THE DELPHI DIESEL SYSTEMS PENSION. SCHEME. Report and Accounts. For
the Year Ended 31 December 2008. Registration Number 10247526 ...
Registration Number 10247526
THE DELPHI DIESEL SYSTEMS PENSION SCHEME Report and Accounts For the Year Ended 31 December 2008
CONTENTS
Trustee and Advisers
1
Report of the Trustee
2-9
Investment Report Statement of Trustee’s Responsibilities
7-8 9
Report of the Actuary
10 - 11
Schedule of Contributions
12 - 13
Independent Auditors’ Report
14 - 15
Fund Account
16
Net Assets Statement
17
Notes to the Financial Statements
18 - 25
Independent Auditors’ Statement about Contributions
26
Summary of Contributions
27
Members’ Information
28
Appendix: The GM (UK) Common Investment Pool Report & Accounts for the year ended 31 December 2008
THE DELPHI DIESEL SYSTEMS PENSION SCHEME TRUSTEE and ADVISERS Principal Employer Delphi Diesel Systems Limited
Trustee Delphi Diesel Systems Pension Trustees Limited
Directors of the Trustee Employee Representatives A. Shepherd (Vice Chairman), J. Kyte (appointed 4 September 2008), J. W. Chandler (appointed 4 September 2008) D. McLellan (resigned 21 March 2008), P. Wilson (resigned 21 March 2008) Company Representatives A. C. Evans, (Chairman) S. Coppock, D. Friday, S. Gregory, C. Palmer Pensioner Representative T. Brind
Secretary to the Scheme Marion McDonald
Actuary
Solicitors
S. Gupta Watson Wyatt LLP
CMS Cameron McKenna (resigned 28 April 2008) Slaughter and May LLP (appointed 28 April 2008)
Registered Auditors
Bankers
PricewaterhouseCoopers LLP
Lloyds TSB Bank Plc
Investment Consultants
Investment Manager Promark Global Advisors Limited (formerly named GM Asset Management (UK) Ltd)
Watson Wyatt LLP
Scheme Administration General Motors UK Limited Griffin House, Osborne Road Luton, Bedfordshire LU1 3YT
1
The Delphi Diesel Systems Pension Scheme Report of the Trustee for the year ended 31 December 2008 The Trustee of The Delphi Diesel Systems Pension Scheme (the “Scheme”) presents its annual report together with the investment report, actuarial statements and certificates, summary of contributions, compliance statement and financial statements for the year ended 31 December 2008.
Constitution of the Scheme The Scheme was established on 7 January 2000 under, and is governed by, a Trust Deed and Rules, as amended. It is a registered pension scheme under the Finance Act 2004. The Scheme is contracted-out of the Second State Pension (S2P). The Trust Deed and Rules sets out the Scheme benefits in detail and specifies the investment powers of the Trustee. The closed section of the Scheme is a defined benefit pension arrangement where earnings levels and length of service determine pensions. The new employee section is a defined benefit pension arrangement with a defined contribution underpin. The Scheme is contributory and provides retirement and dependants’ pensions. The Scheme also provides death benefits, before and after retirement, and discretionary ill-health pensions. All new employees automatically become members of the Scheme to ensure they are immediately covered for the Scheme’s risk benefit package. Employees must confirm their membership by completing a membership form. Service after 6 April 1997 is contracted out using the “reference scheme” test basis introduced by the Pensions Act 1995 (the “Pensions Act”) which requires the Scheme actuary to certify that the Scheme is expected to provide pensions for at least 90% of contributing members, which are at least as good as those under a reference scheme set out in the Pensions Act. The level of contributions to the Scheme with effect from the valuation as at 31 December 2005 is determined by agreement between the Trustee of the Scheme and the Principal Company, Delphi Diesel Systems Limited (the "Company”) and, in default of agreement, by the Pensions Regulator, in accordance with the requirement of the Pensions Act 2004. The cost of providing benefits not covered by members’ contributions is provided by the participating companies. Subject to certain exceptions, for additional benefits required to be granted by law, the Company is required by the Trust Deed to make good any deficit were the Scheme ever to be terminated and the benefits payable will be determined in accordance with the Scheme Rules and overriding legislation.
Scheme Advisers There are written agreements in place between the Trustee and each of the Scheme advisers listed on page 1 and also with the Company.
Management of the Scheme The Trustee of the Scheme, Delphi Diesel Systems Pension Trustees Limited, was appointed and may be removed by the Company. The Scheme rules contain provisions for the appointment and removal of the Trustee. The names of the current Trustee Directors are included on page 1. Five are company appointed directors and four are employee directors who are elected by a ballot of the membership. The Company must approve all appointments and replacements. Mr Danny McLellan and Mr Phil Wilson resigned as Employee Representative Directors on 21 March 2008 and were replaced by Mr James Kyte and Mr John W Chandler on 4 September 2008. CMS Cameron McKenna resigned as the solicitors to the scheme on 28 April 2008 and were replaced by Slaughter and May LLP. To conform to the provisions of the Pensions Act 2004, the Trustee is in the process of finalising the consultation for the appointment of member nominated directors. The Trustee met on 6 occasions during the year.
