The Scheme in brief THE SCHEME. The benefits provided. Finding out more. Why the Scheme was established. How the Scheme is financed

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1 Your Pension

2 Introduction The Scheme continues to provide the security and continuity to enable you to look forwards with confidence. Membership gives you a range of quality benefits. The National Trust Retirement & Death Benefits Scheme Planning for the future takes time and commitment. The National Trust has a long history of helping its employees prepare for the time when they will no longer be working and of providing protection for their families and dependants. It does this through the Retirement and Death Benefits Scheme. The Scheme was first established formally under trust law in 1949 and was closed to new entrants on 31 May It closed to the accrual of pensionable service on 31 March Membership of the Scheme gives you quality benefits including an income when you retire. It is important you understand what the Scheme offers. CONTENTS The Scheme in brief 04 Contributing 06 Benefits 07 Retirement 09 Death 12 Payment arrangements 14 The Scheme & state pensions 16 Leaving the Scheme 18 Other things you need to know 20 Find out more 21 Glossary and key contacts 22 This booklet describes the main features of the Scheme. There is a brief outline of how the Scheme works with what it costs and provides. This booklet does not, however, cover every aspect of the Scheme. Full details are contained in the Trust Deed and Rules, which are the legal basis of the Scheme. Although we have made every effort to make sure that this booklet is accurate, the provisions of the Trust Deed and Rules will always prevail. PLEASE NOTE: members should always check any information provided in this booklet with the Pension Department before acting upon it. Joining The Scheme was closed to new joiners on 31 May Transfers In The Scheme does not accept benefits from any other external pension arrangement to be transferred into the Scheme. Closed to the accrual of pensionable service The Scheme closed to the accrual of pensionable service on 31 March All active members on that date ceased to accrue any further pensionable service in the Scheme. Salary link All active members who ceased accrual of pensionable service on 31 March 2016 retained a link to their salary. This means their pensionable salary will continue to be calculated based on their salary up to the date of leaving employment with the NT. 02 Your Pension Your Pension 03

3 THE SCHEME The Scheme in brief Why the Scheme was established The Scheme exists for the benefit of its members. It aims to provide a secure income when you retire. How the Scheme works The Scheme is set up under trust law and is managed by Trustees who are responsible for every aspect of it. The duties of the Trustees are wide ranging, involving responsibility for the payment of benefits, investment of funds, legal and administrative management. As a result, the Trustees delegate certain tasks to professional advisers who include the Scheme s Actuary, investment managers, auditors and legal advisers. How the Scheme is financed The Scheme provides an extensive range of benefits. The finances of the Scheme are entirely separate from those of the National Trust. THE NATIONAL TRUST PAYS The contributions required to ensure benefit payments can be met now and in the future. Contributions are invested in a fund which is reviewed regularly by the Scheme s Actuary to ensure the long-term financial health of the Scheme. These reviews are used to determine the appropriate rate of contribution required from the National Trust. As a result, the National Trust s contributions will vary from time to time. The benefits provided YOUR PENSION Will build up at the rate of 1/60th of your Final Salary for each year of Pensionable Service. Your Normal Pension Date is your 65th birthday, but you may be able to take a reduced pension after your 55th birthday. You will normally be able to exchange part of your pension for a tax-free cash sum. If you are a National Trust employee suffering from Ill health you may be able to take an early retirement pension if you have accrued 30 years pensionable service. ON DEATH AFTER RETIREMENT A spouse s pension of two-thirds of your pension will be payable, based upon your pension as if no pension had been exchanged for a cash lump sum on retirement. Again, if you are unmarried, this may be paid to a dependant. If you die within the first five years of your retirement, a cash sum will also be paid. ON LEAVING THE SCHEME The benefits available depend on the length of your Pensionable Service. You may retain a pension in the Scheme to be paid at a later date or transfer your benefits to another pension arrangement. Finding out more It is important that you are aware of what membership of the Scheme offers and this is explained in more detail in the pages of this booklet. If you would like to know more, or if you have any questions, contact: The Secretary to the Trustees, The National Trust, Heelis, Kemble Drive, Swindon, SN2 2NA 04 Your Pension Your Pension 05

4 BENEFITS Contributing Benefits No employee contributions have been made to the Scheme since it closed to pensionable service on 31 March Your Normal Pension Date is your 65th birthday. When you retire, you will have the option of exchanging part of your pension for a cash sum. Additional contributions There was a facility to pay additional contributions to provide extra benefits before the Scheme closed to pensionable service on 31 March If you did pay AVCs you will have an AVC account with Zurich. Contributions from the National Trust The National Trust pays the cost of providing the benefits promised and of administering the Scheme. The amount required varies from time to time and is determined on the advice of the Scheme s Actuary who carries out regular reviews of the Scheme s funding. Investment of contributions They are paid into a fund which is invested to provide the Scheme s benefits. The fund is kept entirely separate from any finances of the National Trust. The Trustees have delegated day-to-day investment decisions to independent investment managers who work within guidelines set out in the Trustees Statement of Investment Principles. Retiring at your Normal Pension Date The pension payable at your Normal Pension Date is calculated as: Pensionable Service x Final Salary 60 Please note: the pension payable is restricted to a maximum of two-thirds of Final Salary. When you retire, you will have the option of exchanging part of your pension for a cash sum. Pensions for part-time workers If you work part time, your pension is calculated in a different way. This is to ensure that if you change the number of hours you work, or if you work full-time at any time, your eventual benefits fully and fairly reflect your total service. Your pension is calculated using your part time pensionable service and full time equivalent salary. Pensionable Service is adjusted by multiplying it by the fraction: Actual part-time hours worked Normal hours for equivalent full-time position Final Salary is adjusted by multiplying it by the fraction: Normal hours for equivalent full-time position Actual part-time hours worked If you work part time and do not change the number of hours you work at any time, these adjustments have no overall effect. They do, however, ensure that your pension is calculated fairly if your hours change. 06 Your Pension Your Pension 07

5 BENEFITS BENEFITS Anyone seriously considering early retirement should always check the current benefit structure with the Secretary to the Trustees. Early retirement Voluntary early retirement You can apply to take your pension at any time after age 55. However, we will reduce your pension to take account of the