UK Flexible Benefits Plan. Flex Year 2014/15

Transcription

1 UK Flexible Benefits Plan Flex Year 2014/15 June 2014

2 Welcome to ConocoPhillips Flex. This guide has been designed to provide you with general information about the ConocoPhillips Flexible Benefits Scheme and specific details on the choice of Benefits. Contents 1. Introduction to ConocoPhillips Flex What is ConocoPhillips Flex? Why does ConocoPhillips have a Flex Scheme? Who is eligible for ConocoPhillips Flex? Which Benefits are covered by ConocoPhillips Flex? How does ConocoPhillips Flex work? Enrolment How is my pay affected? What happens if I leave ConocoPhillips during the year? Where to go for help Flex options Flex Account and MyFlex options Spending more or less than your Flex Account What happens if I do not enrol in Flex? Life Events Benefits Holidays Defined Benefit Pension Defined Contribution Pension Employee Life Assurance Spouse/Partner Life Assurance Dental Insurance Childcare Vouchers Cycle2Work Charitable Giving Travel Insurance Tax and National Insurance Tax Tax allowances and your tax code National Insurance Tax and National Insurance summary How the taxation of Benefits works

3 1. Introduction to ConocoPhillips Flex 1.1. What is ConocoPhillips Flex? ConocoPhillips offers a competitive and wide-ranging package of Benefits. The ConocoPhillips Flexible Benefits Scheme (Flex) provides the opportunity for you to vary the rate at which you accrue Pension Benefits, Life Assurance cover and Holidays and to access new Benefits. For example, you may want to buy Spouse/Partner Life Assurance, dependants Private Medical Insurance, or Dental Insurance. Through Flex, you can buy these Benefits either by sacrificing salary or by trading down on a Benefit which you already have but do not need. Under Flex, you can use the value released to opt for another Benefit or extra salary instead. Under Flex you are able to choose the Benefits you want, and both you and the Company get better value from the money spent on your behalf. In addition, by using group buying power the Company is able to obtain better prices/rates than are normally available to individuals buying these Benefits. For some Benefits there may also be an Income Tax/National Insurance saving if you buy through Flex rather than out of your take-home pay. The content and pricing of each item in the Flex menu is reviewed annually and adjusted in line with scheme experience and any changes required by the specific Benefit providers. Individual items may be introduced, modified or deleted in light of scheme experience, take-up by employees and tax or other legislative changes. You will therefore notice that prices may change as part of this review and there is also no guarantee of continuity of individual Benefits beyond the existing scheme year. If you choose to flex any of your Benefits, the choices you make will roll forward from one year to the next (with the exception of DB Pension, Holidays and Cycle2Work) until you amend your Benefit choices, either at Annual Enrolment or if you have a qualifying Life Event Why does ConocoPhillips have a Flex Scheme? The Company has recognised that the standard "one size fits all" approach to Benefits does not match the requirements of its workforce. Employee circumstances vary and there is an increased demand for Benefits that can be used during different stages of an employee's career. Flex provides employees with new Benefit options. The Company hopes that employees will see Flex as an enhancement to their Benefits package and that it will improve understanding of Benefits as a whole Who is eligible for ConocoPhillips Flex? Flex is open to all regular, UK-payroll ConocoPhillips employees including those who are on expatriate assignment. However, it is recognised that some of the Benefit items in the Flex menu may not be appropriate to expatriate employees because of their overseas status (this is covered in Section 5 Frequently asked questions) Which Benefits are covered by ConocoPhillips Flex? The following Benefits are included in Flex: Holidays (sell only) Pension Life Assurance Spouse/Partner Life Assurance Private Medical Insurance Dental Insurance Childcare Vouchers Cycle2Work 3

