A message from the Chair
Welcome to our annual report on the Eli Lilly Group Pension Plan, published in online form for the first time this year.
The key aim of the Trustee remains to ensure the Plan has sufficient assets to pay the benefits in retirement that members are entitled to under the Trust Deed and Rules.
We are pleased to report that we concluded the Actuarial Valuation of the Plan as at 1 January 2023, and the funding level was confirmed at 113.9%. This means that assets were higher than Plan liabilities. This was a small increase from the funding level at the last formal valuation as at 1 January 2020, when it was measured at 112.1%.
You can read more about the results of the valuation in the funding update that is part of this report.
Other notable work of the Trustee Board in 2023 included:
- We completed much of the work related to the implementation of Guaranteed Minimum Pension equalisation, and many members eligible for small increases as a result of this exercise received their payments, including back pay and interest, in November 2023. A smaller number with more complex records received increases in early 2024. Pension equalisation does not impact all members and no action is needed from you if you have not heard from us.
- We reviewed the early retirement reductions for deferred members and the commutation factors that apply when members draw their pensions to ensure that they represented fair value to members exercising choices and members remaining in the Plan. We made some changes, which were communicated in early 2024.
- We launched a new pensions website helping members understand their pension and access key information on the Lilly Plan Portal. You can also now use the Portal to chat with our pension administration team and raise any questions directly with them. If you can register online, we would encourage you to do so – but please be reassured that we will continue to accept queries by phone and post.
- We continued to focus on risk mitigation across all aspects of our operations, including support for the Board, systems and governance, and investment risk. We also continued to review and work to prepare for new regulatory standards, "the General Code," that were published in early 2024. Work on this will continue through 2024.
You can find names of all the Trustee Directors in this report. Short biographies are also now available on our website. We would like to thank Stephen Ingham for his service on the Board during the last three years and welcome Sarah Coles who joined in June 2024.
I would encourage you to read this full report carefully. Any feedback can be sent to the Plan Administrator using the contact details in this report.
Ian Dane — Chair, Eli Lilly Group Pension Plan
Financial update
In this section of our Report, we summarise the key information from the Plan’s 2023 Report & Accounts.
Summary fund account
The fund account is like the Plan’s bank statement, showing our income and expenditure for the year.
| Assets at 31 December 2022 | £1,255.7m |
| Contributions | £2.1m |
| Benefits and expenses paid | £41.1m |
| Net return on investments | £3.8m |
| Assets at 31 December 2023 | £1,220.5m |
Investment allocation and performance
The Plan’s assets are invested with the aim that they provide sufficient funds to cover the Plan’s liabilities, both now and in the future. We have a Statement of Investment Principles that sets out the strategy behind our investments, and each year we publish an Implementation Statement that shows how the strategy has been put into practice. You can read both documents on the Plan website: elilillygrouppensionplan.co.uk/documents
Our assets are currently invested in a mix of Liability Driven Investments (LDIs) and illiquid assets. LDIs are designed to roughly follow the movement of the markets that affect the Plan’s anticipated liabilities, and so to maintain a stable funding position. In practice this means that the majority of our investments are in UK government bonds (or gilts) and similar asset types, with some smaller holdings in asset classes such as private equity and property.
The Trustee has agreed that the illiquid assets currently held will be allowed to run down over time. The Plan does not target a fixed allocation to growth and matching assets but aims to achieve a return that helps it achieve its long term funding target.
The overall annualised return of the Plan’s investments is as follows, with benchmark figures alongside for comparison:
Membership figures
Important reminders
Make the most of your online services
We want the Plan to harness the available technology to deliver a simple, fast and convenient service to you as members. With that in mind, we’d like to remind you of the various online facilities available for you to use.
If you want to:
- Find out how the Lilly Plan works
- Get the latest Plan news
- Learn how to use the Lilly Plan Portal
- Read our Statement of Investment Principles or latest Summary Funding Statement
- Get contact details for the Plan
…go to the Lilly Plan website, elilillygrouppensionplan.co.uk
If you want to:
- See the amount of pension you may be eligible to receive
- See the value of any SpECs or AVC investments you have or review your investment choices
- Update your personal details
- Complete or update your Expression of Wish form (for death benefits)
- Request a transfer quotation
- Chat online to a member of the Administration Team
- Check the progress of your case if you’ve recently raised a query
- View your pension payslips (pensioners only)
…go to the Lilly Plan Portal, accessible from the website, or through MyReward if you’re still working for Lilly.
