Benefits payable when you die

Transcription

1 Benefits payable when you die For Section C members This guide contains details of the benefits that may be payable to your dependants in the event of your death, and the things you can do now to make things easier for those closest to you should something happen. July 2012

2 Introduction The Postal Services Act 2011 (the Act) introduced powers for the Government to take over responsibility for the majority of the assets and liabilities of the RMPP. The Government has established a new pension scheme (the RMSPS) which will be responsible for paying the benefits that members of the RMPP had built up to the end of 31 March 2012 (the cut-off date). The RMPP will remain responsible for all pension benefits earned by members after the cut-off date (as well as some increases applicable to benefits earned up to the cut-off date and all Bonusplan and Flexiplan AVC accounts). This means that only those who were active members of the RMPP on 1 April 2012 will have any benefit entitlement from the RMPP. Members who were already pensioners at the cut-off date will receive their entire pension from the new Government scheme the RMSPS as will those members who had left employment with the Company or opted out of the RMPP on or before the cut-off date but were not immediately in receipt of a pension (deferred members). Members who were in employment with the Company on 1 April 2012 will receive two payments when they start to receive their pension one from the RMSPS in respect of pension accrued up to the end of the cut-off date and the other from the RMPP in respect of pension accrued after the cut-off date (as well as some increases applicable to benefits earned before the cut-off date, as mentioned above). The way that benefits will be allocated between the RMSPS and the RMPP is complex but the following explains broadly how it will be achieved. k A benefit is calculated, on the same basis as if the Act had not been passed: k Calculating what the RMPP pays The RMPP will pay a sum which is equal to the overall benefit described above, less what you would have had from the RMPP if this calculation were done as at 31 March 2012; k Calculating what the RMSPS pays The RMSPS pays the benefits built up to the end of the cut-off date. These calculations are carried out by the Pensions Service Centre (PSC). 2

3 The RMSPS and the RMPP not only provide you with a pension and the option of a cash lump sum when you retire or choose to take your benefits, they also offer some generous benefits designed to make life easier for your beneficiaries in the event of your death. Your beneficiaries might be your: k Spouse; k Civil partner; k Children; or k Someone who is financially dependent on you when you die (such as an unmarried partner or an elderly relative who relies on your support). We may pay a pension to one or more of these people, subject to certain requirements, and we may also provide a lump sum payment in certain circumstances. These are valuable benefits and it is therefore important that we are aware of your wishes in the event of your death. This guide explains more about the various death benefits and the things you can do now to make life easier for others. This guide is intended to be a summary of the provisions of the RMSPS and the RMPP as they relate to your death benefits. The RMSPS is governed by formal Rules. Responsibility for managing the scheme rests with the Manager of the RMSPS. If there is a conflict between the Rules and this guide (insofar as it relates to benefits payable from the RMSPS), the Rules will prevail. The RMPP is governed by formal legal documents known as the Trust Deed and Rules and is managed by the Trustee. If there is a conflict between those documents and this guide (insofar as it relates to benefits payable from the RMPP), the Trust Deed and Rules will prevail. This guide reflects current tax laws. Any nomination (be it prior to 1 April 2012 or later) will be taken into account in relation to benefits payable from the RMSPS and the RMPP unless we are advised otherwise. 3

4 Lump sum death benefit Each of the RMSPS and the RMPP may pay a lump sum when you die, the amount of which will depend on your circumstances at the time, for example whether: k You are still working for the Company and paying into the RMPP; k You are receiving some or all of your benefits; or k You have left Company employment or have chosen to leave the RMPP and so have a preserved pension. In all cases, the maximum amount payable may be subject to the scheme earnings cap (further details can be found in the Guide to benefits - Section C ). For employee members, various flexible retirement options are available so that you may choose to receive part of your benefits whilst continuing to build up further RMPP benefits, payable at a later date. The charts on pages 7 and 8 will help you to understand the amount of the lump sum death benefit payable in different situations. You can find out more about the different flexible retirement options in the guide Flexible retirement options and benefits which can be downloaded from or is available on request from the Pensions Service Centre (PSC) whose contact details are at the end of this guide. 4