2
The Delphi Diesel Systems Pension Scheme Report of the Trustee for the year ended 31 December 2008 (cont’d) Risk Management The Trustee has overall responsibility for internal controls and risk management. They are committed to identifying, evaluating and managing risk and to implementing and maintaining control procedures to reduce significant risks to an acceptable level. In order to meet this responsibility the Trustee has adopted a risk policy. The objective of this policy is to limit the exposure of the Trustee, and the assets that they are responsible for safeguarding, to business, financial, operational, compliance and other risks where possible. The Trustee has created a Risk Register. The purpose of the Risk Register is: to highlight the scope of risk to which the Scheme is exposed from the Trustee’s perspective; to rank those risks in terms of likelihood and impact; and to identify management actions that are either currently being taken, or that are believed should be taken, in order to mitigate the identified risks.
Trustee Training The Pensions Act 2004 requires trustees to have knowledge and understanding of pensions legislation, investments, the Scheme’s trust deed and rules, their statement of investment principles, the statement of funding principles and other documentation which sets out administration policy in relation to the scheme. A training log has been established by the Trustee and each director is responsible for reporting to the Scheme secretary which module of the Pension Regulator’s toolkit they have completed and which additional training programmes they have attended. During the year Trustee Directors have attended specialist training courses offered by investment managers, custodian and other advisors.
3
The Delphi Diesel Systems Pension Scheme Report of the Trustee for the year ended 31 December 2008 (cont’d) Actuarial Valuation The Trustee must obtain an actuarial valuation of the Scheme at least once every three years, to determine the funding level and to provide the basis for it to agree the contribution schedule with the employer. The Scheme Actuary carried out the triennial valuation of the Scheme as at 31 December 2005. The results of a valuation form the basis for decisions about contributions to the Scheme for future service benefits. The actuary works out if the assets currently in the Scheme are sufficient to pay the past service benefits that have already accrued. To do this, he uses many assumptions and these are agreed between the Trustee and the Company. If there is a shortfall in the Scheme for the past service benefits, the Trustee negotiates with the Company to agree a plan to achieve a fully funded status. The principal assumptions underlying the valuation were: the discount rate, which took into account the ability to actually achieve a higher return than gilts, was set at 5.8%pa for past service and 6.4%pa for future service, pay increases at 3.7% per annum, price inflation at 2.7% per annum and increases to pensions in payment (in excess of the guaranteed minimum pension in payment) of 2.7%pa. Assets were assumed to achieve returns of 7.2% per year during the recovery period. The Trustee agreed to use updated mortality tables to reflect general UK trends towards increased longevity. At 1 January 2006, the market value of the assets of the Scheme, excluding AVC’s, was £200.7 million. This was sufficient to cover 91% of the benefits that had accrued to members. This is a shortfall of £19.8 million relative to the Technical Provisions, i.e., the levels of assets agreed by the Trustee and the Company as being appropriate to meet member benefits. The actuary is also required to show what the position would be on a solvency basis with assets used to buy annuities from an insurance company and on this basis the statutory estimate of solvency ratio was 46%. From April 2007, and backdated to January 2007, the Company agreed to pay contributions at the calculated rate to cover the accrual of future benefits which is 13.4% of pensionable pay. In addition, to address the shortfall, the Company agreed to pay £100,000 in 2007, £200,000 in 2008, and higher figures in future years through 2013. The Company will also pay the scheme’s annual PPF levy as and when it falls due up to a capped figure of £800,000 in 2008/9 and increasing thereafter. If the levy is more than the capped figure, then the balance will still be paid into the Scheme providing the total of Company contributions and levy has not exceeded £8.5million in 2007 and rising in future years. The latest schedule of contributions is shown on pages 12 and 13. The financial position of the Scheme and the level of contributions required will be reviewed at the next actuarial valuation which is being carried out as at 31 December 2008.
4
The Delphi Diesel Systems Pension Scheme Report of the Trustee for the year ended 31 December 2008 (cont’d) Scheme Membership
Employee members Number at 1 January 2008 Add Less
2,631
Adjustment to opening balance Employees joining during the year Employees leaving during the year : Retirements Deaths Early leavers with deferred pensions Early leavers with refunds Transfers out
26 340 (117) (4) (111) (136) (1)
2,628
Number at 31 December 2008 Pensioner members Number at 1 January 2008 Add
Less
(369)
629
New pensioners during the year New dependent pensioners Deferred pensions into payment Deaths and terminated pensions
117 9 10
136 (8)
Number at 31 December 2008
757
Deferred members Number at 1 January 2008
662
Add Less
Leavers during the year Transfers out Deaths and terminations Deferred pensions into payment
111 (7) (2) (10)
(19)
754
Number at 31 December 2008 Total membership at 31 December 2008
4,139
5
The Delphi Diesel Systems Pension Scheme Report of the Trustee for the year ended 31 December 2008 (cont’d) Pension Increases The guaranteed rate of increase of pensions in the course of payment, for service before 31 January 2008, is the lower rate of 5% or the RPI: for service thereafter the cap is reduced to 3.75% p.a. In April 2008, the eligible members received an increase on that part of their pension in excess of the GMP of 4.4 %. The Scheme is also required to increase GMP rights accrued after 5 April 1988 once they are in payment. The increase must be in line with the increase in RPI (as measured in September) to a maximum of 3%. In April 2008 the increase was 3%.
