take a look at what

one retiree has to say about it on page 10.

FOR DEFERRED MEMBERS

What you need to know

about the State Pension

There may be lots that you don’t know about the

State Pension, for instance, that you have to claim it

a few months before you start to receive it, the age

you are able to start receiving it and how much you

might get. These are all important things to consider

when planning for your retirement and therefore it’s

important that you’re aware of them. See page 12 for

the full article.

Pensions tax allowances update

You may or may not know that pension contributions

are generally tax free, up to certain allowances set by

the government. We’ve provided some information on

page 12 to help you understand these allowances and

what they could mean for you.

Scheme documents

available on request

To help you find out more about the ongoing

management of, and support for, the Scheme

you can request the following Scheme documents

using the contact details on page 14:

> Schedule of Contributions

> Statement of Investment Principles

> Trust Deed and Rules

> Triennial Actuarial Valuation Report

> Trustee Annual Report and Accounts

> Internal Dispute Resolution Procedure

Membership numbers

Membership Numbers 5 April 2020 5 April 2019

Deferred Pensioners 2,664 2,744

Pensioners 7,9 43 8,423

10,607 11,167

Increases to GKN Pensions in Payment

Your Scheme pension may increase each year when in payment. This helps protect the spending power of your

money. Different levels of increases apply to different parts of your pension depending on, for example, the period of

service it relates to and the Scheme rules.

Under the 2016 Scheme’s Rules, the guaranteed annual increase to pensions in payment is the increase in the Retail

Price Index (RPI) over the previous calendar year, and is subject to a maximum increase of 5%. For GKN members

who joined prior to 6 April 1994, this is also subject to a minimum annual increase of 2.5% for pension earned prior to

31 March 2004 (provided there has been some increase in the RPI over the year, no matter how small).

The resultant pension increases are summarised below:

Pensioners

Inflation Reference

Period (year to)

2020 2019

Service Pre 2010** Service Post 2010*** Service Pre 2010** Service Post 2010***

GKN* 31 December 2.2% 2.2% 2.7% 2.5%

Filton 31 December 2.2% 2.2% 2.5% 2.5%

Westland 31 December 2.2% 2.2% 2.7% 2.5%

ACT 31 December 2.2% 2.2% 2.7% 2.5%

100+ 31 December 2.2% 2.2% 2.5% 2.5%

*Subject to the minimum increases described above. ** Subject to maximum increase of 5% p.a. *** Subject to maximum increase of 2.5%

GKN Group Pension Scheme 2016

Pensions Newsletter – May 2021

The ﬁnancial health of your Scheme

Valuation update

Following the completion of the 5 April 2019 actuarial valuation, a new Recovery Plan has been agreed between the

Trustee and the Principal Employer on 1 July 2020. Under this Plan no further shortfall contributions are required

following the payment of an additional deficit contribution of £15 million on 16 April 2019. The 2020 update showed

that the Scheme was 103% funded at 5 April 2020 (see enclosed Summary Funding Statement). At 31 December

2020, our actuary estimated that the funding level had improved to 105% with a surplus of £24.4m.

Key Features of the Financial Statements

Income and expenditure for the year to 5 April 2020

Year to 5 April 2020 (£ million) Year to 5 April 2019 (£ million)

Funds at the beginning of the year 553.6 537.5

Transfer from other schemes 2.2 –

Plus contributions and other income 16.3 42.2

Less benefits and expenses (39.7) (45.8)

Plus investment performance 33.9 19.6

Net increase on funds during the year 12.8 16.1

Funds at the end of the year 566.4 553.6

Figures may not sum due to rounding.

GKN Group Pension Scheme 2016

Pensions Newsletter – May 2021

Investment Report

Investment Performance

For the year to 31 March 2020, the overall return for the assets of the Scheme was 6.3% compared with a return of

6.7% from the benchmark portfolio. The assets produced a lower return than the benchmark. This was mainly due

to market volatility as a result of the coronavirus pandemic.

Statement of Investment Principles

(“SIP”)

The SIP sets out the investment principles that govern

decisions about the Scheme’s investments. The SIP

was last updated in October 2020 to meet any new

regulations that required further disclosures on the

Scheme’s arrangements with its investment managers.