5 Pensions for your dependants In addition to any lump sum death benefit, each of the RMSPS and the RMPP will also pay a pension on your death to one or more of the following people (depending on your circumstances): k A widow, widower or civil partner; k Your children (up to the age of 18 or, if they are in full-time education or training, up to the age of 23). As explained in the guide Flexible retirement options and benefits, which can be downloaded from or is available on request from the Pensions Service Centre (PSC), it is possible for your NRA 60 and NRA 65 pension to be paid at different times and for you to remain in Company employment whilst receiving some or all of those benefits. In the same way that your flexible retirement options affect the calculation of the lump sum death benefit, they also determine how the pensions for your widow, widower, civil partner and children are calculated. 5

6 Children s pensions Your children will normally get a pension if they are under 18, or under 23 and in full-time education or training which is approved by the Manager of the RMSPS and the Trustee of the RMPP (for their respective benefits), or incapable of self-support because of physical or mental incapacity. Their pension will be a proportion of the pension you were entitled to or, if you die in reckonable service, would have received if you had retired on ill health grounds on the date of your death. How much they get will depend on the number of children you have and whether or not a spouse s, civil partner s or dependant s pension is payable: k Where a spouse s, civil partner s or dependant s pension is payable, the proportion will be ¼ of your pension if there is one child or ½ (divided between the children) where there are two or more children; or k Where no spouse s, civil partner s or dependant s pension is payable, the proportion will be of your pension if there is one child or (divided between the children) where there are two or more children. 6

7 What benefits will be paid when I die? Please follow the steps in one of the following two charts (depending on whether or not you are still employed by the Company) and then refer to the corresponding section later in this guide to see how the lump sum is calculated. The benefits payable on your death will depend on your circumstances immediately before you die. Follow this flow-chart if you are still employed by the Company: Are you still paying contributions (or have you reached maximum reckonable service)? NO YES Are you receiving your NRA 60 pension? Are you receiving your NRA 60 pension? NO YES NO YES Go to b Go to a Are you receiving your NRA 65 pension? Are you receiving your NRA 65 pension? NO YES NO YES Go to f Go to e Go to d Go to c 7

8 Follow this flow-chart if you are NOT still employed by the Company: Are you receiving your NRA 60 pension? NO YES Are you receiving your NRA 65 pension? Are you receiving your NRA 65 pension? NO YES NO YES Go to h Go to i Go to g Go to c Please note: Your NRA 60/65 pensions are the pension benefits payable from age 60 or 65 respectively. 8

9 a A lump sum death benefit of whichever of the following benefits, or below gives the highest amount: Four times your final pensionable pay, less the value of the pension (including any pension supplement) and cash lump sum benefits you have received since you began to receive your NRA 60 pension. Please note: For the purposes of this calculation, final pensionable pay is not reduced by the Lower Earnings Deduction. Also, if you are working part-time at the date of death, the pensionable pay used in this calculation is not uprated to the full-time equivalent); or The total of: a) Five times the annual rate of the NRA 65 pension (without enhancement and excluding any pension supplement) at the time of your death; plus b) If you die within five years of your NRA 60 pension coming into payment, the balance of the NRA 60 pension you would have received for the first five years since your payments started (excluding any future increases and pension supplement). Please note: If you have been receiving your NRA 60 pension for more than five years, there will be no lump sum payable in respect of this portion of your benefit; or If you have a previous period of NRA 60 service which is still preserved (i.e. you are not yet receiving any pension payments) and it has not been added to your current service, then a lump sum of five times the annual rate of that NRA 60 pension built up at the time of your death. A pension payable to your spouse or civil partner calculated as follows: k Payable at the same rate as your pension for the first 91 days after your death (excluding any pension supplement) and then half of the NRA 60 pension (excluding any pension supplement) that you were receiving at the date of your death ignoring any pension you gave up for a lump sum when your payments started, plus (if relevant) half the NRA 60 preserved pension (excluding any pension supplement) that has built up at the date of your death; plus k Half the NRA 65 pension (excluding any pension supplement) that you would have received if you had been retired on ill health grounds with immediate payment at the date of your death. Children s pensions will be payable in certain circumstances. Please refer to page 6 for further information. 9

