Defined Benefit Section. Member Booklet. Your Pension. Your Future.

Transcription

1 Defied Beefit Sectio Member Booklet Your Pesio. Your Future.

2 2 Cotets Itroductio 2 The DB Sectio of the Scheme at a glace 3 Your beefits at Normal Retiremet Date 4 Death before retiremet 6 Death after retiremet 7 Leavig the DB Sectio of the Scheme 8 Additioal Volutary Cotributios 9 Temporary absece 10 Lookig after your iterests 10 Tax status 12 The State ad you 13 Defiitios 14 Special addedum 16 Itroductio The Defied Beefit (DB) Sectio of the Prudetial Staff Pesio Scheme (the Scheme) is a importat ad valuable beefit the Compay provides for its employees. I additio to helpig you provide for your fiacial well-beig i retiremet, it also provides security for you ad your family. This booklet is a summary of what membership of the DB Sectio of the Scheme has to offer. It outlies the mai beefits ad explais the basic priciples of how it works. Every effort has bee made to esure the accuracy of this booklet however it is ot a legal documet. All your beefits are payable i accordace with the Trust Deed ad Rules, the legal documet goverig the Scheme. I the ulikely evet of ay discrepacy betwee ay iformatio provided to you ad the Trust Deed ad Rules, the Trust Deed ad Rules will prevail. If you wish to see a copy of the Trust Deed ad Rules or have ay queries the please cotact: Pesios Maager Prudetial 3 Sheldo Square Paddigto Lodo W2 6PR If you have ay questios or you would like more iformatio about ay aspect of this booklet or the beefits payable uder the DB Sectio of the Scheme, please cotact your dedicated Admiistratio Team: PSPSDB@aohewitt.com Call: (UK callers) (44) (Overseas callers) Write to: The Prudetial Staff Pesio Scheme Defied Beefit Sectio Ao Hewitt Scaig Divisio PO Box 196 Huddersfield HD8 1EG Fially, there are a umber of defied terms used throughout this booklet ad their meaigs are give o pages 14 ad 15. Prudetial Staff Pesio Scheme Member Booklet

3 The DB Sectio of the Scheme at a glace HOW IT WORKS Membership of the DB Sectio of the Scheme is ocotributory ad the Compay pays the cost of providig your beefits. The Scheme assets are kept strictly separate from the Compay s assets ad are ivested with the object of growig i value over the years. Whe members retire, die or leave the DB Sectio of the Scheme, the Scheme assets are used to provide the appropriate beefits. BENEFITS The DB Sectio of the Scheme provides the followig beefits: Retiremet Beefits are provided o retiremet (pages 4 to 5). A pesio which accrues at 1/60th a year ad is based o your Fial Pesioable Earigs ad Pesioable Service; A optioal lump sum (paid tax-free uder curret legislatio). Death Beefits may be provided whether you die before or after retiremet (pages 6 ad 7). A lump sum death beefit to oe or more of your Beeficiaries which ca iclude your Spouse, Civil Parter ad childre; A pesio for your Spouse, Civil Parter or Depedat(s); A pesio for your Eligible Child(re) (up to a maximum of 3). Leavig Beefits are provided if you leave the Compay before retiremet (pages 8 to 9). The beefits you may receive depeds o how log you have bee a member of the DB Sectio of the Scheme but may iclude: A deferred pesio; A trasfer value. TAX ADVANTAGES The DB Sectio of the Scheme is a registered scheme for HM Reveue & Customs' purposes. As a registered scheme, it ejoys a umber of tax advatages: Part of your retiremet beefit ca be take i the form of a tax-free lump sum; Lump sum death beefits are ormally tax-free (subject to the Lifetime Allowace); The Scheme s ivestmets are ormally exempt from capital gais ad icome tax; Full tax relief is usually available o ay Additioal Volutary Cotributios (AVCs) you choose to make. ANNUAL ALLOWANCE All beefits eared i the DB Sectio of the Scheme are subject to the Aual Allowace. This is a limit placed o the value of pesio beefits that you may build up i a certai period which qualify for tax relief. For the 2014/15 tax year the allowace is 40,000. You may be subject to a tax charge if your overall pesio beefits that you build up i the Scheme ad ay other registered pesio scheme durig a scheme year exceed the Aual Allowace. More iformatio o the Aual Allowace is available o the website ELIGIBILITY You will have bee iformed if you are a member of the DB Sectio of the Scheme. Membership of the DB Sectio of the Scheme was closed to ew etrats o ad from 1 August PAYING FOR THE DB SECTION OF THE SCHEME Membership of the DB Sectio of the Scheme is ocotributory. The Compay is resposible for payig the whole amout required to provide the beefits promised by the DB Sectio of the Scheme ad its admiistratio costs. Although you do ot eed to cotribute to the DB Sectio of the Scheme, you ca choose to icrease the beefits you will receive by payig AVCs. See page 9 for further details. Membership of the DB Sectio of the Scheme is o-cotributory ad the Compay pays the cost of providig your beefits. The Scheme assets are kept strictly separate from the Compay s assets ad are ivested with the object of growig i value over the years. 3