4 Travel insurance Charitable Giving The way in which each of these Benefits can be flexed is described in more detail in Section 2 Flex Options. In addition to the Benefits listed above, Flex allows you to take advantage of a Charitable Giving scheme ( Give as you Earn ). You may also have other ConocoPhillips Benefits which are not listed here. These are not affected by Flex and will continue to be provided in exactly the same way How does ConocoPhillips Flex work? Under ConocoPhillips Flex, a flex credit value is placed on your Benefit entitlements for Life Assurance and Pension. The sum of these values is your Flex Account. You can retain your standard Benefit entitlements if you wish, but you have the freedom to select a Benefits package tailored to your individual needs. There is a minimum level of Life Assurance cover and Pension (if you are a member of the DB Pension Plan) below which you cannot flex. This is to ensure that you maintain adequate provision for these Benefits. The Flex programme is administered online through a web-based system called MyFlex. Your MyFlex enrolment form shows your salary and Flex Account, together with the cost of each of your Benefit options. You can if you wish spend more than your Flex Account on buying Benefits by giving up part of your salary. With MyFlex you can therefore express a preference to: Increase the level of an existing Benefit by spending more of your salary Select new Benefits by spending more of your salary Reduce the level of your holiday (by selling down to a minimum of 20 days), Life Assurance or Defined Benefit Pension accrual to release some of the value of your Flex Account. Your salary will be adjusted to take account of your confirmed preferences Enrolment Annual Enrolment For Flex Annual Enrolment in 2014 you will be able to make your Benefit choices via MyFlex between 22 May and 17 June. All your choices will then be effective from 1 July It is your responsibility to complete and submit your online MyFlex enrolment by 18:00 BST on 17 June If you miss this deadline you will not get another opportunity to make elections until annual enrolment 2015 unless you have a qualifying Life Event during the 2014/15 scheme year (see Section Life Events). New hire joining mid-flex year New hire employees can enrol in Flex when they join the Company. The MyFlex enrolment period will be open until the 28th of the month in which you join the Company to make your benefit choices. However, if you are unable to make your choices by that date, you can send a web ticket to HR Connections or call them on ETN or Free Phone and request that a second New Joiner Life Event be opened for you. This second Life Event will remain open for you to enrol in Flex up to the 28th of the following month. If you do not make any choices by the 28th of that following month then the system will close and your benefits will default to your core entitlement. Your benefit choices will apply from 1st of the month after you have made your choices and will remain in force until 30 June Benefit choices can only be altered at the next Annual Enrolment, or if you experience a mid-year Life Event. Submission and authorisation of Benefit choices 4

5 Remember that if you do not submit your online MyFlex enrolment by the deadline, your Benefit choices (with the exception of DB Pension, holidays and Cycle2Work scheme) will default to your previous choice, i.e. your existing Benefit choices will automatically roll forward from the 2013/14 Flex year including any revised pricing. You will then have to wait until the start of the next Flex year before you can change your Benefit preferences unless you have a qualifying Life Event during the year. All Benefit preferences will be checked and authorised by ConocoPhillips. Authorisation of Benefits is required by HMRC regulations. All holiday preferences will be authorised by managers in order that they may plan their resource requirements. After your submission and, prior to and after authorisation, your online Benefit confirmation form will appear for your review, until such time as you have a qualifying Life Event or until the next Annual Enrolment. Should your Benefits preferences not be authorised by ConocoPhillips, you will be contacted by HR Shared Services accordingly How is my pay affected? The total cost of all the Benefits you have selected (excluding DC Pension and Charitable Giving) is compared with your Flex Account. If the cost is greater than your Flex Account, your salary will be reduced by the balance. If you have spent less than your Account, you will have a balance left over which is paid as additional salary and subject to income tax and National Insurance (as applicable) What happens if I leave ConocoPhillips during the year? The majority of your Benefits will cease on your last day of employment with ConocoPhillips and you will however pay a full monthly premium for the month in which you leave, irrespective of your leaving date, which will be deducted from your final pay. The exceptions to this are as follows: If you have chosen to Flex up your Pension accrual in the Defined Benefit Plan and you leave before the 25 th of the month, your Flex contributions will cease at the end of the previous month. If you have chosen to Flex up your Pension contribution to the Defined Contribution Plan and you leave before the end of the month, your chosen contribution rate will be applied to the amount of pensionable salary actually received for the month of leaving. If you have selected the Cycle2Work Benefit you should read the information provided regarding arrangements for payment of the outstanding lease amount when you leave ConocoPhillips Where to go for help If you have questions about the Flex programme generally or the MyFlex system, send a web ticket to HR Connections or call them on ETN or Free Phone

6 2. Flex options 2.1. Flex Account and MyFlex options In Flex, you are given a Flex Account. If you are a member of one of the ConocoPhillips pension plans, your standard level of Life Assurance of 3 x pensionable salary (2 x pensionable salary for hconoco) and the standard Pension provision (accrual rate of 1.75% per year if you are a DB member, or a 12% employer contribution if you are a DC member) are given a value. The sum of these values is your Flex Account. You can use your Flex Account to retain your current Benefits if you wish or you can spend it on different Benefits. Each Benefit has a standard core entitlement and a range of options for flexing that Benefit up or down from the standard entitlement. For Life Assurance and Pension there is a minimum benefit level which you must maintain. Your options are summarised below: Benefit Standard Entitlement Minimum Level Flex Options Notes Holidays Depends on employment contract and service to date 20 days Employees can sell down to a minimum of 20 days, no option to purchase Only applies to employees whose contract allows them to Flex their holidays. This Benefit does not apply if you are: Working overseas on a regular expatriate assignment basis where holiday entitlement is governed by the rules of the Expatriate Policy Working on an offshore rotation A Teesside employee on an annualised hours contract Defined Benefit Pension (ConocoPhillips DB Pension Plan members only) Accrual rate of 1.75% Accrual rate of 1.25% * Accrual rate of 1.25%, 1.50%, 1.75%, 2.00%, 2.25% or 2.50% Contribution rates are calculated for each level of accrual based on your age at 1 July * Additional flex options are available to specific members who have been previously advised of these extended options. Defined Contribution Pension (ConocoPhillips DC Pension Plan members only) Employee contribution 0% of pensionable pay Employer contribution 12% of pensionable pay Employee contribution 0% of pensionable pay Employer contribution 12% of pensionable pay Employee contributions of up to 4% of pensionable pay, matched by Company 1:1 Employee can choose to make contributions to the Plan in excess of 4% but should have regard to the Annual Allowance ( 40,000 for the 2014/15 tax year). Cumulative contributions (employer and employee) made to registered pension arrangements in excess of the Annual Allowance, plus the value of any carry forward unused allowances, within a tax year will not be eligible for tax relief. Contributions above 4% are not matched by the Company. 6

