Dear Member,

I am very pleased to welcome you to “Pensions Focus” for the firsttime, having succeeded Keith Jones as Chairman of your Trusteeswith effect from 1 May 2015.

First of all, on behalf of all IWCSSS members I would like to thankKeith for his considerable contribution and commitment to theScheme since he became acting Chairman in July 2014 and as aTrustee since 2010. Keith has guided the IWCSSS through a verychallenging recent period, and I regard it as a great privilege tohave been appointed as Chairman in his place. Some of you mayknow that I served for nine years as a trustee of the British CoalStaff Superannuation Scheme, so I hope to bring this usefulexperience to my role with the IWCSSS.

This latest edition of “Pensions Focus”, our annual Trustees’ Reportnewsletter for current, former and retired IWCSSS members,covers the year to 31 December 2014. Whilst the Schemeconsisted of 53 distinct employer sections during the year, eachwith its own ring-fenced fund, this Report is intended to give youan overview of the progress of the Scheme as a whole. It is slightlylater than normal this year, owing to the complex nature of the2014 accounts which have only recently been approved.

Probably the most significant event of that year was the transferof two of the Scheme’s largest employer sections - the UK CoalOperations section and the Scottish Coal section - to the PensionProtection Fund on 1 July 2014, following the restructuring of theUK Coal business and the insolvency of Scottish Resources Grouprespectively in 2013. Details of the implications for members ofthose sections have been communicated to them separately; asfar as the Scheme as a whole is concerned, though, the key result

was that assets valued at just over £245 million were transferredout of the Scheme to the PPF, covering the benefits of allmembers of the two sections earned up to July 2013 (UK Coal)and April 2013 (Scottish Coal). This transfer also meant that mostdeferred and pensioner members of the two sections, whoseentire service had been before those dates, ceased to beIWCSSS members.

Following this transfer of assets and members to the PPF, theIWCSSS became a significantly smaller scheme going forward,with the fund’s total value falling from approximately £410 millionto just under £192 million during the year, and total membershipdecreasing from 4,061 to 1,610 (with 405 of these being currentcontributing members). What’s more, this process of contractionis continuing, with the UK Coal Surface Mines section havingalready entered the PPF assessment period in November 2014,and UK Coal’s Kellingley and Thoresby Collieries having closedduring 2015.

All in all, then, the IWCSSS is quickly becoming a very differentScheme with very different funding and management needs.Your Trustees are carrying out a thorough reappraisal of theScheme’s investment strategy to align it with the needs of theemployer sections that remain, and we are working on arange of other measures to ensure that the Scheme - eventhough it is smaller than before - continues to be run just asefficiently, professionally and cost effectively as ever for all itsremaining members.

These matters and a number of other topical pensions issues arecovered in more detail later in this edition of “Focus” and, asalways, I hope you will find it informative and useful.

With best regards,

focusnewsdesk P E N S I O N S

HeatherHeatherMcGuire, Chairman of the Trustees

12

- The Industry-Wide Coal Staff Superannuation Scheme

AN INTRODUCTION FROMTHENEW CHAIRMANOFYOURTRUSTEES, HEATHERMcGUIRE

CONTACT POINTS

NEW SCHEMEWEBSITE

The Scheme’s website is currently unavailable while we make some improvements to it. We’ll let you know when the new-look website isready to use; the address will be www.iwcsss.com. In the meantime you can contact the Scheme using the details above.

Please note that the information in this publication is based only on an interpretation of the Scheme’s Rules, and is not intended to bea definitive statement of your entitlement to specific benefits from the Scheme. Some employer sections of the Scheme differ fromothers in certain respects, and not all employer sections necessarily adhere to the descriptions of benefits or policies described here.This newsletter is current at the point of writing, though its contents are subject to change. The Scheme's Trust Deed and Rules willoverride the information provided in the newsletter in the event of inconsistency.

Published by Industry-Wide Coal Staff Superannuation Scheme Trustees Ltd. Produced by Summerhill Communication Agency Ltd., York. February 2016.

P E N S I O N S

If you are not happy with the response you receive from the administrators, or if your query is about the general operation of theScheme or the Trustees’ policy, please contact the Scheme Secretary at the Trustees Office. Details of how to contact the SchemeSecretary or the Trustees will be available on the Scheme’s website (see below) or are available from the IWCSSS Administration Office.

You can also contact the Scheme Secretary if you would like to see copies of documents such as the Scheme’s Trust Deed and Rules,Annual Report and Accounts, Actuarial Valuation report and Statement of Investment Principles.

