Your guide to the Wrigley Pension Plan

Transcription

1 THE WRIGLEY PENSION AND LIFE INSURANCE PLANS Your guide to the Wrigley Pension Plan Cross the pensions finishing line in good shape

2 The Wrigley Pension and Life Insurance Plans Introduction This booklet tells you all about the Wrigley Pension and Life Insurance Plans and the benefits they provide for you and your family. Your pension could be the largest financial arrangement you will ever make. So it s important that you understand how it works. We ve tried to make this booklet as easy to use as possible by using questions and answers. We ve also tried to keep jargon to a minimum and where there are pension terms we ve not been able to leave out we ve provided an explanation at the back of this booklet for you to refer to. If you would like further information about any aspect of these plans, please contact the People & Organisation (P&O) team : The Wrigley Company Limited Estover Industrial Estate Plymouth, Devon PL6 7PR marianne.stephens@wrigley.com Important This booklet is based on our current understanding of tax and pension scheme law and is subject to change at any time in the future. It describes the benefits as they currently build up past benefits may have been different and aren t necessarily described here. There is a Trust Deed and Rules which sets out the benefits payable and when and how they are to be paid. Legislation and HM Revenue & Customs allowances also govern the benefits payable. This booklet is only a summary, so it doesn t create any legal rights. The Trust Deed and Rules will always apply if there is any difference between it and this booklet.

3 The Wrigley Pension and Life Insurance Plans Contents How the Plan works and how much it costs How does the Plan work? 2 How much do I have to pay? 5 Your retirement benefits How much pension will I get? 6 Can I take early retirement? 8 Can I take late retirement? 9 What options do I have when I retire? 10 Can I do anything to get a bigger pension? 11 Benefits for your family and dependants What if I die? 12 Being a member of the Plan What if I leave Wrigley 14 What if I am away from work for a while? 16 What if I have a problem? 18 The Government and legal matters What benefits will I get from the State? 20 What else do I need to know? 22 Special terms used in this booklet 24

4 How the Plan works and how much it costs How does the Plan work? A pension plan is made up of members who are all expecting to receive a pension when they retire. Where does the money come from? You and Wrigley pay contributions into a special trust fund. The money is kept quite separate from Wrigley s assets it can only be used to pay benefits and the costs of running the Plan. The money is invested so that the fund will grow in value. Professional investment managers manage the Plan s assets. Every three years one of the specialist advisers, the Plan Actuary, makes a formal check on the financial health of the Plan and reports back to the Trustees. It is the Trustees job to ensure, in consultation with Wrigley, that enough money is being paid into the Plan to pay out the benefits to members when they are due. Who looks after the fund? The Plan is looked after by the Trustees. The Trustees consist of individuals appointed by Wrigley, and those nominated by the members in line with the Trustees nomination and selection procedures. The Trustees act impartially at all times and make sure that the interests of all members are taken into account. The Trustees are responsible for running the Plan according to its Trust Deed and Rules (a copy is available from the P&O team ). They employ professional advisers to help them for example, solicitors to help with legal issues, auditors to make sure financial records are maintained accurately and investment managers to invest the money. Day-to-day administration of the Plan is also provided by external professionals. How do we know what the Trustees are doing? Every year the Trustees produce a formal Report and Accounts setting out what has happened to the Plan over the last year. They summarise this information for you in a regular newsletter and you can ask the P&O team for a copy of the full version. In addition, you receive an annual statement which shows the benefits you can expect to get as a member of the Plan. Can new members join the Plan? Membership of the Wrigley Pension Plan has been closed since 1 September This means that no one else can become a member and, if you choose to opt out of membership, you cannot re-join. 2

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7 How the Plan works and how much it costs How much do I have to pay? One of the advantages of being a Plan member is that Wrigley pays a big part of the cost of your pension. What you pay The cost of providing the benefits is very expensive and Wrigley asks you to make a contribution towards this. Your share is 2 % of your Plan Salary and this is taken automatically from your pay before tax is deducted. Don t forget that you get tax relief on your contributions and you also pay lower National Insurance contributions, so the real cost to you is even lower. How much does Wrigley pay? Wrigley pays the difference between what you pay and the real cost of the benefits promised to you by the Plan. This is likely to be a lot more than you pay particularly over the longer term. Every three years the Plan Actuary calculates how much Wrigley needs to pay to meet the promised benefits. On top of this, Wrigley pays extra to meet the Plan s running costs. What if I work part-time or change my working hours? If you change your working hours for any reason, your contributions will be altered to reflect your new salary. If you have worked part-time, your pension will be based on the Final Plan Salary you would have received if you were working full-time. However, your Pensionable Service will be adjusted for periods when you were working part-time. This means that your benefits will fairly reflect the contributions you have paid. 5

