"Today for Tomorrow" The Roche company pension scheme

Transcription

1 "Today for Tomorrow" The Roche company pension scheme

2 Contents Foreword How your company pension scheme is financed Saving for old age Joint financing: Roche and you Pension funds and surplus funds Annuity computation at the start of retirement Two examples Financial cover for invalidity or death In retirement: You will receive this pension The retirement pension with or without support for surviving dependents Widows' and orphans' pensions in retirement In working life: Cover for invalidity or death The invalidity pension Widows' and orphans' pensions during working life Further information If you leave Roche early Pension increase guaranteed Payment date: Month end Obligations of pension recipients Proviso Legal note Imprint An A to Z of the most important terms cover page Notes: With "Today for Tomorrow" Roche offers you a comprehensive company pension scheme. Please take the time to read this brochure. Specialist terms are explained additionally on the back cover page. For reasons of clarity, use of the term "employee" in this brochure refers to both male and female employees. Roche Deutschland Holding GmbH, Roche Pharma AG and Roche Diagnostics GmbH are referred to collectively in this brochure as "Roche".

3 Dear Employees, Every day in your role as health pioneers you contribute to improving the quality of life of thousands. We want to reward your efforts appropriately, which is why Roche has developed "Today for Tomorrow", the 2007 contingency plan providing you with additional income to supplement your statutory pension. Your company pension is financed jointly by us and yourselves. Our company assumes the larger share, with you contributing the smaller share from your income. You also benefit from the performance of the pension capital. Starting from the first pension contributions, which trainees already receive, your pension fund grows year by year. This applies even if you take professional time out to look after your children or care for family members. Finally, after your 60th birthday you can choose when you would like to receive your company pension. "Today for Tomorrow", which includes invalidity and surviving dependents' pensions, can raise our profile in the market. With this company pension provision Roche would like to play its part in ensuring that you can look forward to a carefree future. Edgar Vieth Managing Director of Roche Deutschland Holding GmbH

4 How your company pension scheme is financed Saving for old age Unlike its statutory counterparts, "Today for Tomorrow" is a capital-funded pension scheme. This means that, during your working life, you save on capital. Your company pension is financed from the capital saving. During the saving phase the pension capital is paid into Roche Pensionstreuhand e.v where a. subsidiary account is set up for each employee and an accurate record is kept of what pension capital is available to him. When you retire the pension capital is withdrawn from your subsidiary account and paid into a pension control account. You receive your lifelong additional pension from this account. Ten advantages of your Roche company pension "Today for Tomorrow" offers you several immediate advantages: 1. You have a company pension which can compare favourably in the market. 2. In retirement you receive a supplementary pension for life. 3. With the Roche pension scheme, after your 60th birthday you can choose when 60. You would like to start receiving your pension 4. "Today for Tomorrow" also includes invalidity, widows' and orphans' pensions. In the case of employees under the age of 55, this cover may even additionally be topped up. 5. Roche finances the lion's share of the pension contributions. 6. Trainees and employees also receive pension contributions when on parental leave. 7. Your sacrificed compensation, which is tax-free and free from social insurance contributions, is deducted from your gross salary. 8. You benefit from the performance of the pension capital saved. 9. Roche administers the pension capital so you need concern yourself with (almost) nothing. 10. You receive an annual summary of your pension information.

5 Joint financing: Roche and you The pension capital is financed jointly by Roche and you in the form of contributions. The level of the contributions depends on your income level (pensionable remuneration). The larger share is paid by Roche in the form of pension contributions. You yourself contribute sacrificed compensation amounts. Roche grants you pension contributions of 3.5% for pensionable items of remuneration below the contribution ceiling for German pension insurance funds, and pension contributions of 13.5% of this amount for items above the ceiling. These contributions are paid by our company in addition to your income. The table on page 15 sets out which items of remuneration are pensionable. You yourself contribute sacrificed compensation amounting to 1% of your pensionable remuneration. The benefit to you is that the sacrificed compensation amounts taken from your gross remuneration is tax-free and free from social insurance contributions. The pension that you receive in retirement is taxable and subject to social security contributions. In principle, you then benefit from more favourable tax rates than those during your working life. Contribution ceiling for German pension insurance funds (BBG) Employer and employee together pay German pension insurance contributions. Employees are thereby entitled to claim a statutory pension. However, only income up to the contribution ceiling for German pension insurance is taken into account. In 2007 the contribution ceiling (West) is 63,000 euro. This ceiling is reviewed each year and adapted as necessary. A statutory pension cannot be claimed for items of income above the contribution ceiling. Roche therefore grants higher contributions for these income items. Who does "Today for Tomorrow" apply to? "Today for Tomorrow" applies to all employees entering into a contract of employment or beginning an apprenticeship with a Roche company in Germany after 1 January (The normal retirement age is based on the employee's year of birth, and will probably be some time between your 65th and 67th birthday). Pension contributions are made after the 1st of September of the calendar year, provided that, at that point in time, you have already been working for our company for a minimum of six months. After you have reached the normal statutory pension retirement age applicable to you, Roche will no longer make any pension contributions for you. You are entitled to claim a pension Under "Today for Tomorrow" after you have made your first contribution, provided that you have fulfilled the statutory requirements (see page 14 under If you leave Roche early).

