Transitional Ruling for Mannesmann Benefit Payment Rules in the Vodafone Pension Plan

Transcription

1 Vodafone Transitional Ruling for Mannesmann Benefit Payment Rules in the Vodafone Pension Plan 1 April 2006

2 Contents INTRODUCTION PRINCIPLE OF TRANSITION DETERMINING THE INITIAL COMPONENT MINIMUM GUARANTEE RETIREMENT BENEFITS DISABILITY BENEFITS DEATH BENEFITS NONFORFEITABLE BENEFITS TERMS AND CONDITIONS OF DISBURSEMENT FINAL PROVISIONS RauserTowers Perrin

3 Vodafone 1 INTRODUCTION Employees who joined the company prior to and are employed without notice of dismissal or notice to leave on shall be included in the Vodafone Pension Plan in accordance with these transitional rulings, or transferred from the Mannesmann Benefit Payment Rules (hereinafter referred to as "MLO") to the Vodafone Pension Plan. I. Employees who have already acquired deferred old age, disability or survivor s pensions from the MLO The following transitional rulings shall apply to employees who entered the employ of Vodafone before and have already acquired deferred old age, disability or survivor s pensions from the MLO. The transition shall replace the MLO. II. Employees who have not yet acquired deferred old age, disability or survivor s pensions from the MLO Employees who entered the service of Vodafone before and who have not yet acquired deferred old age, disability or survivor s pensions from the MLO shall participate in the Vodafone Pension Plan as soon as they have been in employment with Vodafone for 6 complete calendar months, but as of at the earliest. The employees shall participate in the basic coverage as of The scope of validity and the prerequisites for participation are governed in more detail in Sections C and E.1.1 of the Vodafone Pension Plan. III. Employees with partial retirement agreements Employees who have signed an early retirement agreement by shall receive the one-time opportunity of choosing between staying in the MLO or transitioning to the Vodafone Pension Plan. The eligible employees must make this choice by The choice shall be binding. If an employee chooses to stay in the MLO, this ruling shall be continued for that employee. If the employee chooses transition, the following transitional rulings shall apply. The transition shall replace the MLO.

4 Vodafone 2 IV. Employees with individual pension commitments in accordance with the Essener Verband Pension Plan For employees in possession of an individual pension commitment in accordance with the Essener Verband Pension Plan on , this commitment shall continue unchanged. Therefore, these employees are excluded from participation in the basic coverage and the basic and enhanced pension of the Vodafone Pension Plan. However, they shall have the opportunity of participating in the deferred compensation scheme of the Vodafone Pension Plan as of PRINCIPLE OF TRANSITION 1.1 The rights to pension payments acquired by (transition date) shall be credited to the employee in the form of an initial component on the account of the Vodafone Pension Plan on Furthermore, an individual minimum guaranteed benefit shall be specified. 1.2 The initial component increases the pension account balance in the Vodafone Pension Plan. 2. DETERMINING THE INITIAL COMPONENT 2.1 The initial component is determined as follows: Initially, the old age pension of the employee that would be yielded upon reaching their 65th birthday in accordance with the MLO is determined (including the allocations in accordance with the MLO transitional rulings dated ). In this context, the following conditions that reflect the definitive basis for the assessment of contributions on the transition date are assumed: No adjustment of the basis for the assessment of contributions. Personal earnings relationship on , defined as the relationship between the individual monthly gross income in May 2006 and the MLO average income in April 2006.

5 Vodafone 3 MLO average income (April 2006): 3,273. In the case of part-time employees, the monthly gross income of a corresponding full-time employee is used for the purpose of determining the personal earnings relationship. Upon cessation of the employment relationship on the transition date: assumption of the most recently reported basis for the assessment of contributions (e.g. gross monthly income). 2.2 The MLO pension benefit determined in accordance with 2.1. is converted into a capital value upon the employee reaching their 65th birthday. This conversion is based on the recognised rules of actuarial mathematics, in particular the Actuarial Mortality and Disability Tables 2005 G published by Prof. Heubeck, the individual present value factor at the age of 65, an actuarial interest rate of 4.5% p.a. and taking an index-linked pension increase of 1% p.a. into consideration. The capital value determined is a pension present value of an old age pension and takes into consideration an entitlement to a survivor's pension of 60%. 2.3 The accrued benefit of the capital value from Item 2.2 determined on a pro rata temporis basis in accordance with Sec. 2 Para. 1 BetrAVG (German Act for the Improvement of Company Pension Schemes) counts as the initial component. For those employees for whom the MLO transitional rulings dated are valid, this initial component comprises two elements. One element of the initial component is based on the allocations determined as of (IC 87) in accordance with the MLO transitional rulings, while the other element is based on the resultant capital value of the pension benefits in accordance with the MLO dated (IC 88). 2.4 In the event that an employee claims retirement benefits from the Vodafone Pension Plan upon or after reaching their 60th birthday, but prior to reaching their 65th birthday, the initial component shall be reduced by 0.4% for every month the benefits are claimed prior to reaching the 65th birthday. 2.5 The initial component is rounded up to full amounts.