8 Your retirement benefits How much pension will I get? Your pension is based on how long you have been a member of the Plan and your highest average salary in the period before you retire (or leave service). On retirement at Normal Pension Date (your 65th birthday), you receive a proportion of your Final Plan Salary for each year of Pensionable Service. It is important to understand that your Final Plan Salary is not your full salary: an amount is taken off to take into account the Basic State Pension payable by the Government (you can see a full definition on page 24). Your pension is worked out as: 1/60 x Final Plan Salary x Pensionable Service So, if for example you retired at Normal Pension Date on a Final Plan Salary of 24,000, after being a member of the Plan for 20 years and 6 months, your pension would be: 1/60 x 24,000 x 20½ years = 8,200 a year Your Pensionable Service has a limit of 40 years. What about inflation? Obviously you want your pension to keep up with increases in the cost of living so that it keeps its value. So, once you start receiving your pension it will increase each year from 1 May, in line with increases in the Retail Prices Index up to a maximum of 5% a year. In the first year, this will not be a full increase, as it will be based on the number of months since you retired. Special increases apply to the Guaranteed Minimum Pension part of your pension (see page 21). How is my pension paid? Once you retire your pension is normally paid on the first day of the month following retirement and then in monthly instalments for the rest of your life. You will pay income tax on your pension. This is deducted through PAYE in the same way as your salary now. However, you don t pay National Insurance contributions on your pension. 6

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10 Your retirement benefits Can I take early retirement? Although the Plan s Normal Pension Date is your 65th birthday, you have the option of retiring early. You can retire and receive a pension at any time from age 55 as long as Wrigley agrees and you give the Trustees three months notice. If you take early retirement, the amount of pension you get is worked out in two stages: 1. We work out your pension at the date you retire: 1/60 x Final Plan Salary x Pensionable Service at the date you retire 2. Because you will be receiving your pension for a longer period of time, it will be reduced to take this into account. If you retire after 62, this reduction is not applied. Further information is available from the P&O team. Can I draw my benefits while I am still working? Once you reach 55, as long as Wrigley agrees, you can ask the Trustees in writing to have your benefits paid even though you are still working for Wrigley. If you do this, you would not normally continue to build up benefits in the Plan for your future Wrigley employment. What if I m ill? With the consent of the Trustees and Wrigley you may be able to receive an ill health early retirement pension provided you meet the conditions set out in the Trust, Deed and Rules. 8

11 Your retirement benefits Can I take late retirement? If you carry on working for Wrigley after age 65, you would normally receive your pension when you actually retire. It will be increased to take account of late payment. You will stop paying contributions from 65. However, as long as Wrigley agrees, you can ask the Trustees in writing to have your benefits paid even though you are still working for Wrigley. If you do this, you would not normally continue to build up benefits in the Plan for your future Wrigley employment. If you have not started to draw your benefits and you die, your benefits will be worked out as if you had retired the day before you died. 9

12 Your retirement benefits What options do I have when I retire? Provided the Trustees agree, you can swap part of your pension for a tax-free cash sum. You will be able to take as much as HM Revenue and Customs allow. At present this is around 25% of the value of your benefits. Value has a special meaning and is worked out as the amount of cash you take, plus 20 times your remaining annual pension. It s a complicated formula and you will be provided with full details of the amount you are entitled to before your pension comes into payment. This will help you decide whether or not to take a cash sum. If you take some of your pension as cash, the amount of pension you get each year will be reduced to take this into account. Further information is available from the P&O team. Sometimes the cash will have to be restricted to meet Government requirements for opting out of the State Second Pension (see page 21), but this doesn t happen very often. Any other options? Before taking any lump sum payment, you may ask the Trustees to reduce your pension to provide a pension for one or more of your dependants in the event of your death. For example, you may wish to take a smaller pension with a larger pension being due to your spouse on your death. Further information is available from the P&O team. 10