Winter 2015/16

If you have a query about your ownmembership or benefits, please contact the IWCSSS Administration Office, since they hold allmember records and are responsible for the calculation and payment of all benefits. Their contact details are:

Industry-Wide Coal Staff Superannuation Scheme20Waterloo Street, Glasgow G2 6DBTelephone: 0141 566 7660 Email: iwcsssadmin@hymans.co.uk

Please quote your National Insurance number or Scheme reference number in any written communication, or have them to hand ifyou telephone. You should also keep the administrators informed of any changes to your address or other relevant personalcircumstances (including if you’re a former member with a deferred pension) so that your records can be kept up-to-date and we cancontinue to keep in touch with you.

THE SCHEME’S ACCOUNTS FOR 2014

The Scheme’s income and expenditure in the financial year to 31 December 2014, and other detailed financial information, are givenin the formal, audited Trustees’ Report and Accounts. While the Scheme had 53 separate employer sections during the year (each withits own ring-fenced fund) these Accounts reflect the aggregated position for the Scheme as a whole.

In the Accounts the Scheme’s auditors have stated that the financial statements give a true and fair view of the transactions that havetaken place. There were 118 instances during the year where contribution payments were made later than they were actually due.Most of these payments were made within nine months, but a provision of £118,000 has been made in the Accounts for contributionsthat are not now expected to be received from the employers concerned.

You can obtain a copy of the Report and Accounts (together with an annex containing information specific to your own employersection) by contacting the Scheme Secretary (please see contact details on page 12). The chart below shows the key highlights of theAccounts, and gives you a brief commentary on what the figures actually mean in layman’s language.

So leaving aside the bulk transfer of assets to the PPF, the Scheme’s income (including theextra employer contributions) was very similar to its expenditure as it was last year.Investment income and gains of more than £28million were generated, and normally thiswould have resulted in a signi,cant increase in the fund value for the year. However, thebulk transfer of assets to the PPF of more than £245million meant that the overall value ofthe IWCSSS decreased by more than 53%, leaving a much smaller Scheme going forwardinto the future.

£+

3

accountsS C H E M Ein briefT H E Y E A R

TRUSTEES’REPORT 2014 - THE YEAR IN BRIEF

2

THEVALUE OF THE FUND ATTHE START OFTHEYEARWAS:

2013£,000

374,157

13,6551,166

501,864

16,735

8,7802,846

100

768132

4,033

16,569

166

35,602

2014£,000

409,925

13,768*1,119

25953

15,865

7,1245,967

17245,160

55175

2,786

261,284

(245,419)

27,099

THEMONEY ADDEDTOTHE FUNDDURINGTHEYEARWAS:

Employer contributionsMembers’ normal contributionsMembers’ Additional Voluntary ContributionsIncome from investments (dividends, interest, etc.)

TOTAL INCOME

THEMONEY SPENT BYTHE FUNDDURINGTHEYEARWAS:

Pension payments and family benefitsTax-free cash sums paid on members’ retirementsLump sum benefits paid to dependants on members’deaths in service or in retirementBulk transfer of assets to Pension Protection FundIndividual transfers-out of leaving members’ benefitsto other pension arrangementsPremiums for Life Assurance policyProfessional and administrative fees and expenses(including investment management, administration,actuarial/consultancy, auditing, legal, secretarial, PPF levy, etc.)

TOTAL EXPENDITURE

THIS GIVES NET INCOMEOR (NET EXPENDITURE)(TOTAL INCOME LESSTOTAL EXPENDITURE) OF:

PLUS increase in market value of investments:

SOTHEVALUE OF THE FUND ATTHE ENDOFTHEYEARWAS: 409,925 191,605

* This included extra contributions totalling just over £9 million paid in by 26 employers. This was in line with the schedules ofcontributions agreed between those employers and the Scheme’s Actuary, as part of ongoing “recovery plans” designed tocorrect funding deficits in those employer sections.

£-

Some of the main developments during the year were as follows:

The fund’s total value decreased from approximately £410 million to just under £192 million. This reductionwas primarily due to the bulk transfer of assets valued at slightly more than £245 million, when the UK CoalOperations and Scottish Coal employer sections entered the Pension Protection Fund on 1 July 2014.

The Scheme exceeded its investment performance target, however, and its assets increased in value bymore than £27 million, which went some way towards offsetting the overall reduction in the fund’s value.