6 Pension funds and surplus funds In December each year, the pension contributions made by Roche, together with your sacrificed compensation amounts, are transferred to Roche Pensionstreuhand e.v., where an accurate record is kept of what contributions have been credited for which employees. 95% of the contributions are used for building up the pension fund. The remaining 5% may be used to finance invalidity and surviving dependents' pensions and is paid into a separate risk adjustment account. Roche guarantees that, at the start of retirement, you have access to guaranteed pension capital amounting to at least 95% of the contributions. Roche Pensionstreuhand e.v. invests the contributions fund units in order to increase the value of the pension fund. If surplus funds are generated, they remain as fixed assets during the saving phase. Some of the surplus funds are used to finance the administrative costs for the pension fund. At the start of retirement, the surplus funds are bindingly credited to the respective subsidiary account as surplus pension capital and increase your pension capital. Once a year you will receive a pension account statement informing you of the amount of the guarantee pension capital provided to date, together with (non-binding) details of the performance of the fund units recorded for you and the anticipated level of your company pension. Family phase no time out for pension provision At Roche you don't have to choose between family and career. And that applies also to your company pension. During your parental leave you will continue to receive pension contributions - at the level of the last one granted - for up to 18 months. Where parental leave exceeds 18 months, you will be credited with a pro rata contribution if you had not been on parental leave for more than 18 months as of the 1st of September of the previous year. If you work part time while on parental leave your company l time" for you. Our company will then top up the pension contributions, based on your pensionable part-time remuneration, up to the level of the last such contribution, for up to 18 months from the start of the parental leave period. You can take professional time out to care for family members in line with company agreements. During this care phase our company will continue to credit you with pension contributions at the level of the contribution last granted. The earlier the better pension contributions for trainees The earlier you begin to save for your old age, the more you will benefit from the performance of the capital saved. That is why Roche unlike many other companies includes trainees in its company pension scheme. Unlike for all of its other employees, Roche provides fixed pension contributions that are not linked to pensionable income. They amount to 50% of trainee remuneration for the third year of training in accordance with the BETV remuneration table. Trainees are not obliged to transfer in a sacrificed compensation amount. Trainees within the context of the "Today for Tomorrow" scheme are those persons who are serving an apprenticeship with Roche as of the 1st of September of the year concerned and have been employed by the company for six months.

7 Annuity computation at the start of retirement When you retire, the pension capital saved for you including any surpluses generated is transferred to a pension control account. You will receive your additional pension for life from this account. The administrative costs incurred during the pension phase will be financed from the pension control account. At the start of your retirement, the level of your company pension is determined as binding. Why can the pension level not be determined earlier? The pension level depends not only on what pension capital is available. It is based on, among other things, statistical life expectancy, that is to say on the age that most pensioners will probably reach, and also on the period of time during which they will draw their pension. Statistical life expectancy is constantly changing, however. People are living to an increasingly old age. The level of your pension also depends on the return on the pension capital. The return cannot be established, however, until the commencement of retirement. For that reason, the level of the pension cannot be fixed until the start of retirement - based on the statistical life expectancy at that time. Before then, the pension level can only be calculated without liability. How is the pension level calculated? To calculate the pension level a so-called annuity conversion factor is employed. This actuarially determined value is used to convert the pension capital to pension payments of equal value. The annuity conversion factor takes into account, amongst other things, your age, the current statistical life expectancy in each case, the future return from the pension capital, and an annual 1% pension increase. The pension capital is multiplied by the annuity conversion factor. The result is the annual pension level. Pension scheme: How much supplementary pension do you need? When you retire you receive a statutory pension which, however, will be far less than the final salary you received during your working life. Your company pension from "Today for Tomorrow" will go part way to making up this shortfall. Beyond this, check carefully what other financing requirement you will have in retirement. If necessary, take additional precautionary measures, for example via a private pension insurance fund or Riester contract. It is worth thinking about your future early on. The earlier you begin with your additional pension provision, the more the performance of the saved capital will contribute to the financial provision for your retirement

