Brakes Group Personal Pension Plan

Transcription

1 Brakes Group Personal Pension Plan April 2017

2 Introduction It is important to plan ahead if you want to make sure you have an income when you stop working. The more you plan for your retirement now, the less you will have to worry about it later. Pension planning is important for all of us - even if you are just starting your career with us and retirement seems a long way off. We run the Brakes Group Personal Pension Plan (the Plan) to provide our employees with a taxefficient and cost-effective way to save and invest money for their retirement. Membership of the Plan is one of the most valuable benefits we provide for our employees. The Plan is provided by Legal & General (L&G) and is a Defined Contribution pension scheme, which means that you know in advance how much will be paid into it. As a member of the Plan you benefit from an employer contribution on top of the contribution you make. L&G offers a wide range of investment options. The choices you make about investing are important as they will affect the value of your pension fund when you retire. Once you are a member of the Plan you will be issued with a personal pension policy and receive a yearly benefit statement from L&G. You will also be able to track the progress of your own policy within the Plan online. This booklet, which must be read alongside the L&G pension plan information, tells you about how the Plan works and the benefits available to you. We know pensions can seem complex so we have included further information in the section What else do I need to know? towards the end of this booklet, as well as details of useful contacts and a Jargon Buster. You can find information and tools to help you in your pension planning at: If you do not have use of a computer and need printed copies of the literature or more information please contact: HR Administration in Ashford by ing pension@brake.co.uk. Please note that the L&G information and policy documents will always overrule this booklet if any differences between them come to light. If you are unsure whether any of the benefits in this booklet are suitable for you please consider seeing a financial adviser. The Financial Conduct Authority website has information about finding a financial adviser at: We have appointed Aon Consulting Limited (Aon) to advise us about arranging the Group Personal Pension Plan, and Life Assurance. As we pay Aon a fee for their advice to us, you will not pay any extra charges if you join the Plan other than those in this booklet and the L&G Investment Fund Guide. If you have any questions or need further information please contact HR Administration in Ashford, by ing pension@brake.co.uk, by calling on or by writing to HR Administration (Pensions), Enterprise House, Eureka Business Park, Ashford, TN25 4AG. Page 2

3 Contents Joining Start making plans... 4 Contributing What it costs to join... 6 Investing Helping your savings grow Taking your benefits What happens if? What else do I need to know? Life Assurance Plan About Aon About L&G Problems and complaints Useful contacts Jargon Buster This guide, which is valid until 5 April 2018 or until further changes are made by Brakes or legislation, has been approved by Aon Consulting Limited whose registered office is Briarcliff House, Kingsmead, Farnborough GU14 7TE. Aon Consulting Limited is authorised and regulated by the Financial Conduct Authority and its registered number, as detailed on the Financial Services Register, is You can check this by visiting: or by contacting the Financial Conduct Authority on Page 3

4 Joining Start making plans Automatic Enrolment By law employers must place most of their employees into a qualifying workplace pension scheme and make a minimum level of contribution. This is known as Automatic Enrolment. Brakes will enrol you into the Plan automatically, if you meet certain conditions. The Government sets these conditions for eligible employees and Brakes will confirm whether you meet them once they have checked your personal situation. Brakes will postpone the auto-enrolment process for up to three months after your hire date. Eligible employees will be auto-enrolled at the end of the month they are hired in, plus two further months. For example, if your date of joining service was 10 July 2017, you would (subject to meeting certain criteria) be auto-enrolled from 1 October You can choose to opt-in during the postponement period and you may be entitled to receive a pension contribution from Brakes. You will receive a separate communication to explain details on this once you have joined service. Please see Opting in overleaf. You have the option to opt in to the Plan if you are not automatically enrolled When you are automatically enrolled into the Plan, or if you opt in to the Plan, you will receive policy documents to confirm your membership. To begin with, your policy will be set up with a selected retirement age (SRA) that is, the age you plan to take benefits of 65. If you already have a personal pension you can still be a member of the Plan. You are allowed to contribute to more than one pension at the same time although there is a limit to the total amount that can be paid in the tax year (see Is there a limit on how much I can pay in each year? on page 10). Opting out If Brakes enrols you in to the Plan automatically but you do not want to be a member of the Plan, you can opt out by following the instructions L&G will send you. You will have one month from the date in the instructions to opt out. If you opt out you will be treated as if you had never joined the Plan. You and Brakes stop contributing to the Plan and you will receive a refund of any contributions you paid from your salary to the Plan in the next available payroll run. If you opt out you will lose your employer s contributions and will not be building up a retirement fund in the Plan. Page 4

