Your Vodafone UK DC Plan Autumn 2016

Transcription

1 Your Vodafone UK DC Plan Autumn 2016 For members of the Vodafone UK Defined Contribution (DC) Pension Plan Click to get started

2 Inside Accessing My Account 4 Membership 6 7 Tax changes and Budget updates 8 9 Options in retirement Investment options Mind the gap and State Pension 14 Value for Money assessment 16 Brexit 17 Further information 18 Hello Welcome to our Autumn 2016 newsletter, particularly those of you who have joined the Vodafone UK Defined Contribution (DC) Pension Plan (the Plan) in the last year. In December 2015 the Trustee appointed an independent adviser to undertake an assessment of the Plan in accordance with The Occupational Pension Schemes (Charges and Governance) Regulations I m pleased to report that the assessment found that the Plan offers good value for money to its members. This has been the first full year since the introduction of the pension freedoms, and there s a reminder of your options at retirement and the investment options the Plan offers on pages 12 & 13. In this edition, you ll also find information about: How to access your account information on the go Some important restrictions to the Annual and Lifetime Allowances We welcome your feedback on our member communications, so please let us know if you have any comments about this newsletter. If you have any queries about your pension, please contact our Plan administrators, Willis Towers Watson (contact details on back page). John Adshead Chairman of the Trustee 2 3

3 Accessing My Account Pension app Download the pension app to access your account on the go and see: New-look online administration site (epa) epa has been given a new look and feel and it s also now fully responsive which means you can access and view epa on any mobile device or tablet and the screen and contents will automatically reformat to fit the screen. You can check how much you ve saved by accessing your account through epa. If you re a current employee and you re logged into the Vodafone corporate network, you can view your account directly without logging in. Your current balance Your contributions history Where your contributions are being invested Any investment switches. Download the app to your device: Search for Track My Pension in the App Store/Google play store. Why not access your account today? Please give us your feedback on the new-look epa: vodafonepensions@willistowerswatson.com To use the app: 1. Enter your username and password. Your username is your login user ID for epa. To get a password for the app, visit epa and select mobile application password. 2. You ll then need to agree to the Terms and Conditions and select generate. You can reset your password within epa whenever you like. 4 5

4 Membership Membership breakdown as at 31 March Active members Total members ,310 16,896 Deferred members ,889 18,942 34,199 35,838 Are you saving as much as your colleagues? You can decide how much you want to save into the Plan. Vodafone makes additional contributions of up to 10% of your salary, depending on how much you put in. Remember, if you pay less than 5% you re missing out on valuable contributions from Vodafone. Increase your contributions You can change your contribution rate at any time by logging into your epa account. 35% 3% 14% 3% 45% of members pay 1% and get 2% from Vodafone of members pay 2% and get 3% from Vodafone of members pay 3% and get 6% from Vodafone of members pay 4% and get 8% from Vodafone of members pay 5% and get 10% from Vodafone 6 7

5 Tax changes and Budget updates Changes to Annual Allowance The Annual Allowance (AA) is 40,000 for the 2016/17 tax year. This is the maximum amount of pension savings (apart from State Pension) you can build up each year that benefit from tax relief. Since April 2016, the AA for those earning more than 150,000 a year is reduced by 1 for every 2 of income over 150,000 (with a minimum AA of 10,000). This is known as the tapered annual allowance. To help you ensure that you don t exceed the tapered annual allowance, Vodafone is introducing a capped contribution option. Under the capped contribution option, each month the contribution rates will be as follows: 5% employee contribution (capped at a month) 10% employer contribution (capped at a month) Any difference between the capped employer contribution and 10% of pensionable pay will be paid as cash through payroll each month subject to tax and National Insurance deductions. If you want to select this option, you can do this through epa. Don t forget that you may have a lower AA of 10,000 if you take DC benefits flexibly and continue to make contributions to a DC pension arrangement. This is known as the Money Purchase Annual Allowance. You can find more information on the HMRC website. Changes to Lifetime Allowance The Lifetime Allowance (LTA) is 1 million for the 2016/2017 tax year (previously 1.25 million in the 2015/2016 tax year). This is the maximum value of pension benefits you can build up over your lifetime in all your pension arrangements without being taxed (excluding State Pension). HMRC s process for applying for protection against the reduction in the LTA is now available. To recap, there are two protections you can apply for. Fixed protection 2016 allows you to retain protected LTA of 1.25m as long as after 5 April 2016 you have no further accrual in Defined Benefit (DB) schemes other than increases in line with inflation, and make no further contributions to DC schemes. If your pension savings as at 5 April 2016 were already worth more than 1m, Individual Protection 2016 (IP16) allows you to have a protected LTA equal to that value, subject to an overall maximum of 1.25m. IP16 does not require you to stop building up benefits in registered pension schemes. How to apply If you meet the relevant criteria, you can apply for either or both of these protections on the HMRC website. 8 9

