REPORT AND FINANCIAL STATEMENTS YEAR … reports... · SIEMENS BENEFITS SCHEME TRUSTEE’S REPORT...
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Registered number: 10126751PSO reference: SF19/78032
SIEMENS BENEFITS SCHEME
REPORT AND FINANCIAL STATEMENTS
YEAR ENDED 30 SEPTEMBER 2012
SIEMENS BENEFITS SCHEME
CONTENTS
TRUSTEE AND ADVISORS ................................................................................................................................................................................. 1
TRUSTEE’S REPORT .......................................................................................................................................................................................... 4
INVESTMENT REPORT ..................................................................................................................................................................................... 13
ACTUARIAL CERTIFICATION OF THE SCHEDULE OF CONTRIBUTIONS ................................................................................................. 20
ACTUARIAL CERTIFICATION OF THE TECHNICAL PROVISIONS .............................................................................................................. 21
INDEPENDENT AUDITORS’ REPORT ............................................................................................................................................................. 22
FUND ACCOUNT................................................................................................................................................................................................ 23
NET ASSET STATEMENT ................................................................................................................................................................................. 24
NOTES TO THE FINANCIAL STATEMENTS.................................................................................................................................................... 25
INDEPENDENT AUDITORS’ STATEMENT ABOUT CONTRIBUTIONS......................................................................................................... 38
SUMMARY OF CONTRIBUTIONS PAYABLE IN THE YEAR .......................................................................................................................... 39
SIEMENS BENEFITS SCHEME
TRUSTEE AND ADVISORSYEAR ENDED 30 SEPTEMBER 2012
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TRUSTEE AND ADVISORS
Trustee Siemens Benefits Scheme Limited
Chairman Capital Cranfield Pension Trustees Limited Represented by Joanna Matthews, 5th Floor, New Liverpool House,15-17 Eldon Street, London EC2M 7LD
Directors Craig Buckley* (active member of Investor Plan)Clinical ScientistHealthcareHome Based
Gerard Gent (with effect from 11 June 2012)Retired – Formerly Head of Legal, Siemens Plc
Stuart Jones (active member of Investor Plan)Commercial DirectorTraffic Solutions, Mobility and Logistics Division UK, Poole
Andrew Kennedy* (active member of Investor Plan)Senior Commercial ManagerIC RL IS (UK), Northampton
Pam Lord* (active member of Investor Plan)Siemens Transmission & Distribution LimitedSir William Siemens House, Manchester
Declan McDonnell (active member of Investor Plan)Retired - Formerly Business Architect, Siemens IT Solutions and Services Limited, Glasgow
Richard Mellor Retired - Formerly Finance Director, Siemens plc - Automation and Drives, Manchester
Robin Phillips (active member of Investor Plan)Finance Director, Siemens IndustrySir William Siemens House, Manchester
Phil Tizzard** (with effect from 12 June 2012)Retired – Formerly Managing Director, Siemens Communications Limited, Milton Keynes
Resignations Jonathan Boles (with effect from 31 January 2012)DirectorEnergy Sector, Renewable Energy Division, Wind Power, Hamburg
Clive Gilmour** (with effect from 11 June 2012)Formerly Lead Auditor, Siemens plc – Corporate Audit, Frimley(Retired from full time employment but continued as Pensioner-nominated Director)
* Denotes Member-Nominated Trustee Director** Denotes Pensioner-Nominated Trustee Director
SIEMENS BENEFITS SCHEME
TRUSTEE AND ADVISORSYEAR ENDED 30 SEPTEMBER 2012
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Secretary Trustee Secretarial Services LimitedRepresented by J Mark Wilson, Director
Registered Office Sir William Siemens Square, Frimley, Camberley, Surrey, GU16 8QD
Principal Employer Siemens Plc (the Company)
Scheme Actuary Richard Whitelam FIAAon Hewitt
Legal Advisors Sacker & Partners LLPSquire Sanders LLPPinsent Masons LLP (previously McGrigors LLP)
Independent Auditors PricewaterhouseCoopers LLP
Scheme Administrators Pension Services, CIT/GSS, FrimleyAon Hewitt (for the Investor Plan)
Investment Advisors Towers Watson Limited
Investment Managers Babson Capital European Senior Loans Limited
BlackRock Investment Management (UK) Limited
Blackstone Partners Offshore Sterling Fund Limited
CB Richard Ellis Investors Limited
Invesco Asset Management Limited
K2 Overseas Investors Limited
Legal & General Assurance (Pensions Management) Limited
Standard Life Investments Limited
Bidwells Property Consultants
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Swaps Counterparties Barclays Bank plc
Deutsche Bank AG
Goldman Sachs International
HSBC Bank plc
Morgan Stanley & Co. International plc
The Royal Bank of Scotland plc
FX Trading Counterparties Bank of America Securities
Barclays Capital
BNP Paribas Capital Markets
Credit Suisse
Deutsche Bank AG
JP Morgan Securities
Societe General Securities
UBS
Property Advisors Bidwells Property Consultants
CMS Cameron McKenna LLP
Knight Frank LLP
SmithsGore
AVC Providers Aegon Scottish Equitable plc
Equitable Life Assurance Society
Scottish Life
Scottish Widows plc
The Prudential Assurance Company Limited
Custodian BNY Mellon Asset Services B.V.
Bankers National Westminster Bank plc
The Royal Bank of Scotland plc
Scheme Advisors
There are written agreements in place between the Trustee and each of the Scheme advisors listed above and also with the Principal Employer. There were no changes to the key Scheme advisors during the year.
SIEMENS BENEFITS SCHEME
TRUSTEE’S REPORTYEAR ENDED 30 SEPTEMBER 2012
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TRUSTEE’S REPORT1. Introduction
This is the twenty second annual report of the Trustee of the Siemens Benefits Scheme (“the Scheme”) and covers the year to 30 September 2012. The Scheme is established and governed by the Trust Deed and Rules and is approved as a registered fund under the Finance Act 2004.
The Scheme is made up of nine Defined Benefits Sections which are closed to new entrants, three of which remain open to future accrual. There is also a Defined Contributions Section. Each section has its own benefits structure. The sections are as follows:
Defined Benefits Sections:
Booster Plan Chemfeed Plan Electric Plan Foundation Plan Horizon PlanLegacy PlanSaver PlanSaver Plan Plus Tower Plan
Defined Contributions Section:
Investor Plan
2. Trustee Information
Constitution of the Board
The principal Employer has the power to appoint and remove the Trustee.
As the Trustee is set up as a corporate trust, all appointments and removals of Directors of the Trustee are subject to the approval of the corporate trust shareholder, Alan Wood. Once approval has been given, an AP04 form (for appointment) or TM02 form (for removal) is completed and sent to Companies House.
The full board of the Trustee consists of eleven Trustee Directors (Trustees). Six are appointed by the Company (Company-Nominated Trustee Directors or CNTDs, including the Chairman) and five are nominated by the membership (four Member-Nominated Trustee Directors or MNTDs and one Pensioner Nominated Trustee Director or PNTD).
As at the date of signing, there were ten Trustee Directors and one vacancy.
Member-Nominated and Pensioner-Nominated Trustee Directors (MNTDs/PNTDs)
With effect from December 2012, the Company decided to remove the four MNTD regions within the UK and replace them with one UK region. This means that all active members will have the opportunity of nominating and electing the four MNTDs. There has also been a slight adjustment to the timings of the MNTD elections. Previously, there was one MNTD election each year, whereas there will now be two MNTD elections every two years.
The first two MNTDs to be elected by active members under the new basis will be elected in early 2013.
The PNTD election process is unchanged.
Deferred members are not eligible to nominate or vote.
Each MNTD/PNTD generally serves for four years, although each MNTD/PNTD can be re-elected after their term of office has expired.
Changes over the year
Phil Tizzard replaced Clive Gilmour as PNTD with effect from 12 June 2012.
Jonathan Boles (CNTD) resigned with effect from 31 January 2012 and was replaced by Gerard Gent with effect from 11 June 2012.
The North East & Scotland Region MNTD remained vacant throughout the year.
SIEMENS BENEFITS SCHEME
TRUSTEE’S REPORTYEAR ENDED 30 SEPTEMBER 2012
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3. Scheme Governance
The Trustee is appointed and empowered in accordance with the Trust Deed and Rules. The Trustee also appoints a number of advisors to assist in the running of the Scheme.
Quarterly Board Meetings
The Trustee formally meets on a quarterly basis to review all aspects of the Scheme. Additional meetings are also convened as necessary. The Scheme’s advisors and service providers are invited to attend and report on a regular basis.
The Trustee maintains a number of logs and registers to cover various aspects of Scheme Governance. This includes a Notifiable Events Log, which is used to record any significant Scheme events that need to be notified to The Pensions Regulator (tPR), as well as a Whistleblowing Log, which records any suspected breaches of law which may also be reportable to tPR.
Other logs in operation include: Calendar of Events; Conflicts of Interest Log; Corporate Hospitality Log; Risk Log; Covenant Log; Duties of Directors Log and Governance Log.
Trustee Sub-Committees
In order to effectively manage the varied requirements of running the Scheme between the quarterly board meetings, a number of sub-committees are in operation, each with its own delegated powers and terms of reference.
