Invensys Pension Scheme Members Booklet

Transcription

1 Invensys Pension Scheme Members Booklet For all employees who joined the Invensys Pension Scheme between 6 April 2000 and 31 October Please keep this booklet in a safe place for future reference. April 2007 Edition

2 Contents inside back cover Objectives of the Invensys Pension Scheme State pension benefits and contracting-out How much pension will you receive? How much do you pay? Can you take a lump sum when you retire? Can you provide extra pension for a spouse or dependent? Inflation protection Early retirement Ill health retirement Flexible retirement Late retirement Death benefits while in service Death occuring after leaving service and before retirement Death benefits after retirement Leaving pensionable employment before retirement Additional Voluntary Contributions What happens when you go on family leave? Can you transfer benefits from a previous scheme? Divorce General information about the Scheme Useful Terms Summary of the principal Scheme benefits

3 Objectives of the Invensys Pension Scheme Objectives The Invensys Pension Scheme ( the Scheme ) has three main objectives: to provide you with a good pension in your retirement; to provide life assurance cover and support for your family if you die early; and to give financial help if you have to give up work through ill health or incapacity. It is important that you understand the total benefits available to you on retirement. This booklet includes a description of the state pension scheme benefits to which you will also be entitled, subject to changes in legislation. In planning your financial resources after retirement, you should take both the state benefits and your Scheme benefits into account. Until 31 October 2004 the Scheme was open to any eligible employee of an Invensys participating company. On 1 November 2004 Invensys plc ( Invensys or the Company ) closed the Scheme to new entrants. However, employees may be admitted at the discretion of Invensys plc and the Trustee. If you opt-out you will not be covered for any death in service benefits and you will have to rely on state pensions or make your own personal pension arrangements. If you have any queries, either about the Scheme generally or about your own entitlement to benefits, please do not hesitate to contact your Human Resources Department. Notes: This booklet is intended to be a basic guide to the Scheme. In the event of any difference, the formal Trust Deed and Rules of the Scheme shall prevail. Copies of these documents are available to members if required. This booklet describes benefits only for those members who are Invensys employees in the United Kingdom ( UK ) and who joined the Scheme on or after 6 April Members who joined the BTR Group Pension Scheme or the Siebe Pension Scheme before 6 April 2000 should refer to booklets and announcements previously supplied to them and the Changes to the Invensys Pension Scheme leaflet dated February Members who joined this section of the Scheme following a merger should also refer to their merger announcements and the Changes to the Invensys Pension Scheme leaflet dated February Members who transferred from the Eurotherm Pension Scheme on 1 June 2001 should refer to the Members Explanatory Booklet dated October 2001 and the Changes to the Invensys Pension Scheme leaflet dated February Invensys Pension Scheme Members Booklet 01

4 State pension benefits and contracting-out The state provides two pensions and other Social Security benefits in certain cases. The first is the basic state pension. This is a continuation of the previous old age pension and, subject to a satisfactory National Insurance contribution history, you will receive this in addition to your pension from the Scheme at your state pension age. Married pensioners may receive an extra pension. The second comes from the State Second Pension (S2P). As a member of the Scheme, you will be contracted-out of this. This means that while you are contributing to the Scheme, you will pay lower National Insurance contributions than if you were earning benefits under S2P and you will not build up benefits in S2P. Instead, the Scheme undertakes to provide you with a pension that meets a reference test set down by the Government as a condition of being contracted-out. Therefore, when Scheme members reach state pension age they will receive at least two pensions a Scheme pension and, unless the Government of the day changes pensions regulations, a basic state pension. Of course, some members may previously have contributed to S2P or other occupational or personal pension arrangements through previous employment outside the Company. In this case, a part of their income in retirement will come from these sources. The Government has also introduced Pension Credit and members who have retired should contact the Department for Work and Pensions to discuss whether they qualify for further benefits. 02 Invensys Pension Scheme Members Booklet

