Defined Contribution Scheme

Transcription

1 MEMBERS BOOKLET The Dresser-Rand Defined Contribution Scheme Understanding Your Pension

2 table of contents SECTIONS Introduction...1 The Trustees...2 Important Information for New Starters...3 Definitions of Terms Used in This Document...4 Summary of Benefits Provided by The Scheme...5 How and When You Become a Member of The Scheme...6 How The Scheme Works...8 How Your Money is Invested...12 More Information on Investment Decisions...14 Your Payment Options at Retirement...16 Additional Information You Should Know About Your Pension...17 Your Life Assurance Benefits Available From The Scheme...18 What Happens if You Leave The Scheme Before Retirement...19 The Security of Your Account...20 Absences From Work (including family leave)...21 Separation of Benefits Due to Divorce or Dissolution of Partnership...22 Other Details About The Scheme...23 Where to Get More Information About Your Member Account...24 Information You Need to Provide...25 The State Pension...26 Complaints About The Scheme...28 Where to Get Assistance or Information Relating to The Scheme...30

3 Defined Contribution Scheme Member s Booklet 1 Introduction Welcome to the Dresser-Rand Defined Contribution Scheme (the Scheme ). The purpose of this booklet is to summarise the benefits and contributions that are payable for members of the Scheme. In particular, it answers the questions that will be most important to you, such as: What benefits does the Scheme provide? How does it work? Why should I join? How do I know my money is secure? Please take the opportunity to read this booklet thoroughly so that you understand more about this benefit being offered to you by the Company. Keep your Member s Booklet in a safe place, together with all the other information on this Scheme - it is important. You can also read it by visiting the HR folder on the R drive. Useful contact details and website addresses are contained at the back of this booklet. Please note that this booklet is only a summary of the detailed technical provisions of the Scheme. Its formal legal terms are set out in the Scheme s governing documentation (the Rules ). The Rules will override this booklet in the event of any inconsistency between them. In particular, this booklet is subject to the powers in the Rules to terminate, wind up and amend the Scheme.

4 2 Defined Contribution Scheme Member s Booklet The trustees The Scheme is run on behalf of the members by Trustees. They must act in accordance with the Rules. Copies of the Rules are available for inspection if required. The Rules provide that trustees of the Scheme are appointed by the Company, subject to one third of the total number of trustees being nominated and selected by Scheme members in accordance with the Scheme s member-nominated trustee procedure. The current Company appointed trustees are: Mr T Vaitkus, Chairperson Mr. D Veal Mrs. L Cook Mrs L O Brien The current member-nominated trustees are: Mr. J Brewer Mr N Perry Member-nominated trustees serve a term of 3 years or 4 years, after which they can be reappointed or another member-nominated trustee may be selected, in accordance with the member-nominated trustee procedure. If you are interested in becoming a Trustee please contact a member of the HR team for further details. The Trustees have a duty to act in the best interests of the members of the Scheme. The main responsibility of the Trustees is to administer the benefits in accordance with the Rules. Other responsibilities include: Appointing professional investment managers and monitoring their performance; Preparing annual accounts and having these professionally audited; Deciding how lump sum death benefits should be distributed. To assist them with their responsibilities, the Trustees use various specialists including: Administrators - who keep members records, calculate benefits and arrange benefit payments. Auditors - who confirm the accuracy of the Scheme s accounts. Investment Managers - who invest the assets of the Scheme. Pension Consultants - who advise the Trustees on current pensions practice. Solicitors - who advise the Trustees on legal matters.

5 important information for new starters Defined Contribution Scheme Member s Booklet 3 If you are a new employee after 1 February 2012 you will be automatically enrolled as a member of the Scheme, making a Salary Sacrifice Contribution of 3 per cent of your basic salary. Should you wish to vary this level of contribution rate or make Non-Salary Sacrifice Contributions only please contact a member of the HR team. You have a period of one month in which to do so. You may also opt-out of pension savings under the Scheme within this period. The relevant form to complete is available from the HR team.

6 4 Defined Contribution Scheme Member s Booklet DEFINITIONS OF TERMS USED IN THIS DOCUMENT The following pensions terms are used in this booklet: Beneficiaries Beneficiaries broadly include your Spouse or former Spouse, family members, Dependants, anyone nominated by you in an Expression of Wish form, anyone named under your will (including charities, societies and clubs), and your personal representatives. Company Company shall mean Dresser-Rand Company Limited. Dependants Dependants means any person(s) who the Trustees consider were substantially dependent on you for financial support or assistance at the time of your death (this may include, for example, your children, an unmarried partner and/or a relative who is living with you at the time of your death). Member Account Member Account means your account under the Scheme, and which will include your contributions and the Company s contributions for you to the Scheme and any investment return. The Trustees decision regarding the amount of your Member Account will be final. Non-Salary Sacrifice Contributions Non-Salary Sacrifice Contributions means the amount of your salary that you choose to save for your retirement. You do not pay income tax on these contributions. Scheme Scheme means the Dresser-Rand Defined Contribution Scheme. Salary Sacrifice Contributions Salary Sacrifice Contributions means the contributions payable to the Scheme by the Company on your behalf. If you make Salary Sacrifice Contributions, you will give up part of your salary and the amount you give up is paid by the Company into the Scheme. Because you receive a lower salary, you pay less National Insurance contributions. You do not pay income tax on these contributions. Spouse Spouse means your husband, wife or civil partner. Trustees Trustees means trustees from time to time of the Scheme who are responsible for running it. See the Section The Trustees for more information.