At present the sub-committees are responsible for: administration; benefits; communications; covenant; documentation; investment;finance audit and risk.
The Administration Sub-Committee supervises the delivery of pension services by the in-house administrator and external providers.
The Benefits Sub-Committee determines discretionary payments such as ill health and death benefits.
The Communications Sub-Committee determines the style and content of all trustee communications relating to the Scheme.
The Covenant Sub-Committee evaluates the Employer’s ability and willingness to support the Scheme.
The Documentation Sub-Committee reviews proposed changes to formal Scheme documents.
The Finance Audit and Risk Sub-Committee supervises the Scheme’s financial statements and budget and liaises with the Scheme Auditor with respect to the Scheme Annual Report and Financial Statements. It also ensures that the risks associated with running the Scheme are identified, evaluated and mitigated as far as possible.
The Investment Sub-Committee monitors the Scheme’s investment managers and their performance, as well as implementing strategic investment decisions made by the Full Board.
Ad hoc sub-committees have operated during the year. For example, the Project Orelle Sub-Committee continued throughout the year. The aim of this sub-committee is to liaise with the Company regarding proposals for incremental funding of the Scheme and to try to reach agreement on any Company proposals before being presented to the Full Board for approval.
Myners Review of Institutional Investment / Investment Governance Group (IGG) Principles
The Trustee follows the guidelines set out in the IGG Report.
The IGG principles were published in November 2010, and whilst not compulsory, they provide a useful framework which can be used as a practical checklist to benchmark a scheme’s investment governance processes against ‘best practice’. The Trustee undertakes annually a review of the Scheme’s performance against the IGG principles.
4. Changes to Scheme
Rule Changes
A revised Definitive Trust Deed and Rules was signed on 1 April 2012. This was a consolidation of previous Rule changes made via previous Deeds of Amendment.
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TRUSTEE’S REPORTYEAR ENDED 30 SEPTEMBER 2012
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Scheme Mergers
There were no Scheme mergers during the year.
Disposals
Following the sale of the share capital of Siemens IT Solutions Limited (SIS) to Atos SA on 30 June 2011, SIS ceased to participate in the Scheme. SIS members were transferred to Atos UK 2011 Pension Scheme with effect from 1 June 2012 except those who opted not to transfer.
On 1 June 2012, a transfer of £266.6 million was paid by the Trustee calculated as a “share of fund” and a top up of £47.7 million to this transfer was made by the Employer under the agreed arrangements.
5. Actuarial
2011 Valuation
The most recent actuarial valuation of the Scheme was completed as at 30 September 2011 (the valuation date) and was signed off by the Scheme Actuary on 19 December 2012.
This was the third valuation of the Scheme carried out under the provision of Pensions Act 2004. A summary of the valuation is issued to members via a Summary Funding Statement and a summary of the latest valuation will be issued to members by 31 March 2013 in the next Summary funding Statement.
With respect to the 30 September 2011 valuation and following discussions with the Employer and the Actuary, the Trustee determined and agreed with the Employer the assumptions to be used to calculate the “technical provisions”. This is the amount needed to be held by the Scheme to provide for benefits already earned that will be paid from the Scheme in the future, assuming the Scheme continues in its present form. The amount is based on pensionable service to the valuation date and assumptions about various factors that will influence the Scheme in the future, such as the levels of investment returns and pay increases, members’ retirement dates and how long members will live.
The Actuarial Certificate of Technical Provisions is set out on page 21.
Technical Provisions
The main assumptions underlying the 2011 valuation calculations were:
Discount rate – pre retirement 4.3% p.a.Discount rate – post retirement 3.8% p.a.Rate of salary increases 4.6% p.a. Price inflation – RPI 3.1% p.a. Price inflation - CPI 2.1% p.a.Rate of pension and deferred pension 3.0% p.a. for pension increasing at RPI capped at 5% p.a.
2.4% p.a. for pension increasing at RPI capped at 3%.p.a.1.8% p.a. for pension increasing at CPI capped at 3%.p.a.3.6% p.a. for pension increasing at RPI capped at 5% p.a. minimum of 3% p.a.2.1% p.a. for deferred pension increase
Mortality Based on the Scheme’s pensioner mortality experience, a 65 year old male pensioner is expected to live to 89.3 years and a 65 year old female pensioner is expected to live to 90.5 years.
Valuation Results
A summary of the funding position at the 2011 valuation date allowing for the SIS bulk transfer is as follows:
£millionValue of benefits earned 3,447Market value of assets held 2,510Shortfall 937Funding level 73%
A copy of the 2011 Valuation can be downloaded from the Scheme’s website (See section 8 for website access).
SIEMENS BENEFITS SCHEME
TRUSTEE’S REPORTYEAR ENDED 30 SEPTEMBER 2012
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Future Service Contribution Rates
If the Scheme had no surplus (or shortfall) and its assets were exactly equal to the technical provisions, contributions would normally still be required to cover the costs of benefits expected to accrue to members in the future. The Projected Unit Method with a three year control period has been used to calculate the future service contribution rates which are as follows:
Booster Plan Not ApplicableChemfeed Plan Not ApplicableElectric Plan 33.3%Foundation Plan Not ApplicableHorizon Plan Saver Plan Not ApplicableLegacy Plan Not ApplicableSaver Plan Not ApplicableSaver Plan Plus 42.2%Tower Plan 37.0%
Deficit Repair
Following the completion of the Scheme Valuation, a Recovery Plan and a Schedule of Contributions was agreed with the Employer. The Recovery Plan summarises the plan of action for correcting the deficit over an agreed period. The Schedule of Contributions sets out what contributions are payable and when they need to be paid. Details are available in the Scheme documents section of the Scheme’s website (See section 8 for website access).
The Schedule of Contributions dated 19 December 2012 has been adopted by the Trustee and the Employer and the Actuary’s certification of this schedule is shown on page 20.
The Schedule of Contributions is designed to clear the shortfall of £937 million as at the valuation date by 31 January 2031.
6. Scheme Finances
Financial Review
The financial statements shown on pages 23 to 36 of the Annual Report have been prepared and audited in accordance with regulations made under sections 41 (1) and (6) of the Pensions Act 1995.
At the year end, the Scheme’s net assets totaled £3.25 billion, a decrease of £22 million from the value at the beginning of the year. This is analysed as follows:
Defined Benefits Section
£000
Defined Contributions
Section £000
Total
£000Net Assets at 1 October 2011 2,761,301 508,390 3,269,691Contributions and other income 78,461 76,368 154,829Benefits and other payments (432,332) (20,603) (452,935)Net Return on Investments 211,973 63,915 275,888Transfers between sections 12,332 (12,332) -Net movement in fund during the year (129,566) 107,348 (22,218)Net Assets at 30 September 2012 2,631,735 615,738 3,247,473
SIEMENS BENEFITS SCHEME
TRUSTEE’S REPORTYEAR ENDED 30 SEPTEMBER 2012
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Contributions to the Scheme
Contributions to the Scheme are paid at the rates detailed below (as percentages of pensionable salaries).
An administration fee of £0.2m was paid to The Pensions Regulator and a risk-based levy of £1.5m was paid to the Pension Protection Fund (PPF) in respect of the period October 2011 - March 2012. The risk-based levy payable to the PPF between April 2012 and September 2012 was accrued at the year end and amounts to £0.3m. In accordance with the prevailing Schedule of Contributions, the Company is obliged to reimburse the Scheme for the full amount of PPF-related levies, and accordingly the relevant debtor is reflected in the financial statements.
From 1 January 2013 the Employer will meet the Scheme’s administration expenses directly.
Period 1 January 2013 to 31 December 2030
Section Member EmployerElectric Plan 6.0% or such lower rate as may have been notified to
certain members for the duration of the period that the reduced rate applies.
33.3%
Saver Plan plus 1.5% / 5% / 6% 42.2%
Tower Plan 6.0% 37.0%
Investor Plan 3% plus any additional contributions paid at the member’s option up to an overall maximum of 7% (equivalent to an overall maximum of 10%)
At rates paid by members plus 1.5%, plus for members of the Foundation, Saver, Booster and Horizon Plans who transferred to the Investor Plan on 1 January 2008:-
75% of the rates paid by the members (2013)
70% of the rates paid by the members (2014)
65% of the rates paid by the members (2015)
60% of the rates paid by the members (2016)
55% of the rates paid by the members (2017)
50% of the rates paid by the members (2018 to 2022)
SIEMENS BENEFITS SCHEME
TRUSTEE’S REPORTYEAR ENDED 30 SEPTEMBER 2012
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Recovery Plan
To eliminate the funding shortfall revealed by the latest actuarial valuation of the Scheme as at 30 September 2011, the Trustee and the Employer have agreed contributions in addition to normal contributions that will be paid to the Scheme by Siemens plc and other participating companies.
These contributions are paid according to the principle that at any point in time, the cumulative amount should be no less than had contributions been paid at the following rate:-
Period £ per monthJune 2013 17,000,000July 2013 to November 2015 2,833,333December 2015 4,280,333January 2016 to June 2025 6,500,000July 2025 to January 2031 2,833,333
This cumulative contribution calculation including contributions paid prior to the date of signing of the Recovery Plan, in excess of the minimum required under the previous recovery plan, was £220.9 million as at the year end.
