JTI Pension Plus. Your Company Pension Plan

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1 JTI_2016_PensionPlus_engl_1.0:Layout :13 Seite 3 JTI Pension Plus Your Company Pension Plan

2 Welcome to JTI Pension Plus Planning ahead together that is the principle behind JTI Pension Plus Good to Know: Internet This brochure provides an initial overview of JTI Pension Plus. Detailed information as well as examples and a JTI Pension Plus calculator can be found on the JTI Pension Plus Web site at In the future, it may be difficult to maintain your standard of living in retirement if you rely solely on the German statutory pension. With JTI Pension Plus, we not only significantly contribute to your financial security by providing annual company s, but we also support your own efforts toward building a nest egg for the future. Furthermore, JTI Pension Plus is more than just a pension plan: in the event of disability or death, you and your family can also count on JTI Pension Plus. JTI Pension Plus is designed to be simple and transparent. JTI sets up a personal pension for you consisting of up to three sub-s: a basic, a plus, and (if applicable) a supplementary. Each year, you receive a basic from JTI. The of the basic is primarily determined by your income. You can make voluntary employee s to the pension fund Hamburger Pensionskasse (HPK). If you choose to do so, JTI adds a matching on top of that in the of 50% of your voluntary. Non-tariff employees can make additional s to the supplementary. These s are also supplemented with matching s from JTI. All s to JTI Pension Plus earn interest in advance. This is done by multiplying the s by an age factor and then crediting the resulting capital s to the respective sub-. Annual statements keep you informed about your current pension balance. The funds in your pension are paid out when you retire (early). In the event of disability or death, risk benefits are paid out in addition to the pension to provide extra security for you and your family. Furthermore, you also receive the respective benefits from the HPK. JTI Pension Plus is paid out in annual installments, as an annuity, or as a lump sum. Pensionable income Plus Matching Voluntary employee Age factor Age factor Supplementary Retirement Disability Death 10 installments Annuity Lump sum Basic Age factor Basic Pension

3 The Basic Contribution The Foundation of JTI Pension Plus By providing the basic, we lay the foundation for your accumulation of assets in JTI Pension Plus: fully financed by JTI, the basic is calculated individually each year based on your pensionable income. The following pay components are included in pensionable income: Annual base pay Annual special payment as per framework collective agreement Agreed target bonus (target PSIP) if applicable The consists of a base of EUR 200 plus 2.5% of the pensionable income up to the social security ceiling (SSCC) and 8.5% of income above the SSCC. Good to Know: SSCC The social security ceiling (SSCC) is the limit of gross income up to which s for the statutory pension insurance must be paid (as of 2016: EUR 74,400 per year). Any portion of income above the SSCC is exempt from pension insurance s. The SSCC is adjusted annually. Information on the current SSCC can be found online. The basic is multiplied by a factor that is determined by your age: the age factor. The result is a capital which is then credited to your basic. Interest and Compound Interest Making Your Pension Account Grow With JTI Pension Plus, the age factor corresponds to the interest earned on the funds: the age factor reflects the interest payment from the time the is credited up to the age of 60. Thus, in the case of a 30-year-old employee, the interest and compound interest for 30 years is figured into the capital by applying the age factor. The age factor is determined on the basis of the current reference interest rate. This reference interest rate consists of the current maximum actuarial interest rate for German life insurance companies plus additional interest of 1.5% from JTI. At present, the reference interest rate is 2.75% per annum (as of January 2016). In addition, the reference interest rate does not change every year but only when the actuarial interest rate for life insurance companies is adjusted the last adjustment was in Only new capital s are affected by a new reference interest rate. Any capital s already credited remain unchanged until payout. This gives you planning security. What happens once you reach the age of 60? Of course, your will continue to increase in value. Until payout begins, interest is paid on your each year using the reference interest rate applicable at that time. This growth is then credited to you as a bonus sum. Good to Know: Age Factor and Interest The age factors and interest rates currently in effect can be found online. SSCC % 2.5% 123 EUR 200 Base 123 Basic X Age factor =