7 Defined Contribution Scheme Member s Booklet SUMMARY OF BENEFITS PROVIDED BY THE SCHEME The Scheme is a pension arrangement which is intended to provide you with benefits for you on your retirement and for your family on your death. The Scheme is under the control of the Trustees. 5 The Scheme is a defined contribution (sometimes also called money purchase ) pension arrangement. This means that contributions are paid into an account held in your name, and this is used to provide benefits for you on your retirement. This is explained in more detail in the following section headed How the Scheme Works. As a member of the Scheme you can: Invest between 1% and 90% of your salary for your retirement (you may be required to make a certain level of minimum contributions in accordance with the automatic enrolment legislation); Receive Company Matching contributions of up to 7%, payable to your Member Account; Choose to invest your funds in various professionally managed investment funds. You may choose to change your investment allocation monthly if desired; Access financial planning tools which are available to you on the internet at www. blackrock.co.uk/pensions/ dresserrand; Monitor your account information and make changes to your investment fund allocation and your rate of savings via the internet; Make use of a member s helpline which allows you to speak to an advisor on a personal basis. In addition to the life assurance benefits you may be covered for as an employee of the Company, as a member of the Scheme, you may be entitled to further life assurance benefits. Death in service benefits are detailed on page 18.

8 6 Defined Contribution Scheme Member s Booklet HOW AND WHEN YOU BECOME A MEMBER OF THE SCHEME NEW STARTERS If you are an employee who started employment on or after 1 February 2012, you will be automatically enrolled as a member of the Scheme and you will make a Salary Sacrifice Contribution of 3% of your basic salary. Should you wish to vary this level of contribution rate please contact a member of the HR team. You have a period of one month in which to do so. You may also opt-out of pension benefits under the Scheme within this initial one month period. The relevant form to complete is available from the HR team. Should you opt out of the Scheme or pay contributions of less than 3%, legislation may require that you should be automatically re-enrolled at a later date in the future and for your contribution rate to revert to 3%. You will be notified of this re-enrolment and if you do not opt-out of the Scheme again or vary your contribution rate within a period of one month, you will automatically make Salary Sacrifice Contributions of 3%. If you choose to opt-out, you will not be able to join the Scheme at a later date (other than the date on which you are required to be automatically enrolled see above) without the consent of the Company and the Trustees, who may require satisfactory medical evidence before you are permitted to join. CURRENT EMPLOYEES If you are an employee of the Company but have not yet joined the Scheme, you may still be able to join the Scheme. If you are interested in joining the Scheme please contact a member of the HR team. If you join the Scheme the options set out below for current employees who are already members will also be available to you. With effect from January 2014, most employees will be required to be automatically enrolled as members of the Scheme, but there will be an option to opt-out. If you are a current employee and are already a member of the Scheme, the following options are available: Non-Salary Sacrifice Contributions You can choose to contribute on a Non-Salary Sacrifice basis at any time. If you would like to resume or initiate Non-Salary Sacrifice Contributions, you can do this via Payroll. The forms are available in the HR folder on the R drive. You should complete the form and submit it to the HR team. If you choose to stop your or vary your contributions at a later date, you may do this at any time via Payroll. Please

9 Defined Contribution Scheme Member s Booklet 7 note, if you pay contributions of less than 3%, legislation may require that your contribution reverts to 3% at a later date (please see above). Salary Sacrifice Contributions You may elect to pay Salary Sacrifice Contributions, or if you already pay Salary Sacrifice Contributions you may vary the rate of these contributions. The enrolment period for Salary Sacrifice Contributions is during April of each year. Each April, you can sign up for a change in Salary Sacrifice Contributions. The revised Salary Sacrifice Contributions will take effect (and therefore your wages will be affected) in the following May. The rate of the Salary Sacrifice Contributions will remain in effect until the following April, when you will have the opportunity to change it for the next 12 month period. Please note, if you pay contributions of less than 3%, legislation may require that your contribution reverts to 3% at a later date (please see above). Further details of how contributions work can be found in the section entitled How the Scheme Works.