Remember, we’ve also got an app, Orion+, which enables you to view your details, including pension payslips.
If you need help to access the Lilly Plan Portal or the Orion+ app, please contact the Administration Team.
Keep your details up to date
It’s really important that you let us know if any of your personal details change, for example if you move house or change marital status. If we don’t have the correct information on file for you, we may not be able to contact you if we need to, and there could ultimately be delays or difficulties in paying your benefits.
The easiest way to update your personal details is on the Lilly Plan Portal, which you can access through our website, elilillygrouppensionplan.co.uk, or through MyReward if you’re still working for Lilly.
As well as things like your name and address, you should check that your Expression of Wish form is up to date. This tells us who you would like to receive any benefits payable from the Lilly Plan if you die while a member.
You can also update your Expression of Wish form through the Lilly Plan Portal. If you aren’t registered, you can request a hard copy form from the Plan Administrator.
Plan news
Climate action update
Climate change continues to be a matter of importance for the Trustee, recognising the impact that pension schemes like ours can have through direct investment and through exercising our voting rights as shareholders in companies. We are also conscious that climate change has an economic impact and want to make sure that the Plan’s investments are safeguarded against any climate-related risks.
During 2023 we prepared our first Taskforce on Climate-Related Financial Disclosure (TCFD) report, relating to activity in 2022, and we have just published our second report covering 2023. Our reports cover four areas:
Governance: This section describes the way we work with our advisors to get the necessary information on climate-related risks and opportunities.
Strategy: Here we look at the actual and potential impacts of climate-related risks and opportunities, considering various scenarios and ensuring the Plan is resilient to these risks, for example by employing a diversified investment strategy.
Risk management: This section describes the processes used to identify, assess and manage climate-related risks and opportunities.
Metrics and targets: Here we define the key metrics we will use to monitor progress to better understand climate risk as it relates to the Plan investments.
In 2023 we set a target to improve the quality of data we receive from our investment managers on climate related matters and aimed to achieve 61% data coverage by 2027. In our most recent report covering 2023 we are pleased to report that data coverage has improved to 67% helping us better understand our climate impact. We will revisit this target ahead of publishing our 2024 report in mid 2025.
You can find a copy of the 2023 report in the document library on the Plan’s website.
GMP update
We have previously reported on the ongoing project to equalise the Guaranteed Minimum Pensions (GMPs) for Plan members and ex-members with service between 1990 and 1997. This project was the result of a court ruling requiring formerly contracted-out pension schemes like ours to ensure fair and equal treatment of men and women in the calculation and payment of GMP benefits.
During 2023, the Plan implemented GMP equalisation for the majority of its pensioner members and some past transferees, making back payments where appropriate. Over the course of 2024 we expect to complete this exercise, with payments to more past transferees and a small remaining group of pensioner members. If you are affected by this, we will communicate with you personally to let you know about any payments you can expect to receive.
Funding update
We have now completed our latest actuarial report.
Here we summarise the main points from the Summary Funding Statement, by way of reminder.
Financial Position at 1 January 2024
The table below shows the funding level of the Plan as at 1 January 2024, along with the funding level as at 1 January 2023 for comparison. All values exclude SpECs and AVCs.
| 1 January 2024 | 1 January 2023 | |
| Value of assets | £1,177.1m | £1,222.9m |
| Value of liabilities (cost of providing benefits already built up) | £1,068.2m | £1,073.4m |
| Surplus / (deficit) | £108.9m | £149.5m |
| Funding level (assets/liabilities) | 110% | 114% |
| 1 January 2023 | |
| Value of assets | £1,222.9m |
| Value of liabilities (cost of providing benefits already built up) | £1,073.4m |
| Surplus / (deficit) | £149.5m |
| Funding level (assets/liabilities) | 114% |
| 1 January 2024 | |
| Value of assets | £1,177.1m |
| Value of liabilities (cost of providing benefits already built up) | £1,068.2m |
| Surplus / (deficit) | £108.9m |
| Funding level (assets/liabilities) | 110% |
Note that the value of assets at 1 January 2023 reflect figures shown in the Plan’s audited accounts, while the asset values at 1 January 2024 reflect unaudited figures.
Change in the Financial Position
As at 1 January 2024, the funding position of the Plan had worsened but a healthy surplus of around £109m remains. The decrease in the Plan’s funding level from 1 January 2023 was due to a number of different factors, but mostly due to the returns from the Plan’s return-seeking assets being lower than those assumed, which resulted in the value of the assets decreasing at a lower rate than the value of the liabilities.