Transfer Values Regulations were published in April 2008 which moved responsibility for the calculation of transfer values from the actuary to the Trustee. Unfortunately, although the regulations became effective on 1 October, 2008, guidance on the calculation of transfer values was not published by the Regulator until 29 September. As soon as the regulations were published, the Trustee immediately started to review the method and assumptions used, based on advice from the actuary. As the calculation of transfer values is now Plan specific, each of the pension plans requires its own calculations. Administration set up a process to work through the applications in date received order, giving priority to those requiring them for divorce purposes.
Review of Financial Development of the Scheme Due to Scheme administrative delays and the Trustee’s on-going assessment of the employer covenant, financial statements, and therefore a statement from the auditor, were not obtained within seven months of the Scheme’s year end. In all other material respects, the financial statements have been prepared and audited in accordance with regulations made under section 41(1) and (6) of the Pensions Act 1995. The Scheme has also adopted the revised Statement of Recommended Practice, “Financial Reports of Pension Schemes” (May 2007) in this report and accounts.
Further Information Further details of investment performance are included in the investment report. Requests for additional information about the Scheme generally, or queries relating to members' own benefits, should be made to the Scheme administrators, whose address appears on page 1 of this report. Further information for members is included in members’ information at the back of this annual report. The US subsidiaries and operations of the Company’s ultimate parent undertaking, Delphi Corporation (“Delphi”) remain in Chapter 11 bankruptcy status, as per the voluntary petitions for business reorganisation filed in October 2005. The non-US subsidiaries and operations of Delphi, including the Company, were not included in the filing and have continued their normal business operations without supervision from the US courts and are not subject to Chapter 11 requirements. There remain no restrictions in their ability to pay their creditors. During the last three years Delphi has made significant progress in resolving the legacy issues and implementing its transformation plan however, as of the date of this report, Delphi and its non-US subsidiaries and operations remain in Chapter 11 reorganisation. The Trustee has been advised that the Company remains committed to the Scheme, it continues to meet its obligations under the schedule of contributions, and has no plans to reduce pension payments, cease contributions, or close the Scheme.
6
The Delphi Diesel Systems Pension Scheme Report of the Trustee for the year ended 31 December 2008 (cont’d) Investment Report The Scheme participates in The GM (UK) Common Investment Pool (“CIP”) the generic name for ten Pension Fund Pooling Vehicles (“PFPV’s) and one Property Unit Trust (“PUT”). The CIP holds investments on behalf of the Scheme and is administered by a corporate trustee, Promark Investment Trustees Limited (“PITL”) (formerly named GM Investment Trustees Limited), which appoints independent investment managers to manage the investments. The Trustee has entered into a contract with a PITL holding company, Promark Global Advisors Limited (“PGAL”) (formerly named GM Asset Management (UK) Limited), to manage the investments. As required under Section 35 of the Pensions Act 1995, copies of the Statement of Investment Principles (“SIP”) are available on request from the Scheme administrators. Details of investments and a financial review are set out in the report and financial statements of the CIP which form an integral part hereof.
Investment Objectives The Trustee wishes to ensure that the Scheme can meet its obligations to the beneficiaries while recognising the cost implications to the participating companies of pursuing excessively conservative investment strategies. The Trustee defined the investment objectives in the SIP, in consultation with the Company, prior to conducting the asset-liability study. These were: 1. The acquisition of suitable assets of appropriate liquidity which will generate income and capital growth to meet, together with new contributions from members and the Company, the cost of current and future benefits which the Scheme provides, as set out in the Trust Deed and Rules. 2. To limit the risk of the assets failing to meet the liabilities over the long term. 3. To minimise the long term costs of the Scheme by maximising the return on the assets whilst having regard to the objective shown under 2.
Asset Allocation The most recent asset/liability study was carried out in 2007 by Watson Wyatt, the investment consultants to the Scheme, which resulted in a reallocation from equities to alternative investments and these were implemented in December 2007. The following asset allocations have been in place throughout 2008. Asset Allocation % 20 32 3 5 5 5 5 15 10
UK Equities International Equities Emerging Market Equities UK Index-Linked Bonds UK Fixed Interest Bonds UK Corporate Bonds International Hedged Fixed Interest Property Alternative Investments
100
Report of the Trustee for the year ended 31 December 2008 (cont’d) Investment Report (cont’d)
7
The Delphi Diesel Systems Pension Scheme The Trustee has signed an investment management agreement with PGAL, covering PGAL’s role in controlling the asset allocation for the Scheme, and aiming to add value through tactical asset allocation. During the year a new Statement of Investment Principles was approved. As required, additional contributions to the Scheme are invested in new units in the various PFPV’s or if cash is required to pay pensions or other benefits, units are liquidated from the PFPV’s. Wherever possible, PGAL tries to match any transactions with other pension plans in the CIP.
Employer-Related Investments At 31 December 2008, the Scheme held no employer-related investments.
Custody Appropriate steps have been taken to safeguard the assets of the Scheme. Details of the custody arrangements for the majority of the assets which are held in the CIP are set out in the report and financial statements of the CIP. Documents of title to the other assets of the Scheme are held by the Company.
Investment Performance During 2008 the Scheme produced overall returns of (24.4) % before fees, which was below the Scheme benchmark return of (21.3) %. Three year returns of (3.7) % per annum were 1.1% below the benchmark, and 5 year returns of 3.9% were 0.7% below the benchmark.