10 8 Defined Contribution Scheme Member s Booklet HOW THE SCHEME WORKS Upon joining the Scheme, a Member Account will be opened for you. You and the Company pay contributions into your Member Account. You may choose the investments that your contributions are invested in from a range of options selected by the Trustees. Details of the investment choices available to you are described in investment information booklet that will be provided to you separately. Further details can also be found on the BlackRock website. The money in your Member Account is used to provide benefits for you when you retire. This will usually be done by the purchase of a policy from an insurance company. Details of the benefit options are described in the section headed Your Payment Options at Retirement. MEMBER CONTRIBUTION OPTIONS You can choose to save on a Salary Sacrifice or Non-Salary Sacrifice basis or both. This was described in the section headed How and When You Become a Member of the Scheme. You can save between 1% and 90% of your monthly salary for your retirement. Salary Sacrifice Contributions The rate of Salary Sacrifice Contribution you choose is fixed for a 12 month period. However, if you have encountered a financial hardship or significant change in your financial circumstances and can no longer afford this salary reduction, you may be able to decrease the rate. To do this, you must complete the Salary Sacrifice Life Event Change form and submit it to the HR team. Each year during the month of April, you will have the option to change the rate of your Salary Sacrifice Contributions. From 1 April through 30 April, you can choose to begin, stop or change the rate of your Salary Sacrifice Contributions. The election you make in April will be effective for the year 1 May through 30 April unless you have an approved Life Event Change. If you choose to do this, changes in contribution can be made via Payroll. Non-Salary Sacrifice Contributions Generally, you can choose to contribute on a non-salary Sacrifice basis at any time and you can change the amount you save at any time. For example, assume you want to increase the amount of your Non-Salary Sacrifice Contributions from 1% to 10% only for the pay period in April. You would need to contact Payroll in late March. Then in late April, after the payroll is processed, you would need to contact Payroll again to reduce the rate of your Non-Salary Sacrifice

11 Defined Contribution Scheme Member s Booklet 9 Contributions to 1% (or any other amount of your choosing). It is important that you notify Payroll well in advance of the payment date to ensure the contribution rate can be processed by Payroll in time. Failure to do so may mean that the change in contributions does not take effect in time. If this is the case, a refund from Payroll or from your account in the Scheme is not an option. Your contributions are deducted through payroll and you obtain full tax relief immediately at your highest rate of tax. This means that (under the current tax rules), if you pay tax at the basic rate of 20%, each 1 you pay towards your pension will reduce your take home pay by only 80p. If you pay higher rate tax at 40% (45% on income over 150,000 a year), your take home pay reduces by only 60p (55p) for each 1 you pay towards your pension. Please contact a member of the HR team for further information. If you pay Salary Sacrifice Contributions you will not be required to contribute directly to the cost of your pension in respect of these contributions. This is because under the salary sacrifice arrangement you agree a reduction of your contractual pay equivalent to the amount you choose to contribute an amount equivalent to the reduction is then paid by the Company to the Scheme. The salary sacrifice arrangement saves money for you and the Company because National Insurance Contributions are paid on your reduced contractual pay. At the same time your pension benefits will be unaffected. COMPANY MATCHING CONTRIBUTIONS The Company Matching Contributions are a valuable part of the Scheme and your retirement income. To be eligible to receive the Company Matching Contributions, you must be contributing to the Scheme. You will receive a Company Matching Contribution only for the pay periods during which you are contributing to the Scheme. Employee Contribution as a percent of basic salary each pay period (the sum of your Salary Sacrifice Contribution Rate and your Non-Salary Sacrifice Contribution rate) Company Matching Contributions each pay period 1% 2.5% 2% 3% 3% 7% 4% - 90% 7%

12 10 Defined Contribution Scheme Member s Booklet HOW THE SCHEME WORKS...continued EXAMPLES: Example Salary Sacrifice Contributions Non-Salary Sacrifice Contributions Total Percent Deducted from Salary Employer Matching Contributions Total Contributions Invested 1 3% 0% 3% 7% 10% 2 3% 3% 6% 7% 13% 3 20% 5% 25% 7% 32% 4 1% 1% 2% 3% 5% 5 0% 40% 40% 7% 47% 6 2% 1% 3% 7% 10% 7 0% 0% 0% 0% 0% In addition to Company Matching Contributions, the Company pays a further amount towards the cost of providing a cash lump sum should you die in service and to meet the Scheme s administration costs. These contributions will continue until you draw your pension, leave employment with the Company, opt out of the Scheme or die, whichever is the earliest. ADDITIONAL VOLUNTARY CONTRIBUTIONS It is not possible to pay additional voluntary contributions to the Scheme. You can, however, make ordinary contributions between 1% and 90% of your basic salary. You can only increase your Salary Sacrifice Contributions on 1 May each year. If you wish to pay higher contributions at any other time you can do this by paying or, if you already pay Non-Salary Sacrifice Contributions, by increasing your Non-Salary Sacrifice Contributions. The maximum amount of pension contributions which you may pay (into all of your pension arrangements) in any tax year without tax becoming payable under the government s tax rules, is the higher of: 100% of your taxable earnings; and 3,600. In addition, you will also incur a tax charge if the total increase in the value of your pension benefits under registered pension schemes is more than 50,000 for the tax years 2011/2012 to 2015/16 (this limit may change thereafter). In relation to the Scheme, this means that if your total amount of contributions is more than 50,000 in the relevant tax year, you will incur a tax charge. For more information on this please contact the Payroll & Pensions Manager.

