CHAIRMAN'S WELCOME
Welcome to the 2022 Trustee's annual newsletter, which we hope will enhance your undestanding of the Savings Trust, the role of the Trustee and also the key things that you need to be aware of.
As the Trust is now Rolls-Royce’s current retirement savings scheme for active employees, and also because of the Pensions Regulator’s increasing focus on Trustee governance, the Trustee Board was expanded during the year with the appointments of Kevin Wright as a Member-nominated Director and Nick Sloan as the Company-appointed Director selected by the Central Negotiating Committee (CNC). I look forward to working with all our new Trustee Directors for the benefit of the Trust and its members.
This year saw the commencement of the investment strategy review, which the Trustee undertakes around every three years. In this review, the Trustee will concentrate on the asset allocation that makes up the default investment strategy, with a focus on improving member retirement outcomes in line with the Pension & Lifetime Savings Association’s Retirement Living Standards. The investment review will also allow the Trustee to continue its ongoing consideration of sustainable investment, meeting its regulatory obligations in this area and considering member engagement with this in the future.
The Trust’s administrator, Aviva, are about to launch an improved way of accessing your account, called MyWorkplace. This will be available either as an app or via the web if you prefer. MyWorkplace is a great way for you to connect with your retirement savings and is the place to discover financial wellbeing and educational content.
Finally, I would like to take this opportunity to thank the Trustee Directors for their ongoing commitment and professionalism, and the pensions executive and wider pensions team for their support and resilience during another challenging period.
Mark Porter
Chair, Rolls-Royce Retirement Savings Trust
THE CHAIR’S STATEMENT – ARE YOU GETTING VALUE FROM THE TRUST?
Each year, the Trustee Board produces a Chair’s Statement that summarises the Trust’s arrangements and explains to members how it provides value for money.
In summary, this year's Chair's Statement:
- Describes the robust governance around the Trust’s investment fund options and our thinking behind the structure of the default investment options, the overall fund range and a summary of the recent investment changes.
- Describes how the Trustee monitors and reviews the Trust’s administration services and ensures that core financial transactions are processed efficiently.
- Confirms the charges and transaction costs for the range of funds available for you to choose from, including the Annual Management Charge (AMC) and an illustrative example of the cumulative effect over time of these charges on your retirement income.
- Confirms the Trustee’s view that the Trust continues to provide good value – both in those areas where you meet some or all of the costs (through the Annual Management Charge (AMC)) and also where the related costs are met solely by Rolls-Royce, e.g., governance.
- Confirms the process by which the Trustee Directors maintain appropriate levels of knowledge and understanding and how they review their effectiveness.
The latest full Chair’s Statement is available to view within the Trustee’s formal Report and Accounts, which are published on a separate Aviva website for your information: https://vfm.aviva.co.uk/rolls-royce/
IN THIS ISSUE
THE TRUSTEE BOARD -
WHO ARE YOUR TRUSTEE DIRECTORS?
The Trust is managed by a corporate Trustee company, called Rolls-Royce Retirement Savings Trust Limited, whose Board of Trustee Directors is assisted by a group of professional advisers.
The Trustee Directors monitor and review the performance of Aviva’s administration function and the team is also audited externally by Deloitte LLP, as part of its annual audit. The Trustee Board is now made up of five Company-appointed Trustee Directors, which includes both a Chair and a Director nominated by the Central Negotiating Committee (CNC), as well as three Member-nominated Trustee Directors elected through the support of members.
The Trustee runs the Trust in the interests of all its members and has responsibility for its governance and administration. During the year, Teresa Waine agreed to continue as a Company-appointed Director for another four-year term, Kevin Wright was appointed as a new Member-nominated Trustee Director, and Nick Sloan was appointed as the Company-appointed Director, nominated by the CNC.
Company-appointed Trustee Directors
Mark Porter (Chair)
Works Convenor / Chair of UK Council, Rolls-Royce plc, Barnoldswick
Fiona Brown
Group Head of Pensions & Benefits, Rolls-Royce plc, Derby
Rebecca Hodgson
Senior People Partner, Rolls-Royce plc, Derby
Nick Sloan
CNC Machinist, Senior TU Rep, Rolls-Royce plc, Derby
Teresa Waine
Internal Audit Manager, Rolls-Royce plc, Derby
Member-nominated Trustee Directors
Nick Halliday
Manufacturing Engineer, Rolls-Royce plc, Annesley
Matthew Hill
Chief of Strategic Patents – Aero, Rolls-Royce plc, Derby
Kevin Wright
Setter/Operator, Convener, RR plc, Inchinnan
Professionals engaged by the Trust
Pensions Adviser – Pensions Department, Rolls-Royce plc, Derby
Administrator – Aviva Life & Pensions
Auditors – Deloitte LLP
Investment Consultant – Mercer
Investment Manager – Aviva Life & Pensions
Legal Adviser – Gowling WLG (UK) Ltd
Life Assurance Providers – Aviva and Met Life
Secretary to the Trustee – Richard Hill, Pensions Manager (Technical & Compliance), Rolls-Royce plc, Derby
The Trustee Directors usually meet annually five times a year, with four quarterly meetings and a strategy event held during October. Following the impact of the global pandemic, when meetings were held on a virtual basis, face-to-face meetings have now recommenced in line with Government guidelines and Company policy. Each Trustee Director typically serves a four-year term, with a maximum of two terms before rotating off the Board.