7 Benefit Standard Entitlement Minimum Level Flex Options Notes Life Assurance (ConocoPhillips DB Pension Plan members only) New Provider in 2014/2015 Zurich 3 x pensionable salary (2 x pensionable salary for hconoco employees) 1 x pensionable salary 1, 2, 3 4, 5 or 6 x pensionable salary Employees can increase cover up to 6 x pensionable salary. If this is the first scheme year you are eligible to participate in Flex you can select any of the six levels of cover. If not, you can increase your benefit by one level only this year (e.g. from 3x to 4x). The increase in benefit may be subject to underwriting. Life Assurance (ConocoPhillips DC Pension Plan members only) New Provider in 2014/2015 Zurich 3 x pensionable salary 1 x pensionable salary 1, 2, 3 4, 5, 6, 7 or 8 x pensionable salary Employees can increase cover up to 8 x pensionable salary. If this is the first scheme year you are eligible to participate in Flex you can select any of the eight levels of cover. If not, you can increase your benefit by one level only this year (e.g. from 3x to 4x). The increase in benefit may be subject to underwriting. Private Medical Insurance Provider Bupa Dental Insurance Provider National Dental Plan Employee only None Single, Married, Family or S/Parent cover None None Single, Married, Family or S/Parent cover under a choice of four levels of dental cover You are automatically enrolled in the PMI programme unless you chose to opt out previously. If you decide to opt out of the programme you will not be able to use the value of this Benefit to purchase other Benefits. If you are on expatriate assignment you will be automatically opted out of the programme as you are covered for PMI under Bupa International or Aetna Global. Due to the wide variety of private dentistry charges, you are advised to compare the benefits schedule with your dentist s charges to satisfy yourself as to the suitability of this Benefit for you, and ensure that you choose the most appropriate plan for your needs. 7

8 Benefit Standard Entitlement Minimum Level Flex Options Notes Spouse/Partner Life Assurance New Provider in 2014/2015 Zurich Travel Insurance NEW Flex benefit in 2014/2015 Provider Crispin Speers and Partners (CSP) Childcare Vouchers Provider Edenred Cycle2Work Provider Halfords None None Cover of 20,000, 40,000, 60,000, 80,000, 100,000, 125,000 or 150,000. None None Single, Married, Family or S/Parent cover None None 1 multiples up to a maximum of 1,000. None None Minimum of 100, then in 10 multiples up to a maximum of 1,000. If you selected this Benefit last year, you can only increase your benefit by one level this year (i.e. from 60,000 to 80,000). The increase in benefit may be subject to underwriting. If this is the first year you are eligible to participate in Flex you can select any level of cover. If you were eligible to participate in Flex in previous years but are selecting this Benefit for the first time this year, you can only select 20,000 of cover. The entire benefit level chosen may be subject to underwriting. Employees can select world-wide cover with or without winter sports Employees who have a change in childcare circumstances mid-year are allowed to increase or reduce their level of childcare vouchers, including starting or stopping vouchers mid-year. You can select a bicycle and cycling safety equipment and lease this from ConocoPhillips over a 12-month period. In order to be eligible for the tax and NI savings, at least 50% of the bicycle s use must be for the purpose of commuting to work. This Benefit is only available at annual enrolment and is not available to employees on expatriate assignment. 8