4 JTI_2016_PensionPlus_engl_1.0:Layout :13 Seite 5 Your Contributions Supplemented by JTI If you are covered by the collective bargaining agreement (tariff employee), then your voluntary s flow into the pension fund Hamburger Pensionskasse (HPK). As before, you receive the collectively agreed supplement of EUR 250 provided by JTI. However, with the implementation of JTI Pension Plus, we take it one crucial step further. In addition to the collectively agreed supplement, you receive a matching ing to 50% of your own HPK. This matching is converted into a capital by multiplying it with the age factor, and it is then credited to the plus. Contributions to the HPK pension fund are supplemented up to an equaling 4% of the SSCC (= EUR 2,976 in 2016); the collectively agreed supplement of EUR 250 is included in this maximum. Thus, the maximum subsidy from JTI in the form of a matching s to 2% of the SSCC. Furthermore, you can pay in an additional EUR 1,800 tax-free; however, you will not receive a matching for this. With JTI Pension Plus, employees not covered by the collective bargaining agreement (non-tariff employees) have the opportunity to make additional s, beyond s to the HPK, in order to close the anticipated pension gap. These s flow into the supplementary and are also supplemented by JTI with matching s ing to 50%. Like the basic, the employee and the matching are converted into a capital before being credited to the respective. Please note: the matchable s (4% of the SSCC) to the HPK must be fully utilized before you can participate in the supplementary. In total (HPK plus supplementary ), you can invest a maximum of 10% of your pensionable income per year. Funding via the matching is limited to 2% of your pensionable income1. 1 If your pensionable income is below the SSCC, the matching per year is limited to 2% of the SSCC. Good to Know: Hamburger Pensionskasse (HPK) All information regarding the HPK s payment of interest and surpluses can be found online at or in the insurance conditions, which are available from your Human Resources department. Collectively agreed supplement from JTI Employee to HPK Tariff employees Matching contribultion from JTI Plus Employee to supplementary Hamburger Pensionskasse (HPK) Employee to HPK x 50% 123 Matching contribultion from JTI Non-tariff employees x 50% Plus Suppl. Hamburger Pensionskasse (HPK)

5 Payout Secure and Flexible Your entire pension (basic, plus, and, if applicable, supplementary ) is paid out to you when you retire (early) or become disabled. In the event of death, the funds are paid to your family or, more precisely, to your spouse, registered partner, or children (if eligible for child allowance). The supplementary can also be paid out to a significant other living with you in a marriage-like relationship. You can choose from different payout options. Generally, your funds are paid out in ten annual installments. However, you can also opt for a life annuity. In this case, actuarial procedures are used to convert your funds into a monthly annuity. You choose the type of payout at the time when payout falls due. Good to Know: Payout Options Up to a total balance of EUR 15,000, your funds may be paid out as a lump sum. Early Departure Should you leave JTI before a payout from JTI Pension Plus is due, you remain entitled to the benefits from the basic and plus, provided that you already have at least five years of participation in JTI Pension Plus. However, entitlements from the supplementary are vested from day one. Good to Know: Taxes and Social Security Your own s are also subsidized by the state via tax advantages. Since the s are made as deferred compensation, they are largely exempt from taxes and social security s. Once the funds are paid out, they are subject to the usual taxation; however, in most cases, the tax rate at the time of payout is lower than the tax rate during working life. Slightly different rules apply to the HPK pension fund and the supplementary with regard to tax exemption details can be found online. Risk Benefits Additional Security You can count on JTI Pension Plus even if the worst comes to the worst. Should you become disabled or die prior to reaching the age of 60, JTI will pay additional risk benefits to you or your family. Up to the age of 40, the risk benefits correspond to 1.5 times your pensionable income. As of the age of 40, the risk benefits correspond to 1.5 times the income minus 5% per started year of age up to the age of 60. Detailed payout conditions are available online. Please note: this brochure merely provides a simplified overview of the rules for JTI Pension Plus. Only the company agreements concerning the company pension plan, the corresponding collective agreement, and the insurance conditions of the HPK are legally binding.

6 Contact JT International Germany GmbH Diedenhofener Str Trier Germany Issued January 2016