Total Rates of return For Periods ended 31/12/2008 (annualised) 1 year 3 years 5 years % % %
Total Rates of return For Periods ended 31/12/2007 (annualised) 1 year 3 years 5 years % % %
Plan returns
(24.40)
(3.70)
3.90
5.00
12.80
13.40
Benchmark
(21.30)
(2.60)
4.60
5.20
12.50
13.50
Out/(under)performance
(3.10)
(1.10)
(0.70)
(0.20)
0.30
(0.10)
Market reports and detailed analysis of the CIP performance are set out in the report and financial statements of the CIP. Since the year end, the value of investments in the global market place has fluctuated considerably due the current economic environment. This has also had a significant impact on the total rates of return in the value of the Scheme’s investments in the CIP. Based on the latest available unaudited management data, as of 30 June 2009, the Scheme’s return to date in 2009 was approximately 0.7% compared to a benchmark of 0.6%.
8
The Delphi Diesel Systems Pension Scheme Report of the Trustee for the year ended 31 December 2008 (cont’d) Statement of Trustee's Responsibilities The financial statements are the responsibility of the Trustee. Pension scheme regulations requires the Trustee to make available to scheme members, beneficiaries and certain other parties, audited financial statements for each scheme year which: show a true and fair view, in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), of the financial transactions of the Scheme during the Scheme year and of the amount and disposition at the end of the Scheme year of its assets and liabilities, other than liabilities to pay pensions and benefits after the end of the Scheme year, and contain the information specified in the Schedule to the Occupational Pension Schemes (Requirement to obtain Audited Accounts and a Statement from the Auditor) Regulations 1996, including a statement whether the financial statements have been prepared in accordance with the Statement of Recommended Practice “Financial Reports of Pension Schemes”. The Trustee has supervised the preparation of the financial statements and has agreed suitable accounting policies, to be applied consistently, making any estimates and judgements on a prudent and reasonable basis. The Trustee is also responsible for making available certain other information about the Scheme in the form of an Annual Report. The Trustee is responsible under pensions legislation for ensuring that there is prepared, maintained and from time to time revised a schedule of contributions showing the rates of contributions (other than voluntary contributions) payable towards the scheme by or on behalf of the employer and the active members of the Scheme and the dates on or before which such contributions are to be paid. The Trustee is also responsible for keeping records in respect of contributions received in respect of any active member of the Scheme and for monitoring whether contributions are made to the Scheme by the employer in accordance with the schedule of contributions. Where breaches of the schedule occur, the Trustee is required by the Pensions Acts 1995 and 2004 to consider making reports to the Pensions Regulator and to members. The Trustee also has a general responsibility for ensuring that adequate accounting records are kept and for taking such steps as are reasonably open to it to safeguard the assets of the Scheme and to prevent and detect fraud and other irregularities, including the maintenance of an appropriate system of internal control. Trustee: Delphi Diesel Systems Pension Trustees Limited
Signature:
Name (Trustee Director):
September 2009
9
The Delphi Diesel Systems Pension Scheme Report of the Actuary
ACTUARY’S CERTIFICATION OF TECHNICAL PROVISIONS
ACTUARIAL CERTIFICATE GIVEN FOR THE PURPOSES OF REGULATION 7(4) (a) OF THE OCCUPATIONAL PENSION SCHEMES (SCHEME FUNDING) REGULATIONS 2005 Name of Scheme:
The Delphi Diesel Systems Pension Scheme
Calculation of technical provisions I certify that, in my opinion, the calculation of the Scheme’s technical provisions as at 1 January 2006 is made in accordance with regulations under section 222 of the Pensions Act 2004. The calculation uses a method and assumptions determined by the trustees of the Scheme and set out in the Statement of Funding Principles dated 21 March 2007.
Signature:
Sanjay Gupta
Date:
21 March 2007
Name:
Sanjay Gupta
Qualification:
Fellow of the Institute of Actuaries
Address:
Watson Wyatt Limited 3 Falcon Gate Shire Park Welwyn Garden City Hertfordshire AL7 1TW
Name of employer: Watson Wyatt Limited
10
The Delphi Diesel Systems Pension Scheme Report of the Actuary (cont’d)
The Delphi Diesel Systems Pension Scheme Actuary's certification of Schedule of Contributions
1. Adequacy of rates of contributions I certify that, in my opinion, the rates of contributions shown in this schedule of contributions are such that the statutory funding objective can be expected to be met by the end of the period specified in the recovery plan dated 21 March 2007.
2. Adherence to statement of funding principles I hereby certify that, in my opinion, this schedule of contributions is consistent with the Statement of Funding Principles dated 21 March 2007. The certification of the adequacy of the rates of contributions for the purpose of securing that the statutory funding objective can be expected to be met is not a certification of their adequacy for the purpose of securing the Scheme’s liabilities by the purchase of annuities, if the Scheme were to be wound up.
Sanjay Gupta Fellow of the Institute of Actuaries
Date ………… 21 March 2007 …………………..
Watson Wyatt Limited 3 Falcon Gate Shire Park Welwyn Garden City Hertfordshire AL7 1TW
Authorised and regulated by the Financial Services Authority
11
The Delphi Diesel Systems Pension Scheme Report of the Actuary (cont’d)
The Delphi Diesel Systems Pension Scheme Schedule of Contributions This schedule of contributions has been prepared by the Trustees, after obtaining advice from the Scheme Actuary, Sanjay Gupta. It specifies the rates and due dates of employer and employee contributions from 1 January 2007 and the likely expenses to be incurred by the Scheme. All contributions are subject to review following the next scheduled actuarial valuation currently due at 31 December 2008.