9 Benefit Standard Entitlement Minimum Level Flex Options Notes Charitable Giving Provider Charities Trust Cost of this Benefit is not included in the calculation of your Flex Adjustment None None Minimum donation 10 per month, no maximum limit. Charitable Giving provides a tax efficient and convenient method of donating to registered charities of your choice directly from your gross pay. This is done via the Charities Trust, an approved Payroll Giving Agency. Your payroll deductions are held in a personal online Freedom Account at Charities Trust and you make donations to charity from this Account as and when you wish to. The amount you choose to donate will not be included in the calculation of your Flex Adjustment and will be shown separately on your payslip as GAYE Spending more or less than your Flex Account You can spend more than your Flex Account on buying Benefits by giving up part of your salary. Although there is no limit on the amount of salary you can give up, you should ensure that you have sufficient salary to cover the additional expense, especially if you have other deductions from your salary such as Additional Voluntary Contributions (AVCs) or a Student Loan. These other deductions will not be reconciled within the MyFlex system. On the other hand, you may not wish to spend all of your Flex Account on Benefits. If you do not spend all of your Flex Account (because you choose to give up some of your Life Assurance cover, DB Pension accrual or Holiday), you will receive a cash supplement in addition to your regular pay that is subject to income tax and NIC. Spending more or less than your Flex Account will mean a change (reduction or increase) in your actual monthly salary. However, the salary figure used in the calculation of your standard salary-related Benefits (such as SIP contributions or sick pay) will not be affected by any of your Flex choices. These Benefits will continue to be calculated on your salary before any Flex adjustment What happens if I do not enrol in Flex? If you choose not to enrol in Flex, or do not submit your online MyFlex enrolment by the deadline, your Benefit choices (with the exception of DB Pension, Holidays and Cycle2Work scheme) will default to your previous choice, i.e. your Benefit choices made in the 2013/14 Flex year will automatically roll forward. Any choices relating to DB Pension, Holidays or the Cycle2Work scheme will revert to core entitlement for the new Flex year. if you have never enrolled in Flex your Benefits will default to your standard core Benefits package. if you made Benefit choices in the 2013/14 Flex year which were different from your standard Benefits, these Benefit choices (with the exception of DB Pension, Holidays and Cycle2Work scheme) will roll forward to the 2014/15 Flex year and will remain in force Life Events Your Flex choices apply from 1 July until the following 30 June and can only be altered mid-year if you experience a qualifying Life Event. Life Events are: getting married, entering into a Civil Partnership, or gaining a partner or dependant 9

10 getting divorced, dissolving a Civil Partnership, becoming legally separated or ending a long-term relationship having or adopting a child or gaining a stepchild death of a member of your immediate family (spouse, partner, or dependent child) commencing or returning from maternity leave or paternity leave changing your working hours from full-time to part- time or vice- versa commencing or returning from a period of unpaid leave lasting one calendar month or more commencing or returning from an expatriate assignment a change in childcare circumstances requiring an increase or decrease in your level of Childcare Vouchers, including starting or stopping Vouchers mid-year where you wish to start, stop or change your Charitable Giving amount a significant change in personal circumstances e.g. redundancy of a spouse/partner Please note that not all Life Events apply to all Benefit types. You should refer to the Life Event section under the individual Benefit type description for details. If you experience a qualifying Life Event and would like to change your Flex choices during the year, please contact HR Connections. Each of the Flex Benefits is described in more detail on the following pages. The Income Tax and National Insurance implications of making certain choices are referred to under the relevant Benefit. Further information on tax and National Insurance is given in Section 4. 10

11 3. Benefits 3.1. Holidays If you decide that you will not need to take all your holiday entitlement in a particular year, you can sell some or all of your holidays in excess of 20 days. You may wish to do this in order to increase your Flex Account to help pay for other Benefits in Flex or to receive an additional cash supplement. Please note: This Benefit only applies to employees whose contract allows them to Flex their holidays. The following groups will not be able to Flex their holidays: Employees working overseas on a regular expatriate assignment basis whose holiday entitlement is governed by the rules of the Expatriate Policy Employees working on an offshore rotation Teesside employees on an annualised hours contract Standard provision The ConocoPhillips holiday year runs from 1 January to 31 December. The individual basic entitlements, which are increased by service-related days, are outlined in the employee handbook. New employees receive a pro-rated entitlement in the first calendar year of employment based on their starting date. Employees who do not make a Flex election will receive holiday on this standard basis. MyFlex options You can sell one or more holidays to which you are entitled in the current holiday year, down to the basic minimum of 20 days. Important information You can only sell holidays which you have already accrued. There is no option to purchase additional holiday. Flexed holiday choices will be applied to the current holiday year, which runs from 1 January to 31 December If you are currently working overseas on a regular expatriate assignment basis you cannot flex holidays because your holiday entitlement is governed by the different rules of the Expatriate Policy. If you are currently employed on a part-time basis, your choice will be in whole days only. This will reflect what a whole day means in your case, e.g. if you work 4 hours per day, a whole day is 4 hours. Life Events You cannot change your holiday choice during the Flex year. Tax and National Insurance You do not pay Income tax or employee National Insurance contributions on the allocated value of your holiday entitlement. However, if you choose to sell some holidays and spend the value on another Benefit, you will pay tax on the Benefit taken. Leaving employment during the year When you leave the Company, a calculation will be made which takes account of the holiday you selected, the number of days holiday you have taken in the relevant holiday year, and the number of months completed in the Flex year. There may be a balancing payment due to or from you. 11