Recovery Plan contributions received by the Scheme:
£000Paid September 2007 86,750Paid October 2007 133,800Paid September 2009 43,312Paid March 2010 128,000Paid March 2011 134,000Paid September 2012 15,000
540,862Less amounts due 1 Oct 2007 to 30 Sept 2012 (319,980)
220,882
It has been agreed that the Trustee will consider a proposal from the Employer to implement a partnership agreement, which will provide an annual income to the Scheme. It is envisaged that under the proposed arrangement, the payments specified in the above table that would otherwise be due from Siemens plc and other participating employers will be reduced by the value equal to any payments from thisarrangement.
Transfers
Cash equivalents paid during the year with respect to transfers out of the Scheme have been calculated and verified in the manner prescribed by Section 97 of the Pension Schemes Act 1993. No cash equivalents paid during the year were less than the amount provided for by Section 94(1) of the Pension Schemes Act 1993. To comply with the Transfer Agreements covering the transfer from the Plessey Pension Funds, benefits in respect of service prior to 1 April 1991 in the Plessey Pension Funds are assumed to be payable from age 60 with no reduction to reflect early payment. This is reflected in the cash equivalents. The cash equivalents assume that all members are married, reflecting the Trustee’s discretion to pay the spouse’s pension to children or other dependants. The transfer values do not allow for discretionary increases to pensions in deferment or payment.
Pensions Increases
The Trustee reviewed and agreed increases to pensions in payment effective 1 April 2012 as follows:
After State Pension AgeBefore State Pension Age Excess over GMP Pre 88 - GMP Post 88 - GMP
Saver, Booster and Foundation Plan
Pre - 06 4.8%Post – 06 3.0% n/a n/a n/a
Saver Plus Plan 4.8% 4.8% Nil 4.8% on 50% of the pension
Electric Plan 5.0% 5.0% Nil 3.0%
Chemfeed Plan Pre – 97 3.0%Post – 97 4.8%
3.0%4.8% Nil 3.0%
Horizon Plan Pre – 06 4.8%Post – 06 3.0%
4.8%3.0% Nil 3.0%
Tower Plan 4.8% 4.8% Nil 3.0%
Legacy
Pre – 97* 3.0%Post – 97 4.8%Pre – 06 4.8%Post – 06 3.0%
3.0%4.8%4.8%3.0%
Nil 3.0%
* 4.8% SBT (former Baxi or L&G), 0% non Baxi or L&G
SIEMENS BENEFITS SCHEME
TRUSTEE’S REPORTYEAR ENDED 30 SEPTEMBER 2012
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Pensions in payment for less than one year as at 1 April 2012 were increased pro rata. Deferred pensions also increased in line with the Scheme Rules. No discretionary increases were awarded.
7. Scheme Membership
The membership at the year end was as follows:
Actives Continuing Deferreds Pensioners Dependants Life TotalDefined Benefits 89 2,495 18,295 8,553 947 2 30,381Defined Contributions 12,236 - 12,072 - - - 24,308Continuing members* (2,495) - - - - (2,495)
Total membership 2012 12,325 - 30,367 8,553 947 2 52,190
Total membership 2011 12,810 - 30,520 8,246 868 2 52,446
* They are members who have benefits in both Defined Benefits and Defined Contributions.
Changes in the membership during the year are set out in the following tables:
Defined Benefits Actives Continuing Deferreds Pensioners Dependants Life TotalAt 1 October 2011 138 2,736 20,008 8,246 868 2 31,998Prior year adjustments* - - 4 (3) 4 - 5Revised 1 October 2011 138 2,736 20,012 8,243 872 2 32,003Joiners** - - 1 2 - - 3New dependants - - - - 105 - 105Members deferring benefits (42) (120) 162 - - - -Transfers out - - - - - - -Withdrawal – No liability*** (3) - (1,497) (32) - - (1,532)Members retiring (4) (116) (329) 449 - - -Death with dependants - (4) (55) (109) (22) - (190)Pensions ceasing - - - - (8) - (8)Opt Out - (1) 1 - - - -
At 30 September 2012 89 2,495 18,295 8,553 947 2 30,381
Notes:*Prior year adjustments relate to the timing of updates to continuing members’ records.**Defined Benefits Sections are closed to new entrants however; some exceptions are made due to deferred applications or in special business circumstances.***Included in the above figures there are 1448 members previously employed by SIS which was sold to Atos Origin SA and on 1 June 2012 were transferred to the Atos UK 2011 Pension Scheme.
Defined Contributions Actives Deferreds TotalAt 1 October 2011 12,672 10,512 23,184Prior year adjustments* (1,266) 1,301 35Revised 1 October 2011 11,406 11,813 23,219Joiners 2,012 - 2,012Transfers out** (4) (406) (410)Members retiring (91) (254) (345)Leavers (no benefits) (58) (87) (145)Deaths (13) (10) (23)Members deferring (1,016) 1,016 -
At 30 September 2012 12,236 12,072 24,308
Notes:*Prior year adjustments relate to the timing of updates to continuing members’ records and corrections as a result of a data cleansing exercise during the year.** Included in the above figures there are 252 Members previously employed by SIS which was sold to Atos Origin SA and on 19 July 2012 and 30 August 2012 were transferred to the Atos UK 2011 Pension Scheme.
The members who retired during the year received their full benefits by way of a commutation or the purchase of an annuity on the open market and are, therefore, not entitled to any further pension benefit.
SIEMENS BENEFITS SCHEME
TRUSTEE’S REPORTYEAR ENDED 30 SEPTEMBER 2012
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8. Further Information
All enquiries about the Scheme or an individual’s entitlement to benefits should be directed to:
HR Delivery CentrePO Box 79 Durham DH1 9TZTelephone 0845 603 9972E-mail [email protected]
Alternatively, please go to the Scheme’s Website at http://intranet.gss.siemens.co.uk/pensions.
Scheme Administration
The Scheme as a whole is administered by:
Pension Services, CIT/GSSSir William Siemens SquareFrimleyCamberley, Surrey GU16 8QD
The Investor Plan is administered by:
The Siemens Investor Plan TeamAon Hewitt131 St Vincent Street Glasgow G2 5JF
Internal Dispute Resolution Procedure
Serious complaints about the Scheme are rare and are generally resolved informally. However, if members are not happy with the result of the informal process or the information or explanation given by the administrators or the Trustee, there is a formal procedure for resolving disputes, details of which are available from Pension Services CIT/GSS, Durham, the pensions’ website or the Scheme Booklet. In addition, members can consult with The Pensions Advisory Service (TPAS) based at 11 Belgrave Road, London SW1V 1RB. TPAS is available to assist members and beneficiaries of pension schemes in connection with any complaints, which have been or are being considered by the trustees.
If TPAS does not resolve the dispute, members can approach the Pensions Ombudsman (based at the same address as TPAS). The Pensions Ombudsman has the power to investigate and determine complaints or disputes of fact or law in relation to occupational pension’s schemes. The Pensions Ombudsman generally expects the administrators and the trustees of a scheme and TPAS to have been approached before investigating any complaint.
Registry of Occupational and Personal Pension Schemes
The Registry’s main purpose is to act as a central agency to help individuals keep track of the benefits they have in previous employers’ schemes. The address is:
DWP Pension Tracing ServiceWhitley Road Newcastle upon Tyne NE98 1BA.
The Siemens Benefits Scheme is registered with the Registry under reference number 10126751.
SIEMENS BENEFITS SCHEME
TRUSTEE’S REPORTYEAR ENDED 30 SEPTEMBER 2012
Page 12
9. Statement of Trustee’s Responsibilities
The financial statements, which are prepared in accordance with UK Generally Accepted Accounting Practice, are the responsibility of the Trustee. Pension scheme regulations require 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 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.
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 payable to 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.
10. Preparation of the Financial Statements
The Trustee confirms that the financial statements have been prepared and audited in accordance with the regulations made under Section 41(1) and (6) of the Pensions Act 1995.
11. Tax Status of the Scheme
The Scheme is registered under the Finance Act 2004. Prior to the introduction of the Act from 6 April 2006, the Scheme was an "exempt approved scheme" under the terms of the Income and Corporation Taxes Act 1998. The Defined Benefits Sections of the Scheme are contracted out of the State Second Pension (formerly the State Earnings Related Pension Scheme) on a money purchase basis under a certificate issued by the Contributions Agency. The Defined Contributions Section of the Scheme is contracted in to the State Second Pension Scheme.
12. Employer Related Investment
The principal employer, Siemens Plc, is not a listed company. As at 30 September 2012 the Scheme had employer related investments of £0.6m with Siemens Plc. This related to the PPF levy contribution that was paid late and therefore not in accordance with the Schedule of Contributions.
The ultimate parent company of Siemens Plc is Siemens AG which is a listed company. The Trustee monitors the total level of direct self investment (in Siemens AG) to ensure that the maximum potential level does not exceed 5%. In addition, the Trustee has made enquiries of their pooled fund investment managers to establish the level of holdings in Siemens AG in the pooled funds. As at 30 September 2012the total investment in Siemens AG represented no more than 0.01% of total assets.