8 Two examples A company pension from "Today for Tomorrow": Using the example of two model employees, you can see how the pension fund grows and what pension you will finally receive. To keep the model calculation manageable, several general conditions are represented in simplified form. The values shown, for example, are based on conversion factors that would apply if the pension starts in This was based on an average pay increase of 1.3%. The pension fund yield was assumed to be a constant 5% per annum. In reality, however, the yield is likely to fluctuate. Example 1: Skilled workers Let us assume that a skilled worker takes up a position with Roche in Germany at the age of 21. His pensionable remuneration is 26,940 euro in the first year of service. As his professional experience increases, his income also grows - by 1.75% a year up to the 20th year of service. At the age of 22 the skilled worker receives the first pension contribution, and pays the first sacrificed compensation amount. From this point, cover for invalidity and death also takes effect (not shown in the table). The tabular summary shows the development of the pension fund. If the skilled worker was to retire at the age of 65 he would draw a gross annual pension of 16,430 euro. Example 2: Consultant Let us assume that a consultant joins our company at the age of 28. Her pensionable remuneration in the first year of service is 34,668 euro. As her professional experience increases, her income also grows - by 2.39% a year up to the age of 55. At the age of 29 the consultant receives the first pension contribution, and pays the first sacrificed compensation amount. From this point, cover for invalidity and death also takes effect (not shown in the table). From the age of 49 her annual income overtakes the contribution ceiling. Her pension contributions and sacrificed compensation amounts are then calculated differently from those we saw in the example of the skilled worker (see "Joint financing: Roche and you", page 5). The tabular summary shows the development of the pension fund. If the consultant was to retire at the age of 65 she would draw a gross annual pension of 18,356 euro.

9 Financial cover for invalidity or death If you are invalided in the course of your working life you receive an invalidity pension from the pension capital. The members of your family receive a widow's or orphan's pension in the event of your death. Young employees and their families enjoy special financial cover through "Today for Tomorrow". Most employees just setting out on their working life have made only a few pension contributions by that stage. This would mean that, in the event of invalidity or death, any invalidity or surviving dependents' pension would be small. To alleviate this financial burden, "Today for Tomorrow" includes minimum financial cover: If you should be invalided or die during your period of service with Roche your subsidiary account is credited with as many pension contributions as you would have received up to your 55th birthday. The level of each of the pension contributions granted additionally by Roche in such a case is equivalent to the last pension contribution that was paid prior to death or the onset of invalidity. This so-called risk pension capital also comprises the value of the sacrificed compensation amounts that you would have paid up to the age of 55. Our company would therefore like to ensure that you or the members of your family then receive financial help if it is needed.

10

11 In retirement: You will receive this pension The retirement pension with or without support for surviving dependents From what point do you want to draw your company pension? At 60? Or later, e. g. at 67? Roche makes this decision for you from your 60th birthday. This applies regardless of whether or not you are drawing a statutory pension at this point. (Please note that you will not receive your statutory pension until you reach the statutory minimum age. This minimum age is usually over 60). During your working life, "Today for Tomorrow" automatically includes financial cover for widows/widowers and orphans. At the start of retirement you choose whether this cover for the members of your family is to remain in place, or whether you wish to have a pension without support for surviving dependents. The decision applies irrevocably to the entire pension phase. At the commencement of retirement, the total pension capital created for you is converted to a retirement pension for life (see also the chapter Annuity computation at the start of retirement, page 7). The level of your retirement pension is based on, among other things, the point from which you wish to claim it, and whether it is to include support for surviving dependents. As a rule of thumb, the later you claim the monthly pension payments, the higher they will be. They will also be higher if you do not opt for support for surviving dependents. If only a small amount of pension capital has been saved for you (e. g. if you have only worked for Roche for a short period of time), the resulting pension would be at a very low level. That applies if the pension capital saved for you does not exceed four times the value of the then valid monthly contribution ceiling. In this case, instead of a pension Roche pays you the capital in full at the commencement of your retirement. You receive your pension (or the one-off capital payment) if the following formal preconditions have been met: You are at least 60 years of age at the time you choose to enter retirement. You submit a written application for a retirement pension six months prior to the desired commencement of retirement. You have left Roche's employment at the commencement of retirement, and you do not work for any other Roche company anywhere in the world.

