A guide for members. Industry-Wide Defined Contribution Section

Transcription

1 Industry-Wide Defined Contribution Section

2 Disclaimer The information provided in this guide is intended for general information and illustrative purposes. Your benefits will be worked out in accordance with and subject to the governing trust deed and rules and relevant legislation. Although every effort has been made to ensure the information given in this guide is accurate, none of the information provided can give you, or your beneficiaries, legal rights to benefits that differ from those provided in the pension trust and rules. We recommend that you get independent financial or specialist advice before making any important decisions about your pension arrangements. If you have any questions about the Budget proposals, contact the Helpline on

3 Contents Welcome 04 Membership 05 Joining 06 Contributions 07 Saving more 08 Investments 09 Your tax limits 11 Managing your Personal Retirement Account 12 Your Annual Benefit Statement 13 What happens if you 14 Leaving service or opting-out 16 Reaching Pension Age 18 Options at retirement 19 Incapacity and death benefits 20 Complaints and difficulties 22 Financial advice 24 Other important items 25 Glossary 27

4 01Welcome to the IWDC Section Welcome to the IWDC Section You re a member of a highly valued pension scheme. So how do you feel about retirement? Is it still a long way off or approaching fast? And what does it mean to you? You probably haven t given it much thought because life s busy enough as it is. That s why it s really important to browse through this guide when you ve got a minute. It includes lots of useful information about getting the most out of your pension and the benefits of being a member of the Industry- Wide Defined Contribution (IWDC) Section of the Railways Pension Scheme (the RPS). There s even more helpful information at By registering and logging-in to the website, you can view details of your Personal Retirement Account and play an active role in planning your retirement. If you have a general query about your pension, please call the RPMI Helpline on Now is the perfect time to start getting the most out of tomorrow by planning for it today. More online - Read as you need available

5 02Membership Membership Here s the good news! You re never too young - or too old - to start planning your retirement. Retirement is no longer seen as the end of the road and many people don t want to change their lifestyles because of it. Benefits By joining the IWDC Section and becoming a Scheme member, you have already taken an important step towards building your financial future. So what are the benefits of belonging? 02/15 IWDC Most importantly, you will get an income for life when you retire (exceptions such as opting-out are explained later in this guide). You can also decide how to make your contributions work best for you in the long term by choosing how they are invested. Plus, you may be able to top-up your contributions through the IWDC Section s Additional Voluntary Contribution (AVC) arrangement

6 03Joining Joining The IWDC Section is open to all eligible employees who have a legal right to join. You can join the IWDC Section if: n it s stated as part of your contract of employment; or n your employer has chosen the Section for auto-enrolment purposes and you are eligible. If your employer has chosen the Section for auto-enrolment, you will be auto-enrolled if you: n earn above the earnings threshold n are at least 22 (but under State Pension age) n usually work in the UK Even if you don t meet these criteria, you may still be able to opt-in or join if your employer agrees. If this is the case, you may need to provide medical evidence to prove you re eligible for any lump-sum death benefit. If you opted out previously you may rejoin the Section only with the consent of the employer and Trustee. You may also be able to transfer-in funds or benefits from a previous employer s pension scheme or a personal pension. The value of these funds will be added to your Personal Retirement Account. A Transfer-in form can be downloaded at Note: The IWDC Section is a contracted-in pension scheme, so benefits from contracted-out schemes can t always be accepted. dc@rpmi.co.uk with queries about transfers-in. Compulsory transfer of employment (TUPE) If you have a compulsory transfer of your employment between two participating employers in the IWDC Section, you will be treated as though you have one continuous period of membership. Your Personal Retirement Account will be automatically transferred to your new employer s IWDC Section. You can find details about your new contribution rates, pension age and lumpsum death benefit cover in your IWDC Section Key Features leaflet. More online - Read as you need available