6 Vodafone The initial component is not adjusted and, in contrast to pension amounts or conversion amounts, is not subject to the investment strategies described in Section G.1 of the Vodafone Pension Plan. That part of the initial component that is based on the allocations determined as of (IC 87) in accordance with the MLO transitional rulings dated is subject to a deviating adjustment ruling; this part shall continue to be increased on an index-linked basis in accordance with these transitional rulings. The part of the initial component (IC 88), that is based on the MLO plan dated , will be increased by 1% per annum at the beginning of January each year until the date an employees leaves the employ of Vodafone. The first increase will be effective 1 January MINIMUM GUARANTEE 3.1 In order to also guarantee the benefits attainable in accordance with the MLO or upon the employee reaching their 65th birthday after the transition, Vodafone shall guarantee the employee a minimum benefit ("guaranteed capital"). 3.2 This guaranteed capital is calculated on the basis of the definitive basis for the assessment of contributions for the MLO (Item 2.1) listed in this transitional ruling. 3.3 The MLO pension benefit determined in accordance with Item 2.1 is converted into a capital value upon the employee reaching their 65th birthday. This conversion is based on the recognised rules of actuarial mathematics, in particular the Actuarial Mortality and Disability Tables 2005 G published by Prof. Heubeck, the individual present value factor at the age of 65, an actuarial interest rate of 4.5% p.a. and taking an index-linked pension increase of 1% p.a. into consideration. The capital value determined is a pension present value of an old age pension and takes into consideration an entitlement to a survivor's pension of 60%. The table with the capital value factors is shown in the attachment. 3.4 The guaranteed capital corresponds to the MLO pension payments determined in accordance with Items 3.2 and 3.3. That part of the guaranteed capital that is based on the allocations determined as of in accordance with the MLO transi-

7 Vodafone 5 tional rulings dated shall continue to be increased on an index-linked basis in accordance with these transitional rulings. 3.5 In the event that an employee claims retirement benefits from the Vodafone Pension Plan upon or after reaching their 60th birthday, but prior to reaching their 65th birthday, the guaranteed capital shall be calculated in accordance with 3.4 and considering the earlier leave date. The calculation will be based on the service years spent with the employer until leave in line with the relevant MLO rules and will be reduced by 0.4% for every month the benefits are claimed prior to reaching the 65th birthday. 4. RETIREMENT BENEFITS 4.1 The balance of the pension account shall be determined in accordance with the Vodafone Pension Plan as follows upon maturity of the pension: 4.2 In an initial step, that share of the balance of the pension account that corresponds to the value of the investment fund shares acquired by Vodafone with the contributions is compared with the total contributions rendered by Vodafone. The higher value is definitive. 4.3 The value determined in accordance with Item 4.2 is added to the initial component determined in accordance with Item 2 of this transitional ruling. 4.4 A comparison is then made between the value determined in accordance with Item 4.3 and the guaranteed capital defined in accordance with Items 3.1 to 3.5 of this transitional ruling. The higher value is the definitive pension payment. 4.5 Upon pension maturity, the employee shall receive the definitive pension payment determined in accordance with Item Furthermore, the employee shall also receive the pension payment that he financed with his own contributions. This pension payment is part of the balance of the pension account that corresponds to the value of the investment fund shares acquired with the contributions of the employee, and as a minimum the total of all contributions rendered by the employee.

8 Vodafone 6 5. DISABILITY BENEFITS The disability benefit is based on the Vodafone Pension Plan. It corresponds to the balance of the pension account at the time of disability, plus the disability benefit from the life insurance. 6. DEATH BENEFITS The death benefit is based on the Vodafone Pension Plan. It corresponds to the balance of the pension account at the time of death, plus the death benefit from the life insurance. 7. NONFORFEITABLE BENEFITS 7.1 An employee is entitled to nonforfeitable benefits if he leaves the employ of Vodafone before his pension matures pursuant to Section G.7 of the Vodafone Pension Plan. 7.2 However, the nonforfeitable benefit entitlement to the initial component in accordance with Item 2 of the transitional ruling presupposes the fulfilment of the statutory periods of nonforfeiture. 7.3 The general retirement age according to section 8 MLO will apply for the calculationof the nonforfeitable benefit of the guaranteed capital. 8. TERMS AND CONDITIONS OF DISBURSEMENT 8.1 For that part of the pension account balance that corresponds to the guaranteed capital, the retirement benefits may be disbursed in the form of a lifelong pension at the wish of the employee in deviation from the terms and conditions of disbursement of the Vodafone Pension Plan. Employees must notify Vodafone of their preferred disbursement form 3 months in advance.

9 Vodafone That part of the pension account balance that corresponds to the guaranteed capital is then converted into a lifelong pension on the basis of the recognised rules of actuarial mathematics, in particular the Actuarial Mortality and Disability Tables 2005 G published by Prof. Heubeck, the individual present value factor at the age of 65, an actuarial interest rate of 4.5% p.a., an index-linked pension increase of 1% p.a. and including an entitlement to a survivor's pension of 60%. 8.3 The first pension payment is made in the month following the establishment of the claim. The payment is made by the last day of the month, at the latest. 8.4 The pension is increased annually by 1%. 8.5 That part of the pension account balance that exceeds the guaranteed capital is paid out in accordance with the terms and conditions of disbursement of the Vodafone Pension Plan. 9. FINAL PROVISIONS 9.1 The Vodafone Pension Plan only envisages a pension contribution if the employee pays an own pension contribution of at least 0.5% of his gross basic salary up to the limit for the assessment of contributions (West) in the form of conversion contributions. If an employee that is transferred to the Vodafone Pension Plan in accordance with this transitional ruling does not wish to pay an own pension contribution into the Vodafone Pension Plan, the employee may declare this in writing upon being transferred to the Vodafone Pension Plan. 9.2 The declaration of forgoing an own pension contribution may only be made in the first 3 months after the Vodafone Pension Plan enters into force. 9.3 If the employee declares his wish to forgo an own pension contribution, the pension contribution of Vodafone shall be limited to 1% of the pensionable income up to the social security ceiling. In addition the employee is not allowed to participate in the deferred compensation scheme.