12 Calculation of Flex costs For all full- time employees other than onshore employees working 12 hour shifts, the Flex value of 1 day s holiday is: (Basic salary + regular allowances) 260. For onshore employees working 12 hour shifts, the Flex value of 1 day s holiday is: (Basic salary + regular allowances)

13 3.2. Defined Benefit Pension This Benefit is only available if you commenced employment with ConocoPhillips before 1 February 2013 and are an active member of the ConocoPhillips Pension Plan (the defined benefit plan). Members accrue entitlement to a pension payable on retirement based on their final pensionable salary and years of pensionable service. Standard provision The standard accrual rate in the ConocoPhillips Pension Plan is 1.75% of pensionable salary for each year of service. Employees who choose not to vary their pension accrual via Flex will accrue pension at this standard rate. MyFlex options You can choose to vary the amount of pension you accrue each year and can select from the following accrual rates: 1.25% 1.50% 1.75% 2.00% 2.25% 2.50% An extended range of options is available to specific members; you will have been advised if this applies to you. Important information Only active members of the ConocoPhillips Pension Plan are eligible to flex their rate of pension accrual. You cannot join the Pension Plan via Flex. Your Flex choice applies until the next Annual Enrolment or earlier if you qualify for a maternity Life Event or commence a period of unpaid employment or sickness absence lasting one calendar month or more. Your Flex choice will be stored on your pension record at the end of the Flex year as a service credit. This can be seen on your annual pension statement. For example, if you select an accrual rate of 2.00%, the MyFlex system will hold a flex service credit of years. This is calculated as ( ) 1.75 = Your total pension in respect of this year would then be calculated as 1 year at the standard accrual of 1.75%, plus a Flex service credit of years at 1.75%. This is equal to 1 year at an accrual of 2.00%. If you Flex your pension, the pension you earn for the twelve months to 30 June next year will be based on the accrual rate you choose. The accrual rate selected will then also apply to other Benefits such as spouse's or incapacity pension in respect of that year. Benefits which are calculated using potential service will continue to be based on an accrual of 1.75% for future service, regardless of your pension accrual choice for this year. The cost of buying or selling pension accrual is age-related and based on your age at the beginning of the Flex year on 1 July. There are separate rates for heritage Conoco employees from standard ConocoPhillips Plan members. This reflects some differences in the detailed Plan terms despite the same standard accrual rate. 13

14 Life Events ~ Maternity and Unpaid Leave of Absence You cannot choose to change your pension choice during the flex year unless you qualify for a maternity Life Event. However, if you commence a period of unpaid leave of absence lasting for one calendar month or more, your pension choice will revert to the standard provision. This also applies if you commence a period of unpaid sickness absence likely to last for one calendar month or more. Tax and National Insurance Income tax and employee National Insurance contributions are not payable on the cost of this Benefit. With effect from April 2014 a 40,000 limit (Annual Allowance (AA)) has been placed on the maximum increase in the value of a member's pension(s) that can occur in a tax year without a charge to tax. The Annual Allowance applies to a member's increases in benefits from all UK registered pension schemes. HMRC also places a limit on the maximum amount of pension savings that members can build up over their lifetime which benefit from tax relief. This is known as the Lifetime Allowance (LTA). For 2014/15 the standard LTA is 1,250,000. If you build up pension savings within registered pension arrangements worth more than the LTA, the value of the excess will be subject to a Lifetime Recovery Charge. This is an area of tax legislation that is complex so if you require advice please contact an independent financial adviser - if you do not already have one then you can find one near you at Leaving employment during the year In the month of leaving, if your last day of employment occurs before the 25 th of that month your flex contribution will cease at the end of the previous month. If you are still on the payroll on or after the 25 th of the month a full flex contribution will be deducted in the month of leaving. Pro rata amounts will not be deducted in respect of pension accrual. The pension that you have earned in the flex year will be incorporated into the calculations of your leaving service pension benefits. Under the rules of the ConocoPhillips Pension Plan, if you leave employment, or opt out of the Pension Plan, within two years of joining, you will not be entitled to a deferred pension. In such circumstances, you would be offered either a refund of your own regular contributions currently equal to 3.5% of your pensionable salary or, providing you have completed more than three months pensionable service, a cash equivalent transfer value payable to an alternative registered pension scheme. Flexing your pension accrual assumes that you have a vested pension Benefit to increase or reduce. If you are a recent entrant to the pension plan and wish to flex your pension accrual you may do so, but should bear in mind that you will not have a vested pension Benefit if you subsequently leave ConocoPhillips employment, or opt out of the pension plan, within two years of joining. If you have elected to reduce your accrual, you will have to refund the Company the amount of pension accrual you have sold. If you elected to purchase additional pension accrual, the company (not the pension plan) will refund the cost of that purchase. Calculation of Flex costs Contribution rates have been calculated for each level of accrual and vary according to your age as at 1 July There are three rates - one for members who joined the ConocoPhillips DB Pension Plan on or before 1 December 2006, one for members who joined the ConocoPhillips DB Pension Plan on or after 2 December 2006, and one for heritage Conoco employees who retain grandfathered Benefits in the ConocoPhillips DB Pension Plan. The following tables shows the contributions required to change from 1.75% accrual for one year (figures are expressed as a percentage of basic salary): 14