13 Defined Contribution Scheme Member s Booklet 11 INVESTMENT FUND OPTIONS There are several investment funds available to you to consider when you are determining how to invest your money. Please refer to the section headed How Your Money Is Invested to learn more about this.

14 12 Defined Contribution Scheme Member s Booklet HOW YOUR MONEY IS INVESTED THE INVESTMENT OPTIONS You may choose from the investment options selected by the Trustees from time to time. Details of the investment choices available to you are described in investment information booklet that will be provided to you separately from BlackRock. Please see the section headed More Information on Investment Decisions for some help regarding which options may be best for you. You may change your choice of interest options from time to time. IF YOU DO NOT CHOOSE ANY INVESTMENT OPTION If you do not choose any investment option, your Member Account will be automatically invested in the default fund selected by the Trustees, called the Lifestyle option. THE LIFESTYLE OPTION The Lifestyle option: Aims to give consistent returns which match the UK stock market indices (i.e. neither outperforming or underperforming UK stock markets); Means that the returns achieved by your Member Account are calculated using a range of Equities, Bonds, Gilts and cash. The mix is automatically adjusted as you get older with a view to achieving a balanced risk investment strategy without you needing to make any investment decisions; and Aims to reduce investment volatility as you approach retirement. It does this by determining the appropriate mixture of different types of investments for your Member Account according to how far you are away from taking your pension. The mix includes fewer Equities and more Bonds, Gilts and cash the closer you are to taking your pension. Unless you indicate otherwise, the assumed age of your retirement will be age 65. You can choose to change this retirement age at any time and as often as you desire.

15 Defined Contribution Scheme Member s Booklet 13 CHANGING YOUR INVESTMENT ALLOCATION You can change your investment allocation at any time simply by calling the BlackRock helpline. You can also change your investment allocation via the BlackRock website. When changing how your funds are invested, you need to consider the following: 1. Do you want to change the investments for only the future contributions? This would mean that the funds you currently have invested would not change. However, all contributions submitted to BlackRock in the future will be allocated to different investment funds. 2. Do you want to change the investments for only the past contributions? This would mean that the funds you currently have invested would be changed in accordance with your instructions. However all contributions submitted to BlackRock in the future will be allocated to your current investment funds. 3. Do you want to change the investments for both the past and the future contributions? This would mean that the past funds and your future contributions will be invested in accordance with your new instructions. Only you can choose how to invest your contributions. You are encouraged to monitor the investment performance of your account and the investment fund options available to you and to use the financial planning tools available on the BlackRock website.

16 14 Defined Contribution Scheme Member s Booklet MORE INFORMATION ON INVESTMENT DECISIONS We understand that making decisions about investment can sometimes be difficult and in this section we will give you some key points to consider when making your investment decisions. WHERE TO GET HELP WITH YOUR INVESTMENT CHOICES Choosing the investment funds for your Member Account may sound complicated but there s plenty of information available to help you make your own decision. In addition, you may want to seek advice from an independent financial adviser. Further details can be found at This section of the booklet outlines some basic details about investment and should make your choice easier. So, before you make your decision, you should read through the next few sections of the booklet carefully as they will answer some important questions that you need to think about. You will also be able to find further details on the BlackRock website. THE THREE INVESTMENT CATEGORIES Generally speaking, investment and savings options fall into one of three categories: Equities: These are shares in companies traded on stock markets in the UK or overseas. Bonds: These are loans to a government or a company, which pay a fixed or variable rate of return for a fixed period of time. Loans to the UK Government are called gilts. Cash: Cash investments, also called deposit-based savings, work very much like building society or bank deposit accounts. Each type of investment has different advantages and disadvantages depending upon circumstances. These are commonly called risks and rewards. The key to understanding about investment is knowing about the risks and rewards of the different types of investment

17 Defined Contribution Scheme Member s Booklet 15 WHAT YOU SHOULD KNOW ABOUT RISK AND REWARD As you may expect, the starting point is that investments with the higher return tend to carry the higher risk. When looking at risk, however, you should be aware that there are two main kinds: Investment risk: This is probably the best known kind of risk. This is what people are referring to in the phrase the value of investments can go down as well as up. So, if you invest in (in particular) equities, the danger is that the value of your investment may fall just before you want to take your pension. On the other hand, equities have historically out-performed other forms of investment over the long-term. However, past performance is no guarantee of the future; and Inflation risk: This risk comes from investments where the returns are too low to keep up with increases in the cost of living. So, the value of your investment is decreasing in real terms compared to prices. This sort of investment tends to carry low investment risk (such as a cash fund), and so is less likely to drop in value over the short term. The basic rule is that as you get older, the importance of each kind of risk changes. Understanding why will help you make your investment decisions. WHY YOUR AGE IS IMPORTANT If you are still many years from your expected retirement (roughly more than twenty years), inflation risk will be a large concern. This is because: If you achieve low returns on your Member Account, your pension might fall seriously short of your expectations; but If you invest in more volatile assets and their value decreases, this investment risk is probably less important because there is time for the value to rise again. This means you may want to think about investing your savings in assets with a higher indicated rate of return (such as equities). If you are within five to ten years of your retirement, however, investment risk may start to become more important. This is because there is less time available for your Member Account to recover from any fall in the value of your investments. Finally, as you get closer to retirement, investment risk becomes critical. This is because any fall in the value of your Member Account will reduce your pension. This means that you may not want any of your Individual Account invested in equities as you approach your retirement date.