Approval of the Trustee’s Report and the Investment Report
The Trustee's report and the Investment report were approved by the Trustee and signed on its behalf on
SIGNED FOR AND ON BEHALF OF THE TRUSTEE
Director Director
SIEMENS BENEFITS SCHEME
INVESTMENT REPORTYEAR ENDED 30 SEPTEMBER 2012
Page 13
INVESTMENT REPORTInvestment Managers
The valuation of Defined Benefits and Defined Contributions assets by investment manager at 30 September 2012 is as follows:
Manager Custodian Brief Market Value at 30 September
2012£000
Legal & General Assurance (Pensions Management) Limited HSBC
BNY Mellon Asset Services B.V.
BNY Mellon Asset Services B.V.
HSBC
HSBC
HSBC
BNY Mellon Asset Services B.V.
Index tracking
Swaps
Index-linked
UK Treasury Bills
Liquidity Fund
Corporate Bonds
Currency Overlay
716,290
49,288
908,712
10,670
113,934
-
5,7731,804,667
Blackstone Partners Offshore Sterling Fund Limited
K2 Overseas Investors Limited
Invesco Asset Management Limited
Babson Capital
BlackRock
CBRE Limited
SmithsGore/Bidwells Property Consultants
Standard Life Investments Limited
AVC fund managers
Cash and cash equivalents
Other investments
Blackstone Partners Offshore Sterling Fund LimitedFirst Republic Trust Company
Citibank
La Salle GTS
J.P. Morgan Bank plc
CMS Cameron McKenna LLP
CMS Cameron McKenna LLP
Citibank
N/A
N/A
N/A
Fund of Hedge Funds
Fund of Hedge Funds
UK Equity
Secured Loans
Credit Screened Bond
Property
Farm Property
Investor Plan
N/A
N/A
N/A
118,799
112,772
122,262
65,995
253,618
118,275
3,806
608,134
6,342
12,198
2,313
Total Scheme Investments 3,229,181
SIEMENS BENEFITS SCHEME
INVESTMENT REPORTYEAR ENDED 30 SEPTEMBER 2012
Page 14
Defined Benefits Section
The significant changes and points to note during the year were:
• In December 2011, the Scheme switched £100m of holdings in the 2027 index-linked gilt to the 2027 Network Rail index-linked bond, achieving a yield uplift of 28 bps.
• In the first half of 2011, the Trustee decided to reduce the size of the CB Richard Ellis Global Investors Limited (“CBREGI”) property portfolio, instructing the manager to gradually sell assets over an estimated two year period, without reinvesting the proceeds. Since the start of Q1 2012, five properties have been sold equating to £11.9m.
• Over the second quarter of 2012, the Scheme disinvested c£306m from a number of LGIM equity, bond and cash funds and transferred c.£267m of these assets to the Atos scheme. The remaining c£39m was left in the Trustee bank account to cover ongoing liquidity requirements.
• Following a review of investment strategy, the Trustee agreed in principle to reallocate a proportion of existing assets (c. 10%-12%, exact amount to be determined) across alternative asset classes, including consideration of Emerging Markets, Reinsurance and Infrastructure. These allocations are to be funded from existing cash holdings, equities and hedge funds. Selection of managers will be taking place throughout 2013.
The Scheme holds a range of different investments that are appropriate to its needs having taken advice from the Scheme's investment advisor Towers Watson Limited. These include equities (company shares), bonds (gilts and index-linked gilts), derivatives (swaps), alternatives (fund of hedge funds, property and secured loans) and corporate bonds (credit). Equities offer a higher potential for long-term growth than other forms of investment. However, the nature of the stock market is such that the value of equities can be very volatile. In contrast, bonds offer a lower likely level of return, but are usually more stable than equities (although are still subject to a level of volatility).
The Scheme invests with both passive and active managers and a property manager. Passive managers invest with the aim of tracking the performance of the markets, producing returns that are in line with those achieved by the market. Active managers aim to outperform an investment benchmark index.
The Trustee monitors investment performance on a quarterly basis and reviews the overall Scheme portfolio on an annual basis. The Trustee maintains a Statement of Investment Principles in accordance with Section 35 of the Pensions Act 1995 and this was updated in March 2012 (a copy is available on request).
BNY Mellon Asset Services B.V. provides a core custody service which includes safekeeping of assets; settlement of transactions; proxy voting services; monitoring of corporate actions and tax reclaims. In addition ancillary services are provided which include investment accounting, performance measurement and risk reporting.
Defined Benefit Scheme Performance
During the year to 30 September 2012 the Scheme's assets outperformed their benchmark by 0.7%, returning 8.2% against a benchmark of 7.5% (excluding the impact of the Scheme's swap hedging programme).
A summary of the Scheme’s performance over the last five years is shown below. The table shows the total asset returns achieved by the Scheme compared with the benchmark which has been used as a measure of performance since 1 June 2003.
Year to 30 September Scheme return %* Benchmark2012 8.2 7.52011 5.7 5.52010 8.8 8.22009 1.4 1.72008 (5.8) (4.6)
Annualised return over 5 years to 30 September 2012 3.5 3.6Annualised return over 3 years to 30 September 2012 7.6 7.1
*Scheme returns include returns from currency hedging and exclude the change in value of SWAP contracts which are intended to track changes in the value of certain future Schemeliabilities.
SIEMENS BENEFITS SCHEME
INVESTMENT REPORTYEAR ENDED 30 SEPTEMBER 2012
Page 15
Defined Benefits Section – 1 year returns
Asset Class Inception Date Index Portfolio Return
Index Return
Multi asset passive – Legal & General Managed since 01 May 2002 Various* 6.6 6.5
Fund of Hedge Funds – Blackstone** 30 June 2008 3 Month $ LIBOR +4.5% 5.2 4.9
Fund of Hedge Funds – K2** 30 June 2008 3 Month $ LIBOR +4.5% 6.9 4.9
UK Equities – Invesco 01 September 2006 FTSE All-Share 17.3 17.3
Secured Loans – Babson Capital ** 6 July 2009 Credit Suisse WesternEuropean LeveragedLoan Index
14.5 8.1
BlackRock Global Credit Fund 01 August 2009 BC Corp 500-Fin.&IssBC Capped Index GBP Hedge
11.5 11.3
Property – CB Richard Ellis Global 01 July 1993 UK Retail Price Index (RPI) + 5% per annum***
1.7 7.9
Notes:* FTSE All-Share, FTSE World ex UK, FTSE World ex UK Hedged, iBoxx £ Non-Gilts x BBB in excess of SWAP yields + 6 month rolling LIBOR, LIBID 7 day notice and Siemens Index Linked Gilts Benchmark.
** The performance of Blackstone, K2 and Babson Capital is reported in local currency at the manager level, but reported in GBP Sterling at the total Scheme level taking in account the impact of the currency hedging.
Included in the multi asset passive portfolio managed by Legal and General above are segregated index-linked securities which are held on a passive basis. These index-linked securities returned 4.7% in the year to 30 September 2012.
SIEMENS BENEFITS SCHEME
INVESTMENT REPORTYEAR ENDED 30 SEPTEMBER 2012
Page 16
Distribution of AssetsPooled
Investment Segregated
Investments Total DB
Investments £000 £000 £000 %
UK
Equity 172,041 - 172,041 6.6
Treasury Bills 10,670 - 10,670 0.4
Liquidity Fund 113,934 - 113,934 4.3
Index-linked securities - 908,712 908,712 34.7
Derivatives contracts - 55,061 55,061 2.1
Corporate Bonds 678,256 - 678,256 25.9
Property – Freehold - Leasehold
--
116,0316,050
116,0316,050
4.40.2
OverseasEquities – Global 241,873 - 241,873 9.2
Corporate Bonds 65,995 - 65,995 2.5
Fund of Hedge Funds 231,571 - 231,571 8.9
Investment Securities 1,514,340 1,085,854 2,600,194 99.2
Other Investment assets
Defined Benefit AVCs*/EDCs** 6,342 - 6,342 0.2
Cash 12,198 - 12,198 0.5
Accrued Income and Management Expenses 2,313 - 2,313 0.1
Total investments held under management 1,535,193 1,085,854 2,621,047 100
Investments exceeding 5% of the value of net assets are detailed below:
2012 2011 2012 2011Market Value Market Value % of Net
Assets £000 £000 % %
BlackRock Credit Screened Bonds 253,618 227,561 7.9 7.0UK TREASURY IDX-LKD STK 4.125% 22-JUL-2030 163,963 159,784 5.1 4.9UK GOVT IDX-LKD STK 2.000% 26-JAN-2035 191,613 187,641 5.9 5.8Legal & General – LDI AAA-AA-A Corp Bond 424,638 421,884 13.2 12.9
* AVCs are Additional Voluntary Contributions.** EDCs are Employee Directed Contributions.
SIEMENS BENEFITS SCHEME
INVESTMENT REPORTYEAR ENDED 30 SEPTEMBER 2012
Page 17
Defined Benefits Section – Members’ AVC/EDC Arrangements
Defined Benefits Section Members’ AVC/EDC Assets
2012 2011£000 £000
Equitable Life 3,492 3,792Aegon Scottish Equitable 2,227 2,373Scottish Widows 105 461Scottish Life 419 -Prudential 99 102
6,342 6,728
The Siemens Benefits Scheme includes a number of AVC and money purchase arrangements with five providers: Equitable Life; Aegon Scottish Equitable; Scottish Widows; Scottish Life and Prudential. In addition Investor Plan members including continuing members can pay AVCs and EDCs through the Standard Life platform.
