Year in Summary

1. The year in summary

This section summarises the year to 31 March 2018.

Estimated funding position

Each year, the Scheme Actuary provides the Trustee with an estimated funding position, based on the assumptions agreed at the previous triennial valuation. As at 31 March 2018, the assets of the Scheme were £5,097m and the liabilities were estimated to be £5,080m. This indicated that the Scheme had a small surplus of £17m and a funding ratio of 100%.

Schneider Electric results for 2017

Schneider Electric reported its 2017 results on 15 February 2018. Adjusted earnings before interest, taxes and amortisation (EBITA) were €3.7bn (2016: €3.5bn). Free cash flow was €2.3bn (2016: €2.2bn). Total market capitalisation of Schneider Electric at 31 March 2018 was €41bn (circa £36bn).

Scheme Administration

During the year we migrated all of our membership data onto a new administration system. This has helped to improve efficiency, quality control and process assurance. The new system has improved functionality, notably with respect to calculating annual pension increases. This process was previously undertaken by our actuarial adviser and has now been automated, giving considerable cost efficiencies. 

We also introduced a new calculator for valuing members’ options, such as early retirement and transfer values. This delivers cost neutral benefit calculations that are routinely updated for market conditions.

The next stage of development will take advantage of the administration system’s improved on-line functionality. We will roll this out in phases, starting with the pensioner members in 2018.


The Scheme closed to future accrual on 31 March 2015. All the active members became deferred members at that time.

The Scheme has 63,585 members, 5.8% fewer than last year. 42,515 are receiving a pension and 21,070 are deferred members. 

The Guaranteed Minimum Pension Reconciliation Project

The Scheme is continuing to reconcile all its Guaranteed Minimum Pensions (GMPs) with the UK Government’s records. All other pension schemes are doing the same thing. The Government has extended the completion deadline from December 2018 to March 2019 and we will work with them to deliver against this timetable.  

Pension Increase Exchange (PIE)

The Pension Increase Exchange project that the Company ran throughout the financial year is drawing to a close. Almost 4,000 pensioner members chose to accept their PIE offer.

The Trustee is continuing to make PIE an option for members as they reach retirement.

Other developments

The Trustee redesigned its retirement pack, which had become quite complex following the introduction of new options for members, such as PIE and transfers out. These were introduced at the time the Scheme moved onto the new administration system.

The Trustee also reviewed the DC and AVC offering that was available to members. As a result of this review the Trustee has concluded that it should consolidate its offering. It has also changed its default fund to be one that targets cash, rather than an annuity. This decision was based on an understanding of how members utilise their DC savings. These changes will be implemented during 2018.

Triennial Valuation

The Trustee is in the process of carrying out a full valuation as at 31 March 2018, and is aiming to complete the process later this year. This will include agreeing new actuarial assumptions with the Company to determine the Technical Provisions (Scheme liabilities).


2. Our investment summary

Our investment strategy

Our investment strategy is:

  1. to secure members’ future benefits by reducing risk and delivering consistent, reliable investment performance.
  2. to meet the requirements of the Company to achieve 1% p. a. above the return on gilts (The Strategic Target). This requires the Trustee to invest in assets that have an element of additional risk associated with them.

The Scheme’s assets performed broadly in line with their target, helping to deliver a stable funding level

The year to 31 March 2018 saw a broadly supportive macro-economic environment. Markets performance was generally positive, in particular for assets at the higher end of the risk spectrum. However, it weakened in the last quarter as concerns over high prices and macro-economic and geo-political risks rose. The Scheme’s assets achieved a return of 1.3% over the year. This was 0.3 percentage points below the Strategic Target. The Scheme’s funding level remained stable and ended the year at 100%. During the year, the Investment Committee and the Executive Office (EO) focused on the following investment initiatives:

  • Enhancement of risk return profile, by implementing a number of asset and risk re-allocations, seeking to reduce the downside risk while maintaining the assets’ return potential.
  • Ongoing focus on cash flow generation, ensuring that there is projected to be sufficient cash available to pay pensions.
  • Responsible Investments, strengthening the inclusion of Environmental, Social and Governance factors in the investment process

You can find further details in the Investment report on page 13.

3. The outlook

The Scheme is well positioned for the future

The funding level, along with the security provided by Invensys Limited and the Schneider Electric Guarantee of £1,750m, gives the Trustee confidence that the Scheme is well positioned to pay the pensions promised to its members.

The Trustee will continue to assess the financial security of the Scheme

Looking to the future, the Trustee will continue to monitor both the funding level and the security provided by the Company. Where there are opportunities to improve the security of our members’ benefits, we will seek to work with the Company to achieve them.

The Trustee will continue to monitor the Scheme’s investments closely, looking for ways to deliver the current investment target while managing investment risk.

Thank you to the Board

Once again, the Board has had an eventful year. I would like to thank them for their involvement, effort and enthusiasm. They had to tackle an increasing number of technical issues and significant projects, in order to meet the responsibility of providing a safe and secure Scheme for all members, now and in the future. I would also like to thank Geoff Campion for his time on the Board, which totalled 9 years between his two tenures.


Kathleen O’Donovan
Chairman of the Trustee of the Invensys Pension Scheme
15 August 2018