4 Your beefits at Normal Retiremet Date The DB Sectio of the Scheme provides you with a pesio ad the optio of a tax-free lump sum based o a accrual rate of 1/60ths, your Fial Pesioable Earigs ad Pesioable Service at your Normal Retiremet Date, ormally your 60th Birthday. You will be etitled to receive your Scheme pesio from your Normal Retiremet Date ad the pesio will be paid mothly for the rest of your life. 4 The formula used to work out your Scheme pesio is: 1/60 x Fial Pesioable Earigs x Pesioable Service Complete moths of Pesioable Service cout as a proportio of a year. Part of your pesio from the DB Sectio of the Scheme will be liked to arragemets for cotractig out of the State Secod Pesio (S2P) ad may be subject to special regulatios. Beefits provided by the DB Sectio of the Scheme are subject to HM Reveue & Customs limits. Example: The example below shows the pesio payable to a member retirig at Normal Retiremet Date with Fial Pesioable Earigs of 20,000 ad Pesioable Service of 15 years. 15/60 x 20,000 = 5,000 a year If you joied the DB Sectio of the Scheme before April 1986 please cotact your dedicated Admiistratio Team for details of how your pesio is calculated. PART-TIME SERVICE Special rules apply if you have part-time Service while a Scheme member. Further details ad a example calculatio are provided o page 12 but, i geeral, the formula above is used to calculate your beefits, with your actual Fial Pesioable Earigs icreased to your full-time equivalet ad your Pesioable Service decreased to take ito accout your reduced hours worked. LIFETIME ALLOWANCE The beefits that are payable from the DB Sectio of the Scheme are subject to the Lifetime Allowace. The Lifetime Allowace places a limit o the value of the total pesio beefits that you ca accumulate durig your workig life from the Scheme ad ay other registered pesio scheme without icurrig a additioal tax charge. This limit is curretly set at 1.25 millio for the 2014/15 tax year. You may be subject to a tax charge if your overall pesio fud exceeds the Lifetime Allowace. More iformatio about the Lifetime Allowace is available o the website PENSION INCREASES Oce your pesio is i paymet it will be icreased each year as follows: Beefits eared for Pesioable Service o or after 6 April icreased i lie with the rise i the Cosumer Prices Idex (CPI) for the year i questio, up to a maximum of 2.5%. Icreases ormally take effect from 1 April each year ad are based o the CPI icrease measured as at the previous 30 September. I additio the Compay may choose to award discretioary icreases. Beefits eared for Pesioable Service betwee 6 April 1997 ad 5 April icreased by the rise i the CPI for the year i questio, up to a maximum of 5%. Icreases ormally take effect from 1 April each year ad are based o the CPI icrease measured as at the previous 30 September. I additio the Compay may choose to award discretioary icreases. Beefits eared for Pesioable Service before 6 April will oly attract icreases o the Guarateed Miimum Pesio (GMP) part of your pesio. Your GMP will be icreased as required by legislatio (see page 16). Ay pesio i excess of the GMP may be icreased at the Compay s discretio. PAYMENT OF YOUR PENSION Your pesio from the DB Sectio of the Scheme will be paid mothly, i advace, o the first workig day of each moth. The first istallmet will be paid directly ito your chose bak accout ad may be more tha oe moth s pesio. Remember, pesios are treated as eared icome, ad are taxed i the same way as your curret earigs uder the PAYE system. YOUR TAX-FREE LUMP SUM You may exchage (or commute ) up to 25% of the value of your beefits for a oe-off lump sum. Uder curret legislatio, the lump sum is ormally paid tax-free. Takig a tax-free lump sum will lead to a reductio i your aual pesio calculated by applyig a rate specified by the Scheme Actuary. The actual amout of cash you ca receive for each 1 of pesio give up will deped o the rates i force at the time. EXTRA PENSION FOR DEPENDANTS Uder the Scheme s Trust Deed ad Rules your Spouse or Civil Parter is automatically etitled to a pesio o your death. Before you retire you may also choose to ask the Trustee to give up part of your pesio to provide additioal beefits (payable o your death) for your Spouse, Civil Parter or a Depedat(s). Prudetial Staff Pesio Scheme Member Booklet

5 THE STATE SPREADING OPTION If you take your pesio from the Scheme before reachig your State Pesio Age, your retiremet icome will ot iclude the Basic State Pesio. This is because the Basic State Pesio is oly payable from State Pesio Age. However i certai circumstaces the DB Sectio of the Scheme gives you the optio of electig to receive total retiremet icome which is broadly the same both before ad after State Pesio Age. This is called the State Spreadig Optio ad works as follows: You surreder, for the remaider of your lifetime, part of your DB Sectio pesio i exchage for a temporary icrease from your date of retiremet util you reach State Pesio Age. At State Pesio Age, this temporary icrease will stop ad your Basic State Pesio will start to be paid. Details of this optio will be provided shortly before retiremet or o request from your dedicated Admiistratio Team. EARLY RETIREMENT FROM SERVICE ON REQUEST You may ormally retire before your Normal Retiremet Date if you meet all of the followig coditios: You are age 55 or more; You have completed at least 2 years' Qualifyig Service; The Compay gives its approval. Your pesio will be reduced by factors decided by the Trustee as calculated by the Scheme Actuary to take accout of the fact you are beig paid early ad for a loger period of time. EARLY RETIREMENT THROUGH ILL-HEALTH If you have to leave Service with the Compay at ay age due to ill-health, you may be grated a immediate early retiremet pesio. Two categories of ill-health pesio are available the level which applies will deped o the view of the Compay s medical adviser as to the extet of your ill-health. I summary, the types of ill-health pesio which you may be eligible for depeds if you are determied to be sufferig from Total Icapacity (meaig you caot udertake ay paid employmet) or Serious Icapacity (meaig you caot udertake your curret job or similar oe). Total Icapacity Pesio The calculatio of the pesio uder this category will be based o your potetial Pesioable Service to your Normal Retiremet Date ad your Fial Pesioable Earigs at the date you retire. Serious Icapacity Pesio The calculatio of the pesio uder this category will be based o your completed Pesioable Service at the time of retiremet. Your Service must have stopped for a Serious Icapacity Pesio to be payable, though the amout payable will ot be reduced to take accout of early paymet. If you are i receipt of a Serious Icapacity Pesio, the Trustee may review ad (if appropriate to do so) reduce, icrease or susped that pesio. FLEXIBLE RETIREMENT The Compay is aware that situatios ad eeds chage ad wat to support all employees. Therefore you o loger eed to stop workig before takig your Scheme pesio uder the flexible retiremet optio. Certai coditios apply, amely: You must be aged at least 55; You have completed at least 2 years' Qualifyig Service; You must have agreemet from the Compay; You must sig a ew cotract of employmet which may ot iclude ay special terms that previously applied. You have the same optios available to you uder flexible retiremet as you do if you were retirig at your Normal Retiremet Date. You may cotiue to accrue pesio beefits after takig flexible retiremet but these will be as a member of the Defied Cotributio (DC) Sectio of the Prudetial Staff Pesio Scheme (the Scheme). The basis upo which future pesio beefits are eared differs greatly betwee the DB ad DC Sectios of the Scheme. I the DC Sectio of the Scheme the Compay will pay 6% of Pesioable Pay kow as Employer Credits. These are held i a Persoal Accout o your behalf ad ivested to purchase uits i your chose fud(s) ad the fial value of these uits will be used to purchase beefits with the isurer of your choice o retiremet. Membership of the DC Sectio of the Scheme is o-cotributory but you may make persoal cotributios. If you decide to make persoal cotributios the the Compay will pay Matchig Employer Credits up to a further 6% of Pesioable Pay. I the evet of your death i Service you will be treated as havig died after retiremet (see page 7). I additio, a lump sum may be payable from the DC sectio of the Scheme. For more iformatio about what beefits will be payable o your death if you become a active member of the DC Sectio of the Scheme, please refer to the Member Booklet for the DC Sectio of the Scheme which is available o the website For more iformatio about flexible retiremet please cotact your dedicated Admiistratio Team. It is also recommeded that you seek idepedet fiacial advice if you eed help o makig this very importat decisio. If you do ot have a fiacial adviser details of those ear to you ca be foud at LATE RETIREMENT If you stay i Service with the Compay after your Normal Retiremet Date you ca cotiue to build up pesio beefits util you complete 40 years' Pesioable Service. If you cotiue workig after completig 40 years' Pesioable Service, your beefits are icreased by a factor decided by the Trustee as calculated by the Scheme Actuary to make up for their late paymet. Should you die while employed after your Normal Retiremet Date, beefits will be paid to your Spouse, Civil Parter, Depedat(s) or childre as described for death i Eligible Service but by referece oly to completed Pesioable Service. 5