5 How much pension will you receive? When you retire you will be entitled to receive your Scheme pension and it will be paid monthly in advance for the rest of your life. It will be calculated from your own final pensionable pay and your own retirement percentage which is related to your pensionable service. Please see below and the Useful Terms on page 19 for more details. In certain circumstances, your pension may have to be restricted to comply with HM Revenue & Customs requirements and Scheme Rules. Pensions from the Scheme taken earlier than normal retirement age will usually be reduced by an early retirement factor since the pension is expected to be paid for a longer period of time. Gross earnings and pensionable pay Gross earnings are your total taxable earnings excluding benefits in kind, payments in lieu of holiday pay, profit-related bonuses, severance pay, share option benefits or cash payments in lieu of benefits in kind. Pensionable pay is your gross earnings less the lower earnings limit. Final pensionable pay Final pensionable pay is the average of the best three consecutive tax years of your pensionable pay during the last ten years while a contributing member of the Scheme before you retire, reach normal retirement age, leave or die (whichever happens first). This will normally be the last three complete tax years of that period. Final pensionable pay is restricted by the Scheme Earnings Cap (see page 19). Pensionable service Pensionable service is the number of years and days of continuous service from the date you joined the Scheme up to the earliest of the date of your retirement, normal retirement age, leaving or death for which contributions have been paid. If you have had a period of absence during which you did not pay any contributions, your pensionable service may be reduced accordingly. Retirement percentage The Scheme is a one-sixtieth scheme which means that for each year of pensionable service you build up 1/60th of 100% i.e % as a retirement percentage. For each day of a part year, 1/365th of % is calculated. For example: a member with 24 years pensionable service will build up a retirement percentage of 24 multiplied by % or 40%. A pension at age 65 is calculated by multiplying this percentage by final pensionable pay. a member with 20 years and 120 days pensionable service will build up a retirement percentage of /365 multiplied by % or 33.88%. A pension at age 65 is calculated by multiplying this percentage by final pensionable pay. Invensys Pension Scheme Members Booklet 03

6 How much pension will you receive? (cont.) Pension examples The two examples of retirement percentages from the previous section are set out below showing how a pension will be calculated on normal retirement at age 65. Pensions taken earlier than age 65 will usually be reduced by an early retirement factor. See page 7 for further details about early retirement. Example 1 Example 2 In your best three consecutive tax years in the final ten years of pensionable service your pay details are: Gross Lower Pensionable earnings = earnings limit pay 25,000 4,264 20,736 25,500 4,368 21,132 26,000 4,524 21,476 and the average of the final column over three years means your final pensionable pay is: 21,115 21,115 Your pensionable service to retirement is: 24 years /365 years So your retirement percentage is: 40% 33.88% Your annual Scheme pension is worked out by multiplying your final pensionable pay by your retirement percentage 8,446 7, The lower earnings limit figures shown above are for illustration only. The Government sets the rate every year (see the Useful Terms on page 19) and the actual value for 2007/2008 is 4, For each tax year, we take gross earnings and deduct the lower earnings limit for that year. This gives the pensionable pay for that year. Then we take the average of the best three consecutive tax years pensionable pay in the final ten years of pensionable service. This is final pensionable pay. 3. All benefits from the Scheme are subject to HM Revenue & Customs regulations and Scheme Rules. These are referred to in the General information about the Scheme section starting at page 15 of this booklet. NB: From 6 April 2006 for those members subject to the statutory earnings cap ( 105,600 as at 5 April 2006) Scheme pension will be calculated with two elements: 1. Pension will be calculated using the member s final pensionable pay restricted to the Scheme Earnings Cap for all pensionable service; and 2. At retirement that part of the pension accrued prior to 6 April 2006 will be increased so that it shall not be less than the pension that would have arisen if the member had ceased to be in pensionable service on 5 April 2006 and the benefit revalued between 6 April 2006 and the date of retirement. 04 Invensys Pension Scheme Members Booklet

7 How much do you pay? You pay: and pensionable pay is: 10% of pensionable pay gross earnings less the lower earnings limit Please see the Useful Terms on page 19 for a more precise description of gross earnings. An important aspect of it is that it includes overtime and commissions. This means that, while you will pay slightly higher contributions, these elements of your pay are pensionable. No contributions will be deducted from earnings in excess of the Scheme Earnings Cap (see page 19). Members who participate in the SMART Pensions arrangement run by the Company should refer to the explanatory booklet available from your Human Resources department. The actual cost to you of your contributions will be reduced by tax relief which is provided automatically through the payroll in your net pay calculation. In addition, as a member of the Scheme you will be contracted-out of S2P; you will also pay lower National Insurance contributions than if you were contributing to S2P. If you are a part-time employee, the calculation of your contribution is different from those mentioned above, so please discuss this with your Human Resources Department. How much does the Company pay? The Company pays whatever amount is required to ensure that the fund is sufficient to meet the promised benefits. Therefore, the rate of its contribution will vary from time to time depending on the Scheme s funding position. What happens if you are absent through illness? Contributions based on the calculation above will still be deducted from any pay, including sick pay, that you receive. If you are not being paid or your earnings are below the lower earnings limit, you will pay no contributions but, if the Company approves, your period of sickness will still count as membership of the Scheme for the purpose of calculating pensionable service. Additional Voluntary Contributions (AVCs) The options regarding AVCs are explained on page 13. Can you take a lump sum when you retire? Yes, up to 25% of the value of your total pension rights (including additional voluntary contributions) up to the Lifetime Allowance (see page 16). In order to establish the value of your pension rights, the pension is multiplied by a factor of 20. The Scheme commutation rate is then applied to determine the amount of pension given up to provide the lump sum. Invensys Pension Scheme Members Booklet 05