5 If you opt out you can re-join at a later date please contact HR Administration in Ashford for further details. If you opt out or stop contributions to the Plan and do not re-join the Plan while in this employment, your employer must automatically enrol you again every three years if you are an eligible employee. Brakes will tell you if this happens. If you are automatically enrolled again you can opt out if you still do not want to be a member of the Plan. If you decide that you want to leave the Plan any time after the one-month opt out period, please tell HR Administration in Ashford. Your benefits will be treated as if you had left employment please see the section What happens if? later in this booklet. Opting in To opt in to the Plan please contact HR Administration in Ashford. They will then explain how to optin. If, after opting in, you change your mind and decide not to join the pension, you will have one month to notify L&G and, as above, you will receive a refund of your contributions. However, there are a limited number of circumstances in which individuals who have opted in (as opposed to being automatically enrolled) could receive back less than they have paid in. Please contact L&G if you require more information on this point. Pension protection If you have Primary, Enhanced, Fixed Protection, Individual Protection 2014, Fixed Protection 2014 or have applied for/are going to apply for Individual Protection 2016, or Fixed Protection 2016, please read the important information contained in the What else do I need to know? section before making any decisions about whether to join your employer s pension and/or life assurance arrangements. Other pension benefits Once you are a member of the Plan you may be able to transfer in benefits from past pension arrangements. However, this is a complex area and you should seek financial advice beforehand. If you are thinking of reviewing your previous pension arrangement(s), please contact the Aon Transfer Team first who will be able to explain your options on or by to PensionSwitch.team@aon.com. Page 5

6 Contributing What it costs to join Salary Sacrifice As a member of the Plan, your contributions are usually paid through a Salary Sacrifice arrangement called Pensave. This means that you choose the level of salary you want to exchange for a pension contribution and your salary reduces by this amount. Your employer then pays this amount into the Plan on your behalf, on top of their employer contribution. As a result, the amount you give up never becomes part of your salary. The total amount paid into your pension policy is the same as it would be if you did not take part in Salary Sacrifice. As you do not pay National Insurance on the salary you give up through Salary Sacrifice, your take-home pay will be slightly higher than if you made contributions from net pay. Please see below for an example comparing Salary Sacrifice with contributing from pay. Contribution Rates When you join the Plan, you will be required to exchange or pay a minimum percentage of your pensionable salary. The minimum contribution rate and definition of pensionable salary are set out in the Contribution Appendix. Initially you will be auto-enrolled based on the Auto-Enrolment contribution rates and stated pensionable salary. Once you have completed 3 or 6 months (dependent upon grade) continuous company service, you will then have the ability to opt up to the Elective contribution rates based on the stated pensionable salary definition. Please note, if you joined the Plan in April 2015 and you are a former member of the Brakes Money Purchase Pension Plan, a different contribution structure applies. If you are in this group, please refer to the communications you have been sent for details. Alternatively, please contact HR Administration in the first instance. Page 6

7 Reference salary Your higher salary, before the reduction in "exchange" for a pension contribution, is called your reference salary. This is kept on record and used for pay reviews, working out pension contributions, mortgage references and benefits such as life assurance. Pensave will mean a change to your Terms and Conditions of Employment because you will be giving up salary equivalent to the amount of money that you would have paid on a standard basis into the Plan. Some examples of the National Insurance Contribution (NIC) savings under Pensave are provided below: Pensionable Salary ( ) 5% Pensave salary reduction ( ) Maximum Annual NIC Saving ( ) 25,000 1, ,000 1, ,000 1, ,000 2, ,000 2, ,000 3, ,000 3, ,000 4, ,000 4, ,000 5, Source: Aon Consulting Limited Where earnings after Pensave are under 45,000 (the National Insurance Upper Earnings Limited [UEL] for the tax year starting 6 April 2017), the saving is 12% of your Pensave amount. For post- Pensave earnings above the UEL, the employee NIC rate is 2% - which explains the relatively lower NIC savings shown above for the 50,000 category and higher. Does this affect the level of tax that I have to pay? No. When Pensave is implemented, you will receive full tax relief at source on your pension contributions. If you make pension contributions on a non-pensave basis, you will only receive Basic Rate Income Tax Relief at source and will have to reclaim any Higher Rate Tax Relief from your local tax office. How will Pensave affect the level of my pension benefits? The overall amount of contributions that will be paid into the Plan and your benefits at retirement will remain unchanged, compared to if they had been made on a non-pensave basis. How will Pensave impact my State Benefits? The impact of Pensave participation on State Benefits is described below: Benefits paid by Brakes The majority of employer-paid work absence (e.g. Maternity Pay, Adoption Pay and Paternity Pay) can be calculated using your Reference Salary, so that no reduction in benefit results from Pensave participation. Page 7