6 Death before retiremet If you die i Eligible Service while earig pesio beefits uder the DB Sectio of the Scheme the followig beefits will be payable. LUMP SUM A lump sum equal to 4 times your Fial Pesioable Earigs at the date of death, together with a refud of the value of ay AVCs you may have paid. SPOUSE'S/CIVIL PARTNER'S PENSION Your Spouse or Civil Parter will receive a pesio, payable for life, equal to 54% of the pesio you would have received at your Normal Retiremet Date, but based o your Fial Pesioable Earigs at the date of your death. I the evet of the death of your Spouse or Civil Parter, the pesio will cotiue to be paid i respect of ay Eligible Child(re) (up to a maximum of 3). DEPENDANT S PENSION If you die without leavig a Spouse or Civil Parter, a pesio will be payable to oe or more of your Depedat(s), i such proportios as the Trustee decides. The amout of pesio will be equal to that which would have bee paid to a Spouse or Civil Parter. I additio, the lump sum payable ca be used to provide ay Depedat's auity. If the Depedat s pesio is paid to a Eligible Child who subsequetly dies, the Depedat s pesio will cotiue to be paid to other Eligible Child(re). However if the Depedat s pesio is paid to a perso who is ot a Eligible Child who subsequetly dies, the Depedat s pesio will stop. ELIGIBLE CHILD'S PENSION I additio, if you die leavig a Eligible Child(re), a pesio will be paid i respect of each Eligible Child (up to a maximum of 3). The amout payable is 1/6th of the pesio you would have received at your Normal Retiremet Date but based o your Fial Pesioable Earigs at the date of your death. The pesio will be payable i respect of your Eligible Child(re) while they are uder age 18. If they remai i full-time educatio or vocatioal traiig, the pesio may cotiue at the Trustee s discretio but ot ormally beyod the age of 23. PAYMENT Pesios payable o your death will be payable from the day after your death. The first istallmet will be paid i proportio to oe moth s pesio depedig o the date of death. After this it will be paid mothly i advace o the first workig day of the moth. OPTING OUT If you have opted out of Pesioable Service ad die while i Eligible Service the oly the lump sum of 4 times your Fial Pesioable Earigs will become payable. Ay Spouse, Civil Parter or Eligible Child(re) pesios payable will be the same as a death of a member with a deferred beefit (see page 8). If you do decide to opt out of the DB Sectio of the Scheme, the uder the ew Automatic Erolmet legislatio the Compay will be obliged to re-erol you to the DC Sectio of the Scheme approximately every 3 years or may do so earlier should your circumstaces chage. You do have the right to opt out of the DC Sectio of the Scheme as part of the Automatic Erolmet process. 6 Prudetial Staff Pesio Scheme Member Booklet