15 Members of the ConocoPhillips Defined Benefit Pension Plan (Joiners on or before 1 December 2006) The following tables shows the contributions required to change from 1.75% accrual for one year (figures are expressed as a percentage of basic salary). Age at 1 July 18 to 30 Inc 1.25% accrual 1.50% accrual 1.75% accrual 2.00% accrual 2.25% accrual 2.5% accrual Example An employee aged 38 on a basic salary of 25,000, who opted for an accrual rate of 2.25% would have to pay 9.40% of basic salary = 2,350 p.a. 15

16 Members of the ConocoPhillips Defined Benefit Pension Plan (Joiners on or after 2 December 2006) The following tables shows the contributions required to change from 1.75% accrual for one year (figures are expressed as a percentage of basic salary). Age at 1 July 18 to 30 Inc 1.25% accrual 1.50% accrual 1.75% accrual 2.00% accrual 2.25% accrual 2.5% accrual Example An employee aged 38 on a basic salary of 25,000, who opted for an accrual rate of 2.25% would have to pay 8.70% of basic salary = p.a. 16

17 hconoco members of the ConocoPhillips Defined Benefit Pension Plan The following tables shows the contributions required to change from 1.75% accrual for one year (figures are expressed as a percentage of basic salary). Age at 1 July 18 to 30 Inc 1.25% accrual 1.50% accrual 1.75% accrual 2.00% accrual 2.25% accrual 2.5% accrual Example An employee aged 38 on a basic salary of 25,000, who opted for an accrual rate of 2.25% would have to pay 10.0% of basic salary = 2,500 p.a. 17

18 3.3. Defined Contribution Pension This Benefit is only available if you commenced employment with ConocoPhillips on or after 1 February 2013 and are an active member of the ConocoPhillips Defined Contribution Plan (the Plan). ConocoPhillips provides this Defined Contribution (DC) Plan to help you save for your retirement You will have your own retirement account which remains yours throughout your working life. Contributions made to your account can be invested in a range of funds, with the aim of increasing your retirement savings. Standard provision The company will contribute 12% of your pensionable salary to your retirement account without the need for you to make any contribution at all. MyFlex options As a member of the Plan you are not mandated to make a personal contribution, but there are benefits of you choosing to make a personal contribution through MyFlex since the company will match your contribution rate, capped at 4%, in addition to paying the standard 12% employer contribution. Employee Exchange Employer Contribution Total Contribution 0% 12% 12% 1% 13% 14% 2% 14% 16% 3% 15% 18% 4% 16% 20% 5%+ 16% 21%+ Although there is no upper limit on the level of contributions that can be made to your retirement account as such, please note the reference to the Annual Allowance referred to below (Tax and National Insurance section). Please also note that ConocoPhillips is not permitted to pay any employee less than the National Minimum Wage. Any election you make through MyFlex will become effective from the 1st of the month following that election. Important information Details of your investment choices can be accessed here The amount of pension you receive at retirement will depend on the total contributions paid to your account each year, investment returns, applicable management charges and the cost of purchasing an annuity at that time. 18

19 Life Events and Unpaid Leave of Absence You will not normally be able to change your pension election during the flex year unless you qualify for a Life Event. If you commence a period of unpaid leave of absence lasting for one calendar month or more, your pension choice will revert to the standard core provision. This also applies if you commence a period of unpaid sickness absence likely to last for one calendar month or more. Tax and National Insurance Tax and employee National Insurance contributions are not payable on the cost of this benefit. With effect from April 2014 a 40,000 limit (Annual Allowance (AA)) has been placed on the maximum increase in the value of a member's pension(s) that can occur in a tax year without a charge to tax. The Annual Allowance applies to a member's increases in benefits from all UK registered pension schemes. For a Defined Contribution Plan (or Money Purchase arrangement) the increase relates to the actual amount of employee and employer contributions paid into registered pension arrangements during a Pension Input Period (PIP). The PIP for the ConocoPhillips DC Plan runs from April 1st to March 31st annually. HMRC also places a limit on the maximum amount of pension savings that members can build up over their lifetime which benefit from tax relief. This is known as the Lifetime Allowance (LTA). For 2014/15 the standard LTA is 1,250,000. If you build up pension savings within registered pension arrangements worth more than the LTA, the value of the excess will be subject to a Lifetime Recovery Charge. This is an area of tax legislation that is complex so if you require advice please contact an independent financial adviser - if you do not already have one then you can find one near you at Leaving employment In the month of leaving, if you elected to exchange salary then the payment in your final month will be pro-rated based on the number of days worked. 19