8 The two principal benefits where a different solution is required are as follows: Statutory Maternity Pay (SMP) As the initial 6 weeks SMP is based on average earnings over a specified period, participation in Pensave would ordinarily lead to a reduction in benefit. However, Brakes will make an equivalent topup payment so that members are no worse off. Statutory Sick Pay (SSP) If at any point, Sick Pay was to reduce to the lower (Statutory) level, Brakes would arrange to continue the Plan membership as a contributory, non-pensave member, reverting to Pensave membership following return to work. Benefits paid by the State NIC-related benefits As some State Benefits (e.g. Jobseekers Allowance and Employment and Support Allowance) are governed by the amount of employee NICs paid, it is important that only those members whose earnings (after Pensave adjustment) are above the National Insurance Lower Earnings Level (LEL: 5,876 for the tax year starting 6 April 2017) are invited to join Pensave. If post-pensave earnings fell below the LEL, this would potentially reduce certain State Benefits. This is one of the reasons those with earnings below the National Minimum Wage or National Living Wage will be excluded from Pensave. If you are unsure how Pensave might affect your State Benefits, you should contact Her Majesty s Revenue & Customs (HMRC). You can find out more about Pensave at: Changing how much you sacrifice You can change the level of salary you sacrifice every April or if you have a life event. Please contact HR Administration if you experience a Life Event. You need to bear in mind some tax rules and limits see the section What else do I need to know?. Life events Examples of life events include: Birth/adoption of a child Divorce/separation Death of a partner Marriage/civil partnership Notice or start of maternity leave Financial Hardship If you do not have a life event, the level of salary you give up must stay the same until the following April. Please contact HR Administration for information on how maternity or paternity leave, or sickness absence may affect your Plan contributions. Page 8

9 Will all members participate in Pensave? You will automatically be included in Pensave if your earnings, after allowing for this salary reduction, are above the National Minimum Wage or National Living Wage. There may be certain members where participation in Pensave would contravene National Minimum Wage or National Living Wage legalisation or where the overall effect of Pensave allowing for the impact on various State Benefits may be unfavourable. Any members in this position will therefore be excluded from Pensave and will make personal contributions to the Plan on a non-pensave basis. Will Pensave be around forever? Brakes expect Pensave to continue while it provides advantages for both Brakes (the Employer) and colleagues and whilst there is no legislation which could prevent it. As such, Brakes reserves the right to withdraw Pensave at its sole discretion. Paying contributions from your salary on a non-pensave basis If you wish, you can opt-out of Pensave prior to auto-enrolment or at a later date and pay contributions from your monthly salary (HR Administration in Ashford can provide further information about opting-out of Pensave). As above, if your earnings would be below the National Minimum Wage or National Living Wage, after the salary reduction, you will automatically be excluded from Pensave and your contributions will be paid on a non-pensave basis instead. The non-pensave basis is the more traditional way of making personal pension contributions. You receive your salary each month in full and then pay your contribution from it. The contribution structure for non-pensave members offered by Brakes is the same for Pensave members. Your contributions are taken from your pay and paid into the Plan each month along with Brakes contributions. You can change the amount you contribute or make a one-off contribution by contacting HR Administration in Ashford, in writing. You will be subject to a tax charge if the total contributions exceed the Annual Allowance, which is 40,000 for Pension Input Periods ending on or after 6 April (See page 21 for further details) Tax Relief To encourage savings the Government allows tax relief on pension contributions. Under current tax rules if you pay basic rate Income Tax every 1 you contribute costs you 80p. Contributions are taken from your take-home (net) pay but increased (grossed up) by the basic rate Income Tax relief before they go into your policy in the Plan, as shown in the example below. Monthly contribution Breakdown to show benefit of tax relief Your contribution 100 Income Tax relief at 20%* 20 Cost to you deducted from take-home pay 80 Employer contribution** 100 Total amount paid into your policy 200 *Based on tax rates for the year starting 6 April 2017 **Assuming you and your employer contribute the same percentage of your salary Page 9

10 Will I receive tax relief on my contributions? If you don t pay Income Tax: You will automatically get tax relief of 20% on contributions up to 3,600 or 100% of your relevant UK earnings, if greater. If you pay Income Tax at 20%: You will automatically receive tax relief on your personal pension contributions up to 100% of your relevant UK earnings, because your pension provider claims tax relief for you at your basic rate of 20% and adds this to your policy. If you pay Income Tax at 40%: You will receive basic rate tax relief automatically with the ability to claim an extra 20% tax relief on contributions via your Self-Assessment tax return. If you don t fill in a tax return, call or write to Her Majesty s Revenue & Customs (HMRC). If you pay Income Tax at 45%: You will receive basic rate tax relief automatically with the ability to claim an extra 25% tax relief on contributions in your Self-Assessment tax return. If you don t fill in a tax return, call or write to HMRC. Please remember that tax treatment depends on your personal circumstances. Your circumstances and the tax rules may change in the future. Is there a limit on how much I can pay in each year? No, but you will only receive tax relief on contributions up to 100% of your relevant UK earnings. You may also be subject to a tax charge if contributions (including your employer s contributions and any tax relief) exceed the Annual Allowance (see the 'What if I pay too much in?' section later in this booklet for details). Page 10