7 04Contributions Contributions You and your employer make regular contributions, which are taken from your Pensionable Pay and are usually tax free. Check your Key Features leaflet to see your contribution rate, or check with your payroll office. Your employer may change the contribution rate in the future, but will consult with you first. The contributions are used to buy units in the default investment fund chosen by the Trustee, or you can select your own funds if you prefer a more hands-on approach.your Personal Retirement Account is based on the value of these investments (see the Investments section for more details). You can stay in the IWDC Section as long as you are eligible (e.g. you can make contributions up until the age of 75 if you remain in employment) and until you take your benefits. If you leave the Scheme before you qualify for your benefits, you may become a preserved member. Please see the Leaving service or opting-out section for more details. n If you are in a salary sacrifice arrangement, your gross pay is reduced by an amount equal to your annual amount of contributions. Your contributions to the IWDC Section are then paid on your behalf by your employer every pay period. This usually reduces the amount of National Insurance contributions you make from your gross pay. Ask your employer if they operate a salary sacrifice arrangement. 02/15 IWDC 06 07

8 05Saving more Saving more You may be able to top-up your benefits by paying Additional Voluntary Contributions (AVCs) to help increase the value of your Personal Retirement Account. Like your normal contributions, AVCs are taken from your pay before income tax is applied. This means you do not pay income tax on them. You may also be able to pay AVCs through a salary sacrifice arrangement if your employer offers one. With AVCs, you decide: n how much you want to contribute (subject to set limits see for details). n how you invest your contributions n when you start - and stop - making contributions AVCs may be particularly suitable if you: n have earnings which do not count towards your Pensionable Pay, such as bonuses and overtime n are thinking about retiring early n simply want to save a bit more towards retirement You have to take your AVC benefits at the same time as your normal IWDC benefits. If you d like to start paying AVCs, fill in the Application to Pay Additional Voluntary Contributions form. This can be downloaded at More online - Read as you need available

9 06Investments Investments The IWDC contributions paid into your Personal Retirement Account are automatically invested in the default fund chosen by the Trustee. However, if you want to take more control, you can choose your own investment fund or funds from the range offered by the Trustee. Your Personal Retirement Account is made up of all your units in your chosen fund or funds. Its value depends on: n the number of units in each fund, and n the transaction price of each of those funds on any particular day. The value of your benefits will depend on contributions paid; any cost in exercising right to transfer; any charges payable; age at which you access the benefits; performance of investments; and any cost of converting to an annuity. Prices change daily according to the performance of each fund and they can go down as well as up. The higher the value of your Personal Retirement Account at the date you buy an annuity, the higher your potential retirement income could be. If you have chosen a Lifestyle strategy, you should consider choosing a Target Retirement Age the age at which you plan to retire. This may be different from your Pension Age. In a Lifestyle strategy, the Trustee aims to protect your Personal Retirement Account from sudden swings in investment marketsby gradually switching your investments from higher growth funds to more stable funds. This process starts ten years before your Target Retirement Age. more overleaf 02/15 IWDC 08 09

10 06 Investments Your investment choices You can choose either: n The default investment option. This means that your contributions are automatically invested in the default fund or funds when you join the IWDC Section. They then follow an investment strategy decided by the Trustee. In other words, the investment decisions are made for you. OR n A self-select strategy. If you are comfortable making your own investment decisions, you can choose a fund or funds from the range offered by the Trustee. Deciding which funds are suitable for you can depend on how much time is left until you plan to retire and your attitude to risk. The Trustee may change the available funds from time to time to make sure the fund range remains appropriate for members. Login to to view the IWDC Section s fund choices and factsheets. The factsheets contain information on each fund s objectives, performance and charges. You can also review where your current holdings and future contributions are invested by checking the details of your Personal Retirement Account. The Trustee, RPMI and your employer can t offer financial advice. Please speak to an independent financial adviser if you would like investment guidance. A list of advisers in your area can be found at A Change of Investment form can be downloaded at More online - Read as you need available

