LUXFER GROUP RETIREMENT SAVING OPTIONS EXPLANATORY LEAFLET

Transcription

1 LUXFER GROUP RETIREMENT SAVING OPTIONS EXPLANATORY LEAFLET The Group believes that it is important to help employees to provide for their retirement and, in the unfortunate event of their premature death, for their dependants. In the UK, the principal Group arrangement is the Luxfer Group Retirement Savings Plan (the Plan ), the primary objective of which is building a retirement pot with both employee and employer contributions. In addition a lump sum and a spouse s or dependant s pension is payable in the event of death before retirement. All new UK employees are encouraged to join the Plan in order to obtain these benefits. The full range of retirement and death benefits provided by the Group in the UK is as follows. Life insurance When you start employment, you will be automatically covered with life insurance of three times your contracted earnings (excluding overtime and bonus) as at the last 1 st April before your death, payable in the event of your death while employed by a Group company in the UK. This benefit is provided, whether or not you join the Plan, whilst you remain in employment. If you join the Plan you will also be eligible for a dependant s pension. Further information about when and how the death benefits are paid is included in this leaflet. Retirement saving options You may join the Plan if you meet the requirements set out under How do I join? and you will then become entitled to all the benefits described in this leaflet. If you do not join the Plan on these terms, your employer is legally required to auto-enrol you in the Luxfer Auto-enrolment Scheme when you meet the auto-enrolment requirements. The auto-enrolment requirements are set out in a separate letter from your employer. Legislation lays down the minimum requirements for the Auto-enrolment Scheme and these require a lower employer contribution than the Plan requires, although your own contributions will be at a similar level (except before October 2018 when these contributions will be lower). Therefore if you choose not to join the Plan you will forgo a substantial employer contribution towards your retirement benefits. Furthermore, you will not be covered for the additional spouse s or dependant s pension payable in the event of death before retirement. The differences between the Plan and the Auto-enrolment Scheme are summarised on the table overleaf. There is also an example to illustrate the higher amount paid by your employer to the Plan, and space for you to work out your own contribution. Please take time to read this leaflet to understand the advantages to you and your dependants of joining the Plan, which you are encouraged to do as this will make a substantial contribution towards a comfortable retirement. Although this may be many years away, the earlier you start saving for retirement the better your retirement income will be. Please speak to your Local Pensions Administrator if you have any questions about the Plan or autoenrolment. Luxfer Group Limited April

2 Entry qualifications COMPARISON OF TERMS Luxfer Group Retirement Savings Plan* Aged 16 or over Employed in the UK Luxfer Auto-enrolment Scheme ( AE Scheme ) Aged 22 but below State Pension Age Employed in the UK Earning at least the single person s tax allowance, 10,000 in 2014/15 Employee contribution rates Must join before autoenrolment requirements apply Based on pensionable salary which includes all contracted earnings in excess of the State lower earnings limit each year ( 5,772 in 2014/15). 4% of pensionable salary Plus 1% tax rebate 5% in total Will be enrolled within three months after first being eligible Based on all earnings between 5,772 and 41,865 per year (in 2014/15). Before 1 October 2017: 0.8% of earnings, plus 0.2% tax rebate 1.0% in total Between 1 October 2017 and 30 September 2018: 2.4% of earnings, plus 0.6% tax rebate 3.0% in total Employer contribution rates Depends on age. 4.25% of pensionable salary for employees up to age 25 rising to 9.25% of pensionable salary from age 61 From 1 October 2018: 4% of earnings plus 1% tax rebate 5.0% in total Before 1 October 2017: 1% of earnings Between 1 October 2017 and 30 September 2018: 2% of qualifying earnings (See full table in this leaflet) From 1 October 2018: 3% of qualifying earnings Death in service benefits Lump sum and spouse s or Lump sum dependant s pension Provider Aviva NEST Charges Minimum charge 0.35% of value 1.8% of contributions plus 0.3% of fund of fund Investment advice Provided Available at employee cost *Read the rest of this leaflet for more information about the Plan and the death benefits provided whether or not you join the Plan. 2