10 b A lump sum death benefit of whichever of the following benefits or below gives the higher amount: Four times your final pensionable pay. Please note: For the purposes of this calculation, final pensionable pay is not reduced by the Lower Earnings Deduction. Also, if you are working part-time at the date of death, the pensionable pay used in this calculation is not uprated to the full-time equivalent); or Five times the annual rate of any preserved NRA 60 pension which has not been added to your current service (excluding any pension supplement and without enhancement) that would have been payable to you at the time of your death. A pension payable to your spouse or civil partner calculated as follows: k Half the NRA 60 and NRA 65 pension that you would have received if you had been retired on ill health grounds with immediate payment at the date of your death. Children s pensions will be payable in certain circumstances. Please refer to page 6 for further information. Please ensure you have referred to the flow-chart guides on pages 7 and 8 to make sure you are reading the section appropriate to you. 10

11 c A lump sum death benefit of: If you die within five years of your NRA 60 pension coming into payment, the balance of the NRA 60 pension you would have received for the first five years since your payments started (excluding any future increases and any pension supplement). If you have been receiving your NRA 60 pension for more than five years, there will be no lump sum payable in respect of that portion of your benefit; plus If you die within five years of your NRA 65 pension coming into payment, the balance of the NRA 65 pension you would have received for the first five years since your payments started (excluding any future increases and any pension supplement). If you have been receiving your NRA 65 pension for more than five years, there will be no lump sum payable in respect of that portion of your benefit. Please note: If you were retired from Company service on ill health grounds, and you die within five years of starting to take your pension benefits, the following benefits would be paid, if greater than and combined: Four times your final pensionable pay, less the value of the NRA 60 and NRA 65 pensions (including any pension supplement) and lump sum benefits you have received since you began to receive your NRA 60 and NRA 65 pensions. Please note: For the purposes of this calculation, final pensionable pay is not reduced by the Lower Earnings Deduction. Also, if you are working part-time at the date of death, the pensionable pay used in this calculation is not uprated to the full-time equivalent. A pension payable to your spouse or civil partner at the same rate as your pension (excluding any pension supplement) for the first 91 days after your death and then calculated as follows: k Half the NRA 60 and NRA 65 pensions (excluding any pension supplement) that you were receiving at the date of your death ignoring any pension you gave up for a lump sum when your payments started. Children s pensions will be payable in certain circumstances. Please refer to page 6 for further information. 11

12 d A lump sum death benefit of whichever of the following benefits or below gives the higher amount: Four times your final pensionable pay, less the value of the pension (including pension supplement) and cash lump sum benefits you have received since you began to receive your NRA 60 pension. Please note: For the purposes of this calculation, final pensionable pay is not reduced by the Lower Earnings Deduction. Also, if you are working part-time at the date of death, the pensionable pay used in this calculation is not uprated to the full-time equivalent; or The total of: a) Five times the annual rate of the NRA 65 pension that would have been payable to you (without enhancement and excluding any pension supplement) at the time of your death; plus b) If you die within five years of your NRA 60 pension coming into payment, the balance of the NRA 60 pension you would have received for the first five years since your payments started (excluding any future increases and any pension supplement). Please note: If you have been receiving your NRA 60 pension for more than five years, there will be no lump sum payable in respect of this portion of your benefit. A pension payable to your spouse or civil partner calculated as follows: k Payable at the same rate as your pension (excluding any pension supplement) for the first 91 days after your death and then half the NRA 60 pension (excluding any pension supplement) that you were receiving at the date of your death ignoring any pension you gave up for a lump sum when your payments started; plus k Half the NRA 65 pension (excluding any pension supplement) that you would have received when you opted out, had you been 65 at that date. Children s pensions will be payable in certain circumstances. Please refer to page 6 for further information. Please ensure you have referred to the flow-chart guides on pages 7 and 8 to make sure you are reading the section appropriate to you. 12

