The reduced Annual Allowance from 6 April 2011

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1 The reduced Annual Allowance from 6 April 2011 The Annual Allowance is an annual limit on tax-efficient contributions you may pay into UK registered pension schemes. The allowance applies to the total of all pension contributions paid by you, your employer or any third party on your behalf. To date, the Annual Allowance has been set relatively high. Ignoring restrictions in place for high earners, the allowance is 255,000 for the 2010/11 tax year. The Annual Allowance will reduce to 50,000 for the 2011/12 tax year and there will be no fixed increase to the Annual Allowance for at least the next four tax years. The Annual Allowance applies to the value of your total pension savings to all UK registered pension plans each year. The pension savings to be tested against the Annual Allowance are those made in the input period ending in a tax year. The input period for the Walt Disney Retirement Savings Plan is aligned with the tax year but if you pay into other pension arrangements, you will need to confirm the input period for these arrangements. For defined contribution pension arrangements such as the Walt Disney Retirement Savings Plan, it is the value of the contributions paid into the Plan by you and Disney which count towards the Annual Allowance. If the value of your pension savings over the preceding three years has been below the Annual Allowance (deemed to be 50,000 for the 2008/09, 2009/10 and 2010/11 tax years), any unused allowance can be carried forward to offset pension savings above the Annual Allowance in the 2011/12 tax year. In order to benefit from carry forward for a particular year, you must have been a member (active or deferred) of a UK pension scheme at some point during that tax year. When calculating how much unused allowance you have available you will need to take into account your pension savings to the Walt Disney Retirement Savings Plan (and to any other pension arrangements) during the relevant input periods ending in these tax years. Marginal rate tax relief (currently at 20%, 40% or 50%) will continue to be available on pension savings within the Annual Allowance. If the value of your annual pension savings exceeds the Annual Allowance (and any carry forward allowance), the excess will be subject to tax at your highest marginal rate. The Pension Input Period The input period for the Walt Disney Retirement Savings Plan is aligned with the tax year so that your contributions paid between 6 April 2011 and 5 April 2012 are assessed against your Annual Allowance for the 2011/12 tax year. Other pension arrangements may have different input periods which count towards a given tax year. If you have made other pension savings, you should contact the administrator of these arrangements to confirm your input period. To determine how much of your Annual Allowance you have used, you will need to add together your pension savings for each arrangement with an input period ending in the relevant tax year.

2 Carry forward If the value of your pension savings is less than 50,000 in a year, you may carry forward your unused Annual Allowance for up to three tax years. For example, if you pay 30,000 each year in input periods ending in the 2011/12, 2012/13 and 2013/14 tax years, you would be able to carry forward 60,000 (3 x 20,000) to the 2014/15 tax year as follows: Tax year Available Annual Allowance Pension savings Unused Annual Allowance carried forward 2011/12 50,000 30,000 20, /13 70,000 30,000 40, /14 90,000 30,000 60, /15 110,000 You must use your current year Annual Allowance before any carry forward Annual Allowance and you may only carry forward the cumulative total of unused Annual Allowance so, in the above example, if pension savings in the 2013/14 tax year had been 90,000, this would reduce the carry forward Annual Allowance for the 2014/15 tax year to nil. For the 2011/12 tax year, you may look back three years to the 2008/09 tax year and if your pension savings were less than 50,000 in input periods ending in the 2008/09, 2009/10 and/or 2010/11 tax year, you will be able to carry forward the difference between your actual pension savings and 50,000. You may only carry forward any unused Annual Allowance from a tax year in which you were a member, either active or deferred, of a UK registered pension arrangement although your current pension savings need not be to the same arrangement. Who could be affected by the Annual Allowance changes from 6 April 2011? For the majority of members, we would expect their ongoing pension provision within the Walt Disney Retirement Savings Plan to be below the level of the Annual Allowance. However, the new rules could result in an additional tax charge being levied in the following circumstances: You consistently pay high pension contributions to the Walt Disney Retirement Savings Plan. You pay a large one-off contribution into the Walt Disney Retirement Savings Plan. You pay large pension contributions to other pension arrangements. Can I pay additional pension contributions within my Annual Allowance? If you do not currently pay pension contributions that will exceed the Annual Allowance, you could consider paying extra contributions. This may be of particular interest if: You pay income tax at 50% or 40%.