11 Comparing the Pensave and non-pensave membership This example shows how Income Tax and National Insurance is worked out, depending on whether you are taking part in Pensave or not. The example uses an annual salary figure of 25,000 and assumes contributions of 5% from both you and your employer. Pensave Member Non-Pensave Member Salary 25,000 25,000 Salary amount given up 1,250 None Tax and National Insurance based on salary amount of You pay tax and National Insurance of 23,750 25,000 4,320 4,720 Contribution from your pay Your employer contributes None 1,250 (as well paying in the 1,250 that you have given up) 1,000 (this is 1,250 less 250 tax relief) 1,250 Total payment into pension 2,500 2,500 Take-home pay 19,430 (includes increase from National Insurance saving) 19,280 Please note: The figures in the example are based on a yearly personal allowance of 11,500 (2017/18 tax year) and are estimates only. They may not reflect the Plan s actual contribution rates. Page 11

12 Percentage of funds Investing Helping your savings grow There is a range of funds available, in which you can invest your contributions. The L&G Investment Fund Guide (entitled WorkSave Pension Investment Options ), available on: gives you full details of all the funds available and the charges they carry. You can also request the Investment Fund Guide from L&G directly. You must think carefully about how your fund will be invested and whether it is appropriate for your personal circumstances and attitude towards investment risk. If you are unsure you should seek financial advice. Default Investment Option if you joined the Plan after 11 April 2016 If you joined the Plan on or after 11 April 2016, your contributions will initially be invested in the L&G (PMC) Multi-Asset Fund. Your funds will remain invested in this fund up until your Selected Retirement Age (SRA) unless you choose to switch funds. The Default Investment Option was changed due to the introduction of new retirement flexibilities from April Once your contract is instigated and the first contribution is paid you will have the option to amend your fund choices should you wish to do so. Default Investment Option if you joined the Plan before 11 April 2016 Your contributions will be automatically invested in the L&G Multi-Asset/Over 15 Year Gilts 10 Year Lifestyle Profile. Once your contract is instigated and the first contribution is paid you will have the option to amend your fund choices should you wish to do so. It is a lifestyle strategy initially investing in the L&G (PMC) Multi-Asset Fund, which then automatically switches to bonds and cash as you approach your Selected Retirement Age (SRA). The strategy initially invests in the L&G (PMC) Multi-Asset Fund to provide the opportunity for growth over the longer term, before switching to the L&G (PMC) Over 15 Year Gilts Index Fund and the L&G Cash Fund ten years before your SRA. Brakes Group Personal Pension Plan - Default Investment Option (if you joined the Plan before 11 April 2016) 100% 80% 60% 40% 20% 0% Years to SRA L&G Multi-Asset L&G Over 15 Year Gilts Index L&G Cash Page 12

13 Default Investment Option if you joined the Plan in April 2015 and you are a former member of the Brakes Money Purchase Pension Plan Please note, if you joined the Plan in April 2015 and you are a former member of the Brakes Money Purchase Pension Plan, a different Default Investment Option applies. If you are in this group, please refer to the communications you have been sent for details. Alternatively please contact L&G in the first instance. You should note that the Default Investment Option may not be suitable for everyone. You must read the L&G Investment Fund Guide for further details of the default option. Further information on these investment options can be provided by L&G if required, but if you are at all unsure of what action to take, you should seek financial advice. Full details of each fund making up the lifestyle approach are in the L&G Investment Fund Guide, along with further details on choosing your own funds. Please note that a lifestyle approach, where the investment automatically moves to lower risk funds as you approach retirement, may not be suitable if you do not intend to fully draw benefits at your SRA perhaps because you wish to access benefits over a period of time in retirement or intend to utilise a combination of methods to take benefits such as an Annuity, Flexi Access Drawdown or Uncrystallised Fund Pension Lump Sums (see the section Taking your benefits for more information on these options). It is important that you review your SRA from time to time and tell L&G as soon as possible if you want to change it. Otherwise, the fund switching may start at the wrong time - too late, and you could end up being exposed to unnecessary risk or too early, and your investments may miss out on potential higher returns. Please note that investment decisions you make at the start are not final you can switch existing funds, redirect future contributions to other funds or both at any time. You should contact L&G if you want to make any fund switches. Types of funds Unit-linked funds These funds are divided into units of equal value. The contributions from your account buy a number of these units, depending on how much the units are worth at the time. These units will go up and down in value, which in turn will make the value of your plan rise and fall accordingly. If unit prices fall, your plan may be worth less than you have invested. Page 13