13 Your retirement benefits Can I do anything to get a bigger pension? The Wrigley Pension Plan provides a good benefit when you retire. But there may be reasons why you want to top up the amount of pension you get and the good news is that Wrigley will pay towards you doing this. You may just want to have more retirement income. Or perhaps you are considering early retirement but don t want a reduced pension. Your pension is based on how long you have been a member of the Plan, so if you joined the Plan later in life or had a career break to raise a family for example your pension might not be as much as you would like. You can boost your retirement income by paying Additional Voluntary Contributions (AVCs) and if you do this Wrigley will add on half as much again, up to a maximum each year of 3% of your annual basic salary. How much can I pay as an AVC? You decide how much of your earnings to contribute. Currently, tax relief is available on contributions up to 100% of your earnings in any tax year. However, if your pension savings including your main Plan contributions - go above the Annual Allowance, a special tax charge, known as the Annual Allowance charge, may be payable. There is also a limit (the Lifetime Allowance ) on the amount of total pension savings and benefits you can build up over your lifetime on a tax efficient basis. Can I stop and start AVCs? You are free to increase, reduce or stop your AVCs. Also, you do not have to commit yourself to regular savings - they can be paid as a lump sum if you prefer. What can I do with the AVC money I build up? Within the limits allowed by the Plan, you can use your AVC fund at retirement to buy extra pension or as part of your tax-free cash sum. Although it is up to the Trustees to agree the mix of benefits. For further information on AVCs, contact the P&O team. How else can I boost my pension? You can pay into other pension arrangements, such as a personal or stakeholder pension plan, to boost your pension benefits. Currently, tax relief is available on contributions up to 100% of your earnings in any tax year, but remember the Annual and Lifetime Allowances apply to all of your pension arrangements. 11

14 Benefits for your family and dependants What if I die? People often forget that as well as providing a pension when you retire, the Plan also offers valuable benefits for your family and dependants when you die. What if I die before I retire? If you die while you are working for Wrigley and still contributing to the Plan, your nominated dependants will receive: A lump sum of four times your Life Insurance Salary (payable from the Life Assurance Plan), plus a refund of your contributions along with the value of your (and Wrigley s matching) Additional Voluntary Contributions. A pension for your spouse or civil partner of half the pension you would have received at Normal Pension Date, but based on your Plan Salary at your date of death. This will be paid for the rest of his or her life. If you die without leaving a spouse or civil partner, or if they die, the Trustees will share this pension between your children up until they reach age 18 (or 21 if they are still in full time education). It may also be possible for the Trustees to pay a pension to someone who was dependent on you because of disability, or who was financially dependent on you. All pensions paid are increased in the same way as your own pension would have been. What if I die after retirement? If you die after starting to receive your pension, your nominated dependants will receive: A pension for your spouse or civil partner of half of your pension at the date of your death. This will include any increases paid since you retired and also any pension you gave up in exchange for a tax-free cash sum. The pension will be paid for the rest of his or her life. Children s and dependants pensions are payable in the same way as they are on death before retirement. All pensions paid are increased in the same way as your own pension would have been. A lump sum if you die within 5 years of retirement. This will be equal to the balance of any unpaid pension from those first 5 years. 12

15 Benefits for your family and dependants How do the Trustees know who to pay the benefits to? If anything should happen to you, the Trustees have to decide who should receive your lump sum death benefit. You must fill in a Nomination Form telling them who you would like your benefits to be paid to so they can be aware of your wishes. And remember, if your personal circumstances change, for example if you marry, divorce or have children, it is very important to keep your form up to date. Nomination Forms are available from the P&O team. The Trustees cannot be bound by your wishes but will take them into account. Because the lump sum is paid in this way, it can be paid tax-free. Important notes If your spouse or civil partner is more than 10 years younger than you, the pension may be reduced to take account of the longer time over which it is likely to be paid. Details are available from the P&O team. The Trust Deed and Rules set out special rules that apply if you marry after leaving Wrigley, and die within six months of the marriage. For example, benefits may not be payable in the event of a deathbed marriage. Normally all death benefits will be paid automatically without there having been an enquiry into your state of health before you died.. Sometimes, however, restrictions are placed on these death benefits before retirement as the lump sum death benefit is insured under an insurance policy. You will be told if this apples to you. 13