11 07Your tax limits Your tax limits The Railways Pension Scheme is a registered pension scheme with HM Revenue & Customs. This means that members currently have valuable tax privileges, such as receiving tax relief on contributions and the option to take a tax-free lump sum at retirement. However, you can only build up, and receive, a certain amount of pension benefits before you have to pay tax. These limits, set by HM Revenue & Customs, are called the Annual Allowance and the Lifetime Allowance. There is also a limit on the tax-free cash lump sum you can get from the Scheme, which applies to all members. This is currently set at 25% of the value of your Personal Retirement Account. You are strongly advised to get independent financial advice if you think you will be close to, or over, the Annual Allowance or Lifetime Allowance. A Guide on Benefits and Contributions Tax Limits What is the Annual Allowance? This is the limit you can contribute tax-free in all your pension arrangements during any single year. If your contributions go over the Annual Allowance, you may have to pay tax (see for more details). Will my pension savings exceed the Annual Allowance ; and Paying tax on pension savings over the Annual Allowance limit. What is the Lifetime Allowance? This is the limit on the total value of all your pension arrangements, including any you might have outside the Scheme (excluding state pensions). Historically, very few members have been affected by this limit see for full details. 02/15 IWDC 10 11

12 your Personal Retirement Account 08Managing Managing your Personal Retirement Account Keep an eye on your Personal Retirement Account at Register by using your National Insurance number, and then use your unique Pension Reference Number to login and view: n information about the IWDC Section n investment information and details of how to find local independent financial advisers n facts about State benefits n downloadable forms n the value of your Personal Retirement Account and where it s invested n how much you are contributing More online - Read as you need available

13 09Your Annual Benefit Statement Your Annual Benefit Statement Every year, RPMI sends you a statement which includes: n Details of the contributions made to your Personal Retirement Account by you and your employer in the past 12 months n The number and value of units in each of the investment funds in your Personal Retirement Account n The current value of your Personal Retirement Account n An illustration of the benefits you may receive at your Pension Age (or at your Target Retirement Age if this is different from your Pension Age). This includes details of the amount of the annuity income you may get at retirement, based on Statutory Money Purchase Illustrations n Information on the assumptions used to produce your illustration 02/15 IWDC 12 13

14 10What happens if you What happens if you Take a period of temporary absence If you are temporarily absent from work, you will need to check about continuing contributions with your employer. Take maternity, paternity or adoption leave If you get maternity, paternity, additional paternity, family or adoption leave pay, your contributions are based on what you are earning at that time, but your benefits are based on your normal rate of pay. Your employer will continue to pay contributions based on your pensionable pay. They will also pay the difference between your normal contributions and your actual contributions. If you don t return to work after your period of ordinary leave ends, you will be treated as if you are on temporary absence, and your employer will tell you what the effect will be on your pension arrangements. Retire and start work again If you retire after age 55, you can take your benefits from the IWDC Section and, if you are eligible, re-join the IWDC Section as a member. If you retire before age 55 (i.e. you have a Normal Minimum Pension Age of 50), HMRC states that you can only restart employment with your current employer if you have: n a break in employment with that employer of at least six months; or n a break in employment with that employer of at least one month and your re-employment is materially different If you retire before age 55, you must also claim all your benefits from all periods of membership within the RPS at the same time. This includes any benefits you may have in the Shared Cost Arrangement of the RPS. on maternity, paternity, parental or adoption leave. More online - Read as you need available

15 10 What happens if you Take your benefits early while working You may be able to claim your benefits early (from age 55) and continue working without having to leave employment. You need your employer s consent to do this. Your employer s consent may also be needed if you wish to re-join the IWDC Section once you have taken your benefits. Divorce If you divorce or dissolve a civil partnership, your Personal Retirement Account will be taken into account along with your other assets when working out a financial settlement. (See panel below). RPMI will provide you with the transfer value details of your Personal Retirement Account on request. Only you or the court can ask for a transfer value in connection with divorce proceedings. The transfer value is the value of your Personal Retirement Account on the day of calculation. Financial settlements There are two types of financial settlements which can be awarded through Court orders: Work part-time If you work part-time, your contributions are reduced according to the amount of hours you work. For example, if your full-time weekly contribution amount was 50, and you work 20 hours of a 37-hour standard week, your weekly contribution amount would be: Part-time hours per week Standard hours per week Full-time weekly contribution x = Your part-time weekly contribution n Any death-in-service benefit from the Section would also be pro-rated, depending on how many hours you work. n Pension Sharing - your ex-spouse or civil partner can be awarded part of your transfer value through a pension sharing order. n Pension Earmarking - your ex-spouse or civil partner can be awarded some of your benefits through an earmarking order. These can only be paid when your benefits start. 02/15 IWDC 14 15