8 Can you provide extra pension for a spouse or dependent? When you retire, you can provide extra benefit for your spouse or dependent by setting aside part of your pension to be paid to a chosen dependant after your death. If you are interested in this option further details will be provided at the time. Inflation protection Your Scheme pension will usually be based on your earnings just before you retire and these normally take account of the changes in the cost of living up to that time. On retirement, your pension will increase each year during payment by an amount that takes into account the rise in the Retail Prices Index (RPI) over a 12 month period. Pension accrued to 5 April 2006 will be subject to a maximum of 5% in any year and pension accrued after this date will be subject to a maximum of 3% in any year. Increases are paid on 1 April each year. If you leave the Scheme before normal retirement age and you do not retire immediately, your pension earned to leaving will be increased from the date of leaving to the date of retirement. Details are given on page 11. State pensions If Government regulations do not change, your basic state pension from the state pension scheme will also be increased annually after state pension age, in line with price increases. Early retirement If you retire at any time after your 50th birthday you will be entitled to an early retirement pension. NB: due to legislative changes brought about by the Pensions Act 2004 any members admitted at the discretion of the Company after 6 April 2006, the minimum retirement age will become 55 with effect from 6 April What do I lose? The disadvantage of early retirement is that your pension will be smaller. This arises for three reasons. First, it will be based on final pensionable pay (see pages 3 and 19) at the time you retire and that will probably be less than it would be at your normal retirement age. Second, it will be based on the pensionable service you complete up to the date you retire, not the service you would have completed had you stayed in the Scheme right up to normal retirement age. 06 Invensys Pension Scheme Members Booklet

9 Third, your pension will be reduced in accordance with tables produced by the Scheme Actuary to take account of the longer period for which it will be paid. Retirement due to a health breakdown Subject to your employer s and the Trustee s approval, you may retire early irrespective of your age if you suffer from a serious health breakdown as certified by the Trustee s medical adviser. This is dealt with in more detail below. Tax-free lump sum option at retirement As with retirement at your normal retirement age, you have the option to give up part of your pension for a tax-free cash lump sum (see page 5). Death after retirement On death after early retirement, the benefits as described on page 10 will become payable, but related to your early retirement pension. Ill health retirement If you have to stop working at any age for your employer due to a breakdown in health, you may apply to retire with a special pension.your application must be supported by your employer and it will need to be approved by the Trustee. If you are unlikely, on medical grounds, ever to be able to work again, you may be granted a full incapacity pension. This means that your pension will be calculated as if you had worked up to age 65 and it will be paid immediately without reduction for early payment. If there is a less severe health breakdown but you still have to leave because you are unable permanently to work at your normal job, you may be granted a partial incapacity pension. This would be calculated by using your actual pensionable service in the Scheme. It is paid immediately and without reduction for early payment. All applications will be reviewed by an independent medical adviser appointed by the Trustee. Should you recover your health, the Trustee reserves the right to suspend the pension being paid to you. Rights to a tax-free lump sum (as above), spouse s pensions and dependants and children s allowances (see page 9) apply to full and partial incapacity pensions. Invensys Pension Scheme Members Booklet 07

10 Flexible retirement With the consent of the Company you may be allowed to retire from the Scheme on or before normal retirement age whilst continuing to work for the Company. In these circumstances you will normally be required to take your pension (and any cash sum) on your retirement from the Scheme. Your Human Resources Department will discuss this option with you should these circumstances arise. Late retirement With the consent of the Company you may remain in pensionable service after age 65. In these circumstances your pension will be increased in respect of the period by which the commencement of your pension is deferred. Death benefits while in service If you die while employed by the Company before your normal retirement age and you are a contributing member of the Scheme, the following benefits are payable: Lump sum First, a lump sum will be paid under discretionary trust of four times your annual rate of gross earnings (restricted to the Scheme Earnings Cap) at date of death, plus the value of any additional voluntary contributions. The sum will normally be tax-free. The Trustee has to decide who will receive the money. To assist the Trustee, you should complete a Nomination Form and revise your wishes on a supplementary Nomination Form (both obtained from your Human Resources Department) as necessary. Spouse s pension Second, if you are married, a pension for life is immediately payable to your spouse which is one-half of the pension you would have received had you worked to your normal retirement age. If your spouse is more than ten years younger than you, the spouse s pension will be reduced by 2% for each year in excess of ten years difference. If you are in a registered civil partnership, a pension for life is immediately payable to your civil partner which is calculated in the same way as, and subject to the same terms as, a spouse s pension except that it excludes any pensionable service completed before 5 December Invensys Pension Scheme Members Booklet