Total membership of the Scheme reduced from 4,061 to 1,610. This was because most deferred andpensioner members of the UK Coal Operations and Scottish Coal employer sections, whose entire servicehad been before 9 July 2013 and 19 April 2013 respectively, were transferred out of the Scheme whenthose sections entered the Pension Protection Fund on 1 July 2014 (2013 figures in brackets):

Current contributing members 405 (434)Former members eligible for deferred pensions on retirement 612 (1,712)Retired members and dependants receiving pensions 593 (1,915)

Following a review of the Scheme’s investment strategy carried out by the Trustees in anticipation of theUK Coal Operations and Scottish Coal sections’ entry into the PPF, Legal & General InvestmentManagement, BlackRock Investment Management, Standard Life Investments and Towers Watson wereappointed for ongoing investment management of those sections.

The participating employers paid a total of nearly £13.8 million into the Scheme.

Benefits totalling more than £13.1 million were paid out during the year to individual members who hadretired from the Scheme or transferred out, or to the dependants of members who had died.

Some developments since the year end:

ACTUARIAL VALUATIONThe next actuarial valuation of the Scheme will be undertaken as at 31 December 2015 and arrangementsare already underway for this. The Trustees have written to most sponsor employers in advance of thediscussions which will be required to agree new funding plans for the respective employer sections. Theoutcome of the valuation will be reported in the next “Focus” and members will receive funding statementsspecific to their employer section once its valuation has been agreed.

PENSION INCREASESFor most IWCSSS pensioners, the Trust Deed provides for an annual cost of living increase each 1 January,in line with the increase in the Retail Prices Index over the 12 months to the previous November. As aresult the increase payable from 1 January 2016 was 1.1%.

Pensioner members of the UK Coal employer sections receive increases to pensions in payment in linewith statutory minimum provisions, based on the increase in the Consumer Prices Index (CPI) for the12 months to the previous September. CPI decreased by 0.1% and, whilst pensions will not be decreasedin value, there has been no increase to these pensions.

In anticipation of the entry of the UK Coal Operations and Scottish Coal employer sections into the Pension Protection Fund in

July 2014, the Trustees undertook a review of the investment strategy of those two sections. This was to ensure that those assets were

transferred with the minimum disruption for the employer sections which remained. The transfer to the PPF resulted in a reduction in

the Scheme’s total assets of more than £245 million.

The shareholding in Harworth Estates Property Group Limited was transferred to the PPF on 1 July 2014, as were the assets in the

Legal & General LDI mandate, and following the review the Trustees agreed the following further changes:

> With effect from 1 March 2014, the seven small “alternative” portfolios (listed opposite) were liquidated, and these funds (then

totalling 10.5% of the Scheme’s total assets) were reinvested in the Towers Watson Diversifying Strategies Fund (DSF).

> From the same date, the assets in the Schroder property fund were diverted into other property funds which were seen as more

appropriate, managed by Legal & General, BlackRock Investment Management and Standard Life Investments. These assets

accounted for 6.6% of the total at the year end.

> For ongoing management of the remainder of the Scheme’s assets (totalling around 81.2% at the year end), the Trustees

appointed Legal & General, who will invest in a mixture of UK and overseas equity and bond funds.

Following these changes, the breakdown

of the overall portfolio between asset

types at 31 December 2014 was as

follows (2013 figures in brackets):

Performance

All of our investment managers are set challenging performance targets or “benchmarks” which they are expected to match or

exceed. We can report that the Scheme’s assets outperformed these“benchmarks”by 0.6%, increasing in value by 11.4%compared to the end of 2013. So in cash terms, the Scheme exceeded its overall investment performance target with our assets

increasing in value by more than £27 million, and this went some way towards offsetting the overall reduction in the Scheme’s assets

resulting from the UK Coal Operations and Scottish Coal sections being transferred into the PPF during the year.

HOWTHE SCHEME’S MONEY IS INVESTED

The Scheme’s assets are invested through professional investment managers. Here we report on the investment climate which

prevailed during 2014, the strategy followed by the Scheme, and the performance which resulted.

Climate

After a year of strong returns in 2013 from the equity markets, but a much more subdued climate in the bond markets, the position

was somewhat reversed in 2014.

The FTSE All-Share Index in the UK, for instance, fell by 2.1%, with the second half of the year being particularly volatile. European

markets, as indicated by the FTSE World Europe ex-UK Index, returned just 0.2%. The FTSE Japan Index grew only by a modest 2.7%.

And the FTSE AW Emerging Markets Index increased by 7.9%. The North American market did buck the trend, though, with the Dow

Jones Industrial Average producing growth of around 27%.

In the bond markets, by contrast, UK Government Bonds as measured by the FTSE Gilts All Stocks index delivered growth of 13.9%,

and corporate bonds (as measured by the BofA Merrill Lynch Sterling Non-Gilts Index) produced a return of 12.4%. The property

market also performed well, with the IPD UK All Property Index rising by 19.3%.