3 Example contributions after October 2018 based on total annual earnings of 32,000, of which 28,000 would count as pensionable under the Plan. Age Annual contribution ( ) Your contribution Company contribution Total contribution The Plan The AE Scheme The Plan The AE Scheme The Plan The AE Scheme Up to and over Your contribution includes the tax rebate, the deduction from pay is (to the Plan) and (to the AE Scheme). The deduction from pay for the AE Scheme before October 2018 will be lower ( up to October 2017 and between 1 October 2017 and 1 October 2018). The company contribution to the AE Scheme before October 2018 will also be lower. There is space below to work out your own comparison by following the worked example (based on AE Scheme contributions after October 2018) Retirement Savings Plan The AE Scheme Example You Example You What is your age? Use the table on page 5 This is 3% at all to find the employer 5.75% ages contribution rate for your age What is the annual amount of earnings that are pensionable (see page 4)? Your pensionable salary is: 30,000 These are all earnings between 5,772 and 41,865 30,000-5,772 24,228 33,000-5,772 27,228 Your annual contributions from pay are: Add tax rebate of 25% of your contribution Your total contributions including rebate are: Your employer s annual contributions at your current age are: The total contributions to the Plan for you are: 24,228 x 4% = x 25% = ,228 x 5.75% = 1, , , , ,228 x 4% = x 25% = 272,28 1, , ,228 x 3% = , ,

4 LUXFER GROUP RETIREMENT SAVINGS PLAN Plan membership To help employees to provide for their retirement the Group has arranged for the payment of contributions for investment in the Aviva Group Personal Pension Scheme (GPP) which you are encouraged to join. The Plan has been designed with you in mind, so we hope you make good use of it. This leaflet explains when you are eligible to join the Plan and the contributions payable if you join. More information about the GPP is contained in the Aviva joining guide and key features booklet. Both your employer and you make regular contributions to the GPP. To help you to plan your investments your Local Pensions Administrator will arrange for you to meet a financial consultant employed by Cullen Wealth Limited 1, when you first join and at regular intervals thereafter. At these meetings you will have the opportunity to discuss your retirement planning and investment options. It is therefore important that you attend meetings arranged for you. When planning your retirement, please remember the State benefits you will receive in addition to your pension from the Plan. There is more information about these benefits on the Government s website at go to the working, jobs and pensions section. How do I join? Joining the Plan is simple. If you satisfy the eligibility conditions all you need do is complete the application form at the end of this leaflet. To be eligible to join the Plan you must be: Aged 16 or over; Employed on a permanent contract in the UK by a company within the Luxfer Group; You must apply to join the Plan before the date notified to you by your employer, and as soon as you apply to join you will be covered for the dependant s pension benefits described in this leaflet (very occasionally there may be exceptions to this but you will be told if this applies to you). Your contributions, and those of your employer, start from the 1 st of the following month. If you do not apply to join the Plan, you will be enrolled in the Auto-enrolment Scheme when eligible, and the dependant s pension benefits described in this leaflet will not be provided (you will, however, still be covered for the life insurance benefit). Once you have applied to join your Local Pensions Administrator will arrange an appointment for you to meet a Cullen financial consultant, who will discuss with you your GPP membership and investments. What do I pay? You directly contribute 4% of Pensionable Salary, which will be taken from pay after deduction of tax and National Insurance Contributions. HM Revenue & Customs (HMRC) pay to your GPP a tax rebate currently equal to 25% of your contribution (i.e. 1% of your Pensionable Salary) giving a gross contribution of 5%. (This is based on the standard rate of income tax (20%) so the direct contribution may change if the standard rate alters. Higher rate tax payers can claim a further tax rebate from HMRC through PAYE or the self assessment system.) Pensionable Salary is your annual rate of contracted earnings less the State lower earnings limit in force as at 6 April each year. Pensionable salary will be adjusted when your earnings change, and also from 1 April each year to allow for the change in the State lower earnings limit. 1 Cullen Wealth Limited is an independent financial adviser, regulated by the Financial Conduct Authority, appointed by Luxfer to offer advice to employees who join the Plan. Cullen acts solely for members of the Plan and not as an agent of your employer. 4