11 Children s allowances Third, any dependent children will receive an income (normally paid to their surviving parent or guardian) until age 16, or until they have completed full-time education up to age 21. Where there is no registered civil partner, the total allowance payable would be 50% of the level of the spouse s pension for one child, or 100% for two or more children. These amounts would be doubled if there is no spouse. Where there is a registered civil partner, the total allowance payable would be 50% of that part of the spouse s pension arising from pensionable service completed before 5 December 2005 for one child, or 100% for two or more children. Upon the death of the civil partner the amounts payable would be doubled and increased to include that part of the spouse s pension arising from pensionable service completed from 5 December Dependants allowances Fourth, in the absence of a spouse, the Trustee may exercise its discretion and pay an allowance equal to the difference between 100% of your pension and the pensions being paid to a registered civil partner and any dependent children to one or more of the deceased s dependants (including unregistered same-sex relationships). In deciding whether to grant an allowance, the Trustee will take into account the nature of the relationship and the level of financial dependence. The Trustee may also use this discretion (where there are no other dependants to whom this benefit could be paid) to make provision for registered civil partners up to the level that a spouse would have received Pension or allowance increases Any pension or allowance will be increased during payment at the rates stated on page 6. Death occurring after leaving service and before retirement See page 11 for benefits provided in this instance. Invensys Pension Scheme Members Booklet 09

12 Death benefits after retirement Spouse s pension and children s and dependants allowances If you are married, then on your death after retirement, a spouse s pension becomes payable. The spouse s pension is payable for life, and will be equal to half your gross pension payable at the date of death before any reduction resulting from taking a tax-free lump sum. A spouse s pension will be reduced, however, by 2% for each year in excess of ten years difference if the recipient is more than ten years younger than you. If you are in a registered civil partnership, then on your death after retirement, a civil partner s pension becomes payable for life, which is calculated in the same way as, and subject to the same terms as, a spouse s pension except that it excludes any pensionable service completed before 5 December Children s allowances are paid as described on page 9. If you leave no spouse, a dependant s allowance may be paid, by Trustee discretion, as described on page 6. Pension increases Pensions will be increased during payment at the rates set out on page 6. Death within five years after retirement Once you retire, your pension benefits are paid for the rest of your life. However, if you die within five years of your retirement, a lump sum death benefit equal to the unpaid balance of the five years pension payments will be paid by the Trustee under discretionary trust having noted any nomination you have made. (This is in addition to any spouse s or civil partner s pension, children s or dependants allowances which may be payable as described above.) This will normally be paid tax-free. If retirement was a result of permanent ill health and death occurs before age 65, the lump sum death benefit will be increased where necessary so that it shall not be less than four times gross earnings (restricted to the Scheme Specific Earnings Cap) at retirement, less any tax free cash taken. 10 Invensys Pension Scheme Members Booklet

13 Leaving pensionable employment before retirement Deferred pension Your pensionable service may end because you either decide to stop contributing to the Scheme before retirement or you leave employment with the Company or one of its subsidiaries. If this happens, and you have completed at least two years pensionable service, you will be entitled to a deferred pension payable from normal retirement age. Your deferred pension is the pension you earned up to the date you withdrew from the Scheme. Members aged 50 and over (or at any age following a serious breakdown in health) may apply for the pension to start at a reduced rate before normal retirement age. Inflation protection before retirement Your deferred pension will be increased in relation to the period after your pensionable service ends, up to your normal retirement age or your earlier retirement at the rate of 5% compound for each complete year, or at a rate specified by the Government (generally representing Retail Price Inflation) whichever is the lower in respect of this period. Death before retirement If you should die before you retire, a surviving spouse will receive a pension calculated as one-half of your deferred pension (revalued up to your date of death). This will be subject to a reduction if your spouse is more than ten years younger than you. If you are in a registered civil partnership and die before you retire, a surviving civil partner will receive a pension calculated in the same way as, and subject to the same terms as, a spouse s pension except that it excludes any pensionable service completed before 5 December There would also be paid by the Trustee under discretionary trust a lump sum death benefit equal to five times the annual amount of your deferred pension, increased as noted above, plus any AVCs. Children s and dependants allowances may also be paid as described on page 9. Death in retirement On your death in retirement the benefits set out on page 10 will become payable but based on your deferred pension, with increases as noted above. Leaving with less than two years pensionable service If you leave, on a basis other than due to redundancy or opt-out of contributory membership of the Scheme, before you have completed two years pensionable service, you will normally receive a refund of your own contributions (including any AVCs) paid to the Scheme, unless you leave having completed at least three months pensionable service when you may elect to transfer your benefits to another pension arrangement (see page 12). Any refund of contributions payable to you will be reduced to take account of: (i) your share of the amount required to re-instate your S2P benefit in light of the fact that whilst a member of the Scheme you have been contracted-out of S2P (see page 2); and (ii) tax at a specially reduced rate currently 20% on the first 10,800 of the refund and 40% on any amount above this. Should you leave due to redundancy you will have the option of either a deferred pension as described above or an early retirement pension if aged 50 or over, or a refund of your own contributions after the deductions referred to above. Invensys Pension Scheme Members Booklet 11