18 16 Defined Contribution Scheme Member s Booklet YOUR PAYMENT OPTIONS AT RETIREMENT Although your Normal Retirement Age, as defined under the terms of the Scheme, is 65, you may take your pension at any time from age 55 (or age 50 if you have a protected pension age). The level of your pension benefits at retirement will depend on the value of your Member Account and the retirement benefits that you choose (in addition to your regular retirement pension) from the options available when you take your pension. These options are: A cash sum on retirement - part of your benefits may be taken as a cash sum (currently tax-free) which is payable when your pension starts to be paid. The maximum amount of your pension you can give up for cash is normally limited to 25% of the value of your benefits under the Scheme. You may be entitled to a higher amount based on 3/80ths of your final remuneration for each year of service with the Company (capped at 40 years). For further details, please contact a member of the HR team; Pension increases - there is no legal requirement for your pension to increase each year once it comes into payment (for example, to allow for inflation). However, you may choose to purchase a policy from an insurance company which provides for this; Family pension - you can give up part of your pension to have a pension paid to one or more of your Dependants in the event of your death; and Guarantee period - you can also have your pension guaranteed to be paid for a maximum of ten years. This means that if you die within the guarantee period, your pension will continue to be paid to your Dependants for the remainder of that period or a lump sum will be payable to your Beneficiaries equal to the amount of pension that would have been payable to you during the guarantee period. The cost of adding options to your pension usually reduces the amount of your own pension. Alternatively, you can choose to transfer the value of your Member Account to another registered pension arrangement, such as a personal pension scheme. Please contact BlackRock if you would like to discuss these options.

19 ADDITIONAL INFORMATION YOU SHOULD KNOW ABOUT YOUR PENSION Defined Contribution Scheme Member s Booklet 17 Your pension will normally be purchased in your name with an insurance company using the proceeds of your Member Account. The Company have engaged a Third Party Provider called The Open Market Annuity Service, or Tomas. They will work with members to search the open market to assist them in finding the best annuity option for their personal circumstances. The service is funded by the Company. Entry to this service will be when you contact BlackRock to indicate that you wish to progress to retirement and they will pass your details to TOMAS, who will contact you directly to progress. Before your pension is due to start, you will receive a statement showing full details of your options. You may also want to obtain independent financial advice about your options when you near this time. Please see Where to get more information about your Member Account for further details. You will also be notified if it is necessary to reduce your benefits from the Scheme to take account of any tax that HM Revenue and Customs is to impose on your benefits. This will only rarely occur. However, it may occur, for example, if the value of your pension savings in all of your pension arrangements exceeds the lifetime allowance (currently 1,500,000 but this will be reduced to 1,250,000 from the 2014/2015 tax year). If you want to take your pension before age 65, your pension will generally be smaller because fewer contributions will have been paid and your Individual Account will have been invested for a shorter period. If you choose to retire later than your NRD, your Member Account will have been invested for longer and your pension will potentially be paid for a shorter time and so it will generally be higher in value.

20 18 Defined Contribution Scheme Member s Booklet YOUR LIFE ASSURANCE BENEFITS AVAILABLE FROM THE SCHEME DEATH IN SERVICE As an employee of the Company, if you die in service before reaching the later of age 75 and state pension age and you are a contributing member of the Scheme, a lump sum is payable to your Beneficiaries equal to six times your basic salary. If you are a salary sacrifice member this lump sum is calculated by reference to the salary you would have been paid if you had not chosen to sacrifice part of your salary in exchange for the Company paying contributions to the Scheme. If you are a contributing member of the Scheme and you die before reaching the later of age 75 and state pension age, an additional lump sum equal to your Member Account is also payable. DEATH WHILE A PENSIONER If you die while in receipt of a pension, a pension may be payable to your Dependants on the terms you chose when you retired. DEATH HAVING LEFT THE SCHEME If you die after leaving the Scheme but before taking your pension, the Trustees will provide either a lump sum or pension for one or more of your Dependants from the proceeds of your Member Account. PAYMENT OF LUMP SUM DEATH BENEFITS In order that they may be paid free of inheritance tax, lump sum death benefits are paid at the discretion of the Trustees. So that the Trustees know who you want the lump sum to be paid to, you must complete an Expression of Wish Form which can be found at the back of this booklet. The Trustees will take full account of your wishes when paying this benefit. However they are not legally bound to follow them. It is very important that you update your Expression of Wish Form from time to time, especially if there is a material change in your personal circumstances (such as getting married or divorced, or having children). You can obtain further copies of the Expression of Wish Form from a member of the HR team. The Trustees decision on which of your Beneficiaries should receive any lump sum death benefit is final.