Strategy

The investment strategy for each employer section is decided separately. Generally, those employer sections with higher proportions

of current contributing members tend to invest more heavily in assets which are expected to produce long-term growth, such as

equities and property. Those more “mature” employer sections with higher proportions of pensioners, on the other hand, tend to opt

for the less volatile, lower risk asset types like bonds and cash. These usually produce less growth, but they deliver the more

predictable flows of income which these sections need in order to pay out the regular pensions of their members.

At the start of the year:

> approximately 25.1% of the Scheme’s total assets were managed by Legal & General Investment Management using a mix of

UK, North American, European, Japanese, Asia Pacific and Global Emerging Markets equities, and listed infrastucture

> Legal & General also managed a corporate bonds and index-linked gilts portfolio accounting for a further 15.3% of the total

assets

> Schroder Investment Management looked after a property fund comprising another 7.4% of the assets

> for the UK Coal Operations section only:

- approximately a further 26.2% of the total assets were held in a Liability Driven Investment (LDI) mandate, managed by

Legal & General and intended to match movements in the value of that section’s liabilities due to changes in interest rates

or inflation

- and some 10.2% of the assets were invested in a majority shareholding (jointly with the Industry-Wide Mineworkers’ Pension

Scheme) in UK Coal’s property business, Harworth Estates Property Group Limited (HEPGL)

> in addition, smaller portions of the portfolio totalling 9.4% were managed by seven further investment managers using various

“alternative” asset types: Blackstone Alternative Asset Management (hedge fund), CB Richard Ellis Investors (property),

Gresham Investment Management (commodities), Nephila Capital (insurance-related assets), Prudential M&G InvestmentManagement (UK companies financing fund), Rogge Funds (emerging markets currency fund) and Sankaty Advisors(alternative credit products).

> and the remaining 6.4% of the assets were held in cash deposits.

4 5

investmentS C H E M E

Overseas equities (unquoted) (HEPGL) 0% (10.2%)

UK equities (quoted) 15.8% (6.8%)

Overseas equities 37.0% (15.6%)

LDI 0% (26.2%)

Bonds 28.4% (15.3%)

Property 6.6% (7.4%)

Alternative investments 10.5% (12.1%)

Cash/other assets 1.7% (6.4%)

76

So that the Trustees can prioritise their timeas efficiently as possible, there are also three sub-committees of the Trustees,covering Investment; Administration, Risk & Finance; and Valuation & CorporateActivity. Each of these generally meets at least four times a year.

YOURTRUSTEES

The Scheme is run by a trustee company called Industry-Wide Coal Staff Superannuation Scheme Trustees Limited. The Articles ofAssociation of this company provide for the appointment of eight directors, who form the Scheme’s Committee of Management. Fourof the directors are appointed on behalf of the employers who participate in the Scheme, and four are appointed by the trade unions(one each by Prospect (formerly BACM), APEX GMB, NUM COSA and NACODS). The Committee of Management (which for simplicity isreferred to as “the Trustees”) met formally four times during 2014 for the conduct of normal business, and had an additional meeting todiscuss a refinancing package for UK Coal.

After the year end, Keith Jones resigned as a Trustee (and therefore as Chairman of Trustees) with effect from 30 April 2015, followingthe entry of the Scottish Coal section into the Pension Protection Fund. Keith had been acting Chairman since July 2014 and an IWCSSSTrustee since 2010. He has been replaced as a Trustee and Chairman from 1 May 2015 by Heather McGuire. Heather is from BESTrustees,one of the UK's leading independent trustee companies. She was previously Group Pensions Manager for Associated British Ports (ABP),and she also chairs the May Gurney Pension Scheme and the Pilots’ National Pension Fund. Heather will be well-known to some membersas she served for nine years as a trustee of the British Coal Staff Superannuation Scheme, also chairing the BCSSS Administration andBenefits sub-committee. In addition, Jason Sutton from Coal Products became an employer-appointed Trustee from 1 June 2015.

PROFESSIONAL ADVISERS

The Trustees have overall responsibility for running the Scheme. However, they delegate some of the more specialised tasks toexternal professional advisers, whose performance they monitor closely. A number of changes took place to our team of advisersduring 2014:

> As reported in last year’s “Focus”, the Trustees decided to move the administration of member benefits from Aon Hewitt toHymans Robertson with effect from 6 May 2014.

> As also advised last year, TheTrustees Office Limited was appointed to provide Scheme Secretariat and managementsupport services from 1 May 2014, replacing Coal Pension Trustees Services Limited. Jonathan Storer at The Trustees Office isScheme Secretary.