14 Leaving pensionable employment before retirement (cont.) Transfer of benefits You can request a transfer of benefits at any time up to one year before normal retirement age as an alternative to a deferred pension or within three months of leaving the Scheme where you have completed less than two years pensionable service. The value of the pension benefits described on the previous pages may be transferred to a suitable scheme at your new job, subject to agreement between the Trustee and the receiving arrangement on the terms of the transfer. The transfer will take the form of a cash sum (known as a transfer value ), which will represent the value of your benefits under the Scheme.Your new employer will tell you what benefits can be provided with the money under your new scheme. Alternatively, you may have the transfer value paid to an insurance company to secure benefits under an insurance policy issued in your own name, or to a personal pension arrangement.you may ask the Trustee not more than once every 12 months for an estimate of the transfer value available to you on a particular date. The Trustee will give you a written statement of entitlement within three months of your request. This statement will be given to you within ten days of the date on which the calculation is completed and the value quoted to you will be guaranteed for three months from that date. If you want to transfer the quoted transfer value to another scheme or to an insurance policy or to a personal pension arrangement, you must apply in writing to the Trustee within that guarantee period. If the estimate of the transfer value is needed because of a divorce settlement, you should tell the Trustee this when asking for the estimate as the Trustee may need further information from you. The transfer value is the amount which would be sufficient at the date of calculation to provide your preserved benefits at your normal retirement age. The calculation takes into account guaranteed and statutory increases which will be applied in the period up to your normal retirement age. Some discretionary benefits are excluded in calculating the transfer value. Further details will be provided by Invensys Pensions on written request. Change of address If any benefits are deferred for you under the Scheme, you should write to Invensys Pensions with details of any change in your address so that it can contact you when your pension is due to start. Please provide your National Insurance number when writing. Early retirement from deferred pension status Subject to the Rules of the Scheme, you may retire early providing you are at least 50 years of age (but see page 6 regarding the legislative change in 2010). Your pension will be paid at a reduced rate because of early payment. The amount of reduction is periodically reviewed by the Actuary to the Scheme. If you suffer a serious breakdown in health the Trustee may pay a pension at any age, at a reduced rate as advised by the Actuary. You may also take a part of your pension as a tax-free lump sum, provided that pension legislation continues to allow this. 12 Invensys Pension Scheme Members Booklet

15 Additional Voluntary Contributions (AVCs) Members who started paying AVCs to the Scheme before 6 April 2006 Your existing arrangement remains open and you may continue to pay (and increase, decrease or stop) contributing in the normal way. Contributions Your contributions must be a minimum of 4 a month. That part of your earnings which you pay to the Scheme as an AVC is not liable for income tax. Thus, the actual cost to you is much less since the total tax you pay is reduced. This is exactly the same as applies to your basic contributions (see page 5). You may also, or instead, make an occasional single payment subject to the HM Revenue & Customs limit (see page 16) not being exceeded. Investment The choices open to you vary from a very low risk cash fund to higher risk funds based on stocks and shares. Before you choose, you should take into account your age, when you expect to retire and your appetite for risk taking with your investments. You should also take independent financial advice before you invest. Your contributions will be paid by your employer to Invensys Pensions who will then pass the money onto your AVC provider. The amount your investment grows by will depend on economic accounts here and abroad. While an investment in a cash fund can be expected to grow with interest accrued, don t forget that the values of investments in stocks and shares, and fixed interest Government and company bonds can decrease in value as well as increase. Receiving benefits at retirement Benefits from an AVC arrangement are taken at the same time as those from the Scheme. The proceeds of your investment may be used to take extra cash and pension. Full details will be provided at retirement date. The situation after 5 April 2006 The Scheme does not offer members the option of taking out new AVC policies from 6 April Members wishing to make additional contributions towards their retirement provision may seek independent financial advice regarding stakeholder, free standing AVCs and other suitably approved pension arrangements. What happens when you go on family leave? During your working life there may be periods of service when you are absent due to maternity, adoption, paternity or other parental leave ( family leave ). If you go on family leave intending to return to your employer, you will continue to pay contributions but these will be based on your statutory maternity, adoption, paternity or parental leave pay. During this period you will retain life assurance cover based on a notional earnings figure taking into account your earnings immediately before your period of absence began. Invensys Pension Scheme Members Booklet 13