16 Being a member of the Plan What if I leave Wrigley? If you leave Wrigley your membership will stop. You will have two options: Keep your benefits in the Plan You may keep all of your pension benefits in the Plan until your Normal Pension Date. Your pension will be worked out as follows: 1/60 x Final Plan Salary x Pensionable Service at the date you leave This is called your preserved pension and it will be increased between the date you leave and the date it is paid in line with Government requirements* As long as the Trustees and Wrigley agree, it may be possible to receive your pension at any time from age 55. Because you will be receiving your pension for a longer period of time it will be reduced to take this into account. If you are in ill health, early payment may be possible at any age as long as the Trustees and Wrigley agree. Again, your pension may be reduced. Transfer your pension You can choose to transfer the value of your benefits to one of the following: Your new employer s scheme A personal pension A buy-out policy The transfer payment will be worked out by the Plan Actuary on a basis agreed with the Trustees and in line with legal requirements. It will be equal to the value of your preserved pension benefits at the time, taking into account economic conditions. (No allowance is made for discretionary increases, as there is no guarantee that they will be paid.) If you choose to keep your pension benefits in the Plan, you can subsequently request a transfer at any time up to one year before your Normal Pension Date. You can ask for a transfer value calculation at any time. When calculated, the amount will be guaranteed for three months. If it is less than 12 months since your last calculation, a charge will be made for re-calculating the numbers. 14

17 Being a member of the Plan What if I go to work elsewhere within The Wrigley Company Ltd or another subsidiary of Mars Inc? It may be possible for your membership of the Plan to remain unaffected and you may not be treated as having left. Further information is available from the P&O team. What if I am still working for Wrigley and want to leave the Plan? You must give the Trustees one months notice in writing if you decide to leave the Plan while still working for Wrigley. Your benefits will be treated in the same way as if you had left Wrigley. You will not be able to re-join the Plan. * Broadly the benefits you have earned over and above your Guaranteed Minimum Pension (which is fully inflation proofed - see page 21), are increased in line with inflation up to 5% a year, for benefits earned before 6 April 2009 and 2.5% a year for benefits earned on or after then. 15

18 Being a member of the Plan What if I am away from work for a while? Most absences from work are for a short period of time and won t affect your membership of the Plan. There will, however, be circumstances where your membership may be affected. What if I am ill? If you become unable to work through illness or disability, your membership will normally continue with the consent of the Trustees for as long as Wrigley continues to pay you. What if I take maternity leave? Your membership of the Plan will continue during any period of paid maternity leave (or in certain other situations covered by legislation) and your benefits will be based on your notional earnings as if you were working normally. You will, however, only be required to pay contributions based on your actual earnings. If you exercise a right to return to work on a particular date and there is a break between that date and the end of the period of paid maternity leave, you may suspend your contributions during the break and the Trustees will decide how this will affect your benefits. You have the option to make up these missed contributions on your return. And what about paternity leave and adoption leave? If you take paternity or adoption leave your pension and death benefits will be continued in the same way as for maternity leave. What about other absences? If you become unable to work for any other reason, Wrigley and the Trustees will decide whether your membership should continue, whether you will be covered for death benefits and, in each case, for how long. If your contributions are reduced or suspended while you are away, Wrigley and the Trustees will decide to what extent your benefits will be affected. 16

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20 Being a member of the Plan What if I have a problem? The Trustees aim to ensure that the Plan is managed to a high standard, but there may be times when you find you need some help sorting out a problem with your pension or another matter relating to your membership of the plan. Most queries can be sorted out quickly through the P&O team. If your problem cannot be resolved in this way, the Trustees operate an Internal Dispute Resolution Procedure. Full details of the procedures can be obtained from the P&O team. The procedure consists of two stages. Under the first stage your complaint or dispute is fully considered and a decision is made by the P&O team. The second stage is an appeal procedure under which, if you are not satisfied with the first stage decision, you can apply directly to the Trustees to reconsider the decision. Special application forms are available for these purposes from the P&O team. TPAS and the Ombudsman TPAS (The Pensions Advisory Service) can provide advice and help at any time on matters relating to occupational and personal pension schemes. It can be contacted at 11 Belgrave Road, London SW1V 1RB or through their website at or any branch of the Citizens Advice Bureau. If TPAS is unable to resolve a dispute, it may refer the problem to the Pensions Ombudsman who is at the same address. The Pensions Regulator The Pensions Regulator was set up to help ensure that work-based pension schemes in the UK are properly run. It is able to intervene in the running of pension schemes if trustees, employers or professional advisers fail in their duties. 18