1. Name of employer
Delphi Diesel Systems Limited
2. Rates of contribution 2.1
Active members will contribute at the following rates of Pensionable Pay: Open Section members:
3.0% of Pensionable Pay
Closed Section contributory members:
4.5% of Pensionable Pay
All other members contribute at the rates specified in the Rules. Additional Voluntary Contributions can be paid in addition to the above rates 2.2
The employer will contribute at a rate of 13.4% of Pensionable Pay from 1 January 2007 in respect of future accrual of benefits, the provision of death benefits and the expenses of administering the Scheme. As the employer has paid contributions at a rate of 16.4% of Pensionable Pay for January, February and March 2007, the contribution payable in April 2007 will be 13.4% of Pensionable Pay less an amount equal to 3.0% of Pensionable Pay over the months for January, February and March 2007.
2.3
In addition, the employer will pay: £100,000 by 31 December 2007 £200,000 by 31 December 2008 £400,000 by 31 December 2009 £400,000 by 31 December 2010 £600,000 by 31 December 2011 £1,000,000 by 31 December 2012 £1,000,000 by 31 December 2013
2.4
The employer will provide additional funding to meet the scheme’s annual levy payable to the Pension Protection Fund. The employer will pay the levies in full provided the levy falls within the cap as set out below. If the levy for any year is above the cap shown, the Scheme will meet the balance of the Levy. Caps for future levies will be agreed as required. A cap of £700,000 for the 2007/08 PPF levy A cap of £800,000 for the 2008/09 PPF levy A cap of £850,000 for the 2009/10 PPF levy A cap of £900,000 for the 2010/11 and 2011/12 PPF levies
12
The Delphi Diesel Systems Pension Scheme Report of the Actuary (cont’d) 2.5
From time to time, higher contributions than those set out in 2.2, 2.3 and 2.4 may be paid. In particular the employer has agreed to provide additional funding of the difference between the annual PPF caps set out above and the PPF levy from the same year, provided that the total level of pension contributions and PPF levy to the Scheme remains within the total company budget for the relevant year as set out below: 2007 £8.5 million 2008 £9.0 million 2009 £9.5 million 2010 £9.9 million 2011 £10.4 million
3. Due dates for payment Member contributions:
th
to be paid into the Scheme no later than the 19 of each month after that in which they are deducted from earnings.
Employer contributions: except where specified in 2.3, to be paid into the Scheme no later than the 19th of each month after that to which they relate; Notes: 1
This schedule does not cover the employer's commitment to pay across to the Trustee any additional voluntary contributions made by members.
2
The above contributions include an allowance for investment charges, fees in respect of professional advisors, lump sum death benefits and other expenses met by the Trustee which are paid from the resources of the Scheme as and when they fall due.
Agreed on behalf of the Trustees, Delphi Diesel Systems Pension Trustees Limited
Agreed on behalf of Delphi Diesel Systems Limited
….Andy C. Evans…………………………….…….
…..Jeff Parsons………………..……………..
(Capacity) Trustee Date: 19/3/07
(Capacity) Director Date: 21/3/07
Date of Schedule (for reference purposes):
21 March 2007
13
The Delphi Diesel Systems Pension Scheme Independent Auditors’ Report to the Trustee of The Delphi Diesel Systems Pension Scheme We have audited the financial statements of The Delphi Diesel Systems Pension Scheme for the year 31 December 2008 which comprise the Fund Account, the Net Assets Statement and the related notes. These financial statements have been prepared under the accounting policies set out therein.
Respective responsibilities of Trustee and Auditors The Trustee’s responsibilities for obtaining an Annual Report and audited financial statements prepared in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice) are set out in the statement of Trustee’s responsibilities. Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements and International Standards on Auditing (UK and Ireland). This report, including the opinion, has been prepared for and only for the Trustee as a body in accordance with Section 41 of the Pensions Act 1995 and for no other purpose. We do not, in giving this opinion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing. We report to you our opinion as to whether the financial statements give a true and fair view and contain the information required by the relevant legislation. We also report to you if, in our opinion, we have not received all the information and explanations we require for our audit. We read the other information contained in the annual report and consider whether it is consistent with the audited financial statements. This other information comprises all of that set out in the contents page. We consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the financial statements. Our responsibilities do not extend to any other information.
Basis of Audit Opinion We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by or on behalf of the Trustee in the preparation of the financial statements, and of whether the accounting policies are appropriate to the Scheme's circumstances, consistently applied and adequately disclosed. We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements.
14
The Delphi Diesel Systems Pension Scheme Independent Auditors’ Report to the Trustee of The Delphi Diesel Systems Pension Scheme (cont’d) Opinion In our opinion: the financial statements give a true and fair view, in accordance with United Kingdom Generally Accepted Accounting Practice, of the financial transactions of the Scheme during the year ended 31 December 2008, and of the amount and disposition at that date of its assets and liabilities, other than the liabilities to pay pensions and benefits after the end of the year, and the financial statements contain the information specified in Regulation 3 of, and the Schedule to, the Occupational Pension Schemes (Requirement to obtain Audited Accounts and a Statement from the Auditor) Regulations 1996.