16 11Leaving service or opting-out Leaving service or opting-out What happens to your Personal Retirement Account if you leave service, or opt-out? Depending on whether you joined contractually or through auto-enrolment, and also on how long you have been an active member of the Section, you will be entitled to: n a refund of your contributions n a transfer value, or n a preserved (no longer an active member) Personal Retirement Account. Auto-enrolled members To be eligible for a refund equal to the amount of contributions you made, you must complete an opt-out notice within one month of: n the date you received your enrolment information from your employer; or n the date you became a member of the IWDC Section (whichever is the later). If you opt-out or leave service after this optout period, you will be treated as though you left membership as a contractually-enrolled member. Contractually-enrolled members What happens to your Personal Retirement Account depends on how long you have been a member of the IWDC Section. Please note that the periods of membership mentioned below and on the next page include membership you may have transferred-in from other occupational pension arrangements. You can t receive a refund at all if you have transferred-in any benefits from a personal pension scheme, or from an occupational scheme if the combined membership from the transferred-in benefits and your IWDC membership is more than two years (30 days, if joined after 1 October 2015). More online - Read as you need available

17 11 Leaving service or opting-out If you joined the Scheme on or before 30 September 2015, your leaver options are: Under three months membership If you have been in the IWDC Section for less than three months, and haven t transferredin benefits as outlined on the previous page, you will get a refund of the current value of your own contributions (minus the income tax and National Insurance contributions due on those contributions). You will not receive a refund of your employer s contributions. Over three months but less than two years membership You can choose to transfer your Personal Retirement Account, including the value of your employer s contributions, to another registered pension scheme. If you do not choose the transfer option, you will get a refund of the current value of your contributions (minus income tax and National Insurance contributions due on those contributions). You will not receive a refund of your employer s contributions. You can t have a refund if you have transferred-in benefits as previously explained. Instead your Personal Retirement Account will be preserved and invested until you take your benefits. Over two years membership If you have over two years membership of the IWDC Section, your Personal Retirement Account (including the value of your employer s contributions) will remain invested until you take your benefits. A refund is not possible. If you joined the Scheme on or after 1 October 2015, your leaver options are: Under 30 days membership If you have been in the IWDC Section for less than 30 days, you will get a refund of the current value of your own contributions (Minus the income tax and National Insurance contributions due on those contributions). You will not receive a refund of your employer s contributions. Over 30 days membership If you have 30 days or more membership of the IWDC Section, your Personal Retirement Account (including the value of your employer s contributions) will remain invested until you take your benefits. A refund is not possible. As a preserved member (regardless what date you joined the Scheme), you will still get an Annual Benefit Statement so you can see how your Personal Retirement Account is invested. You can also make changes to your chosen investment funds or you can transfer your Personal Retirement Account to another scheme, as long as your new scheme allows. Important: If you leave the Section, but keep your Personal Retirement Account invested, you must tell RPMI about any change of address, either by ing dc@rpmi.co.uk or calling the Helpline on /15 IWDC 16 17

18 12Reaching Pension Age Reaching Pension Age Shortly before reaching your Pension Age, RPMI (on behalf of the Trustee) will send you: n an illustration of your potential benefits n information on how to claim your benefits n details of an annuity broker chosen by the Trustee who can help you buy an annuity and provide independent financial advice. Or, if you prefer, you can buy an annuity from a provider of your choice. If you are considering retiring after your Pension Age, you must take your benefits immediately on leaving employment. You should contact RPMI within six months of your planned retirement date. If you are considering retiring before your Pension Age, you can ask RPMI for an illustration at that earlier age. However you should note that annuity quotes are not guaranteed so it is recommended that you get a new quote within six months of your planned retirement date. More online - Read as you need available