14 Important information Some funds invest in a particular market, with the investment manager for that fund choosing the assets. You may only want to choose specialist funds like this if you are familiar with investing (and the risks it involves), or if you are familiar with that market or how the funds might behave. If you invest in overseas funds, changes in currency exchange rates may affect the value of your investments. Some funds in regions where markets are still developing (often called emerging markets ) may be especially volatile, with dramatic falls and rises in value. Property funds can carry extra risk because of the time it takes to buy and sell property this may make the funds more volatile and you may find that there are delays with moving money you have 'tied up' in property to another type of investment. Some cash or deposit funds are actually money market funds that invest in different types of assets. As a result, these funds can be more volatile than ordinary cash investments and may rise and fall in value. This means the value of your capital the original amount you invested is not guaranteed. Charges To establish the total annual fund charges you pay in the Plan, you will need to add the Scheme Charge of 0.20% to each fund s Fund Management Charge (FMC). FMCs are different for each fund and can be found in the L&G Investment Fund Guide. Examples: The funds that make up the Default Investment Option and their charges are listed below as an example: Fund names L&G (PMC) Multi-Asset Fund L&G (PMC) Over 15 Year Gilts Index Fund L&G Cash Fund L&G fund code Scheme charge Fund Management Charge (FMC) Total annual charge L&G Risk Rating NTW3 0.20% 0.13% 0.33% Average NBR3 0.20% 0.08% 0.28% Cautious EAB3 0.20% 0.10% 0.30% Minimal A 0.33% total annual charge equates to 33p deducted per year for each 100 of your fund value. If you wish to switch funds, you can do so by contacting L&G or via the L&G Manage Your Account website. There are no costs for switching funds. Page 14

15 The Scheme Charge and FMCs reflect the fact that Brakes pays its advisers, Aon Consulting Limited, a fee for advice in respect of the Plan and no commission is paid by L&G to the advisers. Funds managed by other fund managers may have a higher FMC see the L&G information. The above FMCs are correct as at October 2016 and are subject to change. Please note, if you joined the Plan in April 2015 and are a former member of the Brakes Money Purchase Pension Plan, a different charging basis applies. If you are in this group, please refer to the communications you have been sent for details. Alternatively, please contact L&G in the first instance. Page 15

16 Taking your benefits When you choose to take your pension benefits you can use the value of your fund to provide an income and/or cash sums. Under current law you can take your benefits anytime from age 55 and you do not need to stop working to draw your benefits. The minimum age you can start taking your benefits is due to increase to age 57 in Having spent years building up your pension fund, you must make sure you understand the options available when starting to take your benefits. From April 2015 new rules came in, allowing you to take full responsibility for the money you have saved and use your pension fund however you like. Your options are: 1. You can draw money from your fund when you need it, taking 25% of each payment as a tax free cash sum. The rest of the payment will be taxed as income (known as Uncrystallised Fund Pension Lump Sum ). 2. You can take up to 25% of your pension pot as a tax free cash sum and with the remaining 75% of the fund: Take a further lump sum (which will be taxed at your marginal Income Tax rate) Leave it invested and take regular and/or occasional amounts that will be taxed as income (this is known as Flexi Access Drawdown ) or; Buy an annuity which pays you a guaranteed taxable income either for life or a fixed term (you have lots of options for how the annuity works and you can shop around to get the best deal for your circumstances). You can use some or all of your fund for one or more of the above options. Although it is great to have these choices, you must make sure you understand all your options and, in particular, the tax you might have to pay. It is important you think about taking financial advice at the right time. Please note that you can take some or all of your benefits and stay in the Plan. However, in certain circumstances this will trigger the Money Purchase Annual Allowance (see the section headed What else do I need to know? What if I pay too much in? ). Also, there is a Lifetime Allowance which applies to the value of all the pension benefits you build up from all sources (apart from the State) over your working life. For the 2017/18 tax year the allowance is 1 million. For further details of the Lifetime Allowance please see the 'What else do I need to know?' section. Page 16

17 L&G will contact you as you approach your SRA with details of your fund value and more information on the above options. The Aon Retirement Service can also support you in deciding how to take your pension benefits. Five years before your SRA, you will receive log on details for the online portal, which contains lots of useful information on your options and tools to help you start thinking about what you might want to do. Then, 12 months before your SRA, the Aon Retirement Service team will contact you to offer further guidance and support. Or, you can call the team directly on (available 8am to 6pm Monday to Friday). Pension Wise The Government introduced Pension Wise from April Pension Wise is a free and impartial service to help people with defined contribution funds understand what their choices are and how they work. This guidance is available online at over the phone or face to face and covers: what you can do with your pension pot the different pension types and how they work what s tax-free and what s not Pension Wise will not, however, give you personal advice about which option is the most suitable for you. Please note that you have to be age 50 and have a defined contribution pension to use Pension Wise. You should seek financial advice before you make decisions on how you will take your benefits. Page 17