The SIP is available online at www.merceroneview.

co.uk/GKN/statement-investment-principles and

upon request using the details on page 14.

Asset class Value as at 31 March 2020 (£million)

Insured Annuities 135.0

Corporate Bonds 141.3

Government Bonds and Hedging 179.3

Cash and net current assets 110.8

Tot al 566.4

How the Fund was Invested

The distribution of the Scheme’s assets as at

31 March 2020 is shown below.

Split of Fund by Asset Sector (Total Fund %)

Insured Annuities

Corporate Bonds

Government Bonds and Hedging

Cash and net current assets

23.8%

24.9%31.7%

19.6%

GKN Group Pension Scheme 2016

Pension talk

Brexit, COVID-19 and your pension

After leaving the European Union with a deal on

31 December 2020, there is still a lot of uncertainty

around what the implications of Brexit will be in relation

to its impact on investment markets. In addition, as

COVID-19 continues to affect our daily lives, investment

markets are also reacting strongly to the pandemic and

its impact on businesses around the world.

There are, however, a few points that you may have

heard in the news, or been wondering about yourself,

that we would like to reassure you about.

Safety of your pension

The investment risk of your Defined Benefit

(DB) section pension is borne by the Company.

The Trustee works with our advisers to invest

the assets to ensure the Scheme is funded for

the long term. The goal being to ensure that all

members receive the full amount of benefits to

which they are entitled.

The Trustee and our advisers, continue to monitor

financial markets and the Scheme’s investment

strategy. We reduced the level of investment

risk during 2020 and will continue to review this

as the funding level improves. Markets have

recovered well over the last year and this has

improved the Scheme’s funding level.

Is now a good time to transfer my

benefits out of the Scheme?

As a DB member, if you are thinking about transferring

away from the Scheme, you should remember

that a move away usually means that you take on

the investment risk yourself. If you are considering

transferring your DB benefits, please get in touch with

the Scheme administrator, details on page 14.

You should always consult a financial adviser before

making such a move, refer to pages 9 and 15 for

suitable resources to find an independent adviser.

We have engaged with our advisers regarding their

business continuity plans. We are satisfied that our

advisers have in place appropriate plans including

home working with access to secure IT equipment

and platforms so as to minimise disruption to member

services. We have also continued to hold Trustee

meetings virtually during the pandemic.

GKN Group Pension Scheme 2016

Pensions Newsletter – May 2021

Pension talk

A few of the topics covered in this article

> How fraudsters are taking advantage of the

current pandemic

> Tips to protect yourself against potential

pension scams

> Useful resources to help you stay vigilant

You should always be wary of potential pension scams,

but never more so than during the current coronavirus

pandemic. According to the Financial Times, the City of

London Police reported a 400% increase in COVID-19

related fraud within a month and, as of September last

year (reported by unbiased.co.uk), Action Fraud had

recorded total losses of over £2million since the start of

February 2020.

Criminals are taking advantage of more people staying

at home, and the result is an increase in cold calls and

online scams.

The ScamSmart website (www.fca.org.uk/scamsmart)

operated by the Financial Conduct Authority suggests

four ways to protect yourself from fraud:

1. Reject unexpected pension offers whether made

online, on social media or over the phone.

2. Check who you are dealing with before changing

your pension arrangements – check the FCA

helpline on 0800 111 6768 to see if the company

you are dealing with is authorised by the FCA.

3. Don’t be rushed or pressured into making any

decision about your pension.

4. Consider getting impartial information and advice.

You will also find quizzes and resources to help you spot

a scam and a warning list of companies to watch out for.

Remember, cold calling isn’t the only tactic used

by scammers – you could be targeted online too…

Pension scams

GKN Group Pension Scheme 2016

Helping you to stay safe online:

Internet use is an everyday occurrence for most people,

from email, to shopping to banking, and virtually

everything in between. Unfortunately this means that

there are people who will try to take advantage of your

online activity. Here are six tips to follow:

1. Use strong passwords. They should include a

mix of letters, numbers and special characters and

should be different for each site you use.