7 Death after retiremet If you die after retiremet, the followig beefits will be payable. 5 YEAR GUARANTEE LUMP SUM The DB Sectio of the Scheme guaratees that your pesio is paid for a miimum of 5 years. I the evet of your death withi 5 years of your retiremet, a lump sum equal to the upaid balace of 5 years of your pesio will be payable to oe or more of your Beeficiaries. The lump sum will ormally be paid free of tax. This amout does ot take ito accout ay future pesio icreases. Note: If you had take the State Spreadig Optio (see page 5) whe you retired, this 5 year period will be reduced. SPOUSE'S/CIVIL PARTNER'S PENSION Your Spouse or Civil Parter will receive a pesio equal to 50% of the full pesio you were etitled to at retiremet (i.e. before exchagig ay pesio for a tax-free lump sum ad excludig ay pesio from AVC fuds ad the State Spreadig Optio if elected but icludig ay icreases grated sice that time). I the evet of your Spouse s or Civil Parter's death, the pesio will cotiue to be paid i respect of ay Eligible Child(re) (up to a maximum of 3). DEPENDANT S PENSION If you die without leavig a Spouse or Civil Parter, a pesio may be payable to oe or more of your Depedat(s), i such proportios as the Trustee decides. The amout of the pesio will be equal to that which would have bee paid to a Spouse or Civil Parter. If the Depedat s pesio is paid to a Eligible Child who subsequetly dies, the Depedat s pesio will cotiue to be paid to other Eligible Child(re). However if the Depedat s pesio is paid to a perso who is ot a Eligible Child who subsequetly dies, the Depedat s pesio will stop. ELIGIBLE CHILD S PENSION I additio, if you die leavig Eligible Child(re) (up to a maximum of 3) they will receive a pesio from the DB Sectio of the Scheme. The amout payable is equal to 1/6th of the pesio at the date of your death, icludig ay icreases sice your retiremet ad igorig ay optios you made at retiremet. The pesio will be payable i respect of your Eligible Child(re) while they are uder age 18. If they remai i full-time educatio or vocatioal traiig, the pesio may cotiue at the Trustee s discretio but ot ormally beyod the age of 23. PAYMENT Pesios payable o your death will be payable from the day after your death. The first istallmet will be i proportio to oe moth s pesio depedig o the date of death. After this it will be paid mothly i advace o the first workig day of the moth. The DB Sectio of the Scheme guaratees that your pesio is paid for a miimum of 5 years. 7

8 Leavig the DB Sectio of the Scheme If you have completed 2 years' Qualifyig Service ad leave, or opt out of, the DB Sectio of the Scheme without trasferrig your beefits to aother registered pesio scheme, your pesio will remai i the DB Sectio of the Scheme util you reach your Normal Retiremet Date ad you will be treated as a deferred member. Your pesio is calculated i the same way as at retiremet but usig your Pesioable Service ad Fial Pesioable Earigs at your date of leavig. 8 Example: The example shows the pesio payable to a member who joied at the age of 22 ad leaves after completig 10 years Pesioable Service with Fial Pesioable Earigs of 15, /60 x 15,000 = 2,500 a year Note: You will receive additioal credit for ay trasfer value you have brought ito the DB Sectio of the Scheme from a previous arragemet, whilst this optio was available. Your deferred pesio will be revalued util you take it, to reduce the impact of iflatio. PAYMENT OF YOUR DEFERRED PENSION Your deferred pesio will ormally become payable at your Normal Retiremet Date. However, with the Trustee s coset, it may be paid early: From age 55; or O the grouds of ill-health subject to appropriate medical evidece. You will have the same optios of takig part of your pesio as a tax-free lump sum ad providig extra pesio for a Depedat(s) (see page 4). Oce paymet starts, your pesio will be icreased i the same way as described i the sectio Your beefits at Normal Retiremet Date (see page 4). DEATH BEFORE RETIREMENT If you die before your deferred pesio becomes payable, the followig beefits will be payable. Spouse's/Civil Parter s pesio Your Spouse or Civil Parter will receive a pesio of 50% of your deferred pesio, icludig ay icreases grated from your date of leavig up to the date of your death. I the evet of your Spouse's or Civil Parter's death, the pesio will cotiue to be paid i respect of ay Eligible Child(re) (up to a maximum of 3). Depedat s pesio If you die without leavig a Spouse or Civil Parter, a pesio may be payable to oe or more of your Depedat(s) i such proportios as the Trustee decides. The amout of the pesio will be equal to that which would have bee paid to a Spouse or Civil Parter. If the Depedat s pesio is paid to a Eligible Child who subsequetly dies, the Depedat s pesio will cotiue to be paid to other Eligible Child(re). However if the Depedat s pesio is paid to a perso who is ot a Eligible Child who subsequetly dies, the Depedat s pesio will stop. Eligible Child s pesio I additio, if you die leavig Eligible Child(re) (up to a maximum of 3), pesios will be paid to each Eligible Child equal to 1/6th of your pesio. The pesio will be payable to your Eligible Child(re) while they are uder age 18. If they remai i full time educatio or vocatioal traiig, the pesio may cotiue at the Trustee s discretio but ot ormally beyod the age of 23. Lump sum A lump sum equal to 5 times your deferred pesio had it come ito paymet o the date of your death (less ay actuarial discoutig) together with ay AVCs you have paid (plus ay bouses) will also be payable to your estate. Paymet Ay pesios payable o your death will be payable from the day after your death. The first istallmet will be paid i proportio to oe moth s pesio depedig o the date of death. After this it will be paid mothly i advace o the first workig day of the moth. DEATH AFTER RETIREMENT If you die after you have retired, beefits will be paid i the same way as described o page 7. EXPRESSION OF WISH FORM The Trustee decides who should receive ay beefits payable o your death but cosideratio will be give to ayoe that you have omiated as a Beeficiary i a Expressio of Wish Form. It is very importat that you complete ad maitai a Expressio of Wish Form to keep the Trustee iformed of ay chages i your circumstaces, for example if you marry, divorce or have childre. You ca dowload a Expressio of Wish Form from the website or by cotactig your dedicated Admiistratio Team o or PSPSDB@aohewitt.com. TRANSFER OF BENEFITS Provided that the receivig arragemet is a registered pesio scheme or a Qualifyig Recogised Overseas Pesio Scheme (QROPS) if you are trasferrig overseas, the you do geerally have the optio to take a trasfer value from the DB Sectio of the Scheme before your Normal Retiremet Date. If you paid AVCs uder the DB Sectio of the Scheme the these would eed to be trasferred as well. The trasfer value will take the form of a capital sum, kow as the cash equivalet trasfer value, represetig the value of the pesio you eared uder the DB Sectio of the Scheme up to the date you left. It icludes the value of ay AVCs you have paid uder the DB Sectio of the Scheme. Prudetial Staff Pesio Scheme Member Booklet