12 Widows' and orphans' pensions in retirement If former employees die when in retirement, their family members are financially protected by "Today for Tomorrow" if they chose support for surviving dependents at the start of retirement. In this case, Roche pays widows'/widowers' and orphans' pensions. The level of the widow's/widower's pension is 55%, while half-orphans receive 10% of the employee's pension, and complete orphans 20%. Taken overall, surviving dependents' pensions must not amount to more than 100% of the deceased employee's pension, otherwise they will be reduced on a pro rata basis. Prerequisites for widows'/widowers' pensions: Widows'/widowers' pensions are paid to the spouse or registered civil partner (German Civil Partnership Act) of the deceased employee. The widow/widower submits a written application for a widow's/widower's pension. Payment commences not before the widow/widower has reached the minimum age for a large widow's/widower's pension under statutory pension insurance. (This age is currently 45. From 2011 it will gradually increase to 47). Widows/widowers who have not yet reached this minimum age receive a widow's/widower's pension if they care for a child entitled to an orphan's pension, or if their earning capacity has been reduced by 50%. If neither of the latter two prerequisites is fulfilled, the widow/widower receives a 'small' widow's/widower's pension for a period of two years. A claim for a widow's/widower's pension expires if the person concerned remarries or enters into a new civil partnership. Prerequisites for orphans' pensions: Natural and adopted children, as well as stepchildren and parentless children taken into the employee's household, receive orphans' pensions. The orphan (or legal guardians) submits a written application for an orphan's pension. Orphans' pensions are paid up until the age of 18. Orphans who are still at school or in vocational training thereafter, and who are entitled to child allowance, will receive the orphan's pension until their education is completed, but in any event not beyond their 25th birthday. A claim to an orphan's pension shall not apply if the orphan marries.

13 In working life: Cover for invalidity or death Invalidity pension If you should be invalided before you reach your 60th birthday (full reduction in earning capacity), you will receive from Roche an invalidity pension. It is financed from the pension capital saved for you. The pension capital is additionally topped up by risk pension capital for employees who are below the age of 55 at the commencement of a full reduction in earning capacity (see page 9 under Financial cover for invalidity and death). Before the first pension payment is made you choose whether or not your invalidity pension is to include a widows' and orphans' pension. The decision applies irrevocably to the entire pension phase. The total pension capital available to you is converted to an invalidity pension at the commencement of the reduction in earning capacity. You will receive this invalidity pension for as long as the reduction in earning capacity lasts. As soon as you reach your 60th birthday the invalidity pension is continued, without being recalculated, as a retirement pension. If you resume your working life the invalidity pension ceases. In this case, the invalidity pension is reconverted to pension capital which as originally planned is then available for your pension scheme. If you take up secondary employment during your period of invalidity you should observe the cap on additional earnings in respect of statutory pension insurance. Income over and above this limit will be taken into account when your invalidity pension is calculated. This, however, applies only to the part of the invalidity pension that is financed from the pension contributions paid by Roche. Prerequisites for invalidity pensions: You leave Roche's employment due to a reduction in earning capacity, or you switch to an inactive work contract. You do not have an income from selfemployment or other form of employment. You are able to prove that your capacity to earn, as defined by statutory pension insurance, has been reduced (e. g. by providing a copy of a pension approval certificate). You are able to prove each year that your capacity to earn remains reduced (e. g. by providing a copy of the adjustment notice issued by the relevant social insurance agency). You will notify Roche immediately of any changes to the circumstances relating to your reduced capacity to earn.