16 What happens when you go on family leave? (cont.) If any part of your maternity, adoption, paternity or parental leave is unpaid, you will not be required to make any contributions during that period and it will not count towards your pension. You will however remain covered for life assurance based on a notional earnings figure. Should you decide not to return to your employer, you will be treated as having left the Scheme when your contributions ceased. Can you transfer benefits from a previous scheme? The Trustee does not currently offer this facility. It is understandable that you may want to combine all of your occupational pension benefits, but it should not be assumed that a transfer from your previous scheme is the best course of action. There are many points to consider particularly if you have a guaranteed final salary benefit. Divorce Pension sharing provisions came into effect on divorce proceedings commencing on or after 1 December Your pension is a valuable asset and as such its cash equivalent or transfer value may be taken into account along with your other assets. The aim of pension sharing is to separate your ex-spouse s benefit entitlement from your own, so there is a clean break settlement. The Court can order the pension rights of either spouse, up to the time of the divorce, to be shared between the two parties. In Scotland, only benefits earned during the marriage can be shared. If you enter into a registered civil partnership after 4 December 2005 and the partnership is subsequently annulled or dissolved, then your ex-civil partner will be able to seek a pension sharing order as part of their settlement. The pension sharing order will work in the same way as for an ex-spouse. A pension sharing order will result in a percentage of your cash equivalent being shared with your ex-spouse (although in Scotland the order can specify an amount instead of a percentage). 14 Invensys Pension Scheme Members Booklet

17 If you request a cash equivalent in connection with possible divorce proceedings, you should be aware of the following: The cash equivalent will be calculated in accordance with instructions from the Scheme Actuary. The Trustee will not provide the cash equivalent to your ex-spouse unless you or the Court has asked them to. If your ex-spouse is awarded any entitlement through a pension sharing order, it will be used to buy benefits in any approved pension arrangement of his or her choice. This might be a personal pension plan, a buy out contract, your ex-spouse s own occupational scheme or a Stakeholder Pension. Except in exceptional circumstances the entitlement will not be retained in the Scheme. There will be an administration charge for providing anything other than the initial cash equivalent value, and this will be clearly stated on correspondence from the Trustee. The pension sharing order will normally include details of which of the parties to the divorce is to meet the cost of the pension share. General information about the Scheme Actuarial review The Scheme Actuary, appointed by the Trustee, reports to the Trustee each year on the Scheme s ongoing funding position and undertakes a full review of the finances of the Scheme at least once every three years. This review is made so that the Trustee and the Company may consider the financial position of the Scheme and the Company can determine the contributions required to fund all the benefits described in this booklet. If the review discloses a surplus, benefits may be improved (the Company having a discretion, for example, to agree with the Trustee further pension increases), contributions by the employers may be reduced or there may be a combination of both. If the review discloses a deficiency, then the Trustee and the Company would be required to agree a course of action to correct this situation. Annual Trustee Report and Accounts Copies of the full document are available on request from Invensys Pensions. Constitution of the Scheme The Scheme is treated as a registered scheme by HM Revenue & Customs. The information given in this booklet is intended as a summary of the main features of the Rules of the Scheme applicable to members who began pensionable service on and after 6 April It does not override the Trust Deed and Rules which prevail at all times. Copies of the latter are available from Invensys Pensions. The Company has power to discontinue or, subject in some instances to the consent of the Trustee, modify the Scheme in whole or in part. In the event of a discontinuance, appropriate benefits will be provided out of the fund available and there will be no further liability for contributions from you or, subject to statutory requirements, from the employers. Invensys Pension Scheme Members Booklet 15