2. Do not write your passwords down. A secure

password manager is a far better way to keep track

of your passwords. Your paper record could fall into

the wrong hands.

3. Keep your browsers and devices up to date.

Updates keep the security of your devices up to date.

4. Keep your antivirus, firewall, and any other

security software up to date, too. You can

set these programs to automatically update

themselves.

5. Check for the padlock. A secure website will have

a padlock icon next to their address on your web

browser.

6. Never click on links or open attachments from

emails claiming to be from financial companies.

Call the company directly if you are worried about

anything you have read.

Please visit The Pensions Regulator’s website

www.thepensionsregulator.gov.uk/pension-scams

for more information and useful tips to help avoid falling

victim to pension scams.

If you are thinking of transferring your pension benefits

from any pension scheme of which you are a member,

you should always make sure the person / company

you are dealing with is registered with the Financial

Conduct Authority (FCA).

You can check this on the FCA website here:

https://register.fca.org.uk/ or call the helpline on

0800 111 6768.

GKN Group Pension Scheme 2016

Pensions Newsletter – May 2021

A few of the topics covered in this article

> Thinking about what you want from

retirement

> Making the most of your retirement

> Knowing how much income you’ll have in

retirement

The picture of retirement has certainly changed for

many over the years. People want more from retirement

than simply just enjoying the peace and quiet and not

having to go to work. And, they don’t necessarily want

to wait until their sixties to do it.

Whether you’re approaching retirement or you’re

already there, there are lots of things to consider.

What will your perfect retirement

look like?

One thing a lot of new retirees perhaps haven’t

previously considered is the amount of free time they’ll

have. When you’ve been working your whole life, having

nothing to do can sound like bliss. However, for many

that can become the most difficult part so it’s important

to have things in place to fill your time. Maybe you want

to volunteer, focus on your hobbies or travel?

It’s not just the added free time to consider, there are

also other changes that come with retirement:

1. What impact might retirement have on your

friends and family? Will they replace your daily

human interactions when you stop working? Will

you see them more often or less? Retirement can

be a wonderful time to nurture your family and

personal relationships.

2. You may need a strong network of friends and

supporters; people you can count on as time

goes on. Think about how you can build these

social networks and also what support you can

give to others.

3. Finally, how will you maintain a healthy mental

outlook? It’s so important to keep your mind active

and do things that you enjoy.

There are plenty of places for you to get ideas, but if

you need a starting point or inspiration, here are a few

websites that you might find useful:

www.ageuk.org.uk/services/information-advice/

guides-and-factsheets

www.bhf.org.uk/informationsupport

www.volunteeringmatters.org.uk/press/

volunteering-a-key-part-of-a-happy-retirement

Pension talk

Taking control of your retirement

JAY CASSIE, A 70YEAROLD RETIREE SHARES HER EXPERIENCE:

“ I think emotionally I was dying to do it. But after 3 or 4 weeks it hit me that I could sit

here looking at these four walls unless I personally took charge, took responsibility and

did something”

Find out more about things to consider as you approach retirement

www.ageuk.org.uk/information-advice/work-learning/retirement/

GKN Group Pension Scheme 2016

Thinking about the money

Knowing how much income you’ll have is essential

when it comes to taking control of your retirement.

It’s great knowing what you want to do with your

free time, but the question is ‘Can you afford it?’ The

Pensions and Lifetime Savings Association (PLSA)

published UK Retirement Living Standards in 2019,

with the aim of giving people an idea of how much

income they will need after tax to sustain different

standards of lifestyles:

If you haven’t started taking your

Scheme pension yet

You will have received a benefit statement when you

left the Scheme that tells you how much this is likely to

be. If you no longer have this, you can ask the Scheme

Administrators using the contact details on the back

page. Remember though, if you take this earlier than

the Scheme retirement age (65), this will be reduced to

allow for it being paid over a longer period.

You can also find out how much your State Pension

will contribute to your overall retirement income, refer

to the article on page 12 for more information, or visit

www.gov.uk/new-state-pension/what-youll-get.