13 e A lump sum death benefit of whichever of the following benefits or below gives the higher amount: Four times your final pensionable pay, less the value of the pension (including increases and any pension supplement) and cash lump sum benefits you have received since you began to receive your NRA 65 pension. Please note: For the purposes of this calculation, final pensionable pay is not reduced by the Lower Earnings Deduction. Also, if you are working part-time at the date of death, the pensionable pay used in this calculation is not uprated to the full-time equivalent; or The total of: a) Five times the annual rate of the NRA 60 pension (excluding any pension supplement and without enhancement) assuming you were entitled to the immediate payment of this pension at the time of your death; plus b) If you die within five years of your NRA 65 pension coming into payment, the balance of the NRA 65 pension you would have received for the first five years since your payments started (excluding any future increases and any pension supplement). Please note: If you have been receiving your NRA 65 pension for more than five years, there will be no lump sum payable in respect of this portion of your benefit. A pension payable to your spouse or civil partner, calculated as follows: k Payable at the same rate as your pension (excluding any pension supplement) for the first 91 days after your death and then half the NRA 65 pension (excluding any pension supplement) that you were receiving at the date of your death ignoring any pension you gave up for a lump sum when your payments started; plus k Half the NRA 60 pension (excluding any pension supplement) that you would have received when you opted out, had you been 65 at that date. Children s pensions will be payable in certain circumstances. Please refer to page 6 for further information. 13

14 f A lump sum death benefit of whichever of the following benefits or below gives the higher amount: Four times your final pensionable pay. Please note: For the purposes of this calculation, final pensionable pay is not reduced by the Lower Earnings Deduction. Also, if you are working part-time at the date of death, the pensionable pay used in this calculation is not uprated to the full-time equivalent; or Five times the annual rate of the NRA 60 and NRA 65 pensions (excluding any pension supplement and without enhancement) assuming you were entitled to the immediate payment of this pension at the time of your death. A pension payable to your spouse or civil partner calculated as follows: k Half the NRA 60 and NRA 65 pension (excluding any pension supplement) that you would have received at the time of your death. Children s pensions will be payable in certain circumstances. Please refer to page 6 for further information. Please ensure you have referred to the flow-chart guides on pages 7 and 8 to make sure you are reading the section appropriate to you. 14

15 g A lump sum death benefit as follows: k If you die within five years of your NRA 60 pension coming into payment, the balance of the NRA 60 pension you would have received for the first five years since your payments started (excluding any future increases and any pension supplement). If you have been receiving your NRA 60 pension for more than five years, there will be no lump sum payable in respect of that portion of your benefit; plus k Five times the annual rate of the NRA 65 pension that would have been payable to you (excluding any pension supplement and without enhancement) at the time of your death. Please note: The lump sum death benefit from the above calculation is capped at a maximum of four times your final pensionable pay. For the purposes of this calculation, final pensionable pay is not reduced by the Lower Earnings Deduction. Also for part-time employees, final pensionable pay is not uprated to the full-time equivalent. A pension payable to your spouse or civil partner calculated as follows: k Payable at the same rate as your pension (excluding any pension supplement) for the first 91 days after your death and then half the NRA 60 pension (excluding any pension supplement) that you were receiving at the date of your death ignoring any pension you gave up for a lump sum when your payments started; plus k Half the NRA 65 pension (excluding any pension supplement) that you would have received at the date of your death. Children s pensions will be payable in certain circumstances. Please refer to page 6 for further information. 15