REVIEW YOUR RETIREMENT SAVINGS
Whether you’re just starting out, building up your fund or thinking about retirement, we want to help you focus on what’s important.
GETTING STARTED
Making the most of the Savings Trust
If you’re a younger member, or don’t have a lot of retirement savings, your focus should be to remain in the Savings Trust and pay as much as you can afford…
MAKING YOUR CONTRIBUTIONS COUNT
Active members with three years of membership can get a 12% contribution from Rolls-Royce by opting to pay 6%. And don’t forget, you get tax relief too, so your contribution might not cost as much as you think.
It’s worth paying 6% if you can afford to, as that makes sure that you get the highest contribution possible from Rolls-Royce. But even a smaller amount is better than nothing.
You can see how it works below:
| Core design | YOU PAY |
COMPANY PAYS |
TOTAL INVESTMENT |
| MINIMUM | 3% | 6% | 9% |
| 4% | 8% | 12% | |
| 5% | 10% | 15% | |
| MAXIMUM | 6% | 12% | 18% |
If you’ve got fewer than three years of membership, Rolls-Royce’s maximum contribution is capped to between 6% and 10%. For full details, take a look at the Contribution Structure section at www.rolls-roycepensions.com/SavingsTrust
Making additional retirement savings
If you can afford it, you can choose to pay more than 6%. Even though these contributions won’t be matched by Rolls-Royce, they’ll still be eligible for tax relief, as long as your total retirement savings don’t exceed £40,000 in the current tax year. You can find out more about tax relief in the ‘Tax Relief on Retirement Savings’ section at www.rolls-roycepensions.com/SavingsTrust
Changing your level of contribution
Adjusting how much you pay into the Savings Trust is done on the Rolls-Royce TotalReward portal in the benefits section. You can access the TotalReward portal without a password by accessing it through the Engine Room homepage, or by logging in with your username and password at www.rolls-royce.com/totalreward
CHECK YOUR PROGRESS
Funding the retirement lifestyle you want
Once you’ve built a decent level of retirement savings and are getting the maximum contribution from Rolls-Royce, focus on the standard of living you’d like in retirement. And most importantly, how you’ll achieve this…
RESOURCES TO HELP YOU
The Retirement Living Standards, developed by the Pension and Lifetime Savings Association (PLSA), and the Aviva Mid-life MOT are designed to help you understand what you’ll need to save for your retirement.
Retirement Living Standards
The PLSA’s Retirement Living Standards aim to give you an idea of what you’ll need to have saved to achieve a minimum, moderate or comfortable standard of living in retirement.
Find out more by visiting www.retirementlivingstandards.org.uk and watching this short video https://youtu.be/o6g7VpNNliE
Mid-life MOT and retirement planning
Find out more about the Aviva Mid-Life MOT app and get a free check-up of your wealth, work and wellbeing.
PLAN FOR RETIREMENT
Consider your options at retirement
If you’re starting to plan for your retirement, it’s time to start looking at the available options and checking out the help that’s available…
YOUR OPTIONS AT RETIREMENT
Once you’ve reached or are approaching the UK’s minimum retirement age (currently 55 but rising to 57 in 2028), your focus might shift to when you’d like to take your retirement savings and how you might plan for this. You’ll want to consider what your options are both at retirement and beyond this date, and what advice is available to help you make the key decisions.
When you take your retirement savings, you’ll be able to use the money that has built up in your account in a number of different ways. The new Aviva app MyWorkplace makes it easy to track your retirement savings.
Cash
You can take some or all of your account as cash. Find out more about this option at the Government’s MoneyHelper website, including taking your whole account in one go or taking it as a number of lump sums.
Drawdown
You can invest your account with a drawdown provider and withdraw money whenever you like, with no restrictions on the amount you can drawdown. Find out more about drawdown at the MoneyHelper website.Annuity
You can use some or all of your account to buy an annuity at retirement. The MoneyHelper website has more about this option too.