6 Options in retirement When you retire you ll be able to use your account in the following ways: Expression of wish form Have you completed yours? This form tells the Trustee of the Plan who you want to receive the benefits that are payable when you die. These payments are made at the Trustee s complete discretion, but your wishes will be taken into consideration when making a decision. It s important that you nominate someone and make sure you update the details whenever your circumstances change. Cash You can take some or all of your pension savings as cash. You ll receive the first 25% tax free and the rest will be taxed at your marginal rate (for example, 20%, 40% or 45%). Drawdown You can invest your fund with a drawdown provider and withdraw money whenever you like. There are no restrictions on the amount you can drawdown. You can also take up to 25% of your account as tax-free cash. Annuity You can buy an annuity. An annuity is an income for life. You can also take up to 25% of your account as tax-free cash. You can complete the My beneficiaries section of epa or print an expression of wish form to fill out and return. You can also choose a combination of these options. Whatever your retirement choice, you ll need to transfer your account to a provider outside of the Plan. Please contact Willis Towers Watson if you d like further information about the process. To find out more about your options at retirement and how they work, the Government runs Pension Wise a free and impartial service which aims to help DC members who are over 50 understand their options as they approach retirement. Visit the website at or call to book a free telephone or face-to-face appointment

7 Investment options How you invest your account can make a big difference to its value at retirement. There are two ways you can invest your money in the Plan: Lifestyle and self select. 1 Lifestyle With Lifestyle, your investments are chosen for you. When you re a long way from Self retirement, your account will be invested in growth funds. As you get closer to retirement, your account will start to move into lower-risk investments to help protect its value. In the Plan, there are three different Lifestyle options to choose from, each designed to target a different retirement choice: 1. Cash Lifestyle assumes that you ll take your entire account as cash at retirement. This strategy is also the default option for members who don t make an investment choice. 2. Drawdown Lifestyle assumes that you ll take cash from your account flexibly using income drawdown. 3. Annuity Lifestyle assumes that you ll use your account to buy an annuity at retirement. The Lifestyle section of the website will help you understand the funds that your account will be invested in at different points over your working life. 2 select In self select, you can invest your account in a range of different funds. In Lifestyle, the Trustee decides which funds to invest in and when to switch between them, whereas self select lets you choose the investments you believe are suitable for your circumstances. You can find out more about the investment options available on the Investment Documents section of the website. You can also download factsheets for each of the funds. You can change your investment options through your epa account. Am I invested in the right Lifestyle option? You should make sure that your account is invested in line with how you think you ll want to take your Plan benefits at retirement. Your Lifestyle retirement age determines where your account is invested and when your investments start to switch. You don t have to retire at this age but it s important that it reflects your intended retirement age. Remember, you can change your investments at any time. You can choose one of the other Lifestyle strategies or change to self select

8 Mind the gap Are you missing out on free money? Are you saving enough for the income you ll need in retirement? If you re not contributing 5% to the Plan, you re missing out on the maximum 10% that Vodafone will contribute to your account. You might have other pensions or savings and investments elsewhere, but maximising the Company contributions could make a significant difference to the income you ll have in retirement. State Pension Don t forget the State Pension when working out your income in retirement. New State Pension The State Pension changed in April 2016 and the previous State Pension (made up of a basic and additional pension) was replaced with a single-tier flat rate pension. This new State Pension will be up to 8, a year. Your State Pension may be lower if you haven t made full National Insurance contributions or you ve built up benefits in contracted-out pension schemes. The Plan has never contracted out of the additional State Pension. Pension Age increase The Government has also made some changes to the age at which you can get your State Pension. As things stand, the State Pension Age will increase to age 66 by October 2020 and then go up again to age 67 between 2026 and You can find out when your State Pension will be paid by using the calculator on the Government website

9 Value for Money assessment The Occupational Pension Schemes (Charges and Governance) Regulations 2015 require trustees of DC schemes to assess value for members and to explain how they have done so in a statement in their annual report and accounts. The Trustee appointed independent, specialist DC consultants to undertake a review and assessment of the Plan. The assessment covered a broad range of factors that are vital in ensuring that the Plan offers good value to its members. As the definition of value is subjective, the relative value of the Plan was assessed against the wider market. A full statement will be available in the annual report and accounts. However, in summary the assessment found that the Plan provides good value for its members and that some aspects of the Plan represent best practice within the industry, specifically the Company contribution rates and low charges. Brexit There s a lot of short-term uncertainty in the financial markets as a result of the UK s decision to leave the EU, and it isn t clear how and when things will stabilise in the long term. But don t panic. If you look at the performance of the financial markets over any significant period of time, you ll see highs and lows. Brexit isn t the only thing that might affect the value of your pension. It s good to know that the Trustee of the Plan already regularly reviews the investment options within the Plan. The Trustee will continue to do this with the help of professional advisers, with the aim that the range of available investment funds deliver good performance and help to provide good retirement savings outcomes

10 Further information You can find information about the Plan, or access your account via the website: Alternatively you can contact us if you d like more information about your pension: Vodafone Pensions, Vodafone UK Defined Contribution Pension Plan, Willis Towers Watson, PO Box 545, Redhill, Surrey RH1 1YX Tel: or +44 (0) vodafonepensions@willistowerswatson.com Please also keep us updated if your details change, for example if you change address. Your feedback is important We d love to hear any feedback you have about this newsletter, or any suggestions for future editions. Contact us using the above details to let us know what you think. 18