16 h A lump sum death benefit as follows: k Five times the annual rate of the NRA 60 and NRA 65 pension (excluding any pension supplement and without enhancement) at the date of your death. Please note: The lump sum death benefit from the above calculation is capped at a maximum of four times your final pensionable pay. For the purposes of this calculation, final pensionable pay is not reduced by the Lower Earnings Deduction. Also for part-time employees, final pensionable pay is not uprated to the full-time equivalent. A pension payable to your spouse or civil partner calculated as follows: k Half the NRA 60 and NRA 65 pension (excluding any pension supplement) that would have been payable to you at the time of your death. Children s pensions will be payable in certain circumstances. Please refer to page 6 for further information. Please ensure you have referred to the flow-chart guides on pages 7 and 8 to make sure you are reading the section appropriate to you. 16

17 i A lump sum death benefit as follows: k Five times the annual rate of the NRA 60 pension (excluding any pension supplement and without enhancement) at the time of your death; plus k If you die within five years of your NRA 65 pension coming into payment, the balance of the NRA 65 pension you would have received for the first five years since your payments started (excluding any future increases and any pension supplement). If you have been receiving your NRA 65 pension for more than five years, there will be no lump sum payable in respect of that portion of your benefit. Please note: The lump sum death benefit from the above calculation is capped at a maximum of four times your final pensionable pay. For the purposes of this calculation, final pensionable pay is not reduced by the Lower Earnings Deduction. Also for part-time employees, final pensionable pay is not uprated to the full-time equivalent. A pension payable to your spouse or civil partner calculated as follows: k Payable at the same rate as your pension (excluding any pension supplement) for the first 91 days after your death in respect of your NRA 65 pension, and then half the NRA 65 pension (excluding any pension supplement) that you were receiving at the time of your death; k Half your NRA 60 pension (excluding any pension supplement) that would have been payable to you at the date of your death. Children s pensions will be payable in certain circumstances. Please refer to page 6 for further information. 17

18 What happens if I have benefits from another pension scheme? If the value of all benefits payable from all pension schemes (including benefits payable on death) does not exceed the Lifetime Allowance (LTA) then there will be no additional tax for your personal representatives to pay. It will be the responsibility of your personal representatives to declare any benefits in excess of the LTA to HM Revenue & Customs (HMRC) at the time your benefit payment is made. To whom will the lump sum death benefit be paid? However the lump sum is calculated, in accordance with the preceding pages, it can be paid to various beneficiaries, including people nominated by you. The lump sum will not form part of your estate and so will not be subject to Inheritance Tax. Please note: Inheritance Tax laws may change from time to time and neither the Manager of the RMSPS, the Trustee of the RMPP nor the Pensions Service Centre can provide advice on Inheritance Tax. For further information you should contact your local tax office or visit the HMRC website at You could also contact an Independent Financial Adviser. You can find a local Independent Financial Adviser by visiting Who can I nominate? You can nominate one or more people to receive your death benefit lump sum, even if they are not related to you. You can also nominate certain organisations, such as a registered charity, to receive a share of your death benefit. How can I be certain that you will give the money to the right people? Each of the Manager of the RMSPS and the Trustee of the RMPP have complete discretion when selecting beneficiaries but we will normally follow your Lump sum death benefit nomination form. It is important that your wishes are clear. Therefore, if your personal circumstances change, please ensure you complete a new nomination form straight away (for example, when you marry, divorce or separate), even if you wish to re-confirm the existing nominees. Each of the Manager of the RMSPS and the Trustee of the RMPP may choose not to follow a nomination and may do this if your circumstances have changed and you have not completed a new nomination form. We will consider any subsequent will you have written. Also, Court Orders can affect death benefit payments. 18

