Budget updateContracting out – an updateThe Government is making changes to the State Pension system from April 2016 with the aim of creating a clearer and fairer system.

At present the State Pension is a two-tier system made up of the Basic State Pension and the State Second Pension (S2P). In the future, the State Pension will be a single-tier scheme.

Under the current legislation, defined benefit (DB) schemes such as our Scheme are ‘contracted out’ of S2P.

Contracting out means that, rather than paying full-rate National Insurance (NI) contributions and building up benefits in S2P, you instead pay reduced-rate NI contributions. In return, the Scheme provides benefits that are in most cases better than S2P – so effectively, part of your Scheme pension replaces S2P. The Company also pays reduced-rate NI contributions.

From April 2016, S2P will no longer exist. As a result, DB schemes such as ours will no longer be able to contract out of S2P from April 2016, as they do at present. If you still pay NI contributions, you will be contributing to the new single-tier State Pension.

Changes to allowances

The lifetime allowance

The lifetime allowance (LTA) is the amount of pension benefits (excluding State Pension) that you can build up throughout your working life on a tax advantaged basis. Currently the LTA is £1.25 million but the Government has announced that this will reduce to £1 million from 6 April 2016.

The annual allowance

The annual allowance (AA) is the maximum amount your pension benefits (excluding the State Pension) can increase by in any one tax year, on a tax advantaged basis. Currently the AA is £40,000. The Government has announced plans to reduce the AA for high earners from 6 April 2016.

You will be affected by the reduced annual allowance if your taxable earnings (including bonuses, shift pay, incentive plan payments, car allowances etc.) including the increase in value of your pension benefits, is more than £150,000 a year. This figure is referred to as your ‘adjusted income’. If your earnings excluding the value of your pension are less than £110,000 you don’t need to worry about this.

The AA will be tapered for adjusted income above £150,000, with a reduction of £1 for every £2 that your adjusted income exceeds £150,000. The minimum AA will be £10,000 for those with an adjusted income of £210,000 or more.

Could you be affected?

• If you are an active member, pages 14 and 15 of your annual benefit statementshow how much of the AA you have used up in this and previous tax years fromthe Gist Scheme.

• Remember that the AA applies to your total pension savings – so you need toadd your contributions to any other schemes you may have (such as AVCs).

• If you have some unused AA, i.e. you have not contributed the maximumamount, you can ‘carry forward’ this amount for up to three tax years, to offsetan equivalent amount you may be over the AA in future years.

If you are an active or deferred member and think you may exceed either the LTA or the AA you should take independent financial advice. You can find a financial adviser in your area by visiting unbiased.co.uk

ACTION POINT

£1.25mLTA CURRENTLY

£1mLTA REDUCING TO

Designed and produced by A

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Contact detailsBOC Pension ServicesThe Priestley Centre10 Priestley RoadThe Surrey Research ParkGuildfordSurrey GU2 7XY

Helpline: 0800 096 3214Fax: 01483 244 739Email: pensions.uk@boc.comWebsite: www.bocpensions.co.uk

Legal note

Please note that this newsletter is intended to summarise the events of the past Gist Scheme year and nothing in it grants any legal right to benefits. Your entitlement to benefits is defined in the Trust Deed and Rules (as amended from time to time) at the date you leave service. You can download a copy of the current Trust Deed and Rules from the website at bocpensions.co.uk or request one from BOC Pension Services. If you are a pensioner or a deferred member you should ask for a copy of the edition which applied when you retired or left service.

Smartphone users with a QR code app can scan this code to visit our website

Expression of wish reminderRemember to keep your Expression of wish form up to date as your circumstances change. The form lets the Trustee know who you would like to receive any lump sum payment in the event of your death. Although the Trustee cannot be legally bound by your Expression of wish form, it will take your requests into account.

If you don’t keep your form up to date, there may be a delay in any lump sum being paid, as the Trustee would have to investigate the circumstances of the case and decide who any benefits due should go to.

