Meggitt Workplace Savings Plan. Questions/Answers 18 th August 2015

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1 Meggitt Workplace Savings Plan Questions/Answers 18 th August 2015 A response to the typical questions/answers the company receives in respect of the Workplace Savings Plan is provided below and we hope this assists you. If you have any other questions please do contact your local HR Representative or the HR Operations team. 1. How does the Workplace Savings Plan work? The Workplace Savings Plan is a defined contribution pension plan and if you are enrolled you will have a policy, set up in your name, with the plan provider (currently Legal & General). By participating in this plan you agree to give up part of your salary and in return Meggitt makes a payment directly into your Workplace Savings Plan (the Plan ). The savings are then invested into your Workplace Savings either in the Plan default option or in the fund(s) of your choice. The Plan default option is the Meggitt Five Year Lifestyle Strategy Fund, but there is also a Core Fund Range with 11 other investment options available which include Minimal Risk, Cautious Risk, Moderate Risk and High Risk options, as well as Legal & General s extensive full fund range. Your payments into the Plan attract tax relief, provided all contributions paid for your benefit during the tax year do not exceed the Annual Allowance ( 40,000 for 2015/16 tax year) and any future investment growth is in the main tax-free provided your overall pension savings (ignoring the State pensions) do not exceed the Lifetime Allowance (LTA) which is currently 1.25 million (2015/16 tax year). At retirement, the value of your Plan is used to provide you with retirement benefits. 2. Why must I be auto-enrolled? To help people save more for their retirement, the government requires employers to automatically enroll eligible workers into a workplace savings plan. 3. When would I be auto-enrolled? If you do not join the Plan from your start date and you are an eligible worker, as defined below, you will be automatically enrolled into the Plan on the 1 st day of the month following two complete calendar months after the date you started employment. This is illustrated in the table below. Month during which your employment starts January February March April May June July August September October November December Month you will be auto-enrolled from the 1 st of the month April May June July August September October November December January February March

2 5. Who is an eligible worker? You are eligible if you aren t already in a Qualifying pension plan, you earn over 10,000 a year ( 833 a month) (2015/2016 rates), are aged between 22 and the State Pension Age and you work in the UK. 6. Can I join if I am not eligible for auto-enrolment? You can join the Plan if you want to and if you join, both you and Meggitt would pay into it provided the amount you earn before tax is more than 5,824 per year (2015/16). If you wish to join the Plan but do not qualify for auto-enrolment, please contact your local HR representative or the HR Operations team for a Workplace Savings Plan form. 7. Can I opt-out? You cannot opt-out of being enrolled in the Plan; legislation requires you to be enrolled. However, if you do not wish to remain in the Plan, you will be able to opt out within one-month of being enrolled and receive a refund of your contributions. If you leave the Plan after this period, you will not be entitled to a refund of contributions, but your and Meggitt s contributions will remain invested for your future benefit. 8. What information will I receive from the plan provider? The plan provider will provide you with a letter that confirms your enrolment into the Plan and key information about your Plan. Please note that while the provider will use the term contribution, this actually refers to the payment into your Plan made under salary sacrifice as described in question 1 above. 9. If I am automatically enrolled, how will this affect my Lifetime Allowance from a tax perspective? The Government sets a limit on the total tax favorable registered pension savings an individual can build up over their working lifetime (the Lifetime Allowance or LTA ). Any benefits at retirement that are above the LTA at that time will have an additional LTA tax charge deducted before they are paid out. Meggitt is legally obliged to automatically enroll ALL eligible employees into a qualifying scheme, however if employees, with reference to the LTA, have registered for HMRC protection then the company may exercise discretion not to enroll the employee if the employee produces evidence that protection has been applied for. However, where an individual who is automatically enrolled opts out within one month, then the law treats that individual as if they were never a member of the pension scheme they were enrolled into and any protection they might have is unaffected. If you think you are affected by this issue, we would strongly suggest that you seek independent financial advice. If you are affected, we believe that HMRC is likely to contact you. However, it is vitally important that, if you believe you fall into this category, that you inform your local HR representative or the HR Operations team.

3 10. Would Salary Sacrifice affect Statutory Maternity Pay (SMP) and what happens during paid maternity leave? SMP is based on average weekly earnings during the 8 week period, fifteen weeks prior to the Expected Date of Confinement. Statutory maternity pay during this period will be paid at a rate set by the Government for the relevant tax year, or at 90% of the employee's average weekly earnings. Any salary sacrifice adjustments in this 8 week period would reduce the SMP, however if you have more than 26 weeks service, Meggitt will top up your SMP to your full pay for the first 20 weeks of maternity leave. During this 20 week period Meggitt will continue to pay your pension contribution, and your salary sacrifice will continue provided this does not take your salary below the Statutory Maternity Pay amount. For the subsequent 19 weeks of paid maternity leave, you will receive the statutory amount of SMP only. During this time Meggitt will continue to pay your full pension contribution based on your pre-maternity leave salary, however no salary sacrifice deduction will be made from your SMP. 11. Would Salary Sacrifice affect Shared Parental Leave Pay (ShPP) and what happens during shared parental leave (SPL)? Any statutory paternity pay due during additional paternity leave will be paid at a rate set by the Government for the relevant tax year, or at 90% of the employee's average weekly earnings, if this figure is lower than the Government's set weekly rate. The company is required to continue to make payments into your Plan during paid SPL based on your pre-leave salary. Whilst payments to the Plan would continue based on the pre-leave salary, no deductions would be made from any Statutory Shared Parental Leave Pay. 12. Would Salary Sacrifice affect Statutory Sick Pay (SSP) and what happens during statutory sick leave? As above with the Parental leave policy, the company is required to continue to make payments into your Plan during any period of paid statutory sick leave based on your continuing eligibility for the Plan. The company s payment into the Plan will be based upon your pre-statutory sickness salary. 13. Does Salary Sacrifice affect my group income protection benefit? Participation in salary sacrifice does not affect your entitlement to this benefit, which is based on your presacrifice salary. If you become a claimant in receipt of these benefits, this would be considered a lifestyle event and you would be able to opt-out for the period you receive the benefit if you wish to do so. 14. I already participate in a salary sacrifice scheme; can I participate in salary sacrifice for workplace savings as well? Yes, you can participate in salary sacrifice providing your adjusted salary is not reduced below the National Minimum Wage. We will advise you if you are likely to be affected. However, if your circumstances change and you believe your adjusted salary may fall below the National Minimum Wage, please contact your local HR Representative. 15. Can I participate in Pension Salary Sacrifice if I only work part-time? You can participate in the salary sacrifice arrangement as long as your earnings would not fall below the National Minimum Wage or the lower earnings limit for NIC (currently 5,824 for the 2015/16 tax year).