The Trustee still holds closed AVC policies with Equitable Life, Aegon Scottish Equitable, Scottish Widows, Scottish Life and Prudential. No new monies are paid to these policies.
The Trustee is in the process of arranging the transfer of AVC assets from Equitable Life to the Investor Plan which is expected to be completed in the first quarter of 2013.
AVC/EDC arrangements are reviewed every three years whilst changes in provider circumstances and investment performance are monitored on a quarterly basis.
At retirement, the funds are used to secure additional pension from the main Siemens Benefits Scheme using conversion rates set by the Trustee in conjunction with its advisors.
Post April 2006 AVCs/EDCs in excess of 15% of pensionable salary are separately identified and must be used to purchase an annuity outside the Scheme.
SIEMENS BENEFITS SCHEME
INVESTMENT REPORTYEAR ENDED 30 SEPTEMBER 2012
Page 18
Defined Contribution Section
This section is a defined contributions pension plan where the assets are invested on an individual member-by-member basis according to the member’s fund selection.
The DC Platform offers a range of bespoke or “white label” investment funds for members. These funds allow DC members to invest in a range of asset classes via actively and passively managed underlying funds through the Standard Life Fund Platform.
The DC section offers a default investment strategy which utilises the Private Fund, Inflation-Linked Annuity Target Fund and Cash Fund in its structure. The Private Fund held approximately 80% of the DC sections assets on 30 September 2012.
There were substantial changes made to the fund range in 2011 following an extensive review of the defined contribution investment strategy. There were no significant changes to the DC section’s investment options to note in 2012.
As at 30 September 2012, the full range of funds available is as follows:
• Private Fund• Fixed Annuity Target• Cash• Global Equity – Active• Inflation-Linked Annuity Target• UK Equity - Passive• UK Equity - Active• Global Equity - Passive• Ethical• Property• Shariah• Diversified Growth Fund
The value of Defined Contributions investment assets as at 30 September 2012 was as follows:
Distribution of Assets Market Value£000 %
Standard LifeSiemens Private 481,032 79.1Siemens Fixed Annuity 37,831 6.2Siemens Inflation Linked Annuity 21,544 3.6Siemens Cash 13,606 2.2Siemens Global Equity – Active 14,775 2.4Siemens UK Equity - Passive 10,263 1.7Siemens UK Equity – Active 8,923 1.5Siemens Global Equity – Passive 7,723 1.3Ethical UK 6,582 1.1Siemens Property 5,082 0.8Shariah Life 546 0.1Siemens Diversified Growth Fund 227 -Total Investments held under Management 608,134 100
Defined Contributions Section – 1 year returns
During the year to 30 September 2012, all funds in the defined contribution section produced positive absolute returns. The Private Fund returned 11.9%, outperforming its benchmark by 1.1%
Asset Class Index Portfolio Return Index ReturnSiemens Private Composite Benchmark 11.9 10.7Siemens Fixed Annuity Composite Benchmark 16.7 15.9Siemens Cash Overnight LIBOR 0.5 0.5Siemens Global Equity – Active Composite Benchmark 14.5 17.8Siemens Inflation Linked Annuity Composite Benchmark 11.8 11.2Siemens UK Equity – Passive FTSE All-Share 16.2 17.3Siemens UK Equity – Active FTSE All-Share 17.0 17.3Siemens Global Equity – Passive Composite Benchmark 16.0 16.2Ethical UK Morningstar IMA UK ALL Companies Ethical Subsector 21.5 18.6Siemens Property FTSE/EPRA/NAREIT/Global Index 24.5 26.0Shariah Life Dow Jones Islamic Titan 100 index 21.1 21.8Siemens Diversified Growth Fund Composite benchmark 7.7 5.0
Note:All portfolio return figures are net of fees in GBP (£) from the year to 30 September 2012.
SIEMENS BENEFITS SCHEME
INVESTMENT REPORTYEAR ENDED 30 SEPTEMBER 2012
Page 19
Defined Contributions Section Members’ AVC/EDC Arrangements
Investor Plan Members
Members of the Investor Plan have the opportunity to pay AVCs/EDCs, using the same investment funds as the Investor Plan. At retirement, the funds are used to purchase additional pension benefits through an annuity.
Legacy AVC providers
There a number of legacy AVC policies held with other providers which are closed to future contributions. These providers include Aegon Scottish Equitable, Scottish Life, Equitable Life, Scottish Widows and Prudential and the assets are mainly invested in with-profits funds. The Trustee is in the process of arranging the transfer of AVC assets from Equitable Life to the Investor Plan which is expected to be completed in the first quarter of 2013.
SIEMENS BENEFITS SCHEME
ACTUARIAL CERTIFICATION OF THE SCHEDULE OF CONTRIBUTIONSYEAR ENDED 30 SEPTEMBER 2012
Page 20
ACTUARIAL CERTIFICATION OF THE SCHEDULE OF CONTRIBUTIONSName of scheme: Siemens Benefits Scheme
Adequacy of rates of contributions
1. I certify that, in my opinion, the rates of contributions shown in this schedule of contributions are such that the statutory funding objective could have been expected on 30 September 2011 to be met by the end of the period specified in the recovery plan dated 19 December 2012.
Adherence to statement of funding principles
2. I hereby certify that, in my opinion, this schedule of contributions is consistent with the Statement of Funding Principles dated 19 December 2012.
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 was wound up.
Signature RJ Whitelam Date 19 December 2012
Name Richard Whitelam Qualification FIA
Address 10 Devonshire Square Name of employer Aon Hewitt LimitedLondonEC2M 4YP
SIEMENS BENEFITS SCHEME
ACTUARIAL CERTIFICATION OF THE TECHNICAL PROVISIONSYEAR ENDED 30 SEPTEMBER 2012
Page 21
ACTUARIAL CERTIFICATION OF THE TECHNICAL PROVISIONS
Name of scheme: Siemens Benefits Scheme
Calculation of technical provisions
I certify that, in my opinion, the calculation of the Scheme’s technical provisions as at 30 September 2011 is made in accordance with regulations under section 222 of the Pensions Act 2004. The calculation uses a method and assumptions determined by the Trustee of the Scheme and set out in the Statement of Funding Principles dated 19 December 2012.
Signature Richard Whitelam Date 19 December 2012
Name Richard Whitelam FIA Qualification Fellow of Institute and Faculty of Actuaries
Address 10 Devonshire Square Name of employer Aon Hewitt LimitedLondonEC2M 4YP
SIEMENS BENEFITS SCHEME
INDEPENDENT AUDITORS’ REPORT TO THE TRUSTEE OF THE SIEMENS BENEFITS SCHEMEYEAR ENDED 30 SEPTEMBER 2012
Page 22
INDEPENDENT AUDITORS’ REPORTWe have audited the financial statements of the Siemens Benefits Scheme for the year ended 30 September 2012 which comprise the fund account, the net assets statement and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).
Respective responsibilities of Trustee and auditors
As explained more fully in the statement of Trustee’s responsibilities, the Trustee is responsible for the preparation of the financial statements and being satisfied that they show a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.
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.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Scheme’s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Trustee; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the annual report to identify material inconsistencies with the audited financial statements. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.
Opinion on the financial statements
In our opinion the financial statements:
• show a true and fair view of the financial transactions of the Scheme during the year ended 30 September 2012, and of the amount and disposition at that date of its assets and liabilities, other than liabilities to pay pensions and benefits after the end of the year;
• have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and• 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, made under the Pensions Act 1995.
PricewaterhouseCoopers LLPChartered Accountants and Statutory AuditorsSt AlbansDate
SIEMENS BENEFITS SCHEME
FUND ACCOUNTYEAR ENDED 30 SEPTEMBER 2012
Page 23
FUND ACCOUNT
Defined benefits section
Defined contributions
section
Total for the yearended
30 September
Total for the year ended
30 September
Note2012£000
2012£000
2012£000
2011£000
Contributions and BenefitsContributions 3 77,914 73,768 151,682 244,094 Transfers in 5 506 2,574 3,080 3,931 Other income 6 41 26 67 39
78,461 76,368 154,829 248,064
Benefits 7 94,610 7,128 101,738 91,132 Payments to and on account of leavers 8 330,688 13,025 343,713 8,602 Administrative expenses 9 7,034 450 7,484 8,448
432,332 20,603 452,935 108,182
Net (withdrawals)/additions from dealings with members (353,871) 55,765 (298,106) 139,882 Returns on investmentsInvestment income 10 29,496 17 29,513 28,435 Change in market value of investments 11 186,608 63,898 250,506 187,460 Investment management expenses 12 (4,131) - (4,131) (4,416)
Net returns on investments 211,973 63,915 275,888 211,479
Net (decrease)/increase in the fund during the year (141,898) 119,680 (22,218) 351,361
Transfers between sections 4 12,332 (12,332) - -
Net assets of the SchemeAt 1 October 2011 2,761,301 508,390 3,269,691 2,918,330
Net assets of the SchemeAt 30 September 2012 2,631,735 615,738 3,247,473 3,269,691
The notes on pages 25 to 37 form an integral part of these financial statements.