5 What will my employer contribute? The amount your employer contributes to your GPP each year depends on your age at each 1 April, and your Pensionable Salary. When you join the Plan your age at the date of joining counts until the next 1 April. The contribution rates are shown below. Employer Contributions Age Band and later Contribution as % of Pensionable Salary The employer contributions increase as you get older because they will be invested for a shorter time and therefore have less time to grow in value. What about bonus? Both you and your employer pay contributions at the rates shown above on the bonus payments you receive. The maximum level of bonus on which contributions will be paid in any year will be restricted to the higher of (a) the guideline level of management bonus applicable to your job position (ie half the maximum bonus potential for the position) and (b) 5,000. Can I increase my contributions? You may increase the contributions you pay to your GPP to increase your retirement benefits. These can be started or increased, stopped or reduced at any time during the year provided you give one month s notice to your Local Pensions Administrator. As with your ordinary contributions, they will be deducted from your pay and a tax rebate, currently 25% of the amount you contribute, will be paid to your GPP by HMRC. With your employer s permission, you may pay an additional lump sum once a year. If you opt for this, the payment will be collected with the March payroll. If you wish to change your current contributions, please contact your Local Pensions Administrator. Advice on paying additional contributions can be obtained from your Cullen financial consultant. What is the maximum I may contribute? HMRC limit the maximum you and your employer may contribute to the GPP, and to any similar registered pension schemes, to 40,000 per year. There is also a limit on the value of retirement benefits payable at retirement of 1.25 million. Any contributions or benefits in excess of these limits will be subject to tax. Note: the regulations relating to the calculation of maximum contributions and benefits are complex. If you have any questions these should be referred to the Pensions Manager or your Cullen consultant. 5

6 When do the contributions stop? Your own contributions, and those paid by your employer, will be paid as long as you remain in Group employment (there is no upper age). You may opt out of the GPP at any time provided you give at least one month s written notice, but if you do the employer s contributions will also stop and you will not be covered for the dependant s pension benefits. If you then qualify, you will be enrolled in the Auto-Enrolment Scheme. Similarly, if you leave service, your own and your employer s contributions will stop and you will no longer be covered for any death benefits. In either case the contributions you and your employer have already paid will remain in your GPP. What does the Plan cost? Aviva deducts expenses from your GPP investment. These will vary depending on the funds chosen, and detailed information on charges will be provided by your Cullen financial consultant. For some funds the charges will be as low as 0.35% pa of the value of the fund investment. If you leave service, or otherwise stop paying into the Plan the fund charges will increase by 0.5% pa (ie to a minimum of 0.85% pa). 6

7 BENEFITS PAYABLE IN THE EVENT OF DEATH If you die at any time while employed by a Group company in the UK, the death benefits shown below will be payable. Lump Sum Death Benefit A lump sum will be paid equal to: 3 times your contracted earnings as at 1 April before your death; less If you have joined the GPP or the Auto-enrolment Scheme, the notional value of your GPP or Autoenrolment Scheme fund as at the date of death*. In addition the value of your GPP or Autoenrolment Scheme fund will be payable (for information on this see your Aviva or Nest booklet). *To estimate the value of your GPP or Auto-enrolment Scheme fund at the date of death, we will keep a record of your notional fund equal to your own and your employer s ordinary contributions to the Plan, as if invested in the Aviva Balanced Fund. Dependants Pension If you are eligible for the dependant s pension, a pension of 25% of your pensionable salary will be payable. This pension will increase each year in line with the Retail Prices Index up to a maximum of 2.5%. Both the lump sum and, if applicable, the dependant s pension benefits are provided through life insurance policies, held in trust under the Luxfer Group Life Assurance Plan. For the lump sum, the Trustees will decide who will receive the benefit. Under current tax rules, making payment this way enables any lump sum to be paid free of tax. In deciding, the Trustees will take into account your personal circumstances and any wishes you have expressed. You should make your wishes known by completing the Expression of Form attached. If you join the Plan and are eligible for the dependant s pension, you may nominate the dependant or dependants you would like to receive this pension in the event of your death by completing the Dependant s Nomination Form attached. In the absence of any nomination by you, the Trustees will make the decision on your behalf. Whilst legally the Trustees decide to whom these benefits will be paid, it is their preference to follow your wishes unless there are, in their opinion, good reasons not to do so. The reasons for this are obvious - only you know how you want the benefits paying and you cannot expect the Trustees to "second guess" your wishes. Therefore if you do not complete these forms you risk the Trustees paying the lump sum to the "wrong" persons. It is a condition of the life insurance policies that, in certain circumstances, the insurer may request medical evidence before covering you for part or all of your benefits. You will be informed if this applies to you. In such case, the Trustees reserve the right to restrict your cover in line with any special terms imposed by the insurer. Your employer pays the full premium for your benefits under the life insurance policies. 7