20 3.4. Employee Life Assurance Life Assurance provides additional financial security for your family if you are an active member of one of the ConocoPhillips pension plans through a lump sum payment in the event of your death whilst in employment. If you have chosen not to join the Pension Plan then no Life Assurance cover is provided. Standard provision The standard level of cover provided via the ConocoPhillips pension plans is 3x pensionable salary (for heritage Conoco employees who continue to be entitled to the Benefits of the heritage Conoco Pension Plan, the standard cover is 2x pensionable salary). Employees who choose not to vary their Life Assurance cover via Flex will be covered at the standard level. MyFlex options You can choose from the following options: 1 x pensionable salary 2 x pensionable salary 3 x pensionable salary 4 x pensionable salary 5 x pensionable salary 6 x pensionable salary 7 x pensionable salary for DC Pension members only 8 x pensionable salary for DC pension members only Important information You must be an active member of one of the ConocoPhillips pension plans to flex this Benefit. Your Life Assurance cover will be based on your pre-flex pensionable salary, i.e. your pensionable salary before any changes in salary are made as a result of your flex choices. If this is the first year you are eligible to participate in Flex, you can select any of the six levels (eight levels for DC pension members) of cover (subject to underwriting). There is no restriction on flexing down. If you chose to increase your level of life cover last year or are selecting cover for the first time having previously been eligible to participate in Flex, you can increase your benefit by one level only this year. The increase in benefit may be subject to underwriting. If you choose to increase your level of cover, you must be Actively at Work which means that: You have not received medical advice to refrain from work, are not absent from work or restricted from working due to illness or injury and are actively following your normal occupation. This means working at your normal capacity for the normal number of hours required by your contract, either at your normal place of business or at a location at which the business requires you to work. The cost of Life Assurance is age-related and is based on your age at the beginning of the Flex year on 1 July. The cost of your Life Assurance choice will remain constant over the Flex year, regardless of any salary changes during that period, and is based on your pensionable salary at 1 May or at date of joining for mid-year new hires. 20

21 In the event of your death during the year, the Benefit payable will be distributed to your beneficiaries at the discretion of the relevant Trustee Board and will be based on your pensionable salary at the date of death. 21

22 Life Events You can alter your level of life assurance cover in the event of experiencing any of the following Life Events and at Annual Enrolment. Please note, however, that you cannot increase your level of cover by more than one step/increment at any Life Event. getting married, entering into a Civil Partnership, or gaining a partner or dependant getting divorced, dissolving a Civil Partnership, becoming legally separated or ending a long-term relationship having or adopting a child or gaining a stepchild death of a member of your immediate family (spouse, partner, or dependent child) commencing or returning from maternity leave or paternity leave changing your working hours from full-time to part-time, or vice-versa commencing or returning from a period of unpaid leave lasting one calendar month or more (except if absence is due to ill health) commencing or returning from an expatriate assignment a significant change in personal circumstance e.g. redundancy of a spouse/partner Tax and National Insurance Income tax and employee National Insurance contributions are not payable on the cost of this Benefit. Leaving employment during the year Your Life Assurance cover will cease on your last day of employment with ConocoPhillips. You will pay a full monthly premium for the month in which you leave, which will be deducted from your final pay. Calculation of Flex costs The core cost of 3x pensionable salary Life Assurance (2x for hconoco employees) for all ages is per 1,000 of benefit. The annual Flex cost of cover above the standard core entitlement of 3x pensionable salary (2x for hconoco employees) varies with age as at 1 July The table below shows the cost of an extra 1x pensionable salary over the core 3x pensionable salary (or over the 2x salary for hconoco employees): 22