Topping up your retirement income

If your income doesn’t quite stretch to allow you to do

the things you want to do, getting a part-time job can, not

only top up your income but also, give you back a social

element that you may have missed since you retired.

Keep in mind that retirement is the next part of your

journey. Only you can work out what will make you

happy. It’s well within your power to make your

future exciting.

MINIMUM

Low-cost social and

leisure activities and

UK holidays.

MODERATE

More financial security

and flexibility and

holidays in Europe.

COMFORTABLE

More luxuries and

holidays in world-

wide locations.

£10,200

a year*

£20,200

a year*

£33,000

a year*

£15,700

a year*

£29,100

a year*

£47,500

a year*

SINGLE

COUPLE

Most people will be able to achieve the minimum

through a combination of their workplace pensions

and the State Pension and if you have already

retired, you’ll know how much this is. Visit the PLSA

website to find out more, go to www.plsa.co.uk,

or direct to the retirement living standards page

www.retirementlivingstandards.org.uk.

*You would likely need more if living in London.

GKN Group Pension Scheme 2016

Pensions Newsletter – May 2021

Pension contributions are

generally tax-free within certain

HMRC allowances.

However, if you go over these allowances, you

may be subject to tax charges. Here are some tax

limitations that you should be aware of in relation to

your pension contributions for the 2020/21 tax year:

Annual allowance – this is the amount you can save

in all of your registered pension arrangements (from

both your own and your employer’s contributions) over

a tax year before incurring a tax charge. This is set at

£40,000 for the 2021/22 tax year. If you exceed this

allowance, you would be responsible for paying any

charges by 31 January the following tax year.

If you earn more than £200,000 per tax year, you

could be impacted by the Tapered Annual Allowance,

which could reduce your Annual Allowance down to a

minimum of £4,000. More information can be found

on the government website:

www.gov.uk/guidance/pension-schemes-work-

out-your-tapered-annual-allowance

Lifetime allowance – this is the total amount you

can build up over your lifetime, from all UK pension

arrangements, excluding State Pensions, without

incurring a tax charge. This is set at £1,073,100 for

the 2021/22 tax year and will be frozen at this level

until April 2026.

These allowances are subject to change by the

government in April each year.

You can find more information on tax charges here:

www.moneyadviceservice.org.uk/en/articles/tax-

relief-on-pension-contributions

Pension talk

What you need to know

about the State Pension

A few of the topics covered in this article

> How to claim your State Pension

> Knowing your State Pension Age

> How to find out the amount of State Pension

you will receive

Claiming your State Pension

You might not know that you won’t automatically receive a

State Pension, unless you claim it.

You will need to start the process to claim your State

Pension around four months before your State Pension

Age (SPA) if you wish to receive it in time. It can take a few

months to be processed. Further information is in this link

www.gov.uk/new-state-pension/how-to-claim. You

can also choose to claim your State Pension and carry

on working or choose to defer your pension until you are

older, which will increase the annual amount you receive.

Pensions tax allowance update

FOR MEMBERS WHO HAVE NOT YET

TAKEN THEIR PENSION

GKN Group Pension Scheme 2016

What is the full State Pension amount?

The full State Pension amount for 2021/22 is £179.60 per

week (£9,339.20 per year), you need to have paid at least

35 years’ worth of NICs.

The current State Pension system was introduced with

effect from 6 April 2016. A flat rate pension, which

replaced the two-tier Basic State Pension and State

Second Pension. The Scheme was ‘contracted out’ of

the State Second Pension until 2016, meaning that your

Scheme pension replaced the State Second Pension

during this time. Your Scheme pension built up over this

time is guaranteed by law.

How can I get a forecast of my State

Pension?

To find out how much your State Pension will be, you can

ask for a statement using one of the following ways:

• Check your State Pension online at

www.gov.uk/check-state-pension

• Call the Future Pensions Centre on 0800 731 0175

• Submit a BR19 form online at www.gov.uk/

government/publications/application-for-a-state-

pension-statement or by post by downloading the

form and sending it to:

Newcastle Pension Centre, Futures Group

The Pension Service 9

Mail Handling Site A

Wolverhampton

WV98 1LU United Kingdom

In addition, the government has issued various factsheets

to help you calculate your State Pension, which are

available at www.gov.uk/government/publications/

state-pension-fact-sheets

As the gap between your SPA and when you can take

your savings from the Scheme increases, you should think

about how you plan to bridge the gap financially if you are

thinking of retiring before you reach your SPA.

Anyone born between 6 October 1954 and 5 April 1960

will reach their SPA on their 66th birthday. Whereas

anyone born after 5 April 1960 will have an SPA of 67, or

higher as the government plans to further increase the

SPA in the future.

What is my State Pension Age (SPA)?

FOR MEMBERS WHO HAVE NOT YET

TAKEN THEIR PENSION

Between December 2018 and

October 2020, State Pension Age

for both men and women gradually

increased to age 66.

DECEMBER 2018

OCTOBER 2020

2028

State Pension Age for both men and

women will gradually increase from

66 to 67 between 2026 and 2028.

Your pension team

and further information

Nomination Form

In the event of your death, your nomination form is used by

the Trustee as a guide for the distribution of death benefits,

which are payable at Trustee discretion. It is therefore

extremely important that an updated nomination form is

held for you, especially if your circumstances have changed

recently. You can update your nomination form online

through Benpal, or a copy can be obtained by contacting

the Scheme administrators (see [above] for contact details).

Contact Information

So that you don’t miss out on important Scheme information,

ensure your personal information with us is up to date. You can do

this in writing by post or email, or give us a call, using the contact

details below:

GKN Group Pension Schemes

Mercer Limited, Post Handling Centre, St James’s Tower

7 Charlotte Street, Manchester M1 4DZ

0345 337 2456 gknmail@mercer.com

You can also contact Mercer Admin online using their

form via www.uk.mercer.com/contact-us.html

Michael Duncombe – Director

I am sorry to say that after three years as a Trustee, Mick has decided to stand down with

effect from 31 March 2021. Mick became Trustee Chairman following Melrose’s acquisition

of GKN in 2018 and has overseen several major projects in his time as a Trustee. Mick’s

contribution has been huge and, despite the challenges caused by the pandemic, he leaves

the Scheme in a much better funding position and with a lower risk investment strategy than

when he joined. Mick’s legacy will remain for many years to come and I am sure you will join

me in thanking him and wishing him well for the future.

Your Trustee Directors

Independent Director

Andrew McKinnon

Independent Chair

(appointed 1 July 2019)

Neil Pragg

Divisional Finance Director,

Operations and Commercial,

GKN Driveline CVJ

(appointed 7 January 2019)

Alex Grieve

Former Head of Group Health

Safety & Environment,

GKN plc

(appointed 18 February 2010)

John Fitzsimmons^

Setter Operator,

GKN Driveline Birmingham

(appointed 23 May 2018)

^ Active member of the GKN Group Pension Scheme No.3

+ Pensioner of the GKN Group Pension Scheme No.1

* Term of Office expired on 31 December 2020 and subsequently

extended for a further five years

Member Nominated Directors

Company Appointed Director

GKN Group Pension Scheme 2016

Pensions Newsletter – May 2021

Tax Queries

HMRC informs the Scheme how much tax to

take from your pension via a tax code. Please

note that we are unable to change your tax code

unless we have been specifically instructed to do

so by HMRC.

If you are a pensioner and want to ask about

your tax code or tax liability, please contact:

Pay as You Earn and Self Assessment

HM Revenue and Customs

BX9 1AS

United Kingdom

0300 200 3300

GKN Group Pension Scheme 2016

The Money and Pensions Service (MaPS)

combines the Money Advice Service, The

Pensions Advisory Service and Pension Wise

and aims to help you make the best financial

decisions for you.

www.moneyandpensionsservice.org.uk

You can get information about your State Pension

on the official government website, including an

estimate of your State Pension.

www.gov.uk/contact-pension-service

The Department for Work and Pensions website

outlines government initiatives and information

about retirement and pension benefits, including all

you ever wanted to know about the State Pension.

www.gov.uk/government/organisations/

department-for-work-pensions

Useful resources