8 OTHER INFORMATION The statements below apply to the Plan. If you have joined the Auto-enrolment Scheme you should refer to the information provided by NEST. Change of Circumstance It is important that you tell Aviva and your Local Pensions Administrator of any change of address or change of name. To make sure the Trustees know how you would like any death benefits paid you should make sure your Expression of Wish and Dependant s Nomination Forms are up to date. Blank forms are available from the pensions website or your Local Pensions Administrator. Alteration and Termination Luxfer Group Limited reserves the right to alter or to terminate these arrangements at any time, subject to appropriate consultation with the employees affected. Maternity or Adoption Leave You will be treated as a contributing member of the Plan until the end of your paid maternity or adoption leave. The contributions you pay will be based on the actual pay you receive (if any). Your employer s contributions and your death benefits will be based on your pre-maternity pay. Absence Due to Sickness or Injury In the event of absence due to sickness or injury, both you and your employer will continue to make contributions. While you receive full sick pay, these contributions will be based on your pensionable salary as if you were actively at work. When your entitlement to sick pay is exhausted, you may notify your employer that you wish your pensionable salary to be based on the lower level of sickness benefit you are receiving. This will mean a reduction in your contributions and those of your emploiyer. Your death benefits will be based on your full contracted earnings as if you were actively at work. Who Manages the arrangements? The GPP is managed by Aviva. Their performance, both as administrators and investment managers, and the performance of Cullen Wealth Limited, is overseen by a Luxfer Governance Committee made up of Plan members and company representatives. Neither Luxfer nor your employer is responsible for or liable for the performance of Aviva or the advice provided by Cullen Wealth Limited. The death benefits are provided through life insurance policies and held by Trustees. The terms of the life insurance policies are reviewed regularly and the provider may change if better terms can be obtained. Further information If you have any questions about the Plan or your benefits, please contact the Pensions Manager at david.mead@luxfer.com. 8

9 LUXFER GROUP RETIREMENT SAVINGS PLAN Application Form Please complete using block capital letters where appropriate. Once completed, you should forward the form to your Local Pensions Administrator. Surname: First Names: Married/single/other (please specify) Sex*: M/F Address: Post Code: Date of birth: National Insurance No: Date employment commenced Your ordinary contributions are 4% of pensionable salary. If you wish to increase your regular contributions write the additional amount (% of pensionable salary) here. Remember HMRC will pay a tax rebate of 25% of this contribution. % *Please circle as appropriate I apply to become a member of the Luxfer Group Retirement Savings Plan and consent to my employer deducting contributions from my pay. I confirm that I wish to be enrolled into the Aviva Group Personal Pension Scheme and my contributions will be placed in the scheme default fund pending my pension meeting with Cullen Wealth Limited. I understand, and accept, that if I exercise my right to cancel my membership of the Group Personal Pension, my membership of the Plan will be cancelled. Signed:... Date of Application:... For Company use Pensionable Salary Employer contribution rate % 9

10 LUXFER GROUP LIFE ASSURANCE PLAN Expression of Wish Your Name:... National Insurance No... This form applies to any lump sums becoming payable under the life insurance policy. If a lump sum death benefit becomes payable, the Trustees of the life insurance policy will decide who will receive the benefit. Making payments this way avoids the need for payment of tax. The Trustees will take into account your personal circumstances and any wishes you have expressed. You should make your wishes known to the Trustees by completing and returning this form. In the event of my death, it is my wish that the person or persons named below are considered as recipients of any lump sum death benefit payable. (Please use block capitals only. You may continue on a separate sheet of paper, if necessary). Full name Current Address Relationship to myself (if any) % of benefit I understand that this Expression of Wish Form will not be legally binding on the Trustees. Signed:... Date:... The completed form should be placed in a sealed envelope marked Luxfer Group Life Assurance Plan Expression of Wish Form with your name and National Insurance number and given to your Local Pensions Administrator for safe keeping. 10

11 LUXFER GROUP LIFE ASSURANCE PLAN Dependant s nomination Your Name:... National Insurance No... This form applies to any dependant s pension becoming payable under the dependant s pension policy. You may nominate the Dependant or Dependants you would like to receive the dependant s pension payable in the event of your death. In the absence of any nomination by you the Trustees will decide. In the event of my death, I nominate the following to receive any dependants' pension payable: (Please use block capitals. You may continue on a separate sheet of paper, if necessary). Full name Current Address Relationship to myself % of benefit In order to be eligible to receive any pension, the persons nominated must at the time of death be dependants as defined by the trust rules (broadly this means your spouse or partner and any children under the age if 18, or 23 if still in full time education). Any individuals who no longer qualify as dependants will be excluded. In this case, the pension will be redistributed between the remaining beneficiaries on a pro rata basis. Signed:... Date:... The completed form should be placed in a sealed envelope marked Luxfer Group Life Assurance Plan Dependant s Nomination Form with your name and National Insurance number and given to your Local Pensions Administrator for safe keeping. 11