19 Please note: If you do not make a nomination at all, only the following persons will be eligible to receive the death benefit: your widow(er) or civil partner, your grandparents and their descendants (and the spouses, civil partners, widows or widowers of those descendants e.g. your parents, brothers, sisters, children, nieces, nephews, sister s husband etc), your dependants and any person with an interest in your estate. How do I nominate someone? You should complete a Lump sum death benefit nomination form if: k You have never completed one before; or k You need to update or re-confirm a previous nomination. If you nominate more than one person or organisation, please let us know how much you want to be paid to each, for example, 50% to your mother, 25% to your brother and 25% to your friend. Lump sum death benefit nomination forms can be downloaded from or are available from: Pensions Service Centre PO Box 500 CHESTERFIELD S49 1WX If you need help completing the forms you can: k Phone the Pensions Service Centre (PSC) on Postline or please have a pen and paper ready; or k them, either via pensions.helpline@royalmail.com or via the website at Please quote your full name, date of birth and either your National Insurance number or membership number. 19

20 Pensions on the death of an unmarried member or a member not in a civil partnership Each of the RMSPS and the RMPP may pay a pension to one or more of your dependants if, when you die, you: k Are not married to or in a civil partnership with any person; and k Financially support someone. It will help the Manager of the RMSPS and the Trustee of the RMPP to make a decision if you complete a Dependant s pension nomination form. A copy can be downloaded from or is available from the Pensions Service Centre (PSC). However, your dependant will still be eligible to be considered for a pension if you do not complete the form. After your death (and never before then), the person you have nominated will be asked to provide information about their dependency on you. The Manager of the RMSPS and the Trustee of the RMPP will then decide whether or not they are eligible for the pension, and if a pension should be paid. If we decide that a pension is to be paid, your dependant will be contacted and advised of how long the pension will be paid for, and of any terms applying to it. Who can I nominate to receive a dependant s pension? The person you nominate must be financially dependent on you in some way immediately before your death. This will normally be someone who is living with you. Examples of people who may be considered for a dependant s pension are: k A long-term partner (to whom you are neither married nor in a civil partnership with); k A relative who cannot support themselves because of physical or mental ill health; or k Your full-time carer. Please note: Current tax laws may prevent the payment of a dependant s pension to your son or daughter aged over 23. Please contact the PSC for further information if needed. 20

21 What does financially dependent mean? A person may be considered financially dependent on you if: k They share living expenses with you; or k Receive financial support from you; and k Their standard of living would be affected by the loss of your contribution or support. How much will a dependant s pension be? A dependant s pension is normally equal to a widow(er) s pension. That is, half of your pension (excluding any pension supplement) before any of the pension is exchanged for a lump sum. Please note: We may pay a pension of a smaller amount and may reduce or stop a dependant s pension at any time. Normally, we will pay only one dependant but if more than one is chosen, we will decide how the pension is to be shared, taking into account the dependants circumstances at the time of your death. In each case, decisions will be taken by the Manager of the RMSPS (in respect of the RMSPS) and the Trustee of the RMPP (in respect of the RMPP). How can I nominate someone? You should complete and return a Dependant s pension nomination form which can be downloaded from or is available on request from: Pensions Service Centre PO Box 500 CHESTERFIELD S49 1WX If you need help in completing the form you can: k Phone the PSC on Postline or please have a pen and paper ready; or k them, either via pensions.helpline@royalmail.com or via the website at 21

22 Can I change my nomination? To withdraw your nomination you must write to the address on the previous page, quoting your full name, date of birth and either your National Insurance number or membership number. If you simply want to change your nomination you will need to complete a new form, which can be downloaded from or is available from the PSC their details are given on page 21. Please note: Your nomination may be disregarded if your personal circumstances have changed significantly since it was last completed. You should therefore ensure your nomination form is kept up to date with your wishes. Data Protection Act We will need to process certain data about you: k To calculate and pay benefits; k For statistical purposes; k For reference purposes; and k To administer the RMSPS and the RMPP. This may include sensitive data, such as medical details or information about your nominee(s) for death benefit nominations, dependant s pensions, etc. Where sensitive data is to be processed, you will need to confirm in writing (by signing the relevant nomination and/or direction forms) that you, and your nominee(s) where appropriate, agree to the processing of this data for these purposes and that the data may be shared with the administrators, Actuary and advisers to the RMSPS and the RMPP, the Company and other third parties as necessary. By signing the nomination form you are confirming that you fully understand this and that you, and your nominee(s) where appropriate, agree to the processing of this data for these purposes. 22