14

15 Widows' and orphans' pensions during working life If an employee dies during their period of service with Roche, their family members will in any event receive financial support under the terms of the "Today for Tomorrow" scheme. The prerequisites set out on page 11 apply to widows' and orphans' pensions. The level of the surviving dependents' pensions is based on the pension capital saved for the employee concerned. If the employee was under the age of 55 at the time of his or her death, the pension capital is topped up additionally by risk pension capital (see page 9 under Financial cover for invalidity or death). The age of the surviving dependents is taken into account when calculating the pension. First the level of the orphans' pensions is determined from the total pension capital. For each half-orphan this amounts to 10% of the pension that the employee would have received if he or she had been invalided at the time of death. The widow's/widower's pension is calculated from the remaining pension capital. If the employee is survived by only complete orphans entitled to an orphan's pension, then the pension level is calculated based on different rules. In this case, the orphans' pensions are determined from the pension capital without risk pension capital. In any event, however, they are paid until the person concerned reaches the age of 25, regardless of whether the prerequisites for orphans' pensions (see page 11) have been fulfilled.

16 Further information If you leave Roche early If you should leave our company before your retirement starts, you retain your entitlement to claim a retirement, invalidity or surviving dependents' pension under certain conditions. These conditions, which are set down by law, are currently as follows: You are at least 30 (minimum age), and have participated in the "Today for Tomorrow" scheme for at least five years. This statutory regulation, however, applies only to Roche pension contributions, not to your sacrificed compensation amounts which you retain anyway. Roche employees enjoy even better conditions than those provided for in law: In our company, the minimum duration is deemed to have been fulfilled if you have spent, or will spend, a total of five years - including your service period in the respective German Roche company - of uninterrupted service within the Roche Group worldwide. If these conditions have been fulfilled, your subsidiary account is retained with the pension capital achieved. Moreover, you benefit from the performance of the pension fund. After you have left the company you will, of course, not receive any further pension contributions from our company. The level of your future company pension is based on the statutory provisions and depends primarily on the level of the pension fund. If only a small pension fund has been saved for you (less than four times the monthly amount of the valid contribution ceiling), Roche can compensate for your retirement pension expectancy with a one-off payment of the pension fund. This also applies if you have been employed by the respective German Roche company for less than five years. Your retirement pension expectancy will only be compensated for if this is not precluded by statutory provisions. Note for employees under 30: Shortly before this brochure went to press (October 2007), a draft law was published according to which the minimum age is to be lowered to 25. Where applicable, please inform your HR department if this change applies to you. Pension increase: guaranteed Roche increases all paid pensions by 1% each year. Our company therefore ensures that your pension retains its purchasing power in the long term. Payment date: Month end The pension is calculated on an annual basis. However, the pension is transferred in twelve monthly units, in each case at month-end. In doing so, any taxes due und social insurance contributions are retained and deducted directly. Obligations of pension recipients Pensions are to be applied for in writing no later than six months before the start of retirement. In order that the pensions can be paid properly, Roche requires an income tax card from each pension recipient in the year the pension is drawn. Roche must be notified immediately of any changes to civil or marital status. Moreover, those in receipt of an invalidity pension are obliged to indicate without delay any changes to the established reduction in earning capacity and any ancillary income. The promised pension entitlements must not be assigned, used as collateral or pledged. If Roche protects against its obligations arising from "Today for Tomorrow" through reinsurance, the employees are obliged to collaborate. Any pecuniary claims shall be suspended for as long as a person entitled to benefits fails to meet his or her obligations.

17 Proviso Legal note Imprint It is the intention of our company that pension contributions are provided each year. The contribution commitment is initially binding for five years, that is to say until Each year our company checks whether, following consultation with the group workers' council, the contributions period is to be extended. Any extension is announced by our company in a timely manner. If Roche provides no pension contributions in a year, you are not obliged to pay sacrificed compensation amounts. Roche assumes that it will be able to offer "Today for Tomorrow" in the long term and in unchanged form. If, however, the economic situation of Roche should deteriorate to such an extent that it is no longer possible to provide the pension benefits, our company reserves the right to reduce or cease payment of the promised benefits. This proviso shall also apply if the prevailing conditions on the basis of which "Today for Tomorrow" was established change substantially. These include specifically the provisions of statutory social insurance and the handling of pension expenses under tax law. Many circumstances are described in this brochure in simplified form to facilitate understanding. No legal claims can therefore be derived from the contents of this brochure. Only the wording of the group company agreement of 20 September 2007 and the wording of "Roche Deutschland Vorsorgeplans 2007" [Roche Germany Contingency Plan 2007] are legally binding. In addition, the respective valid statutory collective agreement and company provisions are effective. Responsible for contents: Roche Diagnostics GmbH Compensation and Benefits D Mannheim Sandhofer Strasse 116 System design, composition and layout: Watson Wyatt Heissmann GmbH Information status: October 2007