18 What happens if? What happens when I leave this employment? If you leave employment you keep the fund you have built up under your policy within the Plan. You may: Leave your benefits in your policy, where they will stay invested Pay contributions directly to L&G (although Brakes contributions will stop) Transfer your fund to another pension arrangement Start taking benefits from your fund if you are over age 55. The most suitable option for you will depend on your situation at the time you leave. You may want to seek financial advice before deciding what route you will take. What happens if I die? If you die before taking your benefits the fund you have built up to the date of your death would be paid as a cash lump sum and is usually free of any tax liability. This will be paid to your nominated beneficiaries or next of kin if no nomination has been made. To make a nomination you will need to complete an Expression of Wish form (see below). If you die after accessing benefits the treatment of the fund you have accrued is dependent upon how you have taken benefits and how old you are at the time of death. If you have flexibly accessed your benefits by using Flexi-Access Drawdown and die before age 75 the benefits will be passed to your nominated beneficiaries who can receive this as either a cash lump sum or as ongoing income and is usually free of any income tax liability. If you die at age 75 or older the benefit can be paid as either a lump sum or as ongoing income and will be subject to Income Tax at the beneficiaries marginal rate of income tax. If you have purchased an annuity with the pension benefits you had, the benefits payable will depend upon how the annuity was set up when it was bought. It may have a spouse s or dependents pension included which will come into payment upon your death or, if no survivor options were selected, payments will cease upon your death. Page 18

19 Your wishes You must fill in an Expression of Wish outlining who you would like to receive any benefits following your death. Equally, if your personal situation changes, for example, you marry, divorce or become a parent, you may wish to fill in another Expression of Wish form. These forms are available from L&G and should be returned to them directly after you have filled them in. As mentioned above, if you die after taking benefits from the Plan, the amounts payable to your beneficiaries will depend on how you chose to receive your benefits. This is an important situation to plan for and should be part of the financial advice you seek when you start to draw your benefits. Page 19

20 What else do I need to know? Changing your details Once you have auto-enrolled or opted in to the Plan, if you wish to change your investment choice or SRA, contact L&G on or visit When you are automatically enrolled into the Plan, or if you opt in to the Plan, your SRA is set at age 65. However, it can be any age from 55 onwards and you can change it at a later date to the age you plan to draw benefits. The SRA is important because it can affect how your pension contributions are invested please see the sections Investing Helping your savings grow and Taking your benefits at retirement for more details. Other pension arrangements If you already have another pension, you can still be a member of the Plan. You are allowed to contribute to more than one pension at the same time. See What if I pay too much in? later in this section for further details. Please note that your employer will not contribute to any other pension arrangement. Consolidating pensions You may be able to transfer in benefits from past pension arrangements. However, this is a complex area and you should seek financial advice beforehand. If you are thinking of changing your previous pension arrangements, please contact the Aon Transfer Team first who will be able to explain the options you have. State benefits If you reach State Pension Age after 6 April 2016 you will be entitled to the new single-tier State Pension. The full new State Pension will be per week (for 2017/2018), but the exact amount you receive will depend on the National Insurance you have paid over your working life, which is used to work out your new State Pension. If you reached State Pension age before 6 April 2016, you may have received the old two-part State Pension: The Basic State Pension a flat rate amount payable to everyone who had paid enough National Insurance (currently for 2017/18). The State Second Pension (S2P formerly SERPS) which provided mostly earningsrelated benefits. State Pension Ages have been under ongoing review by the Government, and your own State Pension Age depends on both your sex and date of birth. You can use the State Pension Age calculator on the Government s website: to find your State Pension Age, based on the rules currently in force. To find out more about State pensions in general, you can visit the Government s website: or call: or Page 20

21 Please note that joining the Plan may not be appropriate for everyone as contributing to it may affect entitlement to State benefits which may change themselves in future. If you are unsure you should seek financial advice. What if I pay too much in? The Annual Allowance The Annual Allowance applies to all contributions, from you or any employer, paid into all of your pension arrangements over a 12-month pension input period ( PIP ). From 6 April 2016 onwards, all PIPs run in line with the tax year (before this date, PIPs could be different). If the contributions going into your policy during the PIP exceed 40,000 (the Annual Allowance for tax year 2017/18) then the amount you have contributed above the Annual Allowance may be added to your taxable income. You will pay tax on it at your highest rate, unless you have any unused Annual Allowance from the previous three tax years. Since April 2016 for anyone with 'adjusted income' above 150,000 a year the Annual Allowance of 40,000 is reduced. This is called the Tapered Annual Allowance. Adjusted income is taxable earnings from all sources plus the value of any pension contributions during the tax year. The Annual Allowance will reduce by 1 for every 2 of 'adjusted income' over 150,000 with a maximum reduction to the Annual Allowance of 30,000. This means those with adjusted income of 210,000 a year or more will have an Annual Allowance of 10,000. Please note that if your taxable income not including pension contributions (known as 'threshold income') is less than 110,000 a year, your Annual Allowance will not reduce, regardless of the level of adjusted income. If the total payments into the Plan made by you and your employer, plus contributions made to any other pension arrangements, are likely to be close to 40,000 in any PIP please seek financial advice before making any decisions. If you draw your benefits due to ill health then, as long as you satisfy HMRC s requirements, the Annual Allowance will not apply to your benefits in that year. The same is true if you die while still building up your fund. Money Purchase Annual Allowance (MPAA) Since April 2015, tax relievable contributions to defined contribution arrangements have been limited to a Money Purchase Annual Allowance (MPAA) if certain trigger events occur. Trigger events include income paid from a Flexi Access Drawdown fund (but not if you just take the 25% Pension Commencement Lump Sum), payment of an Uncrystallised Fund Pension Lump Sum, income of more than the permitted maximum income under a Capped Drawdown or Flexible Drawdown taken prior to April Page 21