21 Defined Contribution Scheme Member s Booklet 19 WHAT HAPPENS IF YOU LEAVE THE SCHEME BEFORE RETIREMENT If you leave the Scheme (either because you leave employment with the Company or because you opt out of the Scheme), and you have been in the Scheme for more than 2 years, your Member Account will be retained within the Scheme (though you will have the option to transfer your benefits to another arrangement). You will not be able to make any more contributions to your Member Account, but you will be able to change your investments. You should contact BlackRock if you would like to do this. Your options at retirement will then usually be the same as described in the section headed Your Payment Options at Retirement above. This includes having the option of transferring the value of your Member Account to another authorised pension arrangement. IF YOU LEAVE THE SCHEME WITH LESS THAN 2 YEARS IN THE SCHEME If you have been in the Scheme for at least 3 months but less than 2 years and you leave before age 65, you may be entitled: To transfer your benefits to another registered pension scheme, or To receive a refund of the contributions that you have paid to the Scheme (less tax). This will end your entitlement to any further benefit from the Scheme. If you have been in the Scheme for less than 3 months or if you leave after age 65 with less than 2 years service, the contributions that you have paid to the Scheme will be repaid to you. This will end your entitlement to any further pension benefits from the Scheme. Please contact a BlackRock if you would like further information on your eligibility for a transfer or a refund. WHAT HAPPENS IF YOU OPT OUT OF THE SCHEME If you decide to opt out of the Scheme, you will need to contact a member of the HR team who will provide you with the relevant form to complete. You will then cease to be eligible to make contributions to the Scheme. You may only rejoin the Scheme with the consent of both the Trustees and the Company, who may request satisfactory medical evidence before allowing you to do so. If you remain in employment with the Company after opting out of the Scheme you will still be eligible for lump sum death in service benefit of four times your basic salary. AUTO-ENROLMENT If you opt-out of the Scheme but remain in service with the Company you may be required to be automatically enrolled in the Scheme at a later date. You will be enrolled as a salary sacrifice member paying contributions of 3% unless you again choose to opt-out or opt to pay a different rate of contributions.

22 20 Defined Contribution Scheme Member s Booklet THE SECURITY OF YOUR ACCOUNT All money paid into the Scheme is kept separate from the Company s money in the Trustees Bank Account set up especially for the Scheme. The money can only be used in the ways that are described in the Scheme Rules. The Trustees are legally responsible for ensuring that the Scheme is run properly. The Trustees have appointed independent specialists to provide expert advice and to ensure that the Scheme is administered in accordance with legal requirements. Of course, as previously stated above, the value of your Member Account can go up or down depending on the investment returns it achieves.

23 Defined Contribution Scheme Member s Booklet 21 ABSENCES FROM WORK (INCLUDING FAMILY LEAVE) Generally, most absence from work is short and your membership of the Scheme is normally unaffected. If you are away for longer, however, the Trustees will normally continue your membership of the Scheme for so long as you receive earnings from the Company or you are on a period of paid family leave (such as maternity or paternity leave). If this applies to you: You will continue to be covered for the benefits payable on your death (see section headed Your Life Assurance Benefits Available From the Scheme. Generally you must continue to make contributions to the Scheme, but only by reference to the salary, maternity or sick pay that you are actually receiving. The Company continues to make its contributions to the Scheme for you.

24 22 Defined Contribution Scheme Member s Booklet SEPARATION OF BENEFITS DUE TO DIVORCE OR DISSOLUTION OF PARTNERSHIP A Court settlement on divorce (or dissolution of a civil partnership) generally takes pension rights into account as part of your assets. There are three options available to the Court for dealing with pension rights: The value of your Member Account or pension can be offset against other financial assets; Part of your Member Account or pension can be earmarked through a Court order for your ex-spouse to receive when you retire; or The Court can issue a pension sharing order that states the percentage of your pension rights that are to be granted to your ex-spouse. Your Member Account or pension would then be reduced as specified in the Court order, and your ex-spouse would be required to take a pension transfer from the Scheme of an amount equal to the reduction in your Member Account or pension. If you would like further information about this please contact the BlackRock helpline and an adviser will assist you with what you need to do in this situation.