23 Glossary of terms Actuary An expert on pension scheme assets and liabilities, specialising in life expectancy and probabilities (the likelihood of things happening) for insurance and pension purposes. The Actuary for the RMPP is appointed by the Trustee and the Actuary for the RMSPS is appointed by the Government. Additional Voluntary Contributions (AVCs) Extra contributions you can pay to increase your RMPP benefits. You may pay up to a total of 100% of your taxable pay to the RMPP should you wish, including your normal contributions of 6% of contributory pay. However, please be aware that if you wish to pay significant additional pension contributions, they may have to be restricted to ensure that any normal regular deductions can still be made from your earnings. Details of the AVC arrangements are included in the Guide to Additional Voluntary Contributions which can be downloaded from or requested from the Pensions Service Centre. Calculation year Any year within the last three, provided it ends on either: k The last day of your reckonable service; or k A date which is 91 days (or up to eight multiples of 91 days) before the last day of your reckonable service. For example: If your last day of reckonable service is 30 November 2012, your calculation year could end on that date or on any of the following dates which are 91 days (or multiples of 91 days) before 30 November 2012: k 31 August 2012 k 1 June 2012 k 2 March 2012 k 2 December 2011 k 2 September 2011 k 3 June 2011 k 4 March 2011 k 3 December 2010 Please note: The calculation year only relates to the calculation of pension for pensionable service before 1 April For pensionable service after 31 March 2008, the Plan Year applies. Company k For the RMG section, Royal Mail Group or any of its associated or subsidiary companies which are participating in the RMPP; and k For the POL section, Post Office Limited. Contributory pay The amount of pay used to work out how much has to be paid into the RMPP for your benefits. It is equal to your annual rate of basic pay, plus other amounts stated as contributory in your terms and conditions of employment, minus the Lower Earnings Deduction. 23

24 Final pensionable pay This is used to calculate your pension benefits that relate to your service before 1 April 2008 and the lump sum benefit paid to your dependants if you die while still working for the Company. It is either: k Your highest pensionable pay for any calculation year during the last three years of your reckonable service, ending on your last day of reckonable service; or, if greater k The highest average of your pensionable pay in any three consecutive tax years in the last 10 years before you leave service, take your benefits or die. Where final pensionable pay is determined using a calculation year (or tax years) other than that which ends on your last day of reckonable service, it will be increased to take account of the period between the end of the calculation year and the last pension increase date before leaving reckonable service. If you work part-time, the pensionable pay used to calculate your final pensionable pay for pension purposes (but not for the lump sum benefit paid to your dependants if you die while still working for the Company) will first be adjusted to its full-time equivalent. When calculating the lump sum death-in-service benefit, final pensionable pay is not reduced by the Lower Earnings Deduction. Ill health Means serious physical or mental ill health (not simply a decline in energy or ability) such that, in the opinion of the Company, you are permanently incapable of: k Carrying out your current duties; k Carrying out such other duties as the Company might reasonably expect you to perform for it; and k Engaging in employment with any other employer of a type which, in the opinion of the Company, would be reasonable and appropriate for you. However, if you: k Become entitled to a preserved pension; and k You were in pensionable service on 31 March 2000, ill health means physical or mental incapacity that prevents you from following your normal occupation or seriously impairs your earning capacity. The Company s decision as to whether you are in ill health will be final. Confirmation will be required from a registered medical practitioner that you are (and will continue to be) incapable of carrying on your occupation because of physical or mental impairment. In addition, if you are under 55 when you apply for a pension on ill health grounds, you must have ceased carrying on your occupation. 24