SIEMENS BENEFITS SCHEME
NET ASSET STATEMENTYEAR ENDED 30 SEPTEMBER 2012
Page 24
NET ASSET STATEMENT30 September 30 September
Note2012£000
2011£000
Defined benefits section
Investment assets 11 2,883,994 2,882,191 Investment liabilities 11 (262,947) (126,470) Current assets 13 16,991 14,241 Current liabilities 14 (6,303) (8,661)
Net Assets 2,631,735 2,761,301
Defined contributions section
Investment assets 11 608,134 501,980Current assets 13 9,156 8,525 Current liabilities 14 (1,552) (2,115)
Net Assets 615,738 508,390
TOTAL NET ASSETS AT 30 SEPTEMBER 20123,247,473 3,269,691
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 actuarial certificates and in section 5 of the Trustee’s reportincluded in the annual report and these financial statements should be read in conjunction with them.
The notes on pages 25 to 37 form an integral part of these financial statements.
These financial statements were approved by the Trustee at a meeting held on …………………… and were signed on its behalf by:
………………………………………………. Trustee Director
………………………………………………. Trustee Director
SIEMENS BENEFITS SCHEME
NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 30 SEPTEMBER 2012
Page 25
NOTES TO THE FINANCIAL STATEMENTS
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 with the guidelines set out in the Statement of Recommended Practice, “Financial Reports of Pension Schemes” (SORP) (revised May 2007).
2. Accounting Policies
The accounting policies that have been applied consistently in the preparation of the financial statements are set out below.
2.1 Contributions
Normal contributions, both from the members and from the employer, are accounted for on an accruals basis in the month employee contributions are deducted from the payroll. Contribution of PPF levies and administrative expenses are accounted for on an accruals basis.
Employer’s 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, on an accruals basis, in the month deducted from the payroll.
Employer’s shortfall funding contributions are accounted for in accordance with the agreement under which they are being paid or in the absence of an agreement on a receipt basis.
Employer’s contributions in respect of Section 75 debts are accounted for in accordance with the agreement.
2.2 Transfer Values
Transfer values represent the capital sums either receivable, in respect of members from other pension schemes of previous employers who have joined the Scheme, or payable to the pension schemes of new employers for members who have left the Scheme.
They are accounted for on an accruals basis on the date the trustees of the receiving scheme accept the liability.
The liability normally transfers when a payment is made, unless the trustees of the receiving scheme have agreed to accept the liability in advance of receiving the funds.
Group transfers, where the Trustee has agreed to accept the liability prior to the receipt, are accounted for in accordance with the agreement.
2.3 Age-Related Rebates
Age-related rebates are accounted for on an accruals basis.
2.4 Benefits and Other Expenses
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 notified to the Trustee.
Other benefits are accounted for on an accruals basis on the date of retirement, death or leaving the Scheme as appropriate.
2.5 Administrative Expenses
Administrative expenses are accounted for on an accruals basis.
2.6 Investments
Quoted investments including fixed interest securities, index-linked securities, other UK equities and convertibles are valued at bid market prices at the period end date adjusted, where applicable, by accrued interest. Where appropriate, market values listed in overseas currencies are translated into sterling at the rates of exchange ruling at the period end date.
Pooled investment vehicles are valued at the closing bid price if both bid and offer prices are published, or, if single priced, at the closing single price.
Unquoted securities are valued by the fund managers at the year end in accordance with generally accepted guidelines. Derivative contracts are valued at fair value. Derivative contract assets are fair valued at bid prices and liabilities are fair valued at offer prices.
SIEMENS BENEFITS SCHEME
NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 30 SEPTEMBER 2012
Page 26
Derivative contract changes in fair value are included in change in market value where the economic purpose of the contracts relates to assets. Where the economic purpose relates to income the change in fair value is included in investment income.
The fair value of the forward currency contracts is based on market forward exchange rates at the year end date and determined as the gain or loss that would arise if the outstanding contract was matched at the year end with an equal and opposite contract.
The fair value of the interest rate swaps and inflation swaps is calculated using pricing models based on the market price of comparable instruments at the year end date, if they are publicly traded. Interest is accrued monthly on a basis consistent with the terms of the contract. The amounts included in change in market value are the realised gains and losses on closed contracts and the unrealised gains and losses on open contracts. Net receipts or payments on swap contracts are either reported in investment income (where the economic purpose relates to income) or change in market value (where the economic purpose relates to assets).
Income from equities is accounted for on the dates the stocks are quoted ex-dividend. Interest is accounted for on an accruals basis.Accrued interest is excluded from the market value of fixed interest securities and index linked securities but is included in investment income receivable.
Transaction costs are included in the cost of purchases and sale proceeds. Transaction costs include costs charged directly to the Scheme such as fees, commissions, stamp duty and other fees.
PROPERTY
Freehold and leasehold property is stated at open market value at the year end, as estimated using the Royal Institution of Chartered Surveyors Valuation Standards on the basis of professional advice. No depreciation is provided on freehold buildings or long leasehold properties.
The commercial property portfolio is valued annually by Knight Frank under instruction by CB Richard Ellis Investors.
Rental income is accounted for in the period it falls due under the terms of the lease.
AVCs
The market value of the additional voluntary contributions has been taken as the last valuation of the policies at the period end as advised by the provider, with an adjustment for subsequent cash movements to the year end if appropriate.
Foreign Currency Transactions
Investments and monetary balances in foreign currencies are translated at the rates of exchange ruling at the net assets statement date.
Fund account items are translated into sterling at the rates of exchange prevailing at the date of the transaction.
Investment Manager Expenses
Investment manager expenses are accounted for in the period they fall due. The expenses are calculated on an agreed basis between the Trustee and each investment manager. The basis is reviewed periodically.
Performance fees are accounted for on an accruals basis.
The Scheme bears the cost of expenses incurred in the purchase or sale of properties from the property portfolio.
SIEMENS BENEFITS SCHEME
NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 30 SEPTEMBER 2012
Page 27
3. Contributions
Defined benefits section
Defined contributions
section
Total for the year ended
30 September
Total for the year ended
30 September2012£000
2012£000
2012£000
2011£000
Employer’s Contributions Normal 12,960 71,507 84,467 102,119 PPF Levy 2,082 - 2,082 3,480 Additional - 124 124 896Age-related Rebates 134 - 134 870 Shortfall Funding* 15,000 - 15,000 134,000Other** 47,703 - 47,703 -
77,879 71,631 149,510 241,365
Members’ contributionsNormal 22 1,555 1,577 1,904Additional voluntary contributions 13 582 595 825
35 2,137 2,172 2,729
77,914 73,768 151,682 244,094
* In September 2012 the Employer paid a one-off deficit contribution into the Scheme in accordance with the revised and agreed Schedule of Contributions dated 19th December 2012.To eliminate the funding shortfall of £937 million revealed by the actuarial valuation as at 30 September 2011, the Trustee has agreed to the Employer paying additional contributions as follows: £17 million is receivable in June 2013; £2,833 million per month during the period 1 July 2013 to 30 November 2015; £4,280 million in December 2015; £6,500 million per month during the period 1 January 2016 to June 2025 and £2,833 million per month during the period 1 July 2025 to 31 January 2031.
** Following the sale of the share capital of SIS to Atos SA and as part of the agreed arrangements, the Employer paid a top-up payment of £47.7million to the Scheme on 31 May 2012 in order to fund the total transfer payment.
4. Transfers between Sections
Defined benefits sectionTotal for the year ended
30 September
Total for the year ended
30 September2012£000
2011£000
Administration expenses (442) (519)Ill Health payments (90) (88)Life Assurance payments (1,425) (1,560)Continuing member retirements 14,289 8,648
12,332 6,481
Defined contributions sectionTotal for the year ended
30 September
Total for the year ended
30 September2012£000
2011£000
Administration expenses 442 519Ill Health payments 90 88Life Assurance payments 1,425 1,560Continuing member retirements (14,289) (8,648)
(12,332) (6,481)
SIEMENS BENEFITS SCHEME
NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 30 SEPTEMBER 2012
Page 28
5. Transfers In
Defined benefits section
Defined contributions
section
Total for the year ended
30 September
Total for the year ended
30 September2012£000
2012£000
2012£000
2011£000
Individual transfers in from other schemes 267 2,574 2,841 3,858Group transfers in from other schemes* 239 - 239 73
506 2,574 3,080 3,931
*The transfer of Scottish Life AVC policy into the Scheme from Legacy Plan mergers which occurred prior to 2012.