For more information
For more information, including the current position with respect to Company contributions and details of what would happen were the Plan to be wound up, read the full Summary Funding Statement available online.
Pensions news
Update on pension taxation
Since 2006, pension savings have been subject to a Lifetime Allowance (LTA), which places a limit on the overall value you can build up across all your pensions before having to pay additional tax. For the 2022/23 tax year, the LTA stood at £1,073,000.
In March 2023, the Government announced that it would be removing the LTA tax charge with effect from 6 April 2023, and abolishing the LTA altogether from 6 April 2024. You can view a short animation explaining these changes here: elilillygrouppensionplan.co.uk/videos/changes-to-pension-taxation
What does this mean for you?
Most people weren’t affected by the LTA, but if you would have been, the changes are good news: you can now save more for your retirement without incurring a tax charge. There will, however, still be a limit on the amount of money you can take as a tax-free lump sum at retirement.
Prior to the changes, you could take up to 25% of your pension savings as a tax-free lump sum, with the remainder taxed as income. The new arrangements introduce a Lump Sum Allowance (LSA), which has been set at 25% of the value of the LTA at the time of its removal – i.e. £268,275. This is the maximum lump sum you can receive from all your pension savings. If you exceed this limit, the amount over the limit will generally be taxed as income. Members with existing LTA protection may have a higher limit before they are liable to pay the additional tax.
There is also a new Lump Sum and Death Benefit Allowance (LSDBA), set at £1,073,000. This limits the payments that can be made tax-free following someone’s death or in circumstances where, due to ill health, someone’s entire pension is converted to a single cash sum. This limit will be reduced if the person has previously taken tax-free cash sums at retirement (i.e. those covered by the LSA above).
As ever, we recommend that you take independent financial advice if you think you may be affected by any of the issues in this article.
Pension dashboards update
Have you ever wanted to see figures and information from all your different pension schemes in one place? With pensions dashboards that might soon be a reality!
Pensions dashboards are set to transform how you access information about your pension, allowing you to see what you saved with various providers, including your State Pension, all in one place.
The Government and its providers have now completed their development and testing phase and will begin connecting a small number of pension schemes to the dashboards for testing. Once this phase is complete, more and more schemes will begin to connect their data with the dashboards, and they will become available to members for full use. We will let you know when this is the case.
For now, if you think you have any lost pensions, you can find support at moneyhelper.org.uk/en/pensions-and-retirement/pension-problems/tracing-and-finding-lost-pensions
In the meantime, we’ll also be making sure our records are up-to-date and ready for the dashboards. To help us with this, you can visit the Lilly Plan Portal to check your details and change them if necessary.
Pension scams: stay alert!
The last few years have seen an increase in pension scam activity, with savers being pressured into transferring their pensions into arrangements that might seem legitimate and promise a lot, but which result in people losing their money. We want you to be aware of the risks and know what to do if you’re suspicious.
Signs of a scam include:
- Unsolicited contact. A genuine financial adviser or institution won’t call, email or write to you out of the blue.
- Unrealistic promises. Be wary of any investment that offers guaranteed high returns – these are unlikely to be true.
- Unreasonable pressure. Scammers will often try to force you into a quick decision or rash commitment with a “limited time offer”.
You should take your time and always check who you’re dealing with. You can use the Financial Conduct Authority’s ScamSmart website, fca.org.uk/scamsmart, to access the register of firms and individuals who are authorised to give you financial advice.
The ScamSmart website also gives you instructions for what to do if you think you’ve been targeted. You can also report a scam (or attempted scam) to Action Fraud. Call 0300 123 2040 or use the online reporting tool on the Action Fraud website: actionfraud.police.uk
Looking after your financial wellbeing
As we come to the end of another tax year, you may find this a good time to do some financial planning. Figuring out how your Lilly Plan pension fits in with that bigger picture could be a helpful first step. If you want to check the current position of your pension, why not visit the Lilly Plan Portal?
Budgeting and expenses
It’s important to regularly revisit your budget and align it with your financial goals. Analysing monthly expenses and identifying areas where adjustments can be made will help in maintaining a balanced budget and getting on top of any debt you may have. You should also consider potential increases in living costs, such as transport, utilities, and groceries.
There are lots of websites that can help with everything from day-to-day savings tips to debt advice. If you’re struggling, have a look, and consider speaking to someone who can help.