19 13Options at retirement Options at retirement As a Scheme member, you can receive an annuity and the option to take a tax-free lump sum. You can tailor your benefits to meet your personal needs when you retire. Your lump sum You can take up to 25% of the value of your Personal Retirement Account as a lump sum. Under current legislation, this lump sum is tax-free. Tax rules are subject to change. Your annuity If you take a lump sum when you retire, the remaining value is used to buy a regular income from an insurance company. This is usually called an annuity (pension), and is payable for life. You can apply to buy an annuity from your Normal Minimum Pension Age. You can also apply to buy your annuity while still working if you are aged over 55 and your employer agrees. The level of income will depend on the size of your Personal Retirement Account, the cost of buying an annuity at the time you retire (the annuity rate ) and the type of annuity you want. Insurance companies generally offer other options such as: n benefits for your spouse or civil partner if you die before them n a guaranteed payment period (usually five years) if you die shortly after you have bought your annuity 02/15 IWDC n types of annual increases to your pension There may be other retirement options outside the IWDC Section, which involve transferring your Personal Retirement Account to another registered pension scheme before retirement. Flexible options such as: Total Encashment You can take up to 25% of the current value of your Personal Retirement Account as a lump sum, and the remainder can be encashed (subject to your marginal rate of tax). Once you have totally encashed your benefits from the IWDC Scheme, you will have no further benefit in the Scheme. Small Pot If your fund value is less than 10,000 and you do not have any other benefits in the Railways Pension Scheme you may receive the current value of your Personal Retirement Account as a lump sum (subject to 20% tax). It s recommended that you speak to an independent financial adviser if you are thinking about buying an annuity and/or would like to discuss your available options. Your Options At Retirement 18 19

20 14Incapacity and death benefits Incapacity and death benefits Incapacity benefits You may be able to buy an annuity before your Normal Minimum Pension Age. However, the Trustee Company must receive medical evidence from a registered practitioner that you are, and will continue to be, unable to carry out your job. Please contact RPMI for more information. Serious ill-health If you suffer from a serious illness and your life expectancy is less than 12 months, you may be able to take all your benefits as a lump sum. Please contact RPMI for more information. Death in service A lump-sum death benefit may be payable if you are contributing to the IWDC Section and are employed by a participating employer. This amount is based on your death benefit pay and will be paid to your beneficiaries or to your estate at the Trustee s discretion. See your Key Features leaflet for details of your death-in-service benefit. Nomination form for lump-sum death benefits By filling in a Nomination form, you are letting the Trustee know who you would like to get any lump-sum death benefit that may be payable. The trustees do not have to follow your instructions, but they will take them into consideration. Completing a Nomination form can also speed up the payment of benefits. It is very important to keep your Nomination form up to date or fill one in if you haven t already done so. A new Nomination form replaces the nominations made for all previous periods of membership you might have across the RPS, including membership of the IWDC Section and the Shared Cost Arrangement. You can change your nominated beneficiaries at any time by downloading a Nomination form from or request one from the RPMI Helpline on More online - Read as you need available

21 14 Incapacity and death benefits Death in service Your dependants may be eligible for a lump-sum death benefit as described previously. The value of your Personal Retirement Account will also be used to provide: n a pension for your spouse/civil partner or other dependants n a lump sum up to the value of your Personal Retirement Account n a combination of the two. Death after leaving employment but before buying an annuity If you die after leaving service or opting-out, but before you have bought an annuity, the value of your Personal Retirement Account will be paid to your beneficiaries at the Trustee s discretion. Death after you have bought an annuity When you buy an annuity, you may choose one which provides benefits for your spouse/ civil partner or other dependants if you die. You may also choose a guaranteed payment period (normally five years), in case you die shortly after you have taken your benefits. More information is provided when you contact RPMI for an annuity quote. 02/15 IWDC 20 21