9 You may ask for a estimate of the cash equivalet trasfer value available to you. Normally withi 3 moths of your request, the Trustee will give you a writte statemet of etitlemet. This will show your cash equivalet trasfer value which is guarateed for 3 moths from the date o which it has bee calculated (the guaratee date ). The statemet will be give to you ormally withi 10 workig days of the guaratee date. If you wat to trasfer the cash equivalet trasfer value quoted to aother registered scheme or buy-out policy, you must apply i writig to the Trustee withi 3 moths from the guaratee date show o the statemet of etitlemet. The Trustee is ot legally required to provide you with aother statemet withi 12 moths of the date of the last request. If the estimate of the cash equivalet trasfer value is eeded because of a divorce settlemet, you should tell the Trustee this whe askig for the estimate as the Trustee may eed further iformatio from you. Please ote there is o 3 moths guaratee attached to these quotatios. Calculatio of the cash equivalet trasfer value The cash equivalet trasfer value is the amout the Trustee determies, havig take advice from the Scheme Actuary, to be sufficiet at the date of calculatio to provide your deferred beefits at your Normal Retiremet Date, allowig for ay guarateed ad statutory icreases to be applied betwee the date you leave Pesioable Service ad your Normal Retiremet Date. The Trustee has a policy of icludig a allowace for ay discretioary icreases made i the calculatio of cash equivalet trasfer values. Further details will be provided by your dedicated Admiistratio Team upo request. Optig out while remaiig employed by the Compay If you wish to opt out of the DB Sectio of the Scheme the you will eed to cotact your dedicated Admiistratio Team or your local HR Departmet. You will still be covered for a lump sum equal to 4 times your Fial Pesioable Earigs at the date of your death if you die while employed by the Compay, plus ay cotributios you have paid. This is payable tax-free uder curret legislatio up to the Lifetime Allowace. If you opt out, you will also be cotracted i to the State Secod Pesio which meas you pay full Natioal Isurace cotributios. You will ot geerally be permitted to rejoi the DB Sectio of the Scheme oce you have opted out. You do have the optio of joiig the DC Sectio of the Scheme. Uder the ew Automatic Erolmet legislatio the Compay will be obliged to erol you to the DC Sectio of the Scheme oce you have opted out of the DB Sectio of the Scheme (ad to re-erol you to the DC Sectio of the Scheme approximately every 3 years or earlier should your circumstaces chage). You do have the right to opt out of the DC Sectio of the Scheme as part of the Automatic Erolmet process. If you are cosiderig optig out of the DB Sectio of the Scheme, you are advised to seek idepedet fiacial advice. If you do ot have a fiacial adviser details of those ear to you ca be foud at Additioal Volutary Cotributios (AVCs) The DB Sectio of the Scheme is o-cotributory ad the Compay pays the cost of providig your beefits. However, you ca choose to pay AVCs to icrease your future beefits. AVCs are a flexible way of makig your ow cotributios ow to icrease your beefits i the future. You ca pay regular mothly cotributios or a oe-off lump sum. What's more, uder curret legislatio, your AVCs are tax-free, as they are deducted from your salary before tax is calculated. So, if you pay tax at 20%, a cotributio of 10 will oly cost you 8. The payroll system automatically provides this tax relief. You ca ormally pay AVCs tax efficietly of up to 100% of your salary up to the Aual Allowace. If you participate i Pesios Plus, your Salary is reduced by the amout of your AVCs meaig that the AVCs are ot subject to tax or Natioal Isurace. Please ote if you joied the DB Sectio of the Scheme o or after 1 Jue 1989, you ca oly pay up to 15% of your salary to the i-house AVC arragemet (which is actually itegrated withi the DB Sectio of the Scheme ad is ot a separate commercial product). Ay amouts above this limit (up to 100% of salary) must istead be made ito the commercial arragemet with a rage of fud optios selected by the Trustee. For more iformatio o AVCs please refer to A guide to the Defied Beefit Sectio's Additioal Volutary Cotributios arragemets which ca be foud o the website Note: If you wish to provide additioal pesio for your Spouse, Civil Parter or a Depedat(s), you may choose to give up part of your AVCs, istead of your Scheme pesio, whe you retire. You ca start, icrease, reduce or stop your AVCs at ay time by dowloadig ad completig the relevat form from the website or by cotactig your dedicated Admiistratio Team. AVCs are a flexible way of makig your ow cotributios ow to icrease your beefits i the future. You ca pay regular mothly cotributios or a oeoff lump sum. What's more, uder curret legislatio, your AVCs are tax-free, as they are deducted from your salary before tax is calculated. 9

10 Temporary absece Most abseces from work are for a relatively short time ad your membership of the DB Sectio of the Scheme i these circumstaces remais uchaged. If you are away for a loger period ad you stop receivig cotractual pay or statutory sick pay, your membership may be cotiued with Compay ad Trustee coset. MATERNITY LEAVE AND MATERNITY ABSENCE If you are away from work to have a baby, your membership ad beefits uder the DB Sectio of the Scheme will cotiue for all your materity leave i lie with the Compay s Materity Policy. Your membership, Pesioable Service ad beefits will cotiue o the same basis which would have applied to you had you bee workig ormally. The Compay will cotiue to make its ormal cotributios o your behalf. Your beefits will cotiue to build up based o the full salary you would have received had you ot bee o materity leave. If you do ot retur to work, your Pesioable Service will geerally stop 18 weeks after the later of the date your materity leave or statutory materity pay ceases. For further iformatio please cotact your local HR team or your dedicated Admiistratio Team. Lookig after your iterests TRUSTEE Prudetial Staff Pesios Limited, a trust corporatio, is the Trustee of the Scheme ad is resposible for esurig that the Scheme is admiistered i accordace with the Trust Deed ad Rules. The Trustee holds, maages ad ivests assets for the beefit of members ad their Beeficiaries. Trust structures are used for pesio arragemets such as the Scheme ad this meas its assets are held separately from those of the Compay. The Trustee is appoited by the Compay ad its Trustee Directors are selected uder the agreed arragemets ad i lie with prevailig legislatio. Iformatio o the Trustee is provided each year i our ihouse publicatio "Pesio Overview" copies of which are stored i the Documets sectio of the website KEEPING YOU IN THE PICTURE Kowig where you stad with your pesio is very importat. As a member of the DB Sectio of the Scheme, you will be set iformatio desiged to keep you iformed about your beefits ad the DB Sectio of the Scheme i geeral. I additio to this booklet ad the iformatio made available o the Scheme s website all active members receive a persoalised Aual Beefit Statemet of their beefits each year. Copies of the latest formal Scheme Report ad Accouts ad other Scheme documetatio are available o the website. PATERNITY LEAVE Your membership, Pesioable Service ad beefits will cotiue as if you were workig ormally. ADOPTION/PARENTAL/OTHER LEAVE There may be circumstaces i which you eed to take time off work for other reasos, for example adoptio leave, paretal leave or for a emergecy ivolvig your family. Please cotact your HR team for further iformatio. 10 Your beefits will cotiue to build up based o the full salary you would have received had you ot bee o materity leave. Prudetial Staff Pesio Scheme Member Booklet

