Welcome to this the very first digital version of ‘Pension Overview’ for our DB members. This online edition has a little more detail than the printed version and it has been made available for those of you who have chosen to receive digital communications.
We reported in the Summary Funding Statement, issued in September 2018, that the assets for the DB Section reduced by £460 million over the 12 months to April 2018 to £7,306 million. However, over the same period our liabilities (or the cost to provide benefits to members) also reduced by a similar amount, the result being our funding position remained the same. This was a result of the careful matching of the Scheme’s investments and liabilities which protects the Scheme from fluctuations in the investment markets.
As the DB Section is currently much larger than the Defined Contribution (DC) Section, the value of the Scheme’s assets overall also reduced, although as a result of the performance of the individual DC Section investment funds, and the contributions received by the Scheme on behalf of these members, the value of the DC Section assets increased by £45 million to £387 million.
It is a similar story when we look at the membership for both Sections. The DB Section is still much larger with 34,714 members as at 5 April 2018, a reduction of 1,089 members from the same date in 2017. The DC Section by contrast has increased its membership over the same period by 700 to 7,894 members as at 5 April 2018. A copy of the full Report and Financial Statements for the year ended 5 April 2018 can be found in the ‘Documents’ section of the Scheme website.
Last year I highlighted that there were two vacancies on the Trustee Board. Simon Iversen joined the Board with effect from 1 March 2018 to fill the vacancy for a Company Appointed Trustee Director. A ballot of the Active membership of the Scheme resulted in Stephen Cunningham joining the Board on 18 April 2018.
David Higgins resigned as a Trustee Director on 4 July 2018. I would personally like to thank David for his contribution to the Trustee Board. The Company appointed Annabel Gillard as David’s replacement and she formally joined the Board on 5 July 2018.
Several Trustee Directors, myself included, have been interviewed over the past few years. These interviews are published on the Scheme website. Interviews with Annabel, Simon and Steven will be published over the coming months.
The successful management of a scheme as complex as ours requires dedication and hard work.
Undoubtedly you will have seen reports that Prudential plc intends to demerge its UK and European business. We have had preliminary discussions with the Company regarding its intentions and it has reiterated its commitment to support all its UK pension schemes. The Company has committed to keep the Trustee fully updated as the demerger progresses.
It is perhaps more important than ever that the Trustee continues to work closely with the Company to navigate a way forward based on the Company’s covenant. We are currently in the process of appointing a specialist adviser to support the Trustee in this area.
The successful management of a scheme as complex as ours requires dedication and hard work. To that end I would like to extend my thanks to the Pensions Team, the Scheme’s Administrators, the Scheme’s advisers and my fellow Trustee Directors for their continued support.
Michael Abrahams CBE DL
Chairman of the Trustee of the Prudential Staff Pension Scheme