25 Lower Earnings Deduction Currently 3,328 a year for members who work full-time (scaled down for part-time members by reference to hours worked and for those members with any non-reckonable service during a Plan Year). If you work part-time, the Lower Earnings Deduction is reduced in proportion to the number of hours you actually work (compared to the hours that you would work if you worked full-time). For example: If you work 20 hours a week, and the full-time hours for the same job are 40 hours a week, the normal (current) Lower Earnings Deduction of 3,328 a year will be reduced to 3,328 x 20/40 = 1,664 a year when working out your contributory pay. Manager The Secretary of State or those to whom he has delegated responsibility for management of the RMSPS. NRA 60 pension Pension benefits you earned during pensionable service prior to 1 April 2010, where the applicable Normal Retiring Age is 60. NRA 65 pension Pension benefits you earned during pensionable service on and from 1 April 2010, where the applicable Normal Retiring Age is 65. Pension supplement An additional amount of pension based on pensionable service and the Lower Earnings Deduction. It may be paid in addition to your RMSPS and/or RMPP pensions but ends when you reach State Pension age. Under the rules of the RMSPS and the RMPP, any pension supplement due would not be paid until you stop working for the Company. The pension supplement is calculated as follows: k For pensionable service before 1 April 2008: 1/60th of the average Lower Earnings Deduction over the period during which final pensionable pay is calculated, with an additional pro-rata amount for part years. k For pensionable service on or after 1 April 2008: The sum of the supplement blocks that have built up for your pensionable service after 31 March 2008 (increased in the same way as your pension blocks up to the renewal date before your last day of service). The supplement block for each Plan Year is calculated at the renewal date as 1/60th of the Lower Earnings Deduction (reduced appropriately if you work part-time or if you had any periods of non-reckonable service during the Plan Year concerned). 25

26 The maximum combined pension supplement permitted is a pension which would be equal to that calculated using a maximum of 45 years pensionable service. Pensionable pay This is used to calculate the part of your pension benefits for your service before 1 April It is equal to your annual rate of basic pay, plus other amounts stated as pensionable in your terms and conditions of employment, minus the average Lower Earnings Deduction during the calculation year. If you work part-time, the pensionable pay in relation to a calculation year used to calculate your final pensionable pay for pension purposes (but not for the lump sum benefit paid to your dependants if you die while still working for the Company) will first be adjusted to its full-time equivalent. Pensionable service The period of your employment that is taken into account when working out your pension benefits. It is the same as reckonable service unless it has been scaled down by reference to your hours because you worked part-time. The maximum pensionable service used to calculate benefits is 45 years. Preserved pension If you leave service (or opt out of the RMPP) before Normal Retiring Age, you will not lose the benefits you have built up. You will be entitled to a preserved pension (also called a deferred pension) which would normally be paid from Normal Retiring Age. Reckonable service Includes service as a member, service transferred in from other pension schemes, and additional service bought by Additional Voluntary Contributions (AVCs) or by additional Company contributions. It does not include any periods during which you opted out of the RMPP. RMPP Royal Mail Pension Plan. RMSPS Royal Mail Statutory Pension Scheme. Trustee Royal Mail Pensions Trustees Limited the organisation that manages the RMPP in accordance with its Trust Deed and Rules. We Us Our The Manager of the RMSPS and/or the Trustee of the RMPP. 26

27 Get in touch For further information on benefits payable when you die or for more general information about the RMSPS or the RMPP, you can contact the Pensions Service Centre (PSC) using the details below. Pensions Service Centre PO Box 500 CHESTERFIELD S49 1WX Pensioner Helpline Helpline for all other members or Postline network users can call Please quote your full name, date of birth and either your National Insurance number or membership number when contacting the PSC. All booklets are also available to download from the website at 27

28 3C July 2012