You can also choose a combination of these options. Aviva will provide you with full details of your options when you come to retire.
With each of the options you can take up to 25% of your account as tax-free cash, with the remainder being taxable at your marginal tax rate (for example 20%, 40% or 45%).
To find out more about your options at retirement and how they work, the Government runs Pension Wise – a free and impartial service from MoneyHelper, which aims to help Defined Contribution members who are over 50 understand their options as they approach retirement. Visit the website at www.moneyhelper.org.uk/en/pensions-and-retirement/pension-wise to book a free telephone or face-to-face appointment.
Advice on offer
If you’re an active member who is leaving the Company and aged 55 or over, you’re entitled to personal retirement advice by WPS Advisory that’s funded by the Company. Find out more here.
MY-AVIVA AND MY WORKPLACE - CHECK IN ON YOUR RETIREMENT SAVINGS
The best way to know exactly what you’ve got in your retirement savings pot is to log onto MyAviva. You’ll be able to see your fund value, review and amend your investment choices, check for payments received and much more.
Even if you’ve got more than one account in the Savings Trust, you’ll see them side-by-side. And you’ll also see any other pensions and products that you have with Aviva, like car or house insurance.
Aviva are shortly planning to move our members to their new MyWorkplace app and website, which concentrates solely on retirement savings and will be receiving lots of new features as it develops.
Current employees who access their retirement savings account through the Total Reward Portal are already using MyWorkplace, but the wider launch has been temporarily paused while Aviva work through a few problems that have occurred during the rollout.
Once these are resolved, Aviva will contact you with further details of how to log-in. The good news is that you’ll be able to log-in with your existing MyAviva username and password.
You will be able to tell whether you are viewing your account on either MyWorkplace or MyAviva by checking the app icon
You can access the MyAviva web page here
If you’re used to using the Total Reward Portal quick link from the Rolls-Royce network and don’t know your login details, click here to reset your password (your username is usually your email address).
Any problems logging in?
If you have any problems, you can contact Aviva on 0345 604 9915. Lines are open Monday to Friday 8.30am – 5.30pm. Calls may be recorded and/or monitored. If you have any questions about your account or for help with logging in, please contact the Aviva team:
Phone: 0345 604 0803
Email: [email protected]
YOUR BENEFICIARIES – WHY IT’S IMPORTANT TO KEEP THESE UP-TO-DATE
By providing (or updating) your beneficiaries, you’re letting the Trustee know who you want to receive the benefits that are payable when you die.
If you die before taking your retirement savings, the Trustee is responsible for making the following payments:
Your death in service life cover
If you’re currently working at Rolls-Royce, a tax-free lump sum is payable to your beneficiaries. It’s usually 6x your pensionable pay but you may have chosen to increase this.
You can find out the level of your life cover by logging into the TotalReward Portal, either through the Engine Room homepage, or by logging in with your username and password at www.rolls-royce.com/totalreward
Your Retirement Savings
Whether you’re working at Rolls-Royce or are a deferred member of the Savings Trust, the value of your retirement savings will be payable to your beneficiaries.
How the Trustee makes a decision
These payments are made at the Trustee’s complete discretion, but your wishes will always be taken into consideration. That’s why it’s so important to nominate someone and make sure you update the details whenever your circumstances change.
You can review or update your plan beneficiaries using the MyAviva or MyWorkplace website or app. It’s quick and easy to do and ensures that we can allocate death benefits to your beneficiaries as swiftly and as fairly as possible.
INVESTMENTS
Your money is invested to give it a chance to grow. Most members choose to leave their money invested in the Trust’s default investment programme, which has been designed specifically for the Savings Trust by the Trustee’s investment adviser. This is known as the ‘hands-off’ option. There are two other ways you can invest your money in the Trust and these are known as the ‘helping-hand’ and ‘hands-on’ options.
Hands-off approach
Most members invest their money in the Drawdown Lifestyle Investment Programme, which is designed specifically for the Savings Trust by the Trustee's investment adviser. If you haven't decided how to invest your money, this is the option we'll have chosen for you. It assumes that you'll take your benefits in retirement by using the drawdown method explained in the Review your retirement savings section.
The hands-off approach automatically manages your investments into less risky funds as you approach your retirement age, without you needing to do anything.
Helping-hand approach
This is similar to the hands-off approach, offering you two further bespoke investment programmes, designed specifically for the Savings Trust by the Trustee's investment adviser.