11 STAYING IN TOUCH Keepig i touch while you are with the Compay is oe thig, but it s easy to lose touch if you move o. If you leave the Compay with a deferred pesio, the Trustee will keep a record of your last kow address so that you ca be cotacted about your beefits or ay issues affectig the DB Sectio of the Scheme. To help the Trustee do this, it is importat that you keep the Trustee iformed of ay chage of address or your circumstaces oce you have left. If for ay reaso you lose track of the details of your pesio uder the DB Sectio of the Scheme, you ca trace it through The Pesio Tracig Service, which maitais a register of pesio schemes. If you wat to cotact The Pesio Tracig Service the address is: The Pesio Service, Tyeview Park, Whitley Road, Newcastle Upo Tye NE98 1BA Tel: Website: HELP AT HAND The Trustee will do all that it ca to esure that the DB Sectio of the Scheme is admiistered to the highest stadard, but we appreciate that there may be times whe you are uhappy about a certai situatio or you have a cocer that you eed to raise. Most queries ad problems stem from a misuderstadig of iformatio ad ormally ca be quickly ad iformally sorted out without the eed to use ay formal procedures. You should first of all refer ay query to your dedicated Admiistratio Team o If you are still uhappy about the matter, you may the wish to cosider makig a formal complait through the Iteral Dispute Resolutio Procedure. INTERNAL DISPUTE RESOLUTION PROCEDURE If you have ot bee able to resolve ay complait about the DB Sectio of the Scheme iformally, there is a 2-stage formal procedure you may use. Full details ca be obtaied from the Pesios Maager at the address show below. Stage 1 - You should put your case i writig to the Pesios Maager, Prudetial Staff Pesio Scheme, 3 Sheldo Square, Paddigto, Lodo, W2 6PR who will fully cosider your complait ad will ormally give you a decisio withi 2 moths. Stage 2 - If you are ot satisfied with the Stage 1 decisio, you ca appeal to the Trustee to cosider your complait. You will ormally receive a decisio from the Trustee withi 2 moths. Special applicatio forms are available to make a complait or appeal. If you wish, you may use a represetative to act o your behalf. The Iteral Dispute Resolutio Procedure applies to matters cocerig the DB Sectio of the Scheme that affect members ad others who may have a iterest uder the DB Sectio of the Scheme. It does ot apply to disputes betwee employees ad the Compay, or does it apply to disputes where Court proceedigs have started or that are beig ivestigated by the Pesios Ombudsma. OUTSIDE HELP I additio to the Scheme s ow arragemets, the followig exteral bodies may also be able to provide assistace: The Pesios Service The Pesios Service website provides iformatio o State beefits. Tel: Website: You ca apply olie at for a forecast of the beefits you could receive from the State, or call , or +44 (0) if callig from overseas, to go through the applicatio by phoe. The Pesios Advisory Service (TPAS) TPAS is a idepedet volutary body that provides free help ad advice to members ad other beeficiaries of occupatioal ad persoal pesio schemes. TPAS is available at ay time to assist members ad other beeficiaries with ay pesio query they may have or ay difficulty they have failed to resolve with the trustees or admiistrators of a scheme. If you wat to cotact TPAS the address is: 11 Belgrave Road, Lodo, SW1V 1RB Tel: equiries@pesiosadvisoryservice.org.uk Website: The Pesios Ombudsma The Pesios Ombudsma may ivestigate ad decide upo ay complait or dispute of fact or law or complaits about maladmiistratio i relatio to how a occupatioal pesio scheme is ru. The Pesios Ombudsma may be cotacted at: 11 Belgrave Road, Lodo, SW1V 1RB Tel: equiries@pesios-ombudsma.org.uk Website: Please ote that the Pesios Ombudsma ormally isists the matter is first dealt with through a scheme's ow iteral dispute resolutio procedures ad raised with TPAS. The Pesios Regulator The Pesios Regulator is a regulatory body which has a rage of powers to help safeguard pesio rights of members of pesio schemes ad is able to itervee where trustees, employers or professioal advisers have failed i their duties. The Pesios Regulator may be cotacted at: Napier House, Trafalgar Place, Brighto BN1 4DW Tel: customersupport@tpr.gov.uk Website: 11