21 Being a member of the Plan If you want to contact the Pensions Regulator, the address is Napier House, Trafalgar Place, Brighton, East Sussex BN1 4DW. Alternatively, you can the Pensions Regulator at customersupport@thepensionsregulator.gov.uk. You can reach their website at Tracing Service If you lose contact with whoever is responsible for a pension scheme of which you were a member, the Pension Tracing Service may be able to help trace them. The address is Pension Tracing Service, Tyneview Park, Whitley Road, Newcastle upon Tyne NE98 1BA. The Plan is registered with the Pension Tracing Service. Further details can be found at Financial advice Neither the Trustees, Wrigley nor the Plan s administrators are able to give you financial advice. If you need financial advice, we recommend that you speak to an independent financial adviser (IFA). This can be arranged by Wrigley, or you can visit The IFA Consumer Hotline will put you in contact with an IFA in your local area. Wrigley also organises pre-retirement educational seminars in the run up to retirement. 19

22 The Government and legal matters What benefits will I get from the State? In addition to your Plan pension, you will receive a basic State Pension once you reach State Pension age. The amount depends on your National Insurance contribution record. Both you and Wrigley pay towards your basic State Pension through National Insurance contributions How much is the basic State Pension? The basic State Pension is a flat rate amount paid to everyone who has a sufficient National Insurance contribution record. It is reviewed each year by the Government. When do I receive my Basic State Pension? You can begin to receive your State Pension from your State Pension age. For many years this was age 65 for men and age 60 for women, but that s all changing. Since April 2010, the State Pension age for women started to increase gradually from 60 to 65, to match the men s. The current law then provides for this to increase to 66 by 2020, then 67 and - by 2046 age 68. The Government has announced proposals to speed up these increases, but as of March 2013 the proposed changes to the timetable are not yet law. If you are not sure about what your State Pension age will be, you can call The Pension Service on , Monday to Friday from 8.00am to 8.00pm or visit the internet site at 20

23 The Government and legal matters Do I receive a State Second Pension for my time as a Plan member? Although there are plans to change this, there is currently a State Second Pension which may be paid on top of the Basic State Pension. You will not receive this pension as you will not have contributed towards it. The Plan provides benefits which replace the State Second Pension so all Plan members are contracted out of this part of the State Pension. As a result both you and Wrigley pay lower National Insurance contributions. In order to contract-out, the Plan has to meet certain requirements laid down by the Government. The most important of these requirements is that the Plan must provide benefits which are broadly equivalent to, or better than, a model scheme set by the Government. This is known as the Reference Scheme. Up until 6 April 1997 the Plan was required to provide you with a Guaranteed Minimum Pension (GMP) in place of the second tier of State pension (then called the State Earnings Related Pension Scheme or SERPS). Any benefits earned under the Plan at that date are subject to a minimum of the GMP and this benefit is fully inflation proofed (partly by the Plan, partly by the State). The tax-free cash sum you are able to take and the age from which you can early retire may need to be restricted if they would otherwise reduce your benefits to below your GMP. Is my State Pension subject to tax? Yes. All pensions are subject to income tax. 21

