Proposed Pension Changes September 2016

Transcription

1 Proposed Pension Changes September 2016

2 Who we are Jennifer Doran Gordon Campbell

3 Today s agenda Recap of proposed changes Understanding your illustration Your current pension benefits Your proposed new benefits Your illustration Changes to death benefits Next steps Questions

4 Recap of proposed changes

5 The proposed changes Cease pensionable service in the Final Pension Scheme from 30 th November 2016 Any benefits built up continue to be linked to pensionable salary Provide enhanced death benefits Offering membership of the GPP from 1 st December 2016 Benefits members have already built up in the Scheme remain secure. In the future the Company may grant salary increases or bonuses on a nonpensionable basis in respect of the Final Pension Scheme.

6 The proposed changes Final Pension Scheme GPP Scheme Your pension benefits are based salary and length of service The amount of pension you receive is set according to a set of rules The money used to fund your benefits is held collectively and looked after by a set of Trustees Your pension benefits are based on contributions and investment returns The amount of pension you receive is not guaranteed Your pension fund is your own and you choose what to invest in Defined Benefit Defined Contribution

7 Understanding your pension Final Pension Scheme

8 How the Final Pension Scheme currently works Pensionable service Final X Accrual rate X Pensionable Salary = Annual pension Example at retirement Member with 35 years service and a Final Pensionable Salary of 20,000 at retirement age years X 70th X 20,000 = 10,000

9 The impact of the proposed changes No change Pensionable service Final X Accrual rate X Pensionable Salary = Annual pension 35 years X 70th X 20,000 = 10,000 Proposed change The higher of: Pensionable service to 30 November 2016 Or your deferred pension entitlement Final X Accrual rate X Pensionable Salary = Annual pension 20 years X 70th X 20,000 = 5,714

10 Final Pension Scheme - Retirement options Early/late retirement You can choose to retire earlier or later than your normal retirement age of 63 Your pension would be increased (retire later) or decreased (retire earlier) as appropriate Your retirement options Tax-free lump sum Annual pension You can choose to receive a lower pension exchange for a tax-free lump sum An annual pension payable for the rest of your life Broadly increases in line with inflation Transfer value You could choose to transfer your benefits out of the Scheme Your would need to take Independent Financial Advice and it is unlikely to be the right option for most people

11 Understanding your pension GPP Scheme

12 How the GPP scheme would work Your Contributions GPP Scheme Pension Benefits Company Contributions Investment returns Both you and Booths will pay contributions to the GPP Scheme The pension benefits you receive depend on the level of contributions and investment returns

13 GPP Scheme contributions Tier Your contributions (% of gross earnings) Company contribution (% of gross earnings) You would be enrolled in the DC scheme in line with Tier 4 above, and pay contributions of 7% of gross earnings on a salary sacrifice basis. In addition, Booths will pay an extra 1% contribution at 10, 15 and 20 years service, irrespective of the rate paid by you. As a Final Pension Scheme member, you currently pay 9% of pensionable earnings.

14 Salary sacrifice You will be automatically opted-in to salary sacrifice if you earn more than 9.00 per hour or are expected to earn more than 11,500 in the 2016/17 tax year Annual pay under GPP ( ) No salary sacrifice With salary sacrifice Gross Salary 20,000 19,200 Tax 1,800 1,640 NI Contributions 1,433 1,337 Pension Take home pay 16,127 16,223 Your contribution Booths contribution The Governments contribution Total contribution No salary sacrifice GPP Scheme ( ) With salary sacrifice , ,400 1,400

15 GPP Scheme - Investment decisions How much can I afford to contribute? How much do I know about investing? How much money do I need at retirement? How much risk can I accept? When do I want to retire? Investment decisions How will I use my pension pot in retirement?

16 GPP Scheme - Retirement options Cash 25% of your pension pot can be taken tax-free Different rules apply depending on whether you choose an annuity or income drawdown Annuity A guaranteed annual income for life Several different types of annuity Drawdown Withdraw as much or as little as you want at any time More complex

17 Understanding your illustration

18 Your illustration 16,900 13,700

19 Your illustration No change 3,500 2,800 6,300 Proposed change 3,500 36,

20 Your illustration What we have assumed Apart from your salary increasing faster or slower in the future, we have also made a number of other assumptions. The full list is included in your illustration, but we would like to highlight 3: All figures are shown in today s prices You earn investment returns of 5% per year You retire at age 63

21 Death benefits

22 The proposed changes Death Benefits Death benefits Current entitlement Deferred member entitlement Enhanced entitlement Spouses pension 50% of your pension based on service to Normal Retirement Age using Final Pensionable Earnings at your date of death Statutory minimum pension 50% of your deferred pension at date of death Life cover 3 times your Pensionable Earnings at the date of death 3 times your Basic salary at 1 June proceeding the date of death 6 times your basic salary at 1 June proceeding the date of death

23 Next steps

24 Next steps Read & understand your illustration Take part in the consultation process Your feedback matters Know who your employee representative is and ask questions

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