12 Tax status The Scheme is a registered scheme for HM Reveue & Customs purposes. As a registered scheme, it ejoys a umber of tax advatages. Cotributios ad beefits from the DB Sectio of the Scheme will be subject to the Aual Allowace ad Lifetime Allowace. INCOME TAX Your pesio will be subject to PAYE icome tax. INHERITANCE TAX Uder preset legislatio, ay lump sum beefits paid uder the DB Sectio of the Scheme if you die i Eligible Service or i retiremet will ot ormally be subject to iheritace tax. The DB Sectio of the Scheme is arraged so that the Trustee has discretio to decide who receives the lump sum paymets made o your death. As oted above, whilst the Trustee decides who should receive ay beefits payable o your death, cosideratio will be give to ayoe that you have omiated as a Beeficiary i a Expressio of Wish Form. It is very importat that you complete ad maitai a Expressio of Wish Form to keep the Trustee iformed of ay chages i your circumstaces, for example if you marry, divorce or have childre. You ca dowload a Expressio of Wish Form from the website or by cotactig your dedicated Admiistratio Team o or PSPSDB@aohewitt.com. You should ote that, if you leave the DB Sectio of the Scheme ad die before your deferred pesio becomes payable, ay lump sum will be paid to your estate ad, as such, may be subject to iheritace tax. Chages i persoal circumstaces PART-TIME SERVICE Where part-time Service is ivolved, for the purpose of calculatig your pesio ad tax-free lump sum, your part-time salary is coverted to its full-time equivalet ad your Pesioable Service decreased to take ito accout your reduced hours worked. So, your Fial Pesioable Earigs are icreased to calculate the earigs that would be paid if you worked full-time. For example: if you ear 12,000 for workig half of the ormal full time hours, you would ear twice that (ie. 24,000) if you were full-time. The precise formula used is: Fial Pesioable Earigs for hours worked x (full-time hours/your part-time hours) Your Pesioable Service is decreased to calculate its full-time equivalet. Agai, the precise formula is: Pesioable Service x (your part-time hours/full-time hours) Oce these adjustmets have bee made, your pesio is calculated i the ormal way. If you chage your hours, each period of Service is coverted to its full-time equivalet, as are your Fial Pesioable Earigs. MARITAL STATUS It helps the Trustee pay beefits promptly if it is kept iformed of ay chage i your marital status or other family circumstaces. DIVORCE OR DISSOLUTION OF A CIVIL PARTNERSHIP The Trustee must comply with ay order made by a Court followig a divorce or dissolutio of a Civil Partership. GIVING UP YOUR BENEFITS You are ot geerally allowed to give up, trasfer to someoe else or cash i your beefits accrued uder the DB Sectio of the Scheme except as described i this booklet. 12 The DB Sectio of the Scheme is arraged so that the Trustee has discretio to decide who receives the lump sum paymets made o your death. Prudetial Staff Pesio Scheme Member Booklet

13 The State ad you The State pesio is oe type of pesio. It's a regular icome you may receive from the Govermet whe you reach State Pesio Age. It is based o your Natioal Isurace cotributios. The State provides two levels of pesio: The Basic State Pesio, the old age pesio; ad The State Secod Pesio (S2P), a earigs-related top up to the Basic State Pesio. Your State pesio is paid from State Pesio Age. CONTRACTING OUT The DB Sectio of the Scheme is cotracted out of the S2P. This meas that, while you are a active member of the DB Sectio of the Scheme, you will ot build up ay S2P beefits. Istead, the DB Sectio of the Scheme provides a alterative pesio to the S2P. CONTRACTING OUT BEFORE 6 APRIL 1997 If you were cotracted out of the S2P (kow the as the State Earigs Related Pesio Scheme (SERPS)) uder the DB Sectio of the Scheme before 6 April 1997, your Scheme pesio at GMP Pesio Age would have bee at least equal to your Guarateed Miimum Pesio (GMP). GMP is o loger provided i respect of your Service o or after 6 April 1997, but ay GMP you built up before that date will be paid as if the cotractig out coditios had ot chaged. Details of these provisios are show i the special addedum at the back of this booklet. REDUCED NATIONAL INSURANCE CONTRIBUTIONS Sice you will ot build up ay S2P beefits while you are a active member of the DB Sectio of the Scheme, you will ot be asked to cotribute towards them. Both you ad the Compay will pay a reduced rate of Natioal Isurace cotributios. TOTAL RETIREMENT INCOME Although you are cotracted out of S2P, you are still etitled to receive the Basic State Pesio subject to havig a full Natioal Isurace cotributios record. You curretly eed 30 qualifyig years to get a full Basic State Pesio. If you do ot have the 30 qualifyig years eeded to get the full Basic State Pesio, you ca pay volutary Natioal Isurace cotributios. Although you are cotracted out of S2P, you are still etitled to receive the Basic State Pesio subject to havig a full Natioal Isurace cotributios record. 13