24 The Government and legal matters What else do I need to know? HM Revenue & Customs rules The Plan is registered under the Finance Act 2004 with HM Revenue & Customs (what used to be called the Inland Revenue). This means that the Plan and its members receive important tax breaks. However, there are limits to the tax reliefs available - the Lifetime and Annual Allowances - and if you go over these allowances there could be a tax charge. Any pensions paid by the Plan are taxed under the PAYE system. The Plan Rules The Trustees follow the law in running the Plan. Also, as the Plan is set up under a trust, there is a Trust Deed and Rules which sets out the benefits payable and when and how they are to be paid. You can see the Trust Deed and Rules by applying to the P&O team. This booklet is only a summary of the Trust Deed and Rules. If there is any difference between the two documents the Trust Deed and Rules will always apply. Amendment or discontinuance Although Wrigley intends to maintain the Plan indefinitely, there are provisions in the Plan s legal documents for amending or closing it. If your benefits or rights are affected you will be told of any changes. The Trust Deed and Rules sets out a number of events which could lead to the Plan being stopped, such as Wrigley stopping its contributions. If this happens and there is a shortfall in the Plan s funds, current law requires Wrigley to pay in an amount that is estimated to be enough to secure the benefits you have built up in the Plan. There is no guarantee that this will necessarily secure your benefits in full. If the Plan is discontinued because Wrigley is insolvent, the Trustees will follow the Trust Deed and Rules, and the law, to provide benefits for Plan members. How much is paid will depend on the funds at the time and the law that applies then. Personal information All the information you provide in connection with the Plan will be held by the Trustees and the administrators. It is essential that you tell the P&O team of any changes in your personal details, so that the Trustees records can be updated. Your information is kept secure and is only disclosed in limited circumstances, for example to Wrigley in connection with benefits under the Plan, to insurance companies to arrange particular benefits, to actuaries to value your benefits, administrators to arrange and pay your benefits and to government or regulatory organisations if the Trustees are legally obliged to do so. This may include sending your information outside of the European Economic Area. 22

25 The Government and legal matters Giving up your benefits Except in the limited circumstances allowed by law and by the formal Trust Deed and Rules, you are not allowed to give up, cash in or forfeit your benefits or use them as a security for a loan or mortgage. Transfers in Transfers in are at the discretion of the Trustees and Wrigley are currently not being accepted. Divorce If you divorce your spouse or dissolve a Civil Partnership, the court may order part of your pension benefit to be transferred to your former spouse or Civil Partner. If this happens, you can continue to be a member but your benefits will be reduced. If you request the calculation of a transfer value and this is needed because of a divorce or dissolution settlement, you should tell the Trustees this when asking for the estimate as the Trustees may need further information from you. 23

26 Some special terms used in this booklet Annual Allowance is the amount your pension savings can grow in a year before being subject to a tax charge. It is a monetary limit that is set by the Government and applies to all registered pension schemes (such as benefits earned under the Plan and any extra contributions you pay as Additional Voluntary Contributions). The year runs from 6th April to 5th April and for 2012/2013 the allowance is 50,000. Your pension savings are valued as the increase (above Consumer Price Inflation) to your pension benefits during the year, multiplied by a factor of 16. Added to this figure are any extra pension savings such as contributions made to Additional Voluntary Contributions and personal pensions. Final Plan Salary means the annual average of your best 36 consecutive months actual earnings in your last ten years as a Plan member, less the annual average of the basic State pension for a single person at the end of each 12 month period within that 36 month period. If you joined the Plan after 1 June 1989, your Final Plan Salary is subject to an earnings cap. The cap normally increases each year in line with prices and, as at March 2013, is 137,400. Life Insurance Salary means your basic annual salary at the date of your death. Lifetime Allowance is the limit on the amount of total pension savings and benefits you can build up over your lifetime on a tax efficient basis. The allowance is set at a very high level and will not affect most people. It is 1.5 million worth of savings and benefits in the 2012/2013 tax year. The Lifetime Allowance will apply to all of the pension savings and benefits you build up over your entire life. The benefits that you draw from all registered pension arrangements in which you have participated will be measured against your remaining Lifetime Allowance at certain points, including when benefits first come into payment. Normal Pension Date means your 65th birthday. Pensionable Service means the total of the time you have been a member of the Pension Plan, subject to a maximum of 40 years. Periods where you have not made contributions due to a period of absence such as unpaid maternity leave will not be counted as pensionable unless you make up the missed contributions.. Plan means The Wrigley Pension Plan or The Wrigley Life Insurance Plan, as appropriate. Plan Salary is calculated on 1 January each year for the purposes of the Plan and means your PAYE earnings in the preceding tax year less the annual basic State pension for a single person applicable at that time. 24

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28 March 2013