Instead of assuming that you'll use drawdown to take your retirement benefits, you can choose from a Cash Lifestyle or Annuity Lifestyle investment programme. These investments assume that you want to take your benefits in retirement either as cash or as an annuity (an annuity is where you hand over your fund value to an insurance company in exchange for a guaranteed retirement income). These options are outlined in the Review your retirement savings section.
Hands-on approach
This is where you invest your money in one or more of the 18 investment funds offered by the Savings Trust. If you take this approach, it's your responsibility to manage your investments and ensure they're right for you.
Your member guide
You can see exactly how all of these approaches are invested, find out about the investment funds open to you and check out their past performance in the member guide. And you can make changes to whatever approach you take, and set your expected retirement date, through your MyWorkplace account.
Investment performance
While it's not a guide to future performance, we've put together an interactive guide to investment performance over one, three and five years to June 2022. While investment performance in the past year has been disappointing for a number of well-publicised reasons, it's useful to consider how these have performed over a longer-term period. Click on the bars to see the fund names.
Trustee investment review
The Trustee is currently reviewing its investment strategy.
The focus of the review is to look at whether more ESG friendly funds can be incorporated into the default investment option.
The Trustee is also looking at whether the default fund strategy can be simplified to better help you with your planning and also to make investment returns easier to understand.
The Trustee will be in touch as soon as this review has been completed to let you know about the changes that are being made. You can be reassured that if you don’t want to take any action yourself, your Trustee will make any changes for you. However, it’s likely that some new investment choices will be available and for those of you who like to self-select there will be plenty of opportunity to review your investment choices, either at the time or at a later date.
RESPONSIBLE INVESTMENTS AND ESG SURVEY RESULTS
The Trustee continues to believe that well-run companies that take into account of ESG (Environmental, Social, and Governance) factors will offer better returns to investors over the long term, so like many other pension schemes we are actively looking at ESG issues and how we can be a responsible investor in line with both the current and forthcoming regulatory requirements.
The Trustee also recognises that long-term sustainability issues, particularly climate change, increasingly need to be considered as part of the investment decision-making process. It should be noted that the Trustee has a fiduciary responsibility to invest the assets in the best way possible for all the members. In this respect ESG is looked at through a financial lens and decisions taken where this will be of long-term benefit to members.
This year the Trustee has decided to adopt the following:
- A 2050 net zero target for the Trust;
- An interim target of a 50% reduction in emissions by 2030;
- Provisional listed equity and corporate bond portfolio targets of a 20% reduction in emissions by 2025 and a 50% reduction by 2030.
The Trustee has given our appointed investment managers full discretion in evaluating ESG factors, including climate change considerations, and exercising shareholder voting rights, in accordance with their own corporate governance policies and current best practice, including the UK Corporate Governance Code and UK Stewardship Code. Managers are also expected to be signatories to the United Nations-supported Principle for Responsible Investment (UNPRI) unless a suitable reason for not being is provided. As the Trust uses pooled investment funds, rather than investing directly in companies, the Trustee accepts that the assets are subject to the investment fund managers’ own policies in this area. Other key considerations are provided below:
- When appointing new managers and monitoring existing managers, the Trustee considers how ESG, climate change and stewardship is integrated within investment processes;
- The Trustee has set a target that all equity investment managers be highly rated by Mercer for ESG integration and active ownership, with a minimum rating of ESG3* or better, where possible. This is monitored and recorded at least annually;
- The Trustee does not take into account ethical views when choosing the funds available to members and in the investment strategies. However, the Trustee does offer both an equity fund which specifically focusses on managing the risks and taking advantages of opportunities associated with climate change, and a specific ethical fund within the self-select fund range;
- The Trustee has agreed to adopt the recommendations of the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD) which requires an annual TCFD statement. The Trustee will also ask the investment managers to disclose climate-related risks as part of their portfolio reporting, within the framework;
- The Trustee also periodically reviews the appropriateness of offering individual ESG or sustainable investment choices available to members.
*There are four ESG ratings categories ranging from ESG1 (the highest rating) down to ESG4 (the lowest rating). For a strategy to be assigned an ESG1, the investment team must have demonstrated market-leading capabilities in integrating ESG factors. An ESG4 undertakes little or no integration of ESG factors.
Member ESG survey
To help us understand the level of interest and knowledge about ESG, we asked all members to complete a simple survey. Within the opening two weeks, over 4,000 of you took the time to engage, which is a great response that’s given us a really useful insight into what you’re thinking.
As a starting point, we’ve learnt that over 70% of you are worried about climate change. Over 50% of you said that you believe it’s important or very important to use our investment strategy to drive positive social changes and almost 70% thought it was important that we hold to account the companies that we invest in when it comes to ESG issues.