22 15Complaints and difficulties Complaints and difficulties RPMI will do its best to resolve any queries that you or your dependants have about the IWDC Section. In the unlikely event that you have a dispute, the Railways Pension Scheme has a formal complaint procedure. How to make a formal complaint The IWDC Section has a two-stage procedure for sorting out complaints and disagreements. If you have a complaint, you should first write to: Head of Pensions Operations RPMI PO Box 377 Darlington DL3 6XY You will receive a written response within two months from the date on which your complaint was received. If you are not satisfied with the decision, under the second stage of the procedure you may, within six months of receiving the response, appeal to the Trustee Company. If you consider the reply you receive from the Trustee Company to be unsatisfactory, you may contact The Pensions Advisory Service (TPAS) or the Pensions Ombudsman. TPAS TPAS is an independent voluntary organisation with local advisers who are experts in pension matters. You can contact TPAS at any time to help you or your dependants with any difficulties you may have with your pension, or problems that you have not managed to resolve with the Trustee Company or RPMI. TPAS services are free of charge. You can contact TPAS through your local Citizens Advice Bureau or at: The Pensions Advisory Service 11 Belgrave Road London SW1V 1RB T: W: More online - Read as you need available

23 15 Complaints and difficulties Pensions Ombudsman If TPAS cannot sort out your problem, you can ask the Pensions Ombudsman to investigate. The Ombudsman may be able to investigate any complaint or legal dispute relating to an occupational pension scheme. The Pensions Ombudsman s address is: The Office of the Pensions Ombudsman 11 Belgrave Road London SW1V 1RB T: W: The Pensions Regulator The Pensions Regulator is responsible for regulating UK pension arrangements. It has the power to intervene in the running of a pension scheme where trustees, employers or professional advisers have failed in their duties. The Pensions Regulator s address is: The Pensions Regulator Napier House Trafalgar Place Brighton BN1 4DW T: W: 02/15 IWDC 22 23

24 16Financial advice Financial advice The Trustee Company has carefully chosen a company called Origen (which is authorised and regulated by the Financial Conduct Authority) to give Railways Pension Scheme members independent financial advice. Origen may charge a fee or commission for their services. If they do charge, they will tell you before you agree to any financial arrangements they set up on your behalf. You can contact Origen on: quoting railway pensions. Alternatively, can provide details of independent financial advisers in your local area. More online - Read as you need available

25 17Other important items Other important items Annual Report and Accounts You can get a copy of the Annual Report and Accounts of the Railways Pension Scheme by writing to: Railways Pension Scheme IWDC Section RPMI PO Box 377 Darlington DL3 6XY Or you can telephone: Alterations to the Rules The employer and the Trustee Company may jointly change any of the provisions of the IWDC Section, subject to the protections in the Pension Trust and Rules and in accordance with the requirements of any applicable legislation. The employer and the Trustee Company will consult where it is required to do so by law in relation to any changes to the provisions of the IWDC Section. No amendment to the IWDC Section will affect the benefits you have built up at that time. Winding-up Your employer can decide that it (and its employees) will stop taking part in the IWDC Section at any time. If this happens, the Trustee Company will decide whether to wind-up the part of the IWDC Section which relates to your employer, or whether to let you remain as a non-contributing member of the IWDC Section (see the Leaving service section). The Pension Trust and Rules set out the circumstances in which the IWDC Section may be wound-up and how the benefits would be distributed. Data Protection Act 1998 The Data Protection Act 1998 requires that your consent is given before information can be processed about you. The Trustee Company and RPMI use your personal details to administer your Personal Retirement Account. This includes providing your information to a carefully selected third party company or companies, such as Origin, 02/15 IWDC 24 25