6. Other Income
Defined benefits section
Defined contributions
section
Total for the year ended
30 September
Total for the year ended
30 September2012£000
2012£000
2012£000
2011£000
Other income 41 26 67 39
41 26 67 39
7. Benefits
Defined benefits section
Defined contributions
section
Total for the year ended
30 September
Total for the year ended
30 September2012£000
2012£000
2012£000
2011£000
Pensions 66,265 - 66,265 60,176Commutations and lump sum benefits 26,227 1,635 27,862 24,573Lump sum on death benefits 1,886 1,655 3,541 2,964Refunds to members on death - 38 38 70Purchase of annuities 232 3,800 4,032 3,349
94,610 7,128 101,738 91,132
SIEMENS BENEFITS SCHEME
NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 30 SEPTEMBER 2012
Page 29
8. Payments To and On Account of Leavers
Defined benefits section
Defined contributions
section
Total for the year ended
30 September
Total for the year ended
30 September2012£000
2012£000
2012£000
2011£000
Individual transfers to other schemes 8,142 6,719 14,861 8,575Group transfers to other schemes* 322,546 6,251 328,797 -Refunds to members leaving service - 55 55 27
330,688 13,025 343,713 8,602
*Following the sale of the share capital of Siemens IT Solutions (SIS) to Atos SA on 30 June 2011, a total of 1,448 DB members and 252 DC members transferred out to the Atos UK 2011 Pension Scheme. A sum of £314.3 million in respect of the DB members was paid from the Scheme: made up of £266.6 million representing the share of fund and £47.7 million representing a top-up payment from the Employer.
The amount transferred from the Scheme in respect of DC members was £6.3 million.
Included in Group transfers is a payment of £4.9 million to BCC Steria Retirement Plan TST Limited in respect of 72 DB members, £1.4 million payment to Prundential Platinum Pension (British Gas) in respect of 8 DB members and £1.9 million payment to E.ON UK Group of the ESPS – Eastern Category in respect of 7 DB members.
9. Administrative Expenses
Defined benefits section
Defined contributions
section
Total for the year ended
30 September
Total for the year ended
30 September2012£000
2012£000
2012£000
2011£000
Administration and processing 3,708 450 4,158 4,021Actuarial fees 426 - 426 282Audit fee 94 - 94 100Legal fees 465 - 465 314PPF levy 2,082 - 2,082 3,480Trustee fees and expenses 259 - 259 251
7,034 450 7,484 8,448
Administration and processing costs of the DB section are in respect of the services provided by Pension Services a division of Siemens plc. All other administration costs are borne by the Employer.
10. Investment Income
Defined benefits section
Defined contributions
section
Total for the year ended
30 September
Total for the year ended
30 September2012£000
2012£000
2012£000
2011£000
Income from index-linked securities 12,981 - 12,981 17,082Income from pooled investment vehicles 1,537 - 1,537 1,375Net rents from properties 9,866 - 9,866 9,778Interest on cash deposits 33 17 50 50Other investment income 5,025 - 5,025 100Income from annuities 54 - 54 50
29,496 17 29,513 28,435
SIEMENS BENEFITS SCHEME
NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 30 SEPTEMBER 2012
Page 30
11. Investments
Defined Benefits Section
30 September 2012
30 September 2011
Total Total£000 £000
Investment Assets
Index-Linked securities-UK public sector quoted 808,344 879,605-UK corporate quoted 100,368 -
908,712 879,605
Pooled Investment vehicles-Managed Funds 1,282,769 1,379,759-Fund of Hedge Funds 231,571 222,296
1,514,340 1,602,055Derivatives-SWAPS 306,279 250,039-Forward FX 7,767 -
314,046 250,039
Properties 122,081 139,052122,081 139,052
AVC/EDC investments 6,342 6,7286,342 6,728
Cash deposits 12,198 1,343Other investment assets 6,275 3,369
18,473 4,712
Total Investment Assets 2,883,994 2,882,191
Investment Liabilities
Derivatives-SWAPS (256,991) (117,094)-Forward FX (1,994) (3,101)
(258,985) (120,195)
Cash deposits - (103)Other investment liabilities (3,962) (6,172)
(3,962) (6,275)
Total Investment Liabilities (262,947) (126,470)
Total 2,621,047 2,755,721
Defined Contributions Section
Pooled Investment vehicles-Other 603,052 498,384-Property 5,082 3,596Total 608,134 501,980
Total Scheme 3,229,181 3,257,701
All managed funds are managed by companies registered in the UK with exception of the following:
K2 and Blackstone who are both registered in the Cayman Islands.Babson Capital and BlackRock who are both registered in Ireland.
SIEMENS BENEFITS SCHEME
NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 30 SEPTEMBER 2012
Page 31
MOVEMENTS IN INVESTMENTS
Defined benefits section
Market value at 1 Oct 11
Purchases at cost and derivative
payments
Sales proceeds and derivative
receiptsChange in
market valueMarket value at
30 Sep 12£000 £000 £000 £000 £000
Index-linked securities 879,605 99,896 (99,925) 29,136 908,712Pooled investment vehicles 1,602,055 290,272 (516,230) 138,243 1,514,340Derivative contracts 129,844 19,787 (118,792) 24,222 55,061Property UK 139,052 - (11,920) (5,051) 122,081AVCs/EDCs investments 6,728 239 (973) 348 6,342
2,757,284 410,194 (747,840) 186,898 2,606,536
Cash deposits 1,240 (290) 12,198Other investment balances (2,803) - 2,313
(1,563) (290) 14,511
Total DB 2,755,721 186,608 2,621,047
Change in the market value of investments comprises both realised and unrealised gains and losses on investments held at any time during the year. The portfolio of swap contracts, which matches part of the Scheme liabilities, incurred an unrealised loss of £83.7m (2011:unrealised gain of £91.4m). The £83.7m loss is net of sale proceeds of £94m made in June 2012. Realised gains of £9m for the full reporting year and an unrealised gain of £1.2m as of 30 September 2012 (2011: unrealised loss of £1.8m) were incurred within the foreign currency hedging programme.
Transaction costs are included in the cost of purchases and sale proceeds. Transaction costs include commissions, stamp duty and other fees. Transaction costs incurred in the year amounted to £0.7m (2011: £0.5m). In addition, further indirect costs are inherent in the bid-offer spread on investments within pooled investment vehicles and are not separately provided by the scheme.
SIEMENS BENEFITS SCHEME
NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 30 SEPTEMBER 2012
Page 32
Derivative contracts
The main objectives for the use of derivatives and the policies followed during the year are summarised as follows:
Swaps – using over the counter (OTC) traded swaps the Trustee’s aim is to match as far as possible the Scheme’s long term liabilities, in particular in relation to their sensitivities to interest rate and inflation movements.
Forward Foreign Exchange – In order to maintain appropriate diversification of investments within the portfolio and take advantage of overseas investment returns the underlying investment portfolio includes overseas investments. A currency hedging programme, using forward foreign exchange contracts is in place to manage the currency exposure of these overseas investments.
Derivatives contracts comprise:
2012 2011£000 £000
Swaps contracts 49,288 132,945Forward FX 5,773 (3,101)
55,061 129,844
Swaps contracts
Counterparty Type Of Notional 2012 2012Swap Principal Assets Liabilities
£000 £000 £000
RBS Interest Rate (Zero IRS 6M) 249,168 - 7,892Inflation Rate (RPI) 158,369 - 47,554
Total RBS 407,537 - 55,446
Morgan Stanley Interest Rate (Zero IRS 6M) 172,312 96,897 -Inflation Rate (RPI) 88,357 - 26,321
Total Morgan Stanley 260,669 96,897 26,321
Barclays Interest Rate (Zero IRS 6M) 45,456 25,424 -Inflation Rate (RPI) 74,189 - 22,152
Total Barclays 119,645 25,424 22,152
Goldman Sachs Interest Rate (Zero IRS 6M) 121,400 63,920 -Inflation Rate (RPI) 175,825 - 55,012
Total Goldman Sachs 297,225 63,920 55,012
Deutsche Bank Interest Rate (Zero IRS 6M) 125,395 77,016 -Inflation Rate (RPI) 168,656 - 55,439
Total Deutsche Bank 294,051 77,016 55,439
HSBC Interest Rate (Zero IRS 6M) 75,305 43,022Inflation Rate (RPI) 134,019 - 42,621
Total HSBC 209,324 43,022 42,621TOTAL SWAPS (By Counterparty) 1,588,451 306,279 256,991
Net Asset 49,288
SIEMENS BENEFITS SCHEME
NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 30 SEPTEMBER 2012
Page 33
Swaps contracts - continued
Expiration Date Type Of Notional 2012 2012
Swap Principal Assets Liabilities
£000 £000 £000
Less Than 20 years Interest Rate (Zero IRS 6M) 98,961 45,064 249
Inflation Rate (RPI) 101,760 - 30,559
200,721 45,064 30,808
20 - 29 years Interest Rate (Zero IRS 6M) 275,538 133,297 1,394
Inflation Rate (RPI) 294,623 - 96,724
570,161 133,297 98,118
30 - 39 years Interest Rate (Zero IRS 6M) 327,729 113,884 3,672
Inflation Rate (RPI) 328,537 - 99,744
656,266 113,884 103,416
40 years and longer Interest Rate (Zero IRS 6M) 86,808 14,034 2,578
Inflation Rate (RPI) 74,495 - 22,071
161,303 14,034 24,649
TOTAL SWAPS (By Expiration) 1,588,451 306,279 256,991
The notional principal of the swap is the amount used to determine the value of the swapped interest receipts and payments.
SIEMENS BENEFITS SCHEME
NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 30 SEPTEMBER 2012
Page 34
As at 1 October 2012 collateral delivered for the unrealised gain on swaps was £60m (2011: £131m unrealised gain) comprised of giltsand cash.