You can view a summary of the survey results by clicking here. We’ll be speaking to our advisers about these results, and you’ll hear more about what we’re doing on the ESG front in the near future.
The survey is still open so if you haven’t yet participated, there’s still time. We’ll be closing the survey at the end of 2022.
OTHER BENEFITS
To help with your retirement planning, it’s well worth checking your State Pension Age and from age 55 onwards, requesting a projection of your State Pension. This can be done through the Government website here.
You can also explore the possibility of transferring previous pension rights into the Trust. The best way to start this process is to ask the administrator of your previous scheme for a transfer value statement and then contact Aviva with the details to see if a transfer can proceed. The Savings Trust will not be able to accept any previous pension benefits containing pre-1997 Protected Rights (also known as Guaranteed Minimum Pension) at the present time. Aviva have produced a guide to transferring in benefits which you can read by logging in to the MyAviva or MyWorkplace app and website.
Keep the scammers at bay
The MoneyHelper website, provided by HM Government and The Money & Pensions Service, will give you the knowledge to protect yourself from pension scams. If you’re transferring your pension, take a few minutes out to make sure you’re Scam Aware. Click here to find out more.
Please take every precaution when transferring your benefits away from the Trust. To make sure you’re getting the right advice, please use the services provided by WPS Advisory, as they are recommended by both the Trustee and the Company. A charge for advice will be payable, unless you qualify for the funded financial advice offer detailed earlier in the newsletter. This will always be discussed with you before any charges apply.
If you decide to use a different financial adviser, do make sure you understand their charges, as they are often quoted as a percentage of the transfer value. This might seem small but could amount to a large sum, depending on the size of your fund value. For example, if your fund value is £200,000 and your adviser is charging you 1%, this is actually a charge of £2,000.
The number of reported cases of pension fraud has more than doubled during the pandemic, as scammers capitalise on the savers’ fears. Stay alert and protect your retirement savings from scammers.
FUNDS REUNITED
Have you got a stranded Defined Contribution pot or other Savings Trust memberships that you’ve forgotten about?
Other Savings Trust memberships could include old Top-Up or deferred AVC accounts, which you could potentially combine with your current active account. If you contact Aviva and formally request this, they will instigate an internal transfer into your new account.
Tel: 0345 604 0803
Email: [email protected]
Ex-members of the Defined Benefit (DB) Rolls-Royce UK Pension Fund should be aware that some AVCs paid before 2016 provide additional options when used in conjunction with retirement from the DB scheme. These would be lost if you combine them with your active account in the Savings Trust. You can check to see if you might be affected by this by sending an email to the Rolls-Royce pensions team at [email protected] or by calling 01332 333335.
Please note that you will lose your transaction history from your old account when it is closed after the transfer takes place.
FACTS AND FIGURES
We’ve pulled together a summary of the Trust’s latest report and financial statements, but you can see the full document here.
The Trust’s annual accounts are audited by Deloitte LLP, the independent auditor. The following information is taken from the Trust’s accounts for the year ended 5 April 2022.
Assets under management
2022: £858M
2021: £690M
Membership
Active
18,306
Deferred
14,934
Main
AVC
Top-Up
Following a reconciliation of Aviva’s active membership records, many active member records were identified that should have been changed to deferred status. This is the reason for the significant change in membership category from last year’s report.
OTHER INFORMATION
There’s plenty of information available online to help you understand your benefits in the Trust. We always recommend visiting www.rolls-roycepensions.com/SavingsTrust if you’re not sure where to go to find information about your membership.
The Savings Trust homepage has detailed information about the scheme and will signpost you to other online resources that you’ll find useful.
You’ll also find the detailed member guide here and links to Aviva’s websites and Rolls-Royce’s own TotalReward Portal. We’ve also recently added a series of factsheets explaining how tax relief works and what you as a member need to be aware of.
The Savings Trust homepage can be accessed at www.rolls-roycepensions.com/SavingsTrust
Formal documents
If you want to see any of the Trust’s formal documents, these are available on request.
Internal Dispute Resolution Procedure
The Trustee Directors have an Internal Dispute Resolution Procedure available to members. This procedure is in line with statutory requirements. In the event of a member wishing to make a complaint, the first point of contact for all disputes is to send it in writing to the Trustee Secretary:
The Secretary to the Trustee
Rolls-Royce Pensions (ML-90)
PO Box 31
Derby
DE24 8BJ
KEEP IN TOUCH
Let us know what you think about this online report. Send your feedback to [email protected]
Has Aviva got your correct contact details? And are your plan beneficiaries up to date? It’s important to keep your details up to date so that we can contact you about your benefits in the Trust.
Tel: 0345 604 0803
Email: [email protected]