4 16. At what age can I draw my savings? The Plan s normal retirement date is your 65th birthday but you are able to access your savings from age 55 onwards. It is important that you inform Legal & General of your Target Retirement Age, particularly if you are investing in the Meggitt Five Year Lifestyle Strategy Fund, so that your savings are invested appropriately for your time to retirement. If you do not, it will be assumed to be age 65. You may also apply to take your benefits and continue working and, if you choose to do so, continue paying into the Plan. If you continue working, but do not save into the Plan, you may be automatically enrolled. You may continue to work after your normal retirement date. The salary sacrifice arrangement and payments into your Plan continue and your savings will remain invested until you retire. 17. What benefits would I receive? The benefits you receive will depend on the value of your savings at the time you decide to take them (from aged 55 onwards). If you are aged 55 or over you will have the following options available from April 2015; Take the whole fund as cash in one go Up to 25% of the fund can be taken tax free and the rest would be taxed as income; Take smaller lump sums, as and when you like with 25% of each partial withdrawal tax free and the rest taxed as income; Take up to 25% of the total fund tax free, and purchase a regular taxable income from the remaining fund (either via income drawdown where you draw regular amounts directly from the fund, which remains invested or by purchasing an annuity which provides an income either for life, or for a fixed period of time, e.g. 5 years). You would pay your marginal rate of income tax on the savings you withdraw above the 25% Tax Free Lump sum, which depending upon your earnings could be 0%, 20%, 40% or 45%. 18. Will the state pension I get be reduced because of salary sacrifice? The Basic State Pension will not be affected by participating in salary sacrifice provided your earnings are not reduced below the Lower Earnings Limit ( 5,824 for the tax 2015/16 tax year). For some members, dependent on age, earnings and the amount of national insurance contributions paid; there could be a small reduction in their state second pension (S2P) when they retire. Please note that S2P will no longer be available after April 2016 and both the Basic State Pension and S2P will be replaced by a flat rate pension; the salary sacrifice arrangement will have no impact on subsequent state pension accrual.

5 19. Will Salary Sacrifice impact on my Tax Credits? The Tax Credit calculation is based on your taxable (P60) income after the deduction of any normal employee pension contributions. As the reduction in pay as a result of salary sacrifice is slightly larger than normal employee pension contributions (because of the NI adjustment), participation may impact on eligibility for and the amount of Tax Credits, but it should be in your favour, albeit marginally. 20. What happens if I die whilst employed? If you die whilst employed by Meggitt, the value of your savings account will be paid to your beneficiaries. It is important that you complete a Nomination of Beneficiaries form to nominate your beneficiaries and that you ensure you keep the company up-to-date regarding your intended beneficiaries since these would be starting point for any decisions needing to be taken. Your beneficiaries may also be entitled to a lump sum from the Group Life Assurance provided by Meggitt, which is linked to your membership to the Meggitt Workplace Savings Plan. The benefit paid out would be based on your pre-sacrifice salary at date of death. 21. What happens if I leave Meggitt? Your savings will remain invested in the Plan until you retire (or transfer it out). No more contributions from Meggitt will be paid into your savings once you have left the Plan. You may continue to contribute into your Plan directly and you should contact Legal & General to discuss this should you wish to do so. If you do not transfer-out, the value of your savings will be used to provide your retirement benefits when you decide to retire. If you die having left the Plan, the value of your savings will be paid to your beneficiaries as a lump sum cash benefit as described above. 22. Where can I go for further information? You can use this link Information regarding investing and investments can be found in the Useful Documents section. Alternatively you can contact the member helpline on which is open from 8.30am to 7.00pm Monday to Friday and 9.00am to 12.00pm on Saturday. If you do not want to make your own investment decisions, your savings will be invested in the Meggitt Five Year Lifestyle Strategy Fund which seeks to match your investments with your time to retirement. If you would like to make your own fund selections, the materials available on the Legal & General website may assist. If you need general assistance or assistance in investing your savings, you should seek the help of an Independent Financial Adviser ( IFA ) and you can find details of IFA s in your area by visiting Information on pensions and saving for later life can also be found at