PricewaterhouseCoopers LLP Chartered Accountants and Registered Auditors London
September 2009
15
The Delphi Diesel Systems Pension Scheme Fund account for the year ended 31 December 2008
Notes
Year Ended 31-Dec-08
Year Ended 31-Dec-07
£'000
£'000
Contributions and benefits Contributions receivable Transfers in
3 4
12,018 265 12,283
11,326 65 11,391
Benefits payable Leavers Administrative expenses
5 6 7
10,556 451 906 11,913
7,759 149 546 8,454
370
2,937
(61,276) (239) (61,515)
11,259 (260) 10,999
Net increase / (decrease) in the fund during the year
(61,145)
13,936
Net assets of the Scheme At 1 January
254,432
240,496
At 31 December
193,287
254,432
Net additions/(withdrawals) from dealings with members Returns on investments Change in market value of investments Investment management expenses Net returns on investments
9 8
16
The Delphi Diesel Systems Pension Scheme Net assets statement as at 31 December 2008
31-Dec-08
31-Dec-07
£'000
£'000
183,809 9,656 193,465
244,535 9,847 254,382
12
989
928
13
(1,167)
(878)
(178)
50
193,287
254,432
Notes
Investments Pooled investment vehicles AVC investments
Current assets Current liabilities Net current assets/(liabilities)
9, 10 11
Net assets of the Scheme at 31 December
The financial statements summarise the transactions of the Scheme and deal with the net assets at the disposal of the Trustee. They do not take account of obligations to pay pensions and benefits which fall due after the end of the Scheme year. The actuarial position of the Scheme, which does take account of such obligations, is dealt with in the Report of the Actuary included in the annual report on pages 10 to 13 and in the Report of the Trustee on page 4 and these financial statements should be read in conjunction with them. The financial statements on pages 16 to 25 were approved by the Trustee on are signed on their behalf by: The Trustee (Delphi Diesel Systems Pension Trustees Limited)
Signature:
Name (Trustee Director):
17
September 2009 and
The Delphi Diesel Systems Pension Scheme Notes to the financial statements for the Year ended 31 December 2008 1 Basis of preparation The financial statements have been prepared in accordance with the Occupational Pension Schemes (Requirement to obtain Audited Accounts and a Statement from the Auditor) Regulations 1996, and in accordance with the Statement of Recommended Practice, “Financial Reports of Pension Schemes” (revised May 2007) (the “revised SORP”).
2 Accounting policies Contributions Normal contributions, both from the members and from the employer, are accounted for as they fall due under the schedule of contributions, the Scheme rules and the recommendations of the actuary. Employers’ augmentation contributions from the employer are accounted for in accordance with the agreement under which they are paid, or in the absence of such an agreement, when received. Additional voluntary contributions from the members are accounted for in the month deducted from the payroll. Employers’ deficit funding contributions are accounted for in accordance with the agreement under which they are being paid for in the absence of an agreement on a receipt basis. The presentation of the information on contributions in the prior year has been reclassified to be consistent with the current year and as required by the revised SORP. Total contributions are unchanged.
Benefits Where members can choose whether to take their benefits as a full pension or as a lump sum with reduced pension, retirement benefits are accounted for on an accruals basis on the later of the date of retirement and the date the option is exercised. Other benefits are accounted for on an accruals basis on the date of retirement, death or leaving the Scheme as appropriate.
Transfers to and from other Schemes Transfer values represent the capital sums either receivable in respect of members from other pension schemes or payable to the pension schemes of new employers for members who have left the scheme. They are accounted for on a cash basis or where the Trustee has agreed to accept the liability in advance of receipt of funds on an accruals basis from the date of the agreement. Group transfers, where the Trustee has agreed to accept the liability prior to the receipt, are accounted for in accordance with the agreement.
Investments Investments in unitised funds represent the Scheme's share of the accumulated fund of the ten Pension Fund Pooling Vehicles (PFPV’s) and one Property Unit Trust (PUT), collectively known as The GM (UK) Common Investment Pool (CIP), calculated in accordance with the Trust Deed. In accordance with the revised SORP, units held in the unitised funds are valued at bid net asset value. In the prior year they were valued at mid net asset value. The difference in valuation is immaterial to the financial statements and therefore comparatives have not been restated. As a result, the comparative figures for investments are reported on a mid net asset value basis. The adjustment in valuation from mid to bid in the prior year is included in current year change in market value.
18
The Delphi Diesel Systems Pension Scheme Notes to the financial statements for the Year ended 31 December 2008 Valuation of AVC’s with the Prudential Corporation is provided by Prudential and this includes the capital value of policies in payment. The unit linked AVC funds offered by Fidelity Pensions Management are Open Ended Investment Company (“OEIC”) funds and have a single price as valued by the investment manager.
Investment income Interest on cash deposits and other investment income have been accounted for on an accruals basis.
Administrative expenses The administrative expenses of the Scheme are paid by the Scheme, but investment and other related expenses are paid by the appropriate PFPV’s and are borne by the Scheme in proportion to its share therein.
Investment management expenses Investment management fees are accounted for on an accrual basis. Acquisition costs are included in the purchase cost of investments.