25 OTHER DETAILS ABOUT THE SCHEME Defined Contribution Scheme Member s Booklet 23 MAKING CONTRIBUTIONS TO MORE THAN ONE PENSION ARRANGEMENT You can make contributions to another pension arrangement at the same time as making contributions to the Scheme. However, the maximum amount of pension contributions which you may pay (into all of your pension arrangements) in any tax year without tax becoming payable under the government s tax rules, is the higher of: 100% of your taxable earnings; and 3,600. In addition, you may also incur a tax charge if the total increase in the value of your pension benefits under registered pension schemes is more than 50,000 for the tax years 2011/2012 to 2015/16 (this limit may increase thereafter). For more information on this please contact the Payroll and Pensions Manager. You should bear in mind that the Company will not contribute to a pension arrangement other than the Scheme, and you would have to pay your contributions to such an arrangement direct to the provider, rather than having them deducted from your pay. You may wish to seek independent financial advice before making any decisions about paying contributions to such schemes. Please let the HR team know if you intend to make contributions to more than one arrangement. CAN I TRANSFER BENEFITS TO AND FROM OTHER SCHEMES? You may with the consent of the Trustees transfer any pension rights earned from previous employment or from a personal pension into the Scheme. Transfers are invested in your Member Account. You may also transfer your Member Account to another registered pension arrangement. If you want to do this, please contact the Member s helpline at BlackRock and they will provide all of the information you will need. WHAT TAX LAW GOVERNS THE SCHEME? The Scheme is a registered pension scheme for the purposes of the Finance Act As a result, it has the benefit of tax relief on contributions payable under it, and tax relief on the investment returns achieved by it. In exchange for the tax-advantageous nature of the Scheme, HM Revenue & Customs imposes certain limits on the benefits that can be paid by it without tax charges falling due. Your benefits may be reduced to pay any tax charge that falls due in respect of them. WILL MY PENSION BE TAXED? Your pension will be taxed as earned income. Currently, the only tax-free benefit provided by the Scheme on retirement is the lump sum (up to certain limits) (for more details see section called Your Payment Options at Retirement ). Your total pension on retirement may be reduced to meet additional taxes if the value of your benefits from all of your pension arrangements exceeds the lifetime allowance. This is currently 1,500,000. You will be notified before your benefits are reduced for this purpose. Please note that you must satisfy the Trustees that your benefits do not exceed the lifetime allowance if you have benefits under more than one pension arrangement.

26 24 Defined Contribution Scheme Member s Booklet WHERE TO GET MORE INFORMATION ABOUT YOUR MEMBER ACCOUNT As well as this booklet, you will receive an annual statement showing the current value of your Member Account and, at the earlier of the date you take your pension or opt out of the Scheme, a statement of benefits will be provided. In addition, the Trustees prepare an annual report about the Scheme, copies of which are available on request from a member of the HR team. There is also a Pensions Folder on the Company s R Drive where you can: View electronic copies of all communication material; Download the forms for varying your salary sacrifice and/or non-sacrifice contributions; Access your Member Account and view transactions and balances; Access an investment manager web page showing both the investment options that are available to you plus some useful information explaining different investment approaches; View further details in relation to the Members Helpline provided by BlackRock; and You can see the details about the members of HR who you may wish to contact with any queries. You can arrange to inspect a copy of the Scheme Rules by contacting a member of the HR team or a Trustee. Please see the section headed Where to Get Assistance or Information Relating to the Scheme below for relevant contact details, including details of how to contact an independent financial adviser.

27 INFORMATION YOU NEED TO PROVIDE Defined Contribution Scheme Member s Booklet 25 On joining the Scheme, you will need to provide all of the details described in the application form and any other information that the Trustees require. While you are a member of the Scheme, please inform the HR team immediately if you join another pension arrangement as you may need to provide the Trustees with information about the other arrangement. If you do not provide any information that the Trustees require, or if the information that you provide is incomplete or incorrect, any tax payable as a result will be deducted from your Member Account or your other benefits from the Scheme. You should note that the Trustees and the Company will process data relating to you for the purpose of administering and operating the Scheme and paying benefits under it. This may include passing on data about you to any third parties as are appropriate for the administration and operation of the Scheme. By joining the Scheme, you have consented to the Trustees and Company using this data for this purpose.

28 26 Defined Contribution Scheme Member s Booklet THE STATE PENSION The State pension scheme is currently made up of two elements: The State basic pension - a flat-rate amount payable to everyone who has paid enough National Insurance contributions; and The State Second Pension (S2P) - which provides mostly earnings-related benefits between certain earnings limits that build up at three rates. The rates are geared so that pension for lower earners builds up at a higher rate. S2P will change to a flat-rate pension at some stage in the future. S2P replaced the previous additional State pension, SERPS (the State Earnings Related Pension Scheme), in April The Scheme is designed so that you will also earn State pension benefits while you are paying into it. This means that your State pension will be paid in addition to your pension from the Scheme.