> BarnettWaddingham, who had been appointed as administrators for the UK Coal Operations and Scottish Coal employersections during the Pension Protection Fund assessment period from 4 October 2013, continued in that role following thosesections’ subsequent transfer to the PPF on 1 July 2014. They were also appointed as administrators for the UK Coal SurfaceMines section, which entered the PPF assessment period from 14 November 2014.

> As reported on page 4, resulting from the transfer of theUK Coal Operations and Scottish Coal sections’investment assets to the PPF on 1 July 2014, BlackstoneAlternative Asset Management, CB Richard EllisInvestors, Gresham Investment Management, NephilaCapital, Prudential M&G Investment Management,Rogge Funds, Sankaty Advisors and SchroderInvestment Management were no longer required to actfor the Scheme as investment managers.

> For ongoing investment management from 1 July 2014,the Trustees have appointed Legal & GeneralInvestment Management, BlackRock InvestmentManagement, Standard Life Investments andTowersWatson.

> The process of changing the Scheme’s AVC and DCprovider from Prudential to Friends Life (which wereported on last year) was completed, and Friends Lifewere formally appointed on 14 July 2014.

Following all of these changes, our up-to-date team ofadvisers is as follows:

ACTUARIAL CONSULTANTS Aon HewittSCHEME ADMINISTRATORS Hymans RobertsonINVESTMENTMANAGERS Legal & General

Investment ManagementBlackRock InvestmentManagementStandard Life Investments

INVESTMENT ADVISERS Hymans RobertsonTowers Watson

AUDITORS PricewaterhouseCoopersLEGAL ADVISERS Hogan Lovells

InternationalAVC/DC PROVIDERS Friends LifeLIFE ASSURANCE COMPANY AvivaMEDICAL ADVISERS WorkabilityBANKERS Lloyds Banking GroupCOVENANT ADVISERS Grant Thornton

Following these changes, the complete list ofIWCSSS Trustees is now as follows:

Employer-appointed

Heather McGuire (Chairman)Alastair HadNeld (UK Coal)Jason Sutton (Coal Products)RobThorley (Atos Origin UK)

Union-appointed

David Bell (APEX GMB)Dennis Gadsby (Prospect)George Kennedy (NUM COSA)Rowland Soar (NACODS)

Your Trustees, back row (l to r):Rob Thorley, Alastair HadCeld, Rowland Soar, Dennis Gadsby,Jason Sutton; front row (l to r): David Bell, Heather McGuire,George Kennedy.

teamY O U R P E N S I O N S

One of the benefits of the IWCSSS is that if you die inservice, as a former member with preserved benefits or asa pensioner within five years of your pension starting, alump sum benefit is payable. Potentially, this could be asignificant amount of money.

IWCSSS members have the option under the Rules of theScheme to nominate whom they would wish to receiveany cash sum payable from the Scheme. This gives theTrustees the discretionary power to make payments torelatives and dependants, including children, rather thanto a member’s estate. Normally they will make paymentsin accordance with a member’s wishes as expressed in thenomination, though they are not legally bound to do so.Payments made at the discretion of the Trustees are notsubject to inheritance tax. If a nomination is not made,then the Rules require that in most circumstances, anycash sum due on death will be payable to the member’sestate and could be subject to inheritance tax, dependingon the total value of the member’s estate.

TheTrustees can only take account of members’wishes if they know about them, and themeans ofensuring this is bymaking a nomination. It is importantthat members keep their nomination up-to-date toreflect any changes in their circumstances. Forms areavailable on request from the IWCSSS AdministrationOffice. A nomination can be revoked or varied at any timeby writing to the Scheme Secretary (care of theAdministration Office).

DOYOU KNOWWHATWILL HAPPENTOANY CASH SUM PAYABLE FROMTHESCHEME IF YOUDIE?

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newsdeskP E N S I O N S

SCAMPROOFYOUR PENSION SAVINGS!

The new pension freedoms which came into effect in April 2015 (referred to below) apply primarily to members of Defined Contribution(DC) pension schemes, and as a member of a Defined Benefit (DB) scheme you are not directly affected by them.

Having said that, the changes have attracted some clever, manipulative scammers and criminals into the market, desperate to trick unwarypeople out of a lifetime’s hard-earned pension savings, and there is always a chance that you might be approached by one of these. YourIWCSSS benefits are valuable and for most members, it would almost certainly not be in their best interests (or thoseof their families) to transfer-out of the Scheme. It’s important to be aware that in accordance with governinglegislation and the Scheme’s Rules, members seeking to transfer-out will be required to provide evidence to theIWCSSS Administration Office showing that they have taken independent advice.