14 Defiitios This booklet uses certai words that may require further explaatio. The defiitios below should help you uderstad ay techical terms that may ot be familiar to you. Aual Allowace This is the maximum amout of pesio beefits that you ca accrue which will qualify for tax relief. For the 2014/15 tax year the allowace is 40,000. You may be subject to a tax charge if your overall pesio beefits you build up i the Scheme ad ay other registered pesio scheme durig a scheme year exceed the Aual Allowace. 14 Additioal Volutary These are ay persoal cotributios that you choose to pay ad are usually payable mothly although oe-off Cotributios paymets are allowed. Uder curret legislatio, ay AVCs you pay will attract tax relief, as they are deducted from (AVCs) your salary before tax is calculated. If, for example, you pay tax at 20%, a AVC of 100 will oly cost you 80. Basic State Pesio This is the mai type of State pesio payable i the UK from the Govermet to certai idividuals who have reached State Pesio Age. To qualify for a Basic State Pesio at least oe of the followig must apply to you: You were workig ad payig Natioal Isurace cotributios; You were gettig certai beefits, eg for uemploymet, sickess; You were a paret or carer ad claimig certai beefits or credits; You have a spouse or civil parter whose Natioal Isurace cotributios cover you; You were payig volutary Natioal Isurace cotributios. You eed 30 years' worth of cotributios or credits to get the full Basic State Pesio. These are your 'qualifyig years'.if you have fewer tha 30 qualifyig years, your State pesio will be less but you might be able to top this up by payig volutary Natioal Isurace cotributios. The State pesio system is curretly udergoig some quite radical chages ad it is recommeded that you visit to fully uderstad how these chages impact you. Civil Parter This is the perso you have etered ito a registered civil partership with uder the Civil Partership Act Compay Compay meas The Prudetial Assurace Compay Limited or ay associated compay/employer that offers you membership of the Scheme through your cotract of employmet. Cosumer Price The official idex used by the Govermet as its measure of iflatio. The Govermet previously used the Idex (CPI) Retail Prices Idex as its official idex for measurig iflatio. DB Sectio This is the Defied Beefit (DB) Sectio of the Prudetial Staff Pesio Scheme (the Scheme). Deferred Pesio This refers to the beefits retaied withi the Scheme whe you leave before your Normal Retiremet Date. The value of those beefits will be revalued to try to reduce the impact of iflatio. The deferred pesio will ormally become payable from your Normal Retiremet Date but ca be paid earlier or later i certai circumstaces. You may choose to trasfer all of your beefits uder the DB Sectio of the Scheme to aother registered pesio scheme istead of takig a deferred pesio from the Scheme. Your deferred pesio is sometimes referred to as your preserved pesio. Depedat Your Spouse/Civil Parter or ay other perso who, i the opiio of the Trustee, is fiacially depedat upo you at the date you take your pesio or die. Eligible Childre I most cases, this meas your ow or adopted child uder age 18 or later if still i full-time educatio/ vocatioal traiig ad the Trustee so decides (though ot ormally beyod age 23). Eligible Service I geeral, this meas the permaet Service you complete with the Compay. Fial Pesioable I summary, for the purposes of the DB Sectio of the Scheme, this meas the highest of: Earigs 1.Your basic salary eared i the 12 moths immediately before leavig Service, igorig ay additios such as bouses or overtime; 2.Your highest aual salary i ay oe tax year i the last 5 years before leavig Service; or 3. Your average aual salary over the best 3 cosecutive tax years i the last 10 years before you leave Service. The earliest tax year which will cout i poits 2 ad 3 above is that commecig 6 April There are occasios whe your Fial Pesioable Earigs may be calculated differetly. If you have ay questios about this defiitio, please cotact your dedicated Admiistratio Team i the first istace. Flexible Retiremet You o loger eed to stop workig for the Compay before takig your pesio beefits. Subject to certai coditios, you ca choose to take your pesio from the DB Sectio of the Scheme ad cotiue workig for the Compay uder the flexible retiremet optio. Prudetial Staff Pesio Scheme Member Booklet

15 Guarateed Miimum The miimum pesio which must be provided if you were cotracted out of the State Secod Pesio (S2P) Pesio (GMP) before 6 April Its value will be roughly equal to the pesio you would have received if you had stayed i the S2P. GMP Pesio Age GMP Pesio Age is curretly 60 for wome ad 65 for me. Lifetime Allowace The Lifetime Allowace is a limit o the amout of pesio beefits that you ca accumulate durig your workig life from the Scheme ad ay other registered pesio scheme without icurrig a additioal tax charge. The limit is curretly set at 1.25m for the 2014/15 tax year. You may be subject to a tax charge if your overall pesio fud exceeds the Lifetime Allowace. Normal Retiremet The date at which you are expected to retire which for the DB Sectio of the Scheme is ormally age 60. This Date is sometimes referred to as your Normal Pesioable Date. Pesioable Pay For the purposes of the DC Sectio of the Scheme, this meas your basic salary. Pesios Plus The Compay operates a salary exchage arragemet called Pesios Plus, for more iformatio please see the documet Your Guide to Pesios Plus available from your local HR team. Pesioable Service I geeral, this meas the permaet Service (i years ad complete moths) you complete with the Compay as a active member of the DB Sectio of the Scheme. Qualifyig Service This is the period of time you are a active member of the DB Sectio of the Scheme. Service This is the period of time you are a employee of the Compay. Spouse This is the perso to whom you are legally married. State Pesio Age The age at which the Basic State Pesio becomes payable. For me bor before 6 December 1953, the curret State Pesio Age is 65. For wome bor after 5 April 1950 but before 6 December 1953, the curret State Pesio Age will be betwee 60 ad 65. From November 2018 the State Pesio Age for both me ad wome will start to icrease to reach 66 by the ed of September However, this is ot the ed of the proposed icreases. The State Pesio Age is due to icrease to 67 betwee 2026 ad 2028, icreasig agai to 68 betwee 2044 ad State Secod Pesio A secod level of State pesio based o your earigs. S2P is due to be abolished whe the Govermet (S2P) plas to itroduce a sigle-tier flat-rate State pesio. You may be etitled to a pesio from the S2P as well as a Basic State Pesio if you reach State Pesio Age prior to this chage. Trustee Prudetial Staff Pesios Limited, a trust corporatio, is the Trustee of the Scheme ad is resposible for esurig that the Scheme is admiistered i accordace with the Trust Deed ad Rules. The Trustee holds, maages ad ivests assets for the beefit of members ad their Beeficiaries. Trust structures are used for pesio arragemets such as the Scheme ad this meas its assets are held separately from those of the Compay. Security of Persoal Iformatio I order to admiister the DB Sectio of the Scheme, it is ecessary for iformatio about you ad your Depedats to be held ad processed by the Trustee or other parties who act o behalf of the Trustee. The Trustee is the data cotroller uder the Data Protectio Act This iformatio is kept secure ad oly disclosed i limited circumstaces, for example, iformatio may be disclosed to compaies withi the Prudetial Group, Trustee advisers ad other orgaisatios i coectio with the operatio of the DB Sectio of the Scheme. Iformatio may also be disclosed to ay future potetial employers ad their advisers ad, oly if the Trustee is legally obliged to do so, to Govermet or regulatory orgaisatios. 15 Small Prit Compay meas The Prudetial Assurace Compay Limited or ay associated compay/employer that offers you membership of the Scheme through your cotract of employmet. All beefits are payable i accordace with the Trust Deed ad Rules, the legal documet goverig the Scheme. I the ulikely evet of ay discrepacy betwee ay iformatio provided to you ad the Trust Deed ad Rules, the Trust Deed ad Rules will prevail.