19
The Delphi Diesel Systems Pension Scheme Notes to the financial statements for the year ended 31 December 2008 (cont’d)
3
Contributions receivable 2008 £’000
2007 £’000
Participating companies Normal Deficit Contributions Augmentations Other (PPF Levy)
8,697 200 0 670
8,622 100 255 0
Members Normal Additional voluntary contributions
1,814 637
1,753 596
12,018
11,326
Deficit contributions are being made by the employer are being made for 7 years on the advice of the Scheme’s actuary. Employers’ augmentations are paid in respect of certain benefits to individuals.
4
Transfers in 2008 £’000
2007 £’000
Transfers in from affiliated Delphi pension plans
167
20
Individual transfers in from other schemes
98 265
45 65
20
The Delphi Diesel Systems Pension Scheme Notes to the financial statements for the year ended 31 December 2008 (cont’d) 5
Benefits payable
Pensions Commutations and lump sum retirement benefits Lump sum death benefits
6
5,672 4,671 213 10,556
4,645 2,678 436 7,759
2008 £’000
2007 £’000
118 (4) 337 451
13 102 34 149
2008 £’000
2007 £’000
133 1 44 7 78 642 1 906
133 3 57 7 25 321 0 546
2008 £’000
2007 £’000
236 3 239
257 3 260
Administrative expenses
General Motors UK Ltd administration charges Other administration and processing charges Actuarial fees Audit fees Legal and other professional fees Pensions regulator /PPF levy Miscellaneous expenses
8
2007 £’000
Payments to and on account of leavers
Refunds to members leaving service Payments for members joining state scheme Individual transfers out to other schemes
7
2008 £’000
Investment management expenses
Investment management fees Performance measurement fees
21
The Delphi Diesel Systems Pension Scheme Notes to the financial statements for the year ended 31 December 2008 (cont’d) 9 Investments Investments in The GM (UK) Common Investment Pool
UK Equity PFPV International Equity PFPV Emerging Market Equity PFPV Index-Linked Bonds PFPV UK Bonds PFPV International Bonds PFPV Property Unit Trust Cash PFPV Corporate Bonds PFPV Alternative Investments PFPV Pooled investment vehicles AVC’s - Prudential AVC’s - Fidelity AVC Investments
Value at 01.01.08 £’000
Purchases at cost £’000
Sales Proceeds £’000
Change in Market Value £’000
Value at 31.12.08 £’000
49,810 78,861
1,518 10,216
(80) (30)
(14,949) (33,136)
36,299 55,911
8,114 12,930 12,605 12,468 32,795 290 12,475
0 0 0 34 0 3,367 0
0 (3,732) (4,027) (3,323) (405) (1,887) (1,020)
(2,477) 253 1,167 (257) (8,573) 26 (966)
5,637 9,451 9,745 8,922 23,817 1,796 10,489
24,187
0
(226)
(2,219)
21,742
244,535 7,573 2,274
15,135 435 258
(14,730) (662) (77)
(61,131) 272 (417)
183,809 7,618 2,038
9,847
693
(739)
(145)
9,656
254,382
15,828
(15,469)
(61,276)
193,465
N.B. 693 above within AVC investments differs from that disclosed in note 3 due to timing differences with regard to contribution payments and transfers in. The change in market value of investments during the year comprises all increases and decreases in the market value of investments held at any time during the year, including profits and losses realised on sales of investments during the year and investment income received and receivable. The adjustment in the cash PFPV, where the unit value remains constant, recognises the interest on cash deposits in the CIP, partially offset by payment of certain professional fees. The investment manager, Promark Global Advisors Limited (formerly named GM Asset Management (UK) Limited), and Promark Investment Trustees Limited (formerly named GM Investment Trustees Limited), the operator of The GM (UK) Common Investment Pool, are both registered in the UK. Since the year end, the value of investments in the global market place has fluctuated considerably due to the current economic environment. This has also had a significant impact on the value of the Scheme’s investments in the CIP. Based on the latest available unaudited management data, as of 30 June 2009, the aggregate value of the Scheme’s investment in the pooled investment vehicles was approximately £180.3 million.
22
The Delphi Diesel Systems Pension Scheme Notes to the financial statements for the year ended 31 December 2008 (cont’d)
10
Pooled investment vehicles 31-Dec-08
Investment in the PFPV’s/PUT comprising the CIP at market value UK Equity PFPV Emerging Markets Equity PFPV International Equity PFPV Property Unit Trust Index-Linked Bonds PFPV International Bonds PFPV UK Fixed Interest Bonds PFPV Corporate Bonds PFPV Alternative Investments PFPV Cash PFPV
Units
22,601,648 1,512,623 44,722,446 8,484,685 3,901,204 4,037,866 4,436,596 8,237,352 23,419,002 1,796,156
Bid Price £
1.605998 3.726697 1.250166 2.807076 2.422698 2.209581 2.196496 1.273403 0.928378 1.000000
Value £
36,298,201 5,637,087 55,910,481 23,817,157 9,451,440 8,921,992 9,744,966 10,489,469 21,741,687 1,796,156 183,808,636
The investment in the CIP represents the Scheme’s share of each of the pooled funds within the CIP calculated in accordance with the provisions of the Trust Deed. In accordance with the revised SORP, units held in the unitised funds at 31 December 2008 are valued at bid net asset value. At 31 December 2008 the Scheme held 11.23% (2007: 11.20%) of the total aggregate investment in the CIP.