18 General information about the scheme (cont.) Registration The Trustee is registered under the Data Protection Act 1998, entry number C The Scheme registration number at the Pension Regulator s office is Queries and the dispute resolution procedure Contributing members of the Scheme should, in the first instance, discuss any queries they have with their Human Resources Department which may, in turn, need to consult Invensys Pensions. There is a two-stage procedure for resolving disputes, which may be used by any member, or other person with a relevant interest in the Scheme. At the initial stage, you should write with your full details (or those of the member in respect of whom you are raising the matter) to the Pensions Manager of Invensys Pensions at the address given on page 18. He will consider the matter and reply within two months. If you are not satisfied by the answers that have been given, you may appeal in writing within six months of the date of the response.you should send your appeal to the Secretary to the Trustee at the same address, asking for the dispute to be reconsidered and giving your reasons. This application will be referred to the Trustee and its decision will be communicated to you promptly. Whilst pursuing a complaint through the Scheme s dispute resolution procedure, you may also request assistance from The Pensions Advisory Service. If you still require further consideration on the matter, you can approach the Pensions Ombudsman (see below). Individual benefits statements On behalf of the Trustee, Invensys Pensions automatically issues annual statements to contributing members showing estimated pensions payable at normal retirement age, based on recent earnings. Deferred members may request an annual statement showing their accrued entitlement. HM Revenue & Customs and Scheme limits Statutory limits On April 2006, the Finance Act 2004 replaced the old Inland Revenue limits which previously applied to contributions and benefits under exempt approved pension schemes with two new restrictions: Firstly, there is a maximum amount which can be paid tax free into all your pension arrangements each year this is known as the Annual Allowance. This has been set at the greater of 3,600 or 100% of your earnings subject to a maximum limit which for the 2007/2008 is 225,000 (as this is a cash limit, the legislation sets out special factors to apply to final salary pensions to work out whether the increase in their value over the course of a year exceeds this limit). For most people this means that they now have the option to choose how much they want to save in order to provide a pension at retirement. Secondly, there is a limit on the amount of money that can used to provide retirement and death benefits. This is known as the Lifetime Allowance, and has been set at 1.6 million for the tax year 2007/2008. So with the exception of people on high incomes this limit is unlikely ever to be encroached. 16 Invensys Pension Scheme Members Booklet

19 If either the Annual Allowance or the Lifetime Allowance limits are exceeded, individuals will incur tax charges. Any such tax charges arising in relation to pensions under the Scheme will normally be deducted from the value of your benefits before payment. However, these limits have been set high enough so that most people can continue to make retirement provision as they do now (or even make additional provision) without having to pay any additional tax. Scheme limits In addition, the Scheme sets its own benefit limits. The most important of these provides for a maximum pension of two-thirds gross earnings (see Useful Terms) plus some benefits in kind (averaged over the same period as final pensionable pay), all earned uniformly over the period of potential pensionable service to normal retirement age. Gross earnings are subject to a Scheme Earnings Cap, which in 2007/2008 is 112,800. State pensions are not included in any of the above calculations. Investments The Trustee has appointed a number of investment managers to invest the funds which, ultimately, will provide the pension and other benefits described in this booklet. These funds are held by the Trustee and do not form part of the assets of the Company. They are audited annually by the Scheme Auditor and their value relative to the liabilities of the Scheme, is looked at every three years by the Scheme Actuary. The basis upon which each fund manager will invest the financial assets allocated to him are set out in a Trustee document known as the Statement of Investment Principles, a copy of which is available to any member or beneficiary (or Trade Union) on application to Invensys Pensions. TPAS/Pensions Ombudsman The Pensions Advisory Service (TPAS) is available at any time to assist members and beneficiaries of the Scheme in connection with any: pension queries they may have; or difficulty which they have failed to resolve with the Trustee or Invensys Pensions, the administrator of the Scheme. The Pensions Ombudsman may investigate and determine complaints or disputes of fact or law concerning occupational pension schemes made or referred to him. TPAS and The Pensions Ombudsman may both be contacted at: 11 Belgrave Road London SW1V 1RB Tel: (TPAS) Tel: (Ombudsman) Invensys Pension Scheme Members Booklet 17

20 General information about the scheme (cont.) The Pensions Regulator The Pensions Regulator is the statutory regulator of work-based pension schemes in the UK. The main objectives of The Pensions Regulator are: to protect the benefits of members of work-based pension schemes; to promote, and improve understanding of the good administration of work-based pension schemes; and to reduce the risk of situations arising which may lead to claims for compensation from the Pension Protection Fund. The Pensions Regulator aims to support schemes and help trustees to get things right. It provides education and information to those running schemes to help reduce the likelihood of problems occurring. However, if things go wrong it will use its powers to ensure that matters are put right. Further information on The Pensions Regulator is available at Consultation There is a national United Kingdom Pensions Consultative Committee ( UKPCC ). If you are a contributing member of the Invensys Pension Scheme and an employee, you are entitled to be considered for a post in which you would represent Scheme members employed by Invensys in your area. If you are interested in performing this interesting and valuable role, you should, initially, contact your Human Resources Department. Nominations are normally considered when vacancies arise. Members must resign on ceasing to be an employee of the Company. The functions of the UKPCC are: to consult with Invensys Pensions on matters relating to pensions; to assist Invensys Pensions, the Trustee and Company in communicating information to members; to represent the views of members as to matters affecting their interests; for the UKPCC to nominate four members Directors to the Trustee Board of Directors. Invensys Pensions Administration of the Scheme is carried out for the Trustee by Invensys Pensions located at: Higham House New Bridge Street West Newcastle upon Tyne NE99 1TG Tel: (general enquiries) Fax: (general enquiries) enquiries@invensyspensions.co.uk Modification of individual benefits The Scheme is designed to provide retirement benefits related to your pay at or near retirement. If in the opinion of the Trustee and the Company your benefits are not in keeping with this principle, they have the power, acting together, to change your benefits accordingly. 18 Invensys Pension Scheme Members Booklet

