Dear Colleagues

Welcome to Talking Pensions, the Kingfisher pensions newsletter for all employees.

This newsletter provides general information about the Kingfisher Pension Scheme, including highlights of the annual Trustees’ Report and Accounts for 2005-06.

This year has seen a radical overhaul of pensions legislation in the UK. The provisions of the Finance Act 2004 (also known as ‘simplification’) finally came into force on 6 April 2006. The key changes are that the amount that an individual can contribute to their pension arrangements before tax is deducted has been greatly increased and there is now one single overall Lifetime Allowance that covers the amount of pension that a person can receive before a tax charge is applied. You should have received two A-Day communications from the Pensions Department over the past year keeping you informed of progress and what the new changes mean to you. If in any doubt, please contact the Kingfisher Pensions Department.

Like last year, all employees will receive a Personal Benefit Statement. For those of you already building up a Kingfisher pension, the Statement includes information about your pension to date and as well as what you might expect to receive at retirement. For those colleagues who have previously decided not to join the Scheme, we want to be sure you are happy it was the right decision. As such, we have provided a forecast of the pension you might receive if you were to join the Kingfisher Pension Scheme. Again this year I am pleased to say that your Benefit Statement will include an indication of the pension you might expect to receive from the State; giving you a much better idea of what income you will have in retirement.

There has been a lot of press coverage about women and pension provision (or more likely the lack of it). There are many obstacles that prevent women from building up adequate pension provision. Women generally have lower pension provision than men due to lower lifetime pay and career breaks for caring responsibilities such as bringing up children.

You may also have read about the new Government White Paper, one of its many aims is to address this injustice by reducing the number of years of contributions or credits to qualify for a contributory pension from the State. The paper also proposes to increase State Pension Age to 68 over a gradual period and also introduce a new low cost savings vehicle that all employees will be automatically enrolled into if they do not have a suitable employer scheme. However this new plan is not proposed to be introduced until 2012 or later. It is therefore important that you act now if you want to try to ensure you have enough income to retire on.

It is a sobering thought that most of us may not have enough to live on when we retire and we have therefore included some ‘food for thought’ in the article ‘Planning for Retirement’.

Everyone needs to plan for retirement. People are living longer and healthier lives, so it is even more important to think about how and when to save for retirement. Retirement can last for 20 or 30 years, maybe even longer. The basic State Pension is a start but it may not be enough to give you the standard of living you want.

So, if you want a higher income in retirement than you would get from your State Pension, you need another source of income as well. It's never too early to start saving for your retirement. You may have other financial priorities at the moment, but don't make that an excuse to put off saving - delay can cost you money. The question may not be ‘Can I afford to save for retirement?’ but ‘Can I afford not to save for retirement?’

Turning now to the financial position of the Scheme, I can confirm that the Scheme went through a special valuation at 30 September 2005. The reason for this valuation taking place ahead of schedule has been to try to reduce the levy the Scheme has to pay to the Pension Protection Fund for the 2006/2007 tax year. The background to this is at 29 September 2005 the first of the additional funding by the Company of £130 million was made to the Scheme to improve the Scheme’s funding position. As the levy rises for pensions schemes that are not well funded, the Trustee wanted to make sure that the levy was based on the latest valuation, i.e. including the £130 million extra contribution. This should reduce the amount the Scheme has to pay to the Pension Protection Fund. For further information about the Scheme’s financial position look out for highlights of the annual Trustees’ Report and Accounts PDF for 2005-06 from pages 11 to 15.

Finally, should you need further information about the Scheme, you can obtain a copy of the full Trustee’s Report and Accounts either from the Kingfisher Group Pensions Department at the address on page 10 or from the new look pensions website www.kingfisherpensions.com.

Best wishes

Colin Hately
Head of Pensions