Chairman’s welcome Welcome to the 2015 Summary Report and Accounts for members of the Gist Limited Pension Scheme.

As well as the fund value, account and membership information as at 31 March 2015, this issue of the newsletter provides your Summary Funding Statement. Also, as it’s currently a busy time in the world of pensions, we’ve provided details on Government changes to pensions and how you could be affected.

We hope you find this newsletter useful and informative.

If you have any questions, or suggestions for inclusion in future newsletters, please let us know using the contact details shown on the back page.

Susan Anyan (on behalf of Capital Cranfield) Chair of the Trustee Board

You can download a form from bocpensions.co.uk i

The Gist Limited Pension SchemeSummary Report and Accounts 2015.

What could this mean for you?

If you are an active member, the percentage of the LTA you have used up to date from the Gist Scheme is shown on page 14 of your Gist Scheme benefit statement. In your last benefit statement, this percentage was based on the LTA in place at the time – £1.25m.

If your total LTA is 83% or more, you are likely to be affected by the reduction in the LTA. If this is the case, you can apply for ‘transitional protection’ from HMRC to protect you against tax charges on the excess LTA between £1m and £1.25m.

Because the LTA applies to your total pension savings, you will need to add any other benefits you may have to get your total LTA figure. This might include your BOC Pension Scheme deferred pension benefits, AVCs or a previous employer’s pension scheme.

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Please note that if you are already receiving your State Pension, none of these changes affect you.i

Changes to State Pension forecastsDue to these changes in the State Pension system, the State will no longer provide State Pension forecasts after the end of the 2015/16 tax year. Because of this, your annual benefit statements from 31 March 2016 onwards will not include an estimate of your State benefits. The Department for Work and Pensions is working on a new digital service which should enable you to access information about your State benefits online. We will keep you updated in future editions of this newsletter.

Taxation of pensionsAs part of the Government’s Summer 2015 Budget, the Chancellor announced a consultation on the taxation of pensions. Following the radical changes introduced with effect from April 2015 (affecting the way defined contribution pension scheme members can access their benefits), the Government wants to take a fresh look at the way tax relief is applied to pension saving. At present, contributions to pension schemes are tax free, while benefits paid to pensioners are taxed. The consultation aimed to look at whether this is the best approach, or whether a different system would be better.

The consultation period ended on 30 September 2015, but the results and decision around the consultation have not yet been announced. We will keep you updated on the outcome of the consultation, and what this means for you, in future editions of this newsletter.

For active members onlyThe Company has decided to review the Gist Scheme as a result of the changes outlined above. Changes to pension schemes such as the Gist Scheme are subject to consultation which will begin from early January 2016.

Who looks after the Gist Scheme?

Gist Scheme Accounts

Investment Performance

£££

The charts show the Gist Scheme’s income and expenditure for the years ended 31 March 2015 and 31 March 2014.

£55.018mValue at 31 March 2015

Fund value2014/15 2013/14

Value at 1 April 2014 £33.290m

Value at 31 March 2015 £55.018m

Expenditure (£1.661m)

Return on investments* £12.470m

Income £10.919m

Value at 1 April 2013 £22.605m

Value at 31 March 2014 £33.290m

Expenditure (£1.484m)

Return on investments* £1.469m

Income £10.700m

*After management charges.

1 Company contributions include member contributions paid via Salary Exchange.2 Administration expenses includes life assurance premiums.