3 Your taxable income is between 100,000 and 114,950 in the 2011/12 tax year. Your personal allowance is reduced by 1 for every 2 of income between these limits such that your effective marginal tax rate is 60%. Paying additional pension contributions would give you tax relief at the same rate. See the Personal Allowance and UK income tax rates fact sheet at for further details. You are currently restricted by transitional arrangements in force until 5 April Please note these measures will remain in place until 5 April 2011 so you may wish to defer any increases until after 5 April. Further information Further information on the Annual Allowance is available at the HMRC website What should I do if I am unsure how the reduction to the Annual Allowance will impact my pension savings? The guidance in this note is not intended to give taxation or pension advice. If you are unsure whether you are impacted by the reduction to the Annual Allowance or what level of contributions you wish to pay to the Walt Disney Retirement Savings Plan, you should speak to an Independent Financial Adviser. You can find details of advisers in your area at

4 Examples Some examples of how to estimate your pension savings against the Annual Allowance are included below. These examples are for guidance only and you will need to consider your contributions in the context of your own circumstances. Ahmed Adam is a member of the Walt Disney Retirement Savings Plan. He does not pay into any other pension arrangements. Adam s Pensionable Salary is 120,000. He pays 4% of his Pensionable Salary into the Plan and Disney pays 13%. Adam wishes to estimate his contributions to be assessed against his 50,000 Annual Allowance for the 2011/12 tax year. Adam needs to estimate his contributions paid between 6 April 2011 and 5 April 2012, which he works out at 20,400 (17% x 120,000). Adam concludes he can pay a further 29,600 within his 50,000 Annual Allowance and decides to increase his contributions from 6 April Barbara Barbara is keen to pay the maximum possible tax relievable pension contributions into the Walt Disney Retirement Savings Plan to use her 2011/12 Annual Allowance and her carry forward Annual Allowance from the 2008/09, 2009/10 and 2010/11 tax years. Barbara s contributions to the Plan have been as follows: Tax year Available Annual Allowance (for carry forward purposes) Value of pension savings to be assessed 2008/09 50,000 25,000 25, /10 75,000 29,000 46, /11 96,000 34,000 62, /12 112,000 Unused Annual Allowance carried forward Barbara may make total contributions (member plus Disney) of 112,000 between 6 April 2011 and 5 April 2012 before she would incur an Annual Allowance charge in the 2011/12 tax year.

5 Chris Chris pays 500 each month into the Walt Disney Retirement Savings Plan and receives a Disney contribution of 1,625. He also pays 1,000 a month into a SIPP. Chris checks with his SIPP provider and receives confirmation that the input period for his SIPP runs from 1 January to 31 December each year. He therefore needs to include contributions to his SIPP paid between 1 January 2011 and 31 December 2011 and contributions to the Walt Disney Retirement Savings Plan paid between 6 April 2011 to 5 April 2012 against his Annual Allowance for the 2011/12 tax year. Chris estimates his total pension savings to be assessed against his 50,000 Annual Allowance at 37,500 including 25,500 to the Walt Disney Retirement Savings Plan and 12,000 to his SIPP. David David s total contributions to the Walt Disney Retirement Savings Plan are 60,000 in the period from 6 April 2011 to 5 April David has no carry forward available from previous years. David s total taxable income exceeds 150,000 so he pays tax at a marginal rate of 50%. David will incur a 5,000 Annual Allowance charge on his contributions above 50,000, calculated as ( 60,000 less 50,000) x 50%. David will need to report and pay the tax charge via his Self Assessment Tax Return.