23 Age at 1 July Cost per 1,000 cover Age at 1 July Cost per 1,000 cover Age at 1 July Cost per 1,000 cover Example A ConocoPhillips employee aged 38 on a pensionable salary (base salary plus pensionable allowances) totalling 40,000 wishing to flex up from their standard core of 3x salary would pay: Basic cost: (included in Flex account): 3x ( 40,000 1,000) x x 3 = pa Flex cost: (paid by employee): Extra 1x ( 40,000 1,000) x 0.68 = pa Extra 2x ( 40,000 1,000) x 0.68 x 2 = pa Extra 3x ( 40,000 1,000) x 0.68 x 3 = pa Extra 4x ( 40,000 1,000) x 0.68 x 4 = pa (available to DC members only) Extra 5x ( 40,000 1,000) x 0.68 x 5 = pa (available to DC members only) Total cost (Basic + Flex): 4x pa 5x pa 6x pa 7x pa (available to DC members only) 8x pa (available to DC members only The cost of the standard core entitlement of 3x pensionable salary (2x for hconoco employees) is included in your Flex Account. Therefore, the actual cost to you of flexing up (or the credit given if flexing down) is the difference between your standard core entitlement and the total cost of your choice. Making a claim All claims and queries will be handled by the Pensions Administration Team at Capita. In the event of a death, the Pensions Administration Team will complete the claim form and send this, along with the original Death Certificate, to Zurich. (Note: in the absence of a Death Certificate, the original Coroner's 23

24 Certificate is acceptable in the first instance. Sight of the original Death Certificate will be required once it is available). 24

25 3.5. Spouse/Partner Life Assurance Spouse/Partner Life Assurance provides a tax-free lump sum payment in the event of the death of your Spouse or Partner. To qualify for this Benefit, a Spouse/Partner must be aged 16 or above but below 70 as at 1 July of this Flex year. A Spouse/Partner is defined as: Spouse means the legal spouse or civil partner of an eligible employee Dependant partner means a person who is and who has been continuously cohabitating with an eligible employee for at least 6 consecutive months and who is financially dependent or interdependent on or with that eligible employee. It shall not however include any relative, natural child, adopted child, stepchild or foster child or relative. Cover will continue until the earlier of: the date your employment with ConocoPhillips ceases the date you reached the Termination Age (70) the date of your death; and the date your Spouse/Partner reaches the age of 70 Standard provision There is no standard level of provision as this is not a regular Company-provided Benefit. MyFlex options You can choose a level of cover from the following options, subject to the rules outlined below:- 20,000 40,000 60,000 80, , , ,000 Important information The cost of this Benefit is based on the level of cover you select and the age of your spouse/partner at the beginning of the Flex year on 1 July. If you chose this Benefit last year, you can increase your Benefit by one level this year. The increase in Benefit will be subject to the completion of the Application Form (i.e. if you currently have 80,000 of cover and choose to increase this to 100,000 of cover, the 20,000 of increased cover is subject to underwriting). You will need to complete an Application Form to be eligible for the increase. If you have previously had an opportunity to select this benefit (either at the last enrolment window during June 2013 or when you joined the company if later) then the same rule applies. In other words you will be restricted to the first step level of cover of 20,000. You will need to complete an Application Form confirming good health, otherwise cover will not be provided. If this is the first time you are eligible to participate in Flex you can select any level of cover this year. You will need to complete an Application Form confirming good health, otherwise cover will not be provided. Please consider carefully the information below on underwriting before choosing this Benefit. 25

26 Underwriting If you are choosing this Benefit for the first time or increasing your level of cover from its existing level, you must download and complete an Application Form confirming good health. The Application Form must be returned to HR Shared Services at the address below as soon as possible and no later than 18 July NB: If your form has not been received by the deadline, the benefit selection will be removed from your enrolment form. You should scan your completed Application Form, signed by your partner, and forward it to If you are unable to scan and send through to the above mailbox then please post the signed original (keeping a copy for yourself) to: HR Shared Services RUB-02-2W13C Rubislaw House Anderson Drive, Aberdeen AB15 6FZ The Application Form contains a variety of health questions and if all of these are answered "No", Zurich will issue its acceptance and cover will commence on the first day of the month following acceptance. If the health questions 1-3 are answered No, full cover will be in place once Zurich has confirmed so in writing. Should any of these questions be answered with Yes, Zurich will be unable to provide cover. No cover will be provided until Zurich is in receipt of the Application Form and has confirmed and issued its acceptance in writing. Once your selection has been approved, you will not be required to go through underwriting again unless you increase the level of cover in future enrolments or following a Life Event. Life Events You can alter your Spouse/Partner level of life cover in the event of experiencing any of the following Life Events and at Annual Enrolment. getting married, entering into a Civil Partnership, or gaining a partner or dependant getting divorced, dissolving a Civil Partnership, becoming legally separated or ending a long-term relationship having or adopting a child or gaining a stepchild death of a member of your immediate family (spouse, partner, or dependent child) commencing or returning from maternity leave or paternity leave changing your working hours from full-time to part-time or vice-versa commencing or returning from a period of unpaid leave lasting one calendar month or more (except if absence is due to ill health) commencing or returning from an expatriate assignment a significant change in personal circumstance e.g. redundancy of a spouse/partner 26