So what are the warning signs if you’re approached? These are some of the most common things to look out for:

> out of the blue cold calls, emails (especially if they contain obvious spelling or grammar mistakes), text messages,website pop-ups or doorstep callers

> approaches claiming to be able to “release” your pension before you reach age 55> offers of a “free pension review”, a “one-off investment opportunity”, the chance to exploit a “legal loophole”, or

“loans” against your pension> claims that the caller is “authorised by the government”> being rushed into accepting a “once in a lifetime” offer, with paperwork delivered to your door requiring your

immediate signature> any request to hand over personal information like your bank or credit card details or your National Insurance number> talk of your funds being transferred in order to achieve “higher returns” (often overseas into unregulated high-risk or sham investments).

You can find much more information about pension scams and how to protect yourself at:www.thepensionsregulator.gov.uk/individuals/dangers-of-pension-scams.aspx

or by telephone on 0300 123 1047. If you think you may already be a victim of a pension scam then contact Action Fraud atwww.actionfraud.police.uk or call 0300 123 2040.

There is also a wealth of information about safeguarding yourself from scams and fraud of all kinds at:www.ageuk.org.uk/money-matters/consumer-advice/scams-advice

THE NEW PENSION FLEXIBILITIES

As you will probably have seen in the media, some radical, far-reaching changesaffecting pensions came into effect in April 2015. These changes relate mainlyto Defined Contribution (DC) pension benefits, so most members of the IWCSSS(since it’s a final salary or DePned BenePt (DB) scheme) are not directly affectedby them, although if you have left the Scheme and are under age 59 they canbe accessed by a transfer out (which may be reduced) into a DC arrangement.However, the new Qexibilities do apply to the Scheme’s AVC arrangementmanaged by Friends Life, and this is explained opposite.

Essentially, the changes give increased freedom and flexibility for people withDC benefits over how they can use their pension savings at retirement, byremoving the requirement to always use their accumulated fund (or “pot”) topurchase a lifetime pension (known as an “annuity”). In addition they will haveoptions to:

> take their whole pension pot as cash, 25% tax-free and the remainder taxedas income in the normal way

> transfer their pot into an “income drawdown” arrangement (either all atonce or in smaller segments) where it will remain invested and they canthen take out as much or as little as they like, when they like (almost like abank account). Up to 25% of each amount moved into income drawdownwill be tax-free

> or do a combination of all three of the above options.

FURTHER CHANGETO PENSIONSTAX RELIEF IN 2016

In the March 2015 Budget, a further change was announced to the HM Revenue & Customs limits on pension contributions and benePts.

The Lifetime Allowance applies to the total size of your pension fund earned from all sources over your working life. This includes thevalue of your IWCSSS pension, benefits from any previous employers’ schemes, AVCs and any personal pension arrangements, butexcludes your State pension entitlement. Currently the level of the Lifetime Allowance is £1.25 million, but from 6 April 2016 it will bereduced to £1million. From 6 April 2018 it will then increase annually in line with inflation. If your fund at retirement exceeds theLifetime Allowance, the excess will incur tax charges.

Only a relatively small proportion of people are affected by the Lifetime Allowance. To give you a rough idea, under a Defined Benefitarrangement you need to multiply the annual pension you are expecting by a factor of 20. So if you’re expecting pension (from allsources) of £30,000 pa., this multiplied by 20 gives a fund of £600,000, well within the £1 million Lifetime Allowance that applies from6 April 2016. If you think that you might be affected by this change, or you would like further information, please contact the IWCSSSAdministration Office (though they cannot give you any individual tax planning advice - for that you would need to speak to anindependent Pnancial adviser) or visit the HMRC website (www.hmrc.gov.uk). Otherwise, there is no action that you need to take.

From 6 April 2016, there are also changes to pensions tax relief for individuals with taxable income plus pension savings of over£150,000 pa. who will have a “tapered Annual Allowance”. Members with taxable income below £110,000 pa. will generally be able toignore this. As in previous years, individuals will be able to apply to HMRC to protect their pension savings when the Lifetime Allowancechanges. HMRC is introducing a new online service for members to apply for this protection from July 2016 (in the interim periodbetween April and July 2016, members will need to write to HMRC). If you believe you might be affected by any of these new restrictionsfor higher earners you can obtain further details at www.gov.uk/government/publications, typing “pension scheme newsletter” in the‘contains’ Peld and looking for Pension Scheme Newsletter nos. 73 and 74.

