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Update on the financial health of your pension
For the NatWest* Group Pension Fund (the Fund)
We review our financial health regularly. Our latest check is at 30 June 2020 and we’re pleased to confirm that we continue to be in good shape.
*Reminder: the Fund changed its name from 1 August. See the communication we sent you in late summer for details.
Why this matters to you
The value of your benefits depends broadly on how long you work/previously worked with the bank and the salary that counts towards your pension when you stop work. But monitoring the Fund’s financial health means that over time we can adjust to meet our commitments to all members and reassures you that your benefits are secure and well managed.
If you’re not yet receiving a monthly income from the Fund, check the value of your benefits built up to date and what they mean for your future. Log on to your pension record at www.natwestgrouppensionfund.co.uk > Your pension record > Quotes.
The Fund’s 30 June 2020 results
All four sections remain in good financial shape, despite the market volatility in the first half of 2020. Read more below about the estimated funding positions for each section of the Fund as at 30 June 2020.
Unsure which Section you’re in? Log in to your pension record at www.natwestgrouppensionfund.co.uk > Your pension record.
Main Section
Assets£51,640 million
Liabilities£51,277 million
Surplus£363 million
Funding level101 %
This compares to a funding level of 96% at the last full actuarial valuation (31 December 2017)
AA Section
Assets£1,182 million
Liabilities£1,104 million
Surplus£77 million
Funding level107 %
This compares to a funding level of 109% at the last full actuarial valuation (31 December 2017)
NWM Section
Assets£318 million
Liabilities£295 million
Surplus£23 million
Funding level108 %
This compares to a funding level of 91% at the last full actuarial valuation (31 December 2018)
RBSI Section
Assets£95 million
Liabilities£88 million
Surplus£7 million
Funding level108 %
This compares to a funding level of 112% at the last full actuarial valuation (31 December 2018)
Funding level
The funding level is the difference between the assets held by the Fund and how much it needs to pay the benefits promised to all members (i.e. it’s financial obligations – otherwise known as liabilities). At each valuation, the Actuary calculates the liabilities using a set of assumptions for things like members’ life expectancies and future investment returns. The Trustee monitors the health of the Fund closely and reviews this quarterly.
Why does the funding level matter to you?
The better the funding position, the more secure member benefits are. Together, the bank and Trustee are committed to ensuring the Fund is fully funded over time and work together to agree any funding arrangements after every full actuarial valuation.
More about liabilities
The liability values shown are on a ‘technical provisions’ basis. This represents the amount of money required to meet all the benefits which have been promised to members and uses a cautious set of assumptions for future investment returns, life expectancies and other variables which affect the liabilities. These assumptions are set out in the Statement of Funding Principles for each Section.
The next valuation
The next actuarial valuation of all four sections is expected to be as at 31 December 2020.
Why do liabilities matter to me?
You have promised benefits from the Fund which are taken into account when calculating the Fund’s liabilities.
Reminder: to see the value of your benefits in the Fund now and what they mean for your future, log on to your pension record at www.natwestgrouppensionfund.co.uk Your pension record > Quotes.
How the bank supports the Fund
The bank pays a lot of money into the Fund to pay member benefits. To address any funding shortfalls, the bank pays additional contributions. Read more below to see a summary of the latest contributions.
Additional contributions
Main Section
In 2018, the bank made a payment of £2 billion into the Main Section. The bank has also agreed to pay additional contributions of up to £1.5 billion, based on the Fund receiving an amount equal to any shareholder distributions, such as dividends, subject to a cap of £0.5 billion in any one year.
AA Section
As there was no shortfall in funding at the last valuation, no deficit contributions were required.
NWM Section
In 2019, the bank paid £52.7 million into the NWM Section.
RBSI Section
As there was no shortfall in funding at the last valuation, no deficit contributions were required.
Ongoing contributionsThe bank also pays contributions to each Section for active members who are still building up benefits in the Fund to meet the cost of other running expenses such as administration and legal expenses. The contribution rates are agreed between the Trustee and the bank as part of the actuarial valuation based on advice from the Actuary. The bank contribution rates, before allowing for any member contributions, are as follows:
Main Section
Members with a Normal Pension Age of 6541.5%
All other members48.5%
Basis for contributions% of Contribution Salary
AA Section
Members with a Normal Pension Age of 6565.2%
All other members73.7%
Basis for contributions% of Pensionable Salary
NWM Section
Members with a Normal Pension Age of 6538.8%
All other members38.8%
Basis for contributions% of Contribution Salary
RBSI Section
Members with a Normal Pension Age of 6541.8%
All other members41.8%
Basis for contributions% of Contribution Salary
Your questions answered
Select a question to find out more:
What if the Fund closes (‘winds up’)?
The law requires us to provide information on the Fund’s financial position in the event of a ‘wind up’ – where a pension arrangement closes. In this event, no further benefits are built up by active members.
- In this unlikely event, the Fund’s assets would be used to buy the equivalent benefits from an insurance company.
- At the date of the last actuarial valuation, the assets would have secured the proportion of benefits as set out in the table below with an insurance company.
- These percentages are lower than the funding levels shown above. This is because insurance companies add on administration charges and profit margin.
Please note that there are no plans to close or ‘wind up’ the Fund; we have to provide you with this information.
Main Section |
AA Section |
NWM Section |
RBSI Section |
|---|---|---|---|
Full actuarial valuation date: 31 December 2017 |
Full actuarial valuation date: 31 December 2017 |
Full actuarial valuation date: 31 December 2018 |
Full actuarial valuation date: 31 December 2018 |
Funding level using winding up (solvency) assumptions 70% with a shortfall of £19,512 |
Funding level using winding up (solvency) assumptions 83% with a shortfall of £246.2 |
Funding level using winding up (solvency) assumptions 60% with a shortfall of £130.4 |
Funding level using winding up (solvency) assumptions 76% with a shortfall of £22.8 |
What is the Pension Protection Fund (PPF) and how would it be involved in my benefits?
The PPF acts as a safety net and provides compensation to pension scheme members where a scheme is wound up (closed) because the sponsoring employer becomes insolvent and there is not enough money to cover the cost of securing members’ benefits with an insurance company.
The PPF does not provide full protection, so in most cases members would see a reduction in their benefits.
Has the Fund paid money to the bank?
There have been no payments from the Fund to the bank over the year to 30 June 2020.
When does the Pension Regulator intervene?
In certain circumstances, the Pensions Regulator has powers to intervene in the running of a pension arrangement – for example changing the way future benefits build up, setting the level of the funding target, setting the terms of any possible recovery plan and/or imposing a schedule of contributions. The Pensions Regulator has not used any of these powers in relation to any Section of the Fund.
Win £100 Amazon vouchers
If you complete all your information on Your Progress Bar (on your pension record) before 31 October 2020, you could be the lucky winner of one of £100 Amazon vouchers. What’s in it for you? A better and quicker service all round.
Where to find out more if you want to
Explore the Funding and investment section at natwestgrouppensionfund.co.uk/documents/funding-and-investment. Here you’ll find:
- More details in the Full actuarial valuation reports.
- Key actuarial assumptions for the valuations in the Statements of Funding Principles.
- How much money is being paid into the Fund, together with the Actuary’s certificate which confirms that the Schedule meets current requirements in the Schedule of Contributions.
- The Fund’s income and expenditure for the latest year in the Annual Report and Accounts.
- The Trustee’s investment policies in the Statements of Investment Principles.