18 Roche Diagnostics GmbH Compensation and Benefits Mannheim, Germany Sandhofer Strasse 116

19

20 An A to Z of the most important terms Contribution ceiling for German pension insurance funds (BBG) When calculating contributions for the statutory pension insurance fund, only income up to a specified upper limit is taken into account. This upper limit is designated the contribution ceiling for German pension insurance funds (BBG). In 2007 the contribution ceiling (West) is 63,000 euro. This ceiling is reviewed each year and adapted as necessary (see information box on page 5). Parental leave During your parental leave you will continue to receive pension contributions at the level of the last regular one for up to 18 months. This also applies if you take up part-time employment while on parental leave (see information box on page 6). Guaranteed pension capital The guaranteed pension capital is 95% of all pension contributions made available to you, and 95% of all sacrificed compensation amounts paid in by you. (The remaining 5% is credited to the risk adjustment account). Sacrificed compensation amounts In order to finance their company pension, employees pay in 1% of their pensionable remuneration as sacrificed compensation. Total pension capital Total pension capital is made up of the guaranteed pension capital, any surplus funds allotted and, where applicable, the risk pension capital. The level of the total pension payment determines the pension level definitively. Pension control account At the start of retirement, the respective subsidiary account is terminated and the pension capital transferred to a pension control account from where the pensions are paid. Risk adjustment account 5% of the pension contributions and the sacrificed compensation amounts are invested in a separate risk adjustment account. Any risk pension capital is taken from the risk adjustment account. Risk pension capital If employees are invalided or die during their working life, the respective subsidiary account is credited with as many pension contributions as the employee would have received up to his or her 55th birthday. This risk pension capital also comprises the value of the sacrificed compensation amounts that the employee would have paid up to his or her 55th birthday. Roche Pensionstreuhand e.v. Roche transfers the pension contributions and sacrificed compensation amounts to Roche Pensionstreuhand e.v., which maintains the subsidiary accounts and manages the pension fund investment. Surplus pension capital Roche Pensionstreuhand e.v. invests the contributions in fund units. At the start of retirement, any surpluses gained are allotted bindingly to the subsidiary account as surplus pension capital. Subsidiary account Roche Pensionstreuhand e.v. sets up a subsidiary account for each employee in which the paid-in contributions are documented. Annuity conversion factor The annuity conversion factor, an actuarially determined value, is used to calculate the pension level. It takes into account, amongst other things, age, the current statistical life expectancy in each case, the future return from the pension capital, and an annual 1% pension increase. At the start of retirement, the total pension capital is multiplied by the annuity conversion factor. The result is the annual pension level. Pension contributions The pension contributions of Roche are based on the pensionable remuneration. They are paid into Roche Pensionstreuhand e.v. and used exclusively for financing the pension benefits. Pension contributions for trainees Pension contributions for trainees amount to 50% of the trainee remuneration for the third year of training in accordance with the BETV remuneration table. Trainees are not obliged to transfer in a sacrificed compensation amount (see information box on page 6). Pensionable remuneration The pensionable remuneration is used as a basis for calculating the pension contributions and sacrificed compensation amounts (see table on page 15). Pension account statement Each employee receives an annual pension account statement with information on pension contributions and sacrificed compensation amounts, and also the guaranteed pension capital. It is a non-binding statement of the achievable retirement pension. Administrative costs Costs are incurred in administering the pension fund in Roche Pensionstreuhand e.v. e. g. for managing the subsidiary accounts and setting up the pension account statements. Part of the surpluses is used during the saving phase to meet these costs. During the pension phase the administrative costs are financed from the pension control account. Widows' and orphans' pensions If an employee dies during their working life, their surviving dependents receive widows'/widowers' or orphans' pensions from the total pension capital. At the start of retirement, the retirement pension is selected with or without support for surviving dependents.