A further restriction called the Money Purchase Annual Allowance was introduced from 6 April 2015. This may apply to members whotake a one-off cash sum from their AVC fund or transfer it to an income drawdown arrangement under the new pension flexibilities (seebelow). If you continue to make contributions to the Scheme’s AVC arrangement (or another money purchase arrangement) after doing so,the amount on which you can receive tax relief will be subject to the Money Purchase Annual Allowance which is £10,000 pa. in 2015/16.

If neither the tapered Annual Allowance nor the Money Purchase Annual Allowance applies, the Annual Allowance (which is themaximum level of pension contributions upon you can receive tax relief in any year) remains 100% of your earnings or £40,000,whichever amount is the lower.

Changes to AVC arrangements

We reported in last year’s “Focus” that the Scheme’s AVC providerhad changed from Prudential to Friends Life. Contributingmembers wishing to consider paying AVCs should contact theIWCSSS Administration Office or their employer in the firstinstance.

Benefits in the AVC arrangement are known as “flexible benefits”.Following the changes in legislation and the Scheme’s Rules, thechoices available from the AVC fund are now as follows:

> purchase an annuity with Friends Life - the choices about thetype of annuity will be provided prior to retirement

> take your AVC fund as part of the tax-free cash sum permittedunder the Scheme (subject to HMRC limits)

> purchase an annuity with another provider - this is called the“Open Market Option”

> or, subject to HMRC requirements, take your AVC fund as aone-off cash sum, some of which (usually 25%) will be tax-freeunder current legislation (this is a new option).

Please note that, under the Scheme’s Rules, you can only takeyour AVC benefits at the same time as your main Schemebenefits.

Additionally, multiple cash sums and income drawdown asmentioned above are not available under the Scheme’s AVCarrangements.

If further flexibility is required, members of the AVC arrangementcan transfer their AVC fund out of the Scheme and use it forbenefits from other pension providers at any time up toretirement (as long as their contributions to the AVC arrangementhave ceased). Please note that different pension providers mayoffer different options but not necessarily all of the optionsmentioned here.

It is important to note that there may be tax implicationsdepending on what members choose to do with their AVC funds,both in terms of the level of Income Tax payable and the tax reliefavailable on future pension savings (in particular to flexible DCbenefit arrangements).

The Trustees strongly urge members to seek independent financialadvice before making decisions on their Scheme benefits. You canfind a financial advisor at www.unbiased.co.uk. Additionally, forpeople over age 50 who have DC pension savings, including AVCs,the Government has introduced a new free service which providesimpartial guidance on retirement choices for DC benefits calledPensionWise (www.pensionwise.gov.uk, tel: 0300 330 1001).

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In addition to your IWCSSS pension, from State Pension Age you will normally receive the State Basic Pension as well in your retirement.The full rates (effective 6 April 2016) at which the State Basic Pension is paid, if you have paid the required amount of National Insurancecontributions during your working life, are £6,203.60 per year (£119.30 per week) for a single person and £9,921.60 per year (£190.80 perweek) for a married couple.

You may also receive the State Second Pension (S2P), which is an earnings-related pension on top of the State Basic Pension - it waspreviously called the State Earnings-Related Pension (SERPS). This will depend on how many years during your working life, if any, youhave been “contracted-in” to S2P/SERPS. During your IWCSSS membership you have been “contracted-out” of S2P/SERPS, so you will nothave earned any S2P/SERPS pension for this period.

From 6 April 2016, however, the Government is planning that for everyone reaching State Pension Age from that date both the StateBasic Pension and S2P will be abolished, and that they will instead receive a new universal, single-tier State pension. The full amountof this will be £155.65 per week; the actual amount you receive, though, will depend on your National Insurance contribution record, andbecause you have been contracted-out of S2P during the period of your IWCSSS membership (therefore paying lower National Insurancecontributions), you will not receive that full amount. You can find more information about this at: www.gov.uk/new-state-pension

You can obtain an online forecast of how much State Pension you are currently likely to receive (prior to the change to the new single-tierpension) at: www.gov.uk/state-pension-statement

Your State pension will commence when you reach State Pension Age. Following recent changes, your own State Pension Age dependson your gender and your date of birth; you can find out your exact State Pension Ageunder current law at: www.gov.uk/calculate-state-pension

Whatever State Pension you receive, the amount of it will be increased annually. SinceApril 2011, the annual increase is in line with either that year’s growth in averageearnings, the rise in the Consumer Prices Index, or 2.5% (whichever is the highest).

CHANGES TO THE STATE PENSION Abolition of“contracting-out” from 6 April 2016

Another impact of the State Pension reforms is the end of “contracting-out” for members of DB pension schemes from 6 April 2016.This is significant for IWCSSSmembers who will still be in contributing service after that date, as it will affect the level of theirtake-home pay - this is explained below.

As mentioned above, during the whole of your IWCSSS membership you have been “contracted-out” of the State Second Pension (S2P)(and its predecessor, SERPS). This means that you haven’t earned any of this additional or “top-up” State pension during yourmembership, but in return you have paid considerably less in National Insurance contributions. This reduction is called the“contracting-out rebate”. It amounts to 1.4% or your gross earnings between two limits called the Lower Earnings Limit (£5,824 in2015/16) and the Upper Accrual Point (£40,040 in 2015/16).

As reported opposite, however, S2P is to be abolished in April 2016, and as part of this, “contracting-out” will also come to an end. Andas a result, you will no longer pay National Insurance contributions at the lower rate you pay now, because the “contracting-out rebate”will also cease to exist. So from 6 April 2016 you will have a higher amount deducted in National Insurance contributions eachmonth, and consequently your monthly take-home pay will decrease.

Please note that your employer will have to pay significantly more in National Insurance contributions as well. This is because theemployer’s contracting-out rebate will also cease to exist; this currently amounts to 3.4% of employees’ gross earnings between thesame thresholds.

Members receiving a pension and former members with deferred pensions are not affected by this change.

GuaranteedMinimum Pension increases

As mentioned above, because IWCSSS members are “contracted-out” of theS2P/SERPS element of the State pension arrangements, in return for paying lowerNational Insurance contributions the Scheme must provide you with a minimum levelof weekly pension from State Pension Age for the period you were contracted-out.This is known as the GuaranteedMinimum Pension (GMP) element of your pension,and the amount is notified to the Scheme by the government.

From 6 April 2016, due to the changes to the State Pension described above, the wayin which the government increases GMPs annually is also changing.

Currently, from State Pension Age, pension schemes have to provide annual increasesin line with inflation (up to a maximum of 3%) on GMPs earned during service from6 April 1988 onwards. Any annual increase in excess of 3% (if inflation is higher thanthat) and the whole of any increases on GMPs built up before 6 April 1988 areprovided through increases to the State pension by the government.

From 6 April 2016, however, the single-tier State pension rules do not provide forsuch increases to be paid by the government. As a result, the IWCSSS will continue toincrease post-6 April 1988 GMPs up to 3% each year, but no increases in excess of3%will be paid by the government if inflation is higher than that. No pre-6 April1988 GMPs were accrued in the IWCSSS, and so will only be held in the Scheme if youtransferred them in. The government will cease paying increases on these GMPs also.

This may affect you if you reach State Pension Age on or after 6 April 2016. If you arealready over State Pension Age or will be before 6 April 2016, you will continue toreceive GMP increases in line with the current rules.

Please contact the IWCSSS Administration Office if you think you might be affected bythis change and would like further information.

SOME RECENT CHANGESTOTHE SCHEME

During 2015 a number of changes were made to the Scheme’s Rules, which are summarised below:

Mergers between employer sections

An amendment was made to the Trust Deed & Rules to revise the definition of “Associated Employer” and to extend Rule 49(1) toexpressly permit the admission of new members under certain limited circumstances. This amendment was sought specifically tofacilitate a merger between sections within the IWCSSS with a common sponsor.

Transfers out of the Scheme

A further amendment to the Rules has been made to reflect the changes relating to transfers out of the Scheme in accordance withoverriding legislation effective from April 2015. The change allows members of the AVC arrangement to transfer their AVC fundindependently of their main Scheme benefits at any point up to retirement.

Employer sections in PPF assessment period

The Trust Deed and Rules have been amended so that if an employer section is in a Pension Protection Fund (PPF) Assessment Period,the PPF’s basis for exchanging pension for cash can be adopted for that specific employer section. This means that a member wishing toexchange pension for cash would have access to more generous exchange rates than the fixed rates available under the Scheme Rules.Outside of a PPF Assessment Period, the PPF basis would not apply.

Annual/Extraordinary General Meetings

An amendment has been made in principle to the provisions within the Trust Deed to remove the requirement for an Annual GeneralMeeting of Scheme members to be held. This does not remove the provision for Scheme members or Trustees to seek to hold an AGM.

A further amendment enables the appointment of the Chairman of an Extraordinary General Meeting of Scheme members as amember’s proxy. A further change will see proxies included in the quorum for an AGM to make the provisions consistent with thequorum arrangements for EGMs.

Please contact the Scheme Secretary if you would like further information about any of these Rule amendments.