Forward FX
Settlement date Currency Amount Currency Amount 2012 2012
bought bought sold sold Assets Liabilities
£000 £000
01 October 2012 EUR 80,862 GBP 64,422 - 1,235
01 November 2012 EUR 82,077 GBP 65,418 389 -
01 October 2012 USD 365,008 GBP 226,039 6,603 759
01 November 2012 USD 369,669 GBP 228,948 775 -
7,767 1,994
Net Asset 5,773
OTHER INVESTMENT BALANCES30 September 30 September
2012£000
2011£000
Net rent receivable 1,061 275Recoverable tax 32 34Accrued Investment income 2,000 -Interest receivable 3,182 2,953Rent demanded in advance (2,031) (4,232)Investment management fees payable (1,458) (1,129)Other creditors (473) (704)
2,313 (2,803)
Concentration of Investments
Investments exceeding 5% of the value of net assets are detailed below:
2012 2011 2012 2011Market Value Market Value % of Net
Assets% of Net
Assets£000 £000 % %
BlackRock Credit Screened Bonds 253,618 227,561 7.9 7.0UK TREASURY IDX-LKD STK 4.125% 22-JUL-2030 163,963 159,784 5.1 4.9UK GOVT IDX-LKD STK 2.000% 26-JAN-2035 191,613 187,641 5.9 5.8Legal & General – LDI AAA-AA-A Corp Bond 424,638 421,884 13.2 12.9Siemens Private 481,032 400,131 14.9 12.3
SIEMENS BENEFITS SCHEME
NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 30 SEPTEMBER 2012
Page 35
AVC INVESTMENTS
The Trustee holds assets which are separately invested from the main fund. These secure additional benefits, on a money purchase basis, for those members who have elected to pay additional voluntary contributions.
Members participating in this arrangement each receive an annual statement made up to 30 September confirming the amounts held to their account and the movements in the year.
The total amount of AVC investments at the year end is shown below.
30 September 30 September2012£000
2011£000
Aegon Scottish Equitable 2,227 2,373Equitable Life 3,492 3,792Prudential 99 102Scottish Life 419 -Scottish Widows 105 461
6,342 6,728
DEFINED CONTRIBUTION SECTION INVESTMENTS
The following is a breakdown of the defined contribution assets at the period end.
2012£000
2011£000
Assets designated to members 607,610 501,630Trustee undesignated account 524 350Total defined contributions pooled investment assets 608,134 501,980
Defined Contributions SectionMarket value at
30 Sep 11
Purchases at cost and derivative
payments
Sales proceeds and derivative
receiptsChange in
market valueMarket value at 30
September 12£000 £000 £000 £000 £000
Pooled investment vehicles 501,980 100,316 (58,060) 63,898 608,134501,980 100,316 (58,060) 63,898 608,134
Total 501,980 608,134
Investments purchased by the Scheme are allocated to provide benefits to the individuals on whose behalf corresponding contributions are paid.
12. Investment Management Expenses
Defined benefits section
Defined contributions
section
Total for the year ended
30 September
Total for the year ended
30 September2012£000
2012£000
2012£000
2011£000
Administration, management & custody 2,040 - 2,040 2,066Performance fees 866 - 866 552Investment Consultancy Fees 995 - 995 1,381Property expenses 230 - 230 417
4,131 - 4,131 4,416
SIEMENS BENEFITS SCHEME
NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 30 SEPTEMBER 2012
Page 36
13. Current Assets
Defined benefits section
Defined contributions
section
Total for the year ended
30 September
Total for the year ended
30 September2012£000
2012£000
2012£000
2011£000
DesignatedEmployer contributions due - normal - 164 164 -Trustee bank account - 8,721 8,721 8,262
- 8,885 8,885 8,262
Not designatedEmployer contributions due in respect of Employer – PPF Levy* 646 - 646 1,668Provision for transfers between sections** 1,183 - 1,183 1,027Cash balances 14,799 269 15,068 7,396Other Debtors 363 2 365 -Pensions prepaid - - - 4,413
16,991 271 17,262 14,504
16,991 9,156 26,147 22,766
*This amount relates to the PPF levy contribution due from the employer and the balance was received on 10th October 2012. This was not paid in accordance with the Schedule of Contributions.**Provision of receipt from the DC section to cover consolidated benefit payments after 30th September 2012 relating to retirements prior to 30th September 2012.
14. Current Liabilities
Defined benefits section
Defined contributions
section
Total for the year ended
30 September
Total for the year ended
30 September2012£000
2012£000
2012£000
2011£000
DesignatedUnpaid benefits - (1,535) (1,535) (2,098)Other creditors - (16) (16) (13)
- (1,551) (1,551) (2,111)
Not designatedAge-related Rebates (1,225) - (1,225) (955)Unpaid benefits (3,234) - (3,234) (4,298)Contributions paid in advance by participating employers (387) - (387) (110)Accrued expenses (1,286) - (1,286) (3,005)Other creditors (171) (1) (172) (297)
(6,303) (1) (6,304) (8,665)
(6,303) (1,552) (7,855) (10,776)
SIEMENS BENEFITS SCHEME
NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 30 SEPTEMBER 2012
Page 37
15. Employer-Related Investments
As at 30 September 2012 the Scheme had employer related investments of £0.6m with Siemens Plc. This related to the PPF levy contribution that was paid late and therefore not in accordance with the Schedule of Contributions.
The ultimate parent company of Siemens Plc is Siemens AG which is a listed company. The Trustee monitors the total level of direct self investment (in Siemens AG) to ensure that the maximum potential level does not exceed 5%. In addition, the Trustee has made enquiries of their pooled fund investment managers to establish the level of holdings in Siemens AG in the pooled funds. As at 30 September 2012the total investment in Siemens AG represented no more than 0.01% of total assets.
16. Related Party Transactions
The costs of in-house administrative services provided to the Scheme are borne by the Scheme per note 9.
During the year Trustee Directors were paid fees and expenses totaling £0.26m (2011: £0.25m), as disclosed in note 9.
For Trustee Directors who are pensioners and active members, refer to the Advisors page.
Other than where disclosed elsewhere there were no other related party transactions.
SIEMENS BENEFITS SCHEME
INDEPENDENT AUDITORS’ STATEMENT ABOUT CONTRIBUTIONS TO THE TRUSTEE OF THE SIEMENS BENEFITS SCHEME
YEAR ENDED 30 SEPTEMBER 2012
Page 38
INDEPENDENT AUDITORS’ STATEMENT ABOUT CONTRIBUTIONS
We have examined the summary of contributions to the Siemens Benefits Scheme for the Scheme year ended 30 September 2012 which is set out on the following page.
Respective responsibilities of Trustee and auditors
As explained more fully in the statement of Trustee’s responsibilities, the Scheme’s Trustee is responsible for ensuring that there is prepared, maintained and from time to time revised a schedule of contributions and for monitoring whether contributions are made to the Scheme by the employer in accordance with relevant requirements.
It is our responsibility to provide a statement about contributions and to report our opinion to you.
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.
Scope of work on the statement about contributions
Our examination involves obtaining evidence sufficient to give reasonable assurance that contributions reported in the summary of contributions have been paid in accordance with the relevant requirements. This includes an examination, on a test basis, of evidence relevant to the amounts of contributions payable to the Scheme under the schedule of contributions and the timing of those payments.
Statement about contributions
In our opinion, the contributions required by the schedule of contributions for the Scheme year ended 30 September 2012 as reported in the summary of contributions have in all material respects been paid in accordance with the schedule of contributions certified by the Scheme actuary on 30 September 2009.
PricewaterhouseCoopers LLPChartered Accountants and Statutory AuditorsSt AlbansDate
SIEMENS BENEFITS SCHEME
SUMMARY OF CONTRIBUTIONS PAYABLE IN THE YEARYEAR ENDED 30 SEPTEMBER 2012
Page 39
SUMMARY OF CONTRIBUTIONS PAYABLE IN THE YEEMPLOYEE EMPLOYER OTHER TOTAL
Defined Benefits Section
£000
Defined Contributions
Section£000
Defined Benefits Section
£000
Defined Contributions
Section£000
Defined Benefits Section
£000
Required by the Schedule of Contributions:
Normal contributions – ongoing funding 22 1,555 12,960 71,507 - 86,044
Recovery Plan - - 63,996 - - 63,996
PPF Levy - - 2,082 - - 2,082
Total contributions required to be paid by the Schedule of Contributions dated 30 September 2009
22 1,555 79,038 71,507 - 152,122
Other contributions payable
Recovery Plan contributions in prior years* - - (48,996) - - (48,996)
Additional Voluntary Contributions 13 582 - - - 595
Additional - - - 124 - 124
Other** - - 47,703 - - 47,703
Age-related Rebates - - - - 134 134
Total contributions recognised in the Fund Account 35 2,137 77,745 71,631 134 151,682
*Recovery Plan contributions are required to be paid at the rate of £5,333 million per month. The company has in prior years paid in lump sum amounts on the principle that at any point in time, the cumulative amount should be no less than if the contribution has been paid at the rate of £5,333 million per month from the valuation date. See page 9 for further details.
** Following the sale of the share capital of SIS to Atos SA and as part of the agreed arrangements, the Employer paid a top-up payment of £47.7m to the Scheme on 31 May 2012 in order to fund the total transfer payment.
Approved by the Trustee on: ………………………………..
………………………………………………. Trustee Director
………………………………………………. Trustee Director