Income

Year ended 31 March 2015 Year ended 31 March 2014

Total income

Company contributions1

Member contributions

Other income

£1m £5m £7m £9m £11m£3m

£0.186m

£10.095m

£0.638m

£10.919m

£0.174m

£10.178m

£0.348m

£10.700m

Expenditure

Year ended 31 March 2015 Year ended 31 March 2014

Administration expenses2

Death benefits

Pensions

Transfers out

Total expenditure

£1m £5m £7m £9m £11m£3m

£0.113m

£0.575m

£0.059m

£0.631m

£1.661m

£0.052m

£0.349m

£0m

£0.998m

£1.484m

Scheme Actuary Richard Shackleton, FIA, Hymans Robertson LLP

Auditors Ernst & Young LLP

Legal Advisers Mayer Brown International LLP

Investment Advisers Mercer Ltd

Investment Services BOC Pensions Investment Department

Medical Advisers Health Assured Ltd

Bankers HSBC Bank plc

Benefits Administrators BOC Pension Services

Advisers and administrators

Capital Cranfield Professional Trustee, represented by Susan Anyan

Gareth Parkin** Gases, Guildford

Mike Dowe Gist, Basingstoke

Rob Jurkowski Group, Guildford

Company-Appointed Directors Member-Appointed Directors*

Neville Shiggins Gist, Barnsley

Phil Struthers Gist, Basingstoke

*Elected from and by the Gist Scheme’s members

**Appointed with effect from 1 September 2015

The Trustee uses an independent performance measurement service to measure investment returns against set targets (known as benchmarks).

The chart above shows the return on investments compared to the benchmark over the past year and since the Gist Scheme’s start date, 1 April 2011.

Value of the Scheme at 31 March 2014

£33.290m

Value of the Scheme at 31 March 2015

£55.018m

Member contributions

£0.186m

Pensions and lump sums

on retirment £0.396m

Administration expenses

£0.631m

Transfers out

£0.059m

Death benefits

£0.575m

Return on investments

£12.470m

Company contributions

£10.095m

Since 1 April 2011 (annualised)

1 year performance

Investment StrategyThe chart below shows the Gist Scheme’s strategic asset allocation (where the Trustee has decided the assets should be invested) at 31 March 2015.

Growth assets aim to maximise return, while protection assets aim to minimise risk.

Membership statistics as at 31 March

Global equities 26%

Pooled LDI 40%

Bonds 20%

Diversified Growth Funds 10%

UK equities 4%

33.6%

15.5%

18.5%

7.9%Actual

Benchmark

Active members

1,063

1,113

2015

2014

Deferred members

141

122

2015

2014

Pensioner members

106

75

2015

2014

2% 6% 10% 14% 18% 22% 26% 30% 34%

Protection assets

Gro

wth

ass

ets

Summary Funding StatementThe Summary Funding Statement summarises the Gist Scheme’s funding position at the most recent actuarial valuation, as at 31 March 2014, and explains how the position has changed since then.

How well funded is the Gist Scheme?At the most recent actuarial valuation as at 31 March 2014, the Gist Scheme’s funding position on an ongoing basis was:

The Gist Scheme’s funding position on a discontinuance basis was 65% as at 31 March 2014. The discontinuance basis assumes that the Gist Scheme is discontinued or ‘wound up’ on the valuation date. There is no intention to wind up the Gist Scheme.

The change in funding positionIn order to regularly monitor the Gist Scheme’s funding position between the three-yearly actuarial valuations, the Gist Scheme carries out ongoing regular updates.

A scheme’s funding position is based on a set of assumptions about the future, such as how long members are likely to live and what return the scheme expects on its investments. As these assumptions change over time, the funding level will fluctuate. This means that the results of any valuation can only ever be an estimate at a set point in time.

The value of the Gist Scheme’s assets has increased since the 2014 valuation. However, changes in yields and inflation rates have been greater than the increase in assets, causing the funding level to decline from 100% to 92%.

Lump sums on retirement

£0.283m£0.085m

The Trustee can confirm that there have been no payments to the Company out of the Gist Scheme in the past 12 months, or indeed ever, other than administration expenses. The Trustee can also confirm that the Scheme has not been modified by or had a schedule of contributions imposed by the Pensions Regulator.

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Other income

£0.638m

31 March 2014, actuarial valuation

Assets Liabilities

Funding shortfall

£0Ongoing

funding level

100%

£33.3M £33.3M

31 March 2015, funding update

Funding shortfall

£4.6m

Ongoing funding level

92%

Assets Liabilities

£55.0M£59.6M