21 Useful Terms Throughout this booklet there are certain terms which have special meanings and an explanation is given below. Basic state pension is a flat-rate pension. The amount depends on your National Insurance contribution record. Company is Invensys plc. Employer is any company which participates in the Scheme. Final pensionable pay is the average of the best three consecutive tax years of your pensionable pay during the last ten years while a contributing member of the Scheme before you retire, reach normal retirement age, leave or die (whichever happens first). This will normally be the last three complete tax years of that period. Final pensionable pay is restricted by the Scheme Earnings Cap. Gross earnings are your total taxable earnings excluding benefits in kind, payments in lieu of holiday pay, profitrelated bonuses, severance pay, share option benefits or cash payments in lieu of benefits in kind, up to the Scheme Specific Earnings Cap. Invensys Pensions is the administrator of the Scheme and its address is on page 18. Lower earnings limit is the minimum amount which must be earned before becoming entitled to receive an S2P benefit for that tax year. The amount is set by the Government each year and is broadly the same as the basic state pension for a single person. The figure for 2007/2008 is 4,524 a year. Normal retirement age is age 65 for men and women. Pensionable pay is your gross earnings less the lower earnings limit, up to the Scheme Specific Earnings Cap. Pensionable service is the number of years and days of continuous service from the date you joined the Scheme up to the earliest of the date of your retirement, normal retirement age, leaving or death for which contributions have been paid. If you have had a period of absence during which you did not pay any contributions, your pensionable service may be reduced accordingly. Retirement percentage. The Scheme is a one-sixtieth scheme which means that for each year of pensionable service you build up 1/60th of 100% i.e % as a retirement percentage. For each day of a part year, 1/365th of % is calculated. Scheme is the Invensys Pension Scheme, formerly known as the BTR Group Pension Scheme, administered in accordance with a Third Definitive Trust Deed and Rules dated 28 March Scheme Actuary: SM Leake of Punter Southall Ltd. Scheme Auditor: Ernst & Young LLP. Scheme Earnings Cap: Members are not able to accrue benefits in the Scheme on a salary in excess of the Cap, set at 112,800 from 6 April 2007 and rising in line with figures published by the Government. In addition, employee contributions will only be paid on salary up to the Cap. Invensys Pension Scheme Members Booklet 19

22 State Second Pension (S2P) provides a pension linked to your earnings between two earnings limits the lower earnings limit and the upper earnings limit. The Scheme is contracted-out of S2P on a reference scheme test basis (at April 2005) and members do not acquire benefits from it during pensionable service. State pension age is 65 for men and women. However, women born before 6 April 1950 will continue to receive any state retirement pension from age 60. For women born from that date until 5 April 1955, transitional arrangements arise as a result of which entitlement is put back to age 65 on a month-for-month basis. Trustee is Invensys Pension Trustee Limited (formerly BTR Group Pension Trustee Limited). Upper earnings limit is the maximum amount on which you pay National Insurance contributions to the state pension scheme. The figure for 2007/2008 is 34,840 a year. 20 Invensys Pension Scheme Members Booklet

23 Summary of the principal Scheme benefits life assurance cover for death in service of four times the annual rate of gross earnings paid by the Trustee under discretionary trust; a pension from age 65 or a reduced pension at an earlier date if you are retiring; a spouse s pension following your death of one-half of your pension; children s and dependants allowances in certain circumstances; and guaranteed increases to pensions being paid.

24 Find out more about your pension scheme by visiting: Invensys Pension Trustee Limited is the Data Controller for the purposes of the Data Protection Act 1998 and is registered under that Act. Invensys Pension Trustee Limited will hold and use personal information about Scheme members as reasonably necessary in connection with the administration of the Scheme. This information may be transferred to, or accessible from, those countries from time to time in which the principal employer to the Scheme and its group companies operate.