29 Bringing energy and the environment into harmony. Defined Contribution Scheme Member s Booklet 27

30 28 Defined Contribution Scheme Member s Booklet COMPLAINTS ABOUT THE SCHEME If you are a member of the Scheme, a Dependant or Beneficiary of a member, or even if you just want to join the Scheme and have a complaint or grievance, HR will always try and address your concerns informally first. INTERNAL DISPUTE RESOLUTION PROCEDURE In most cases, an explanation by BlackRock or the Human Resources department is likely to resolve matters. However, if you are not satisfied and you wish to take the matter further, you have the option to submit a complaint to the Trustees. If you are now or once were one of the following, and you have a complaint about the Scheme, the administration of the Scheme or the trustees, you may utilise the Internal Dispute Resolution procedure: 1. members (i.e. active, deferred and pensioner members); 2. surviving spouses and dependants of deceased members; 3. employees eligible to become members at the employer s consent or otherwise; 4. employees serving a waiting period; 5. people who ceased to be in any of the above categories; and 6. people claiming to be in one of the above categories. Complaints are to be submitted within 4 months of the occurrence or incident, except for those in category 5 above, who will have 6 months from the date they ceased to be a member or a beneficiary. Please address your complaint to HR Manager, UK, who will process the complaint in line with the required procedure. Complaints must be submitted in writing to the Trustees. Complaints should include the following information: Clearly describe the issue and the fault that took place. Include descriptions of conversations, actions, etc. Provide copies of forms, letters, etc., if applicable. Include names of individuals, if applicable. State that you want the complaint to be formally investigated under the disputes procedure.

31 Defined Contribution Scheme Member s Booklet 29 If you have cause to complain about your treatment under the Scheme, please first raise it informally with the individual concerned, a member of the HR team or with the Trustees. If your complaint cannot be resolved informally you may be able to use the Scheme s formal dispute resolution procedure, and your case will be considered by the Scheme Arbiter. Full details of the Internal Dispute Resolution Procedure, together with application forms for the consideration of a complaint are available on request from HR. THE PENSIONS ADVISORY SERVICE If the problem still has not been resolved, you may refer it to The Pensions Advisory Service (TPAS). This is an independent organisation of pensions experts who have volunteered to assist members and beneficiaries in connection with any difficulties that they have failed to resolve with the trustees or administrators of a pension plan. You can get the name and address of your local TPAS advisers from your Citizens Advice Bureau or you can contact the head office at: TPAS 11 Belgrave Road London SW1V 1RB Tel: (all calls charged at local rate) Internet: THE PENSIONS OMBUDSMAN Finally, if TPAS doesn t resolve the dispute, you can go to the Pensions Ombudsman, who may investigate and determine your complaint or dispute. The Ombudsman s decisions in cases he investigates are legally binding, but the Ombudsman will not usually take on your case unless you have already tried to settle it through the Scheme s internal dispute resolution procedure. You can find out more about this service by asking the Pension Ombudsman s office for a free copy of the leaflet called The Pensions Ombudsman - how he can help you. The Ombudsman s address is the same as for TPAS. Tel: enquiries@pensions-ombudsman.org.uk Grievances about your employment are not covered by this procedure. You should refer to your staff handbook to find out how to deal with these.

32 30 Defined Contribution Scheme Member s Booklet WHERE TO GET ASSISTANCE OR INFORMATION RELATING TO THE SCHEME BLACKROCK BlackRock is the first point of call for all of your enquiries, they will do their very best to assist you. Telephone: uk.ops@blackrock.com Website: THE HR TEAM If you have any queries about your membership that have not been answered to your satisfaction by BlackRock please get in touch with a member of the HR team: Dresser-Rand Human Resources 85 Papyrus Road Peterborough Cambridgeshire PE4 5HG THE PAYROLL & PENSIONS MANAGER At the address above. THE PENSIONS REGULATOR The Pensions Regulator is the body responsible for regulating work-based pension schemes in the UK. The Pensions Regulator can be contacted at: Napier House Trafalgar Place Brighton BN1 4DW Tel: Fax: customersupport@thepensionsregulator.gov.uk

33 Defined Contribution Scheme Member s Booklet 31 PENSION TRACING SERVICE If you have pension benefits in another pension arrangement and you lose touch with the former employer or the providers of the pension scheme, there is a pension tracing service provided by the Department for Work and Pensions (DWP). You can contact the DWP s Pension Tracing Service at: Pension Tracing Service The Pension Service Whitley Road Newcastle upon Tyne NE98 1BA Tel: Internet: PENSION FORECASTING TEAM If you want an estimate of your State pension, you can request a forecast from the Department for Work and Pensions. It will show you, in today s money, the State pension you have already earned and what you can expect to have earned by State pension age. To get a forecast, you can contact the retirement Pension Forecasting Team at: State Pension Forecasting Team Future Pension Centre The Pension Service Tyneview Park Whitley Road Newcastle upon Tyne NE98 1BA Alternatively, further help and assistance is available at: INDEPENDENT FINANCIAL ADVISERS The Company and the Trustees may not by law give you financial advice. In most cases, it is hoped that you will have sufficient information available to you to make your own informed decision on your pension choices. However, where you do not feel confident to do so, you may wish to take financial advice with a view to investing in the manner most suited to your aims. Please remember that you may be charged a fee for any advice you receive. Neither the Company nor the Trustees can take any responsibility for the advice you receive or any action you may take as a result. You can obtain a list of the IFAs in your area from the IFA helpline: Tel: Internet: