The Trustee's annual newsletter to members, including the Scheme's summary funding statement.
UTC (UK) PENSION SCHEME
Newsletter November 2024
Welcome
I’m pleased to welcome you to this year’s update from the Trustee of the UTC (UK) Pension Scheme – your annual round-up of the latest news and developments from the Scheme and the world of pensions. This newsletter contains important
A change to our administrator We recently wrote to members of the Goodrich Section to let them know that the administration of their benefits has been moved to a company called Gallagher. Gallagher is also the administrator for the non-Goodrich Sections, although it was previously known as Buck. We’ve included an article covering both changes on page 6. Pension scams I’d like to remind our members to remain vigilant against pension scams. Criminals are becoming much more sophisticated in their approach, employing a range of techniques to assure you that they are genuine, so please read our article on page 5 for some common signs of a scam. What to do if a member has died Losing a loved one is understandably very upsetting and can be made even more stressful if it’s unclear what needs to happen in respect of their benefits. To provide some reassurance, we’ve included some information on page 8 that explains the process that takes place if one of our Scheme members has died. I hope you find this newsletter useful. If you have any feedback or ideas for future topics you would like to see us cover, please get in touch using the information on the back cover. Greg Smart, Chair of the Trustee UTC (UK) Pension Scheme
information for all members, and I hope it offers some reassurance and understanding about how the Scheme is funded. Summary Funding Statement 2024 is a formal valuation year, and preparations have already begun for the actuary to assess the funding level of the Scheme as at 31 December 2024. In between formal valuations, the actuary carries out less detailed updates on the position of the Scheme, and you can find the most recent update as at 31 December 2023 on page 12. Trustee Board update You may recall that in July 2024, we announced that the terms of office for two of our member-nominated Directors (MNDs) had come to an end, and we therefore had two vacancies that we needed to fill. We are pleased to report that Robin Smith has now been re-appointed for a further five-year term of office. We also appointed a new MND, Eugene Egan, an Otis Section pensioner, whose five-year term of office commenced on 30 September 2024.
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What’s inside?
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Pension news
An update on pensions dashboards Last year, it was announced that the timetable for launching the pensions dashboards would be pushed back to give the pensions industry more time to get ready for this major project. Since then, the Department for Work and Pensions has published new guidance setting out a staged timetable for pension schemes to connect to the dashboards ecosystem. The timetable highlights that the earliest staging dates for larger pension schemes
would be 30 April 2025. Our Scheme’s deadline is 31 August 2025, and we will write to members with an update once there have been further developments. When launched, the dashboards will provide a single place where you can get information about all your pension savings across all schemes (where your benefits have not yet been put into payment), as well as track down any lost pension pots.
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Pension scams: how to spot a scammer As technology advances, pension scams are becoming harder and harder to distinguish from genuine pension communications. Scammers are finding increasingly convincing ways to dupe members, leading to a lifetime’s worth of savings being stolen in a moment. Here are some common, telltale signs that can indicate a scam: • Phone calls, text messages or emails out of the blue about your pension. Don’t forget, cold calling about pensions was banned in 2019, which means you should never be contacted by any company about your pension unless you’ve asked them to contact you. • Pressure to make a decision quickly or within a very short timeframe. Scammers may claim that an offer is time limited, or that you cannot call them back, so a decision must be made quickly. Tactics like this are designed to fluster you into making a decision without really thinking about it. If you’re in any doubt, hang up the phone. • Lucrative offers, such as a high rate of return on your investments, cash incentives, legal loopholes or government initiatives. Remember: if something sounds too good to be true, it often is. • Strange-looking emails and suspicious telephone numbers. Often a scammer will contact you from a cloned email account or telephone number. The email or telephone number may look legitimate at a glance, but on closer inspection, you may notice spelling errors or unexpected area codes. If you’re ever unsure that a call from your pension provider is genuine, contact them using the details listed on their website, not the details provided in an email or over the phone.
Some scammers may have very convincing websites, whereas others may contact you over the phone to assure you they are genuine. Pension scam victims have an average of £75,000 stolen from them, according to the Financial Conduct Authority (FCA) and the Pensions Regulator, so it’s crucial you are absolutely certain that the contact is genuine before you proceed, especially if you’re considering transferring your pension to another arrangement. Before making any big transfer decisions, it may be worth speaking to an independent financial adviser. They will be able to review your circumstances and advise on the best course of action for your situation. MoneyHelper has a free retirement adviser directory that you can use to find a regulated and impartial adviser near you: www.moneyhelper.org.uk/en/pensions-and- retirement/taking-your-pension/find-a- retirement-adviser
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Scheme noticeboard
Goodrich Section administration now with Gallagher (formerly Buck) We recently wrote to members of the Goodrich Section to let them know that the Trustee has changed its administration services from Aptia (formerly Mercer) to Gallagher (formerly Buck, see below). There will be no change to your benefits, the Goodrich Section’s structure or finances as a result of the transfer of administration services to Gallagher. However, your pension records are now held by Gallagher, and all information regarding your pension benefits and retirement options will be provided by Gallagher. Buck is now Gallagher Our non-Goodrich Section members are already being taken care of by Gallagher, although members may be more familiar with their old name, ‘Buck’. Last year, Buck was acquired by a company called Arthur J. Gallagher & Co, and from 1 July 2024 the company name changed to Gallagher. The change of name has had no effect on your benefits. It simply means that any communications you receive in future from Buck will now say they are from Gallagher. If you have any questions about this change or your benefits in the Scheme, you can contact Gallagher using the contact details on the back cover.
PCG strengthening On 21 July 2023, RTX announced that it had reached an agreement to sell certain parts of the Collins Aerospace business to Safran, which includes two of the Scheme’s participating employers: Goodrich Actuation Systems Limited (GASL) and Crompton Technology Group Limited (CTG). The Trustee understands from RTX that the Company has now entered a period of regulatory reviews and consultations. Until the sale closes, GASL and CTG will remain part of RTX’s Collins Aerospace business. Following the above announcement, the Trustee, alongside its advisers, worked very closely with RTX to make preparations and ensure that the Scheme could continue to meet the benefits built up by its members. This includes members who are or were previously employed by GASL and CTG, whose benefits will remain in the Scheme. The Trustee is pleased to report that following these discussions, the formal guarantee from RTX, which was already in place prior to the above announcement, has been strengthened in consideration of GASL, CTG and Rosemount Aerospace Limited (RASL) withdrawing from the Scheme effective 1 October 2024 (RASL is a further participating employer with a very small proportion of the Scheme’s liabilities). The guarantee, which states that RTX will continue to meet present and future obligations and liabilities of the Scheme until 2036, has been extended to remain in place for a further five years to 2041, subject to the terms of the guarantee. The Trustee would like to assure members that no member benefits have been adversely affected by the above activity.
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Accessing your benefits through the member portal Non-Goodrich Section members The portal for our non-Goodrich Section members has been available since 2023. Through the portal, you can: • access your personal information and membership details • update your Expression of Wishes form to nominate your beneficiaries for benefits that may be due on your death • update your contact information • view important documents • view payslips and update your bank details (pensioners). You can log in by visiting www.buckhrsolutions.co.uk/utc If you’re using the portal for the first time, you can click ‘First time user?’ to set up a login ID and password. If you’ve forgotten your login details, you can click ‘Forgotten your details?’ to reset your password. If you’re having trouble registering, or are unable to reset your password, you can contact Gallagher using the details on the back cover. In future, you’ll be able to use the portal to request retirement quotations and carry out certain benefit calculations, but work on making this available is still under way. Gallagher will send you an update when this service is available. Goodrich Section members We are pleased to announce that the member portal has now launched for members of the Goodrich Section. By now, you will have received a letter from Gallagher containing your unique login ID, as well as instructions on how to log in for the first time. If you have any problems accessing the portal, you can contact Gallagher using the details on the back page.
An update on Guaranteed Minimum Pensions (GMP) In our last newsletter, we explained that we were continuing work on our GMP equalisation project, which involves addressing historic gender inequality in GMPs. As part of this project, we’ve been checking our GMP records against those held by His Majesty’s Revenue & Customs (HMRC). For some members, this process has shown that our GMP data does not match HMRC’s, so as a first step we need to rectify our records. We wrote to affected non-Goodrich Section members in August 2024, and we’ll be following up soon with affected Goodrich Section members. This exercise to rectify our records is necessary before we can proceed with equalising GMPs. We are aiming to implement GMP equalisation in the second half of 2025. You don’t need to take any action at this time. If you are affected, you might be due a top-up on your pension but for most members this is likely to be A GMP is a minimum pension that a workplace pension scheme normally provides. It only applies to people who were contracted out of the additional State pension from 6 April 1978 to 5 April 1997. The GMP you get from a workplace pension scheme is usually the same, or more than, the additional State pension you would have got if you had not been contracted out. relatively small. What is a GMP?
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In the event of a member’s death The loss of a loved one can be a very
Complete your Expression of Wish An Expression of Wish tells the Trustee who you’d choose to receive your Scheme benefits in the event of your death. We refer to these chosen individuals as beneficiaries. What you write on the form is a key influence for the Trustee, who will use this information to make a decision about these payments. If you are unmarried and die without a completed Expression of Wish, the Trustee may consider paying a ‘discretionary’ benefit to a partner, where this is permitted under the Scheme’s rules, but to do this the Trustee is obliged to ask for a lot of information at what can be a very sensitive time. The Trustee will have to ask for details of your partner’s financial position and evidence of shared income and expenses etc, so that it can properly assess whether that person is entitled to any benefit. All members can now update their Expression of Wish via the member portal at www.buckhrsolutions.co.uk/utc
distressing time, particularly if it’s unclear what needs to happen in respect of their benefits. We thought it would be useful to outline the process in three simple steps: 1) The Scheme administrator, Gallagher, will need to be informed that a member has passed away – their details can be found on the back page. They will ask for the contact details of the member’s next of kin or executor and will record the death to stop any future pension payments. Any overpaid pension will need to be recovered from the member’s estate, so it’s important you get in contact as soon as possible. supporting documents such as the birth or marriage certificates of any dependant who is, or may be, eligible for death benefits (e.g. a spouse). They will also make the request for any overpaid pension to be returned if it hasn’t been already. All original certificates 2) Gallagher will ask for a copy of the member’s death certificate, plus any will be returned as quickly as possible. 3) Once Gallagher has processed the information, they will arrange for any benefits that are due to dependants or beneficiaries to be paid.
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Money matters
The table on this page is a summary of the Trustee’s formal Report & Accounts for the year to 31 December 2023.
The information is audited so that members can be sure it is an accurate reflection of the Scheme’s transactions over the year.
You can view the full report online by visiting https://online. flippingbook.com/view/47529/
Ins and outs This table shows the money going into and coming out of the Scheme over the year to 31 December 2023.
£000’s
Value of the fund at 1 January 2023
1,568,802
Income Company contributions
0
Total income
0*
Expenditure Benefits paid
(64,740) (5,278) (2,793) (72,811)
Transfers to other plans Administrative expenses
Total expenditure
86,292
Net returns on investments
Value of the fund at 31 December 2023
1,582,283
Any figures shown in brackets are negative amounts. *No contributions were payable in the year, primarily because the Scheme funding level exceeded the threshold for the Company to reimburse the Scheme for the Pension Protection Fund levy paid and pay contributions towards the Scheme’s expenses.
Our membership This chart shows the breakdown of the Scheme’s membership as at 31 December 2023. The Scheme was closed to future benefit accrual on 31 March 2020, so any active members at that time became deferred members from that date.
Deferred members 3,575 Pensioners (including dependants) 5,091
Total 8,666
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Investment matters The information set out on these pages covers how the money built up to pay members’ benefits is invested. The Trustee sets the Scheme’s investment strategy after taking advice from its appointed investment consultant, Barnett Waddingham.
Investing objective and de-risking framework The Trustee keeps a close eye on the funding position of the Scheme and has in place a ‘dynamic de-risking framework’. This framework enables it to move quickly to bank gains whenever there are improvements to the funding position. Moving to a lower target when affordable means less risk is taken and further increases the security of members’ benefits in the Scheme. The de-risking framework, agreed with RTX, was updated on 30 September 2024 to take into account the strengthened parent company guarantee. You can read more about this on page 6.
The Scheme’s investment strategy is set out in a document called the Statement of Investment Principles (SIP), which was last updated in August 2023. If you’d like to see this statement, you can read it by visiting https://online.flippingbook.com/ view/754805965 The Trustee also produces an annual Implementation Statement which describes how the policies set out in the SIP have been implemented. You can read the latest statement here: https://online. flippingbook.com/view/277418520 Responsible investing The Trustee believes it is important to assess appropriately environmental, social and governance (ESG) factors when selecting the Scheme’s investments. This means that, when selecting companies to invest in, it will look at many financially material factors, such as sustainable growth, environmental and climate change impacts, and other social and governance considerations. We are pleased to share that our second Task Force on Climate Related Financial Disclosures (TCFD) report is now available. The report explores how the Trustee assesses, monitors and manages the Scheme’s exposure to climate risks and opportunities. You can read it here: https://online.flippingbook.com/ view/667561390
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Investment performance The table below shows the investment performance over the year to 31 December 2023, as well as the average yearly performance over the three and five-year periods.
1 year (%)
3 years (% p.a.)
5 years (% p.a.)
Scheme return
5.05 7.27
(10.21)
(1.97) (1.66)
Benchmark
(9.44)
Please note that any figures shown in brackets are negative amounts.
Investment split The Scheme’s investment strategy includes the use of Liability Driven Investments (known as LDI) and bond investments. These LDI and bond investments respond in a similar way to the Scheme’s liabilities when government bond yields and expected inflation change over time, which helps to protect the funding level of the Scheme. This chart shows how the assets in the Scheme were allocated to these portfolios as at 31 December 2023.
If you paid Additional Voluntary Contributions (AVCs) AVCs are extra contributions you may have paid into the Scheme while you were an active member. This pot of money is invested, which means the value of your AVCs can go up or down in line with market changes. Although the Scheme has six AVC providers, the vast majority of members’ AVCs are held with Scottish Widows. The other two main providers are Legal & General and Standard Life. Some members may have AVCs with Prudential, Phoenix Life or Aviva. If you have AVCs, you’ll receive an annual statement from your provider, setting out how much is in your account and how it’s changed over the year. If you have a question about your AVCs,
contact the Scheme administrator using the details on the back cover.
Equities
8% 6%
Target return Secure income
14% Buy and maintain corporate bonds 33.5% Liability Driven Investment (LDI) 37.5% Cash 1%
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Summary Funding Statement 2023
Every three years, the Trustee carries out a formal actuarial valuation of the Scheme, which is an estimate of how much money needs to be invested now in order to pay the pensions that members have built up. In between valuations, the Scheme actuary provides an annual estimated update. The latest formal valuation was carried out as at 31 December 2021, and the next one is due as at 31 December 2024. It can take up to 15 months to complete a valuation, but the Trustee will share the results with you once they’ve been finalised. Results of the actuarial update as at 31 December 2023 The table below shows the updates as at 31 December 2022 and 31 December 2023 alongside the results of the formal valuation as at 31 December 2021. The actuary compares the value of the Scheme’s assets with the liabilities. The liabilities are calculated by making various assumptions about what will happen in the future, such as what returns can be expected from the Scheme’s investments, how long members will live for and what future inflation rates will be. The ‘funding level’ indicates how much of the Scheme’s assets cover the value of the liabilities. So, if the funding level is 100% or above, it means that the Scheme is expected to have enough money to meet the full cost of members’ benefits.
Update 31 December 2023
Update 31 December 2022
Valuation 31 December 2021
Assets
£1,562m £1,459m
£1,548m £1,446m
£2,535m £2,288m
Liabilities
Surplus
£103m
£102m
£247m
Funding level
107%
107%
111%
As you can see from the table above, the Scheme’s funding level has remained stable since the last update was carried out as at 31 December 2022. Although the liabilities increased slightly, so too did the value of the Scheme’s assets.
For your information, there have been no payments out of the Scheme’s surplus funds to the Company since the last Summary Funding Statement.
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If the Scheme had discontinued and had been wound up As part of the 2021 valuation exercise, the actuary was required to calculate a wind-up cost. This does not, however, mean that the Company is thinking of winding up the Scheme. It was estimated that if the Scheme had been wound up, the Scheme’s assets would have been sufficient to cover 81% of the amount needed to buy insurance policies to provide all members’ benefits earned up to 31 December 2021. If the Scheme were to start winding up, the Company would be required to pay enough money into the Scheme to enable the Trustee to buy insurance or annuity policies. If the Company is unable to pay the full amount to secure benefits because it is insolvent, the Pension Protection Fund (PPF) might offer the Scheme’s members compensation instead of their benefits. This means that if the Scheme is discontinued and wound up, you might not get your full pension if the funding position is less than 100% on the winding-up basis. Find out more about the PPF at: www.ppf.co.uk or by emailing them at: information@ppf.co.uk Pensions Regulator’s powers – section 231 of the Pensions Act 2004 The Pensions Regulator has not subjected the Scheme to any use of its powers under section 231. These powers include the power to modify the Scheme for future accrual of benefits, subject it to directions about how its technical provisions are to be calculated or how quickly any deficit has to be cleared, or to impose a schedule of contributions.
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Your pensions team The Scheme is managed by a Board of six Trustee Directors – four are selected by the Company and two have been nominated by the Scheme’s members.
Company selected Greg Smart (Chairman) – member of the Otis Section
Our advisers Administrator Gallagher (formerly Buck) Actuary Oliver McCulloch, FIA, Barnett Waddingham LLP Investment adviser Barnett Waddingham LLP – investment advisers to the UTC Common Investment Fund Investment managers UTC Pension Trust Limited – Administrator to the UTC Common Investment Fund Aviva Investors BlackRock Investment Management (UK) Ltd Insight Investment Management Legal & General Assurance (Pensions Management) Limited M&G Investment Management Ltd Phoenix Life Ltd Ruffer LLP Auditor PricewaterhouseCoopers LLP Legal adviser Shoosmiths LLP Secretary to the Trustee Julie Beake, RTX Pensions Manager
Ken Levine – Executive Director, Global Retirement Strategy, RTX Greg Hawes – Associate Director, Benefits Finance, RTX Julie Sullivan – Senior Director, Pension Investments, RTX Member nominated
Robin Smith – member of the Kidde Section Eugene Egan – member of the Otis Section Ian Hayward – former member of the Goodrich Section (resigned on 19 August 2024)
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Who to contact If you have any questions about your benefits in the Scheme or the payment of your pension, please contact the Scheme administrator. Administration of the Scheme is now taken care of by Gallagher (formerly Buck) for all Sections. You can read an article about this change on page 6. Gallagher (Edinburgh) PO Box 321 Mitcheldean Gloucestershire GL14 9BG 0330 123 9563 utcpensions@buck.com
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