23
The Delphi Diesel Systems Pension Scheme Notes to the financial statements for the year ended 31 December 2008 (cont’d) 11 AVC investments The Trustee holds assets invested separately from the main fund in the form of insurance policies from Prudential Corporation or unit linked funds from Fidelity Pensions Management, securing additional benefits on a money purchase basis for those members electing to pay additional voluntary contributions. Members participating in this arrangement each receive an annual statement made up to 31 December confirming the amounts held to their account and the movements in the year.
Prudential Corporation Fidelity Pensions Management
12
2008 £’000
2007 £’000
7,618 2,038 9,656
7,573 2,274 9,847
2008 £’000
2007 £’000
734 151 0 0 0 104 989
700 149 9 45 20 5 928
Current assets
Contributions receivable –employers Contributions receivable –employees AVC contributions receivable Accrued receivables – lump sums Transfers receivable Cash balances
All contributions due to the Scheme relate to the month of December 2008 and were paid in full to the Scheme within the timescale required by the schedule of contributions currently in force.
13
Current liabilities
Pensions and PAYE payable Lump sums payable Death benefits payable Refund of contributions payable AVC benefits payable Payable re members joining State Scheme PPF levy accrued Accrued expenses
24
2008 £’000
2007 £’000
(64) (281) (10) 0 0 (27) (553) (232) (1,167)
(56) (126) (226) (1) (45) (79) (217) (128) (878)
The Delphi Diesel Systems Pension Scheme Notes to the financial statements for the year ended 31 December 2008 (cont’d) 14 Related party transactions The majority of administration expenses are initially paid by the principal Delphi company, Delphi Automotive Systems UK Limited and then recharged to the Scheme excluding VAT. The principal charges are actuarial, legal, audit, pension administration and investment management charges. Total cost for 2008 was £268,000 (2007: £485,000) and of this, at year end £232,000 (2007: £124,000) was outstanding and included in current liabilities.
25
The Delphi Diesel Systems Pension Scheme Independent Auditors' Statement about Contributions to the Trustee of The Delphi Diesel Systems Pension Scheme We have examined the Summary of Contributions to The Delphi Diesel Systems Pension Scheme for the year ended 31 December 2008 which is set out on the following page.
Respective responsibilities of Trustee and Auditors The Trustee’s responsibilities for ensuring that there is prepared, maintained and from time to time revised a schedule of contributions are set out in the statement of Trustee’s responsibilities. Our responsibility is to provide a statement about contributions to the Scheme in accordance with relevant legislation and to report our opinion to you. This report, including the statement about contributions, has been prepared for and only for the Scheme’s Trustee as a body in accordance with Section 41 of the Pensions Act 1995 and for no other purpose. We do not, in giving this statement, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.
Basis of statement about contributions We planned and performed our work so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that contributions reported in the Summary of Contributions have been paid in accordance with the relevant requirements. For this purpose the work that we carried out included examination, on a test basis, of evidence relevant to the amounts of contributions payable to the Scheme and the timing of those payments under the schedule of contributions. Our statement about contributions is required to refer to those breaches of the schedule of contributions which we consider to be material for this statement and which come to our attention in the course of our work.
Statement about contributions to the Scheme In our opinion, the contributions payable to the Scheme required by the schedule of contributions during the year ended 31 December 2008 as reported in the Summary of Contributions on the following page have in all material respects been paid in accordance with the schedule of contributions certified by the Actuary on 21 March 2007.
PricewaterhouseCoopers LLP Chartered Accountants and Registered Auditors London September 2009
26
The Delphi Diesel Systems Pension Scheme Summary of Contributions payable in the year During the year ended 31 December 2008, the contributions payable to the Scheme by the Employer and Employee were as follows:
Employee £’000
Employer £’000
1,814 0 1,814
8,697 200 8,897
0
670
637
0
2,451
9,567
Required by the schedule of contributions Normal contributions Deficit contributions Total Other contributions payable PPF levy contribution AVCs Total (as per Fund Account)
The Trustee (Delphi Diesel Systems Pension Trustees Limited)
Signature:
Name (Trustee Director):
September 2009
27
The Delphi Diesel Systems Pension Scheme
Members’ Information Pensions Tracing Service Contact details for the Pensions Tracing Service, which can help members trace an old pensions scheme that they have lost contact with, are: Pension Tracing Service, Tyneview Park, Whitley Road, Newcastle, NE98 1BA Telephone: 0845 600 2537
The Pensions Advisory Service Any concern connected with the Scheme should be referred to Mr. D. Mount, Pensions Administration Manager, who will try to resolve the problem as quickly as possible. Members and beneficiaries of occupational pension Schemes who have problems concerning their Scheme which are not satisfied by the information or explanation given by the administrators or the Trustees can consult with the Pensions Advisory Service (TPAS). A local TPAS adviser can usually be contacted through a Citizen's Advice Bureau. Alternatively TPAS can be contacted at: 11 Belgrave Road, London SW1V 1RB Telephone: 0845 601 2923
Pensions Ombudsman In cases where a complaint or dispute cannot be resolved, normally after the intervention of TPAS, an application can be made to the Pensions Ombudsman for him to investigate and determine any complaint or dispute of fact or law involving occupational pension Schemes. The address is: 11 Belgrave Road, London SW1V 1RB Telephone: 020 7834 9144.
28