26 17 Other important items in order to provide you with information to help you make an informed choice regarding the options available to you when your benefits become payable. If they do not hold and process these details they are unable to do this. In providing this service, they may need to give your information to other organisations, including for confirmation purposes your employer or any previous employer. When you join the IWDC Section, you give your consent to the use of your information for these purposes. If you pay a fee, you can ask the Data Protection Officer at RPMI for a copy of your personal information that is held. At all times, personal information will be held in line with the Data Protection Act HM Revenue & Customs limits The Railways Pension Scheme is registered with HM Revenue & Customs as a registered pension scheme in accordance with the Finance Act This means that your contributions to the scheme receive tax relief but HM Revenue & Customs imposes a limit on the contributions which can be made each year and on the value of your benefits at the date they crystallise. All benefits and contributions described in this booklet are subject to the Lifetime Allowance and Annual Allowance limits. Non-assignability You may not assign any of the benefits you are entitled to under the IWDC Section to any other person or organisation. Registration and Pension Tracing Service The Railways Pension Scheme is registered with the Registrar of Occupational and Personal Pension Schemes. The Pension Tracing Service assists people who have lost contact with pension schemes and can be contacted at: Pension Tracing Service The Pension Service Tyneview Park Whitley Road Newcastle Upon Tyne NE98 1BA T: W: Further information If you would like further information about the Railways Pension Scheme or about your own entitlement to benefits, please write to: Railways Pension Scheme IWDC Section RPMI PO Box 377 Darlington DL3 6XY Or you can make contact free on: T: or F: or E: dc@rpmi.co.uk More online - Read as you need available

27 18Financial advice Glossary Auto-enrolment A legal requirement that states every employer must automatically enter eligible jobholders into a pension arrangement that meets minimum standards. More information can be found at Annual Allowance For the IWDC Section, the Annual Allowance is measured against the total amount of contributions paid by you and your employer into your Personal Retirement Account in each Scheme Year (6 April to 5 April). If this total, together with contributions you make to other DC arrangements and increases to any benefits you have in DB schemes, is greater than the Annual Allowance you may be subject to a tax charge on the excess. Visit htm for further details. Annuity A contract bought from an insurance company which provides a regular income for life. You will buy an annuity with some or all of your Personal Retirement Account when you retire. Additional Voluntary Contributions (AVCs) Contributions you can make over and above your normal scheme contributions, which are added to your Personal Retirement Account. They can be invested in the same or different funds to your normal contributions. Death Benefit Pay The amount of pay which is used to work out any death-in-service lump-sum benefit. Your Key Features leaflet tells you the death-in-service benefit that applies to you. 02/15 IWDC 26 27

28 18 Glossary Dependant A person who the Trustee Company decides was financially dependent on you, or interdependent with you, at the time of your death. Incapacity A permanent physical or mental incapacity which the Trustee determines prevents you from following your normal occupation or seriously impairs your earning capacity. Default Fund The investment fund or strategy where your contributions are invested by the Trustee Company if you have not chosen to invest them elsewhere. Lifetime Allowance The maximum amount of pensions savings you can build-up with registered pension schemes within your lifetime, without incurring an additional tax charge. Any excess over the Lifetime Allowance may be subject to a tax charge. Further information about the Lifetime Allowance and its current level is available at pensionschemes/understanding-la.htm Lump-Sum Death Benefit A lump sum payable if you die before you take your benefits, you were still employed by an IWDC Section employer and you had not opted-out of the IWDC Section. Your Key Features leaflet tells you how the amount is worked out. Normal Minimum Pension Age This is age 55 (or age 50 if you were an active member in the Railways Pension Scheme IWDC Section or Shared Cost Arrangement on 5 April 2006 and have not transferred-out your benefits since. This is also known as a Protected Pension Age). Pension Age The age at which your benefits are normally payable. Your Key Features leaflet tells you which Pension Age applies to you. Pensionable Pay The part of your pay which your employer has decided is pensionable. Your Key Features leaflet tells you what is included in your Pensionable Pay. More online - Read as you need available

29 Personal Retirement Account Your account within the IWDC Arrangement, which is made up of: n Your normal contributions (or contributions paid by your employer on your behalf, if your employer operates a salary sacrifice arrangement) n Your employer s contributions n Any transfer payments from previous pension arrangements. n Investment return on all of the above For the purpose of this booklet, it also includes your AVC funds if you have made AVC contributions. Target Retirement Age The age at which you have notified RPMI that you aim to retire. This affects you if you have chosen one of the Lifestyle Strategies as an investment option. Trustee Company The Railways Pension Trustee Company Limited, which is the Trustee of the Railways Pension Scheme - Industry Wide Defined Contribution Section. 02/15 IWDC 28 29

30 Useful notes

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