22 The MPAA for 2017/18 is 4,000 meaning that if it is applicable to you this is the maximum amount that you can pay into pensions without incurring a tax charge. Please seek financial advice before you proceed with a trigger event if your total pension contributions are close to (or may become close to in the future) the 4,000 MPAA. Lifetime Allowance The Lifetime Allowance applies to the value of all the pension benefits you build up from almost all sources (apart from the State) over your working life. For the 2017/18 tax year the allowance is 1 million. It has been announced that it will increase with the Consumer Prices Index (CPI) from April Please note that widows pensions and other pensions paid following the death of someone else may not count towards the Lifetime Allowance. Overseas pensions may or may not be included, depending on the circumstances. You can build up benefits over the Lifetime Allowance, but you would have to pay a tax charge on the excess. This charge is 25% if you take these excess benefits as a pension or annuity, which would then also be subject to Income Tax. The charge goes up to 55% if you take the excess as cash. Please note that death benefits paid as lump sums from an HMRC approved registered life assurance arrangement also count towards the Lifetime Allowance. If these benefits, along with any other pensions or cash sums being paid, go over the allowance, a charge of 55% will apply to the excess, unless it is used to pay for dependants pensions. If you think your contributions or benefits may be close to any of the allowances, please consider taking financial advice. Important note do you have Primary, Enhanced, Fixed Protection, Individual Protection 2014, Fixed Protection 2014 or have applied for / are going to apply for Individual Protection 2016, or Fixed Protection 2016? If you join an employer s pension plan and/or registered life assurance scheme, either by completing an application form or as a result of automatic enrolment, you will lose your Enhanced or Fixed Protection. If you join an employer s pension plan through automatic enrolment but opt out within the one-month period, you will be treated as if you have never been a member and you will not lose your protection. If you have Primary Protection, Individual Protection 2014 or if you have applied for / are going to apply for Individual Protection 2016, pension contributions can still be paid into your pension policy. Please note that you will have to pay a tax charge on any pension savings above your protected Lifetime Allowance. More information on protection and automatic enrolment is available on the HMRC website at: Neither your employer nor the Plan provider are responsible for any tax charge or loss of tax relief you incur through joining or being automatically enrolled into any pension or life assurance arrangements. Page 22

23 Life Assurance Plan All employees are eligible for this benefit. Brakes meets the full cost. The life assurance company may apply special terms to some people they will let you know if you are one of them. Level of cover If you die while still working at Brakes, a cash sum life assurance benefit will be payable if you are eligible. The level of cash sum depends on whether you pay pension contributions at the Auto-Enrolment rates or the Elective rates or if you are not a pension scheme member, as follows: Category of colleague Non-pension scheme member Member of the Brakes Group Personal Pension Plan on Auto- Enrolment contribution basis Member of the Brakes Group Personal Pension Plan on Elective contribution basis Level of life assurance cover 1 x annual basic salary 1 x annual basic salary 2 x annual basic salary You automatically qualify for this benefit upon joining the Employer unless you request otherwise. If you do not join the Brakes Group Personal Pension Plan you will still be eligible but your level of cover may be different as above. In all cases, the lump sum multiple will be based on your annual basic salary at date of death. The Life Assurance Plan has a 'free cover level' that is, a level of cover that can be paid out without the need for any medical underwriting. The free cover level may be sufficiently high to mean that you would receive the full level of cover without underwriting. If not, the Employer will let you know what to do next so that you can qualify for the full level of cover. Subject to the above, if you decide to Opt-up to the Elective contribution basis within 12 months of first becoming eligible (e.g. after completion of the 3 or 6 month Employer service criteria based upon grade), there will be no underwriting requirement. However should you Opt-up after 12 months, you will be subject to medical underwriting and your Employer will advise you if this is the case and provide a form for completion. Until underwriting is completed and terms advised, your additional life assurance cover will not be insured. Please note if you joined the Plan in April 2015 and are a former member of the Brakes Money Purchase Pension Plan a different life assurance basis applies. If you are in this group please refer to the communications you have been sent for details. Alternatively, please contact HR Administration in the first instance. Page 23