MoneyHelper is a free, independent service provided by the Government. It offers advice about pensions, benefits, savings and more.
Money Saving Expert gives lots of advice on everything from reducing your bills to finding the best insurance deals.
Age UK offers particular help for older people, including benefits you can claim to ease the pressure.
Citizens Advice can help you if you’re facing problems such as debt.
Government programs and benefits
It’s important to keep up to date with new laws and Government initiatives. This includes staying informed about adjustments in pension taxation, tax credits, and potential help and/or benefits that you may be eligible for. If things aren’t clear, seeking advice from financial professionals or using online resources can help.
Help for Households gives details of any Government support you may be able to claim to help with the cost of living.
Cost of living support provides a list of support available to you. This includes income and disability benefits, bills and allowances, childcare, housing and travel.
The UK Government website provides Government services and information in the UK.
As ever, if you’re making decisions about your financial future, we recommend getting independent help and advice. MoneyHelper is an excellent place to start. It can also help you to find an authorised Independent Financial Adviser (IFA) in your area.
Who’s who
Trustee Board members
During 2023 and so far in 2024, the following Directors have served on the Trustee Board:
Member-Nominated
Ian Dane (Chair)
Kimberley Jackson
Swati Suri
Torkil Fredborg
Company-Appointed
Sarah Coles (appointed 3 June 2024)
Karin Hendrickse
Stephen Ingham (resigned 26 February 2024)
Matt Potter
Independent Trustee
Law Debenture Pension Trust Corporation, represented by Edward Levy
The Secretary to the Trustee is Julie Osman.
Plan advisers
The Trustee Board has appointed various specialist advisers to assist with the running of the Plan. During 2023, these were:
Actuary
Richard Gunton of WTW
Benefit Consultants
WTW
Independent Auditors
Ernst and Young LLP
Legal Adviser
CMS Cameron McKenna Nabarro Olswang LLP
Stephenson Harwood LLP
Investment Consultants
Aon Hewitt Limited (until 31 May 2023)
Redington Limited (from 1 April 2023)
Investment Custodians
Northern Trust
Investment Platform for AVCs and SpECs
Aegon UK plc
Plan Administrator
Gallagher Pensions Administration (formerly known as Buck)
Investment Managers
Adams Street Partners LLC
Alcentra Limited
Aon Investments Limited (AIL)
ARES Management LP
CBRE Global Investors (UK Funds) Limited
Crestline Investors Inc.
CVC Capital Partners
DIF Management BV
DRC Savills Investment Management (DRC)
GreenOak Real Estate Advisors LLP
Insight Investment Management Limited
Kohlberg Kravis Roberts & Co LP (KKR)
M&G Investments
Russell Investments Group LLC
Schroder Investment Management Limited
Taconic Capital Advisors LP
Walton Street Capital
The Plan Administrator
In April 2023, Buck, the Plan Administrator, was acquired by Arthur J. Gallagher & Co. (Gallagher), a leading firm in the insurance, benefits and pensions sectors. From 1 July 2024, the Buck name will no longer be in use, and the Plan Administrator will be known as Gallagher.
There will be no impact on your benefits as a result of this change, and you will not experience any interruption in the administration services provided. In addition, there will be no change to the Plan Administrator’s contact details and the website address for our member portal in the short term. We will advise you if these change at any point in the future.
Useful contacts
Administration Team
As of 1 July 2024, Buck, the Plan Administrator, is operating as Gallagher Pensions Administration. If you have any questions about your benefits, you can contact them by:
Telephone:
0330 123 9591Email:
elililly@buck.comAddress:
Eli Lilly Group Pension Plan
PO Box 319
Mitcheldean
GL14 9BF
To read general information about the Plan, go to our website, elilillygrouppensionplan.co.uk
To access the Lilly Plan Portal and view your specific information, you can go to elilillygrouppensionplan.co.uk and select “Pension portal”. If you’re still working for Lilly, you can also access the Lilly Plan Portal though MyReward.
And don’t forget our new pensions app, which you can also use to view your personal details. Go to your app store and search for “Orion+ Buck” to get started. Even if you’ve registered for the Lilly Plan Portal, you’ll need to set up a separate account on the app.
Other sources of information
You can get general help and advice about pensions from MoneyHelper, a free service from the Government.
Telephone:
0800 011 3797Website:
moneyhelper.org.uk
If you’ve lost touch with a pension you had in the past, the Pension Tracing Service may be able to help.
Telephone:
0800 731 0193Website:
gov.uk/find-pension-contact-details