Rolls Royce DC pension assets rise by £28.5m despite investment losses

The Rolls Royce Retirement Savings Trust’s (RRRST) net assets rose from £422.6m to £451.1m in the year ended 5 April 2020, despite investment losses.

The defined contribution (DC) scheme’s trustee’s annual report and financial statements showed that the scheme had benefited from £75.9m from its dealings with members, up from £73.6m in the year before.

The bulk of this stemmed from employer contributions to the DC scheme, which came in at £68.8m for the year, up from £60.6m in the 12 months prior, while employee contributions rose from £16.5m to £22.4m.

Transfers in accounted for income of £5.8m, just over half of the £11.5m that they brought in in the previous year.

This income was offset slightly by benefits payable increasing to £5.9m, up from £3.3m the year before, and payments to and on account of leavers totalling £14.7m, up from £10.0m.

While income from dealings with members rose, RRRST's net returns on investments swung to a loss of £47.5m from a gain of £16.0m the year before, with the market value of the scheme’s investments dropping by £46.6m during the period.

As such, the growth in the DC scheme’s net assets slowed to £28.5m from £89.5m in the previous year.

The scheme’s investment assets were comprised of £440.8m in pooled investment vehicles, up from £421.6m the year before, and £10.3m in cash, compared with £1.0m.

Membership of RRRST increased from 18,925 to 21,591 during the 12-month period, with this being driven by the addition of 3,862 new joiners, while the number of deferred members rose by 501 to 5,063.

Having joined the scheme, these members are given the choice between taking no action and seeing their contributions invested in one of two default investment programmes, actively choosing between three predetermined investment programmes, or designing and managing their own investment programme from up to 16 self-select investment funds.

In June 2020, following the period examined by the annual report, Rolls Royce was exploring the early closure of its defined benefit scheme in an effort to save £500m in contributions, which would boost the membership of its DC scheme.

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