24 Cash sum payment Following your death, the Trustees of the Life Assurance Plan would pay the cash sum to your beneficiaries. You tell the Trustees who you would like to receive this benefit by filling in the relevant Expression of Wish Form (available on request). The Trustees have the final decision over payment of the benefit (in this way, the amount does not become part of your estate and can be paid free of inheritance tax). So, the form is not legally binding but the Trustees will take account of your wishes. If you have already returned a form, you only need to fill in a new one if you want to change the names on it. If you leave If you leave Brakes your life assurance benefit will stop. If you leave the Pension Plan your life assurance benefit may reduce - please see the above table, in the Level of life assurance cover section, for details. Remember to look for cover elsewhere if you are using it for something specific (to cover your mortgage, for example). This summary is only intended to give a brief overview of this benefit. The full rules governing the scheme are outlined in the provider s scheme documentation and a copy of this is available on request from HR Administration in Ashford. Page 24

25 About Aon Aon Consulting Limited s advice is to Brakes, so unless you request Aon Consulting Limited to provide you with advice with regard to the Plan, you will not receive any advice or a recommendation from Aon Consulting Limited. If you want to receive advice from Aon Consulting Limited on products other than the Plan, you would need to agree payment with Aon Consulting Limited. Aon Consulting Limited will tell you their charge, and how to pay them, before carrying out any business for you. Please note that where this booklet includes a link to a third party website, Aon has no control over and is not responsible for the third party website content. Including these links does not imply endorsement in any way of the site it links to. About L&G L&G is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. You can contact L&G on or you can access the Plan's website here: Problems and complaints If you have a complaint please write to: Aon Consulting Limited The Compliance Department 3 The Embankment Sovereign Street Leeds West Yorkshire LS1 4BJ Tel: complaints@aon.co.uk If you cannot settle your complaint with Aon Consulting Limited you may be entitled to refer it to the Financial Ombudsman Service (FOS) depending on who you are, what capacity you are acting in and the circumstances of your complaint. The FOS website is available at or call for further information. Page 25

26 Useful contacts The Financial Services Compensation Scheme (FSCS) The FSCS is the compensation scheme for customers of UK authorised financial services firms and can compensate customers if a firm has stopped trading or does not have enough assets to pay claims made against it. Aon Consulting Limited and L&G are covered by the FSCS. You may be entitled to compensation from the FSCS if Aon Consulting Limited or L&G cannot meet their obligations. This depends on the type of business and the circumstances of the claim. Most types of investment business are covered in full up to 50,000. Insurance advising and arranging is protected for 100% of the claim with no upper limit. Your personal policy within the Group Personal Pension Plan falls into the insurance advising and arranging category for compensation entitlement purposes. For further information about compensation scheme arrangements please contact: Financial Services Compensation Scheme 10th Floor Beaufort House 15 St Botolph Street London EC3A 7QU Tel: or The Pensions Advisory Service (TPAS) TPAS is an independent non-profit organisation that provides free information, advice and guidance on all pensions, including State, company, personal and stakeholder schemes. TPAS is available to help at any time if you have questions about your own pension arrangements. TPAS 11 Belgrave Road London SW1V 1RB Tel: You can also find more information about the Automatic Enrolment rules on the TPAS website at: Page 26

27 The Pensions Regulator (TPR) TPR oversees the running of workplace pension schemes in the UK. It has wide-ranging legal powers and can step in if employers are failing in their duties towards pension schemes. Their website contains a useful section for people who want to know more about automatic enrolment or have concerns about their workplace pension arrangements. Tel: GOV.UK The Government website contains a State Pensions Guide, details about the Pension Tracking Service (if you have lost track of a pension) and a Pension Scheme Administration Guide. Aon Employee Benefits Transfer Advice Team 4 New Fields Business Park Stinsford Road Poole BH17 0NF Tel: pensionswitch.team@aon.com Page 27

28 Jargon Buster Annual Allowance The maximum amount of pension contributions you can invest in any tax year while still receiving tax relief. Annual Management Charge (AMC) The charge to cover set up and management costs, administration and day-to-day fund management. Annuity An annuity is what most people call their pension. It s a financial product that will provide you with an income for the rest of your life. You can use all or part of your pension fund to buy an annuity from an insurance company. Automatic Enrolment Automatic Enrolment was introduced by the Government to encourage people to save more for their retirement. Employers will automatically enrol their eligible employees into their pension scheme. Employees then have the option to opt out. Benefits What you can take when you choose to take your retirement options. Contributions A payment into your pension plan made by you, your employer or any other person. Default Investment Option Where your contributions will be invested at outset or if you do not make a choice yourself. GPP (Group Personal Pension)/GSHP (Group Stakeholder Pension) An arrangement made by an employer for employees of that company to participate in a personal pension scheme on a group basis. Her Majesty s Revenue and Customs (HMRC) A department of the UK Government responsible for the collection of taxes. Income Tax The amount of tax you pay from your earnings. Inflation This is the increase in the cost of living over time. Inflation means that the value of money reduces over the years. So, if you choose a level annuity that is, one that does not increase year by year over time it will gradually buy you less and less, as the price of everything else increases. Lifestyling An investment strategy used in Defined Contribution (DC) schemes. Under lifestyling, your investments move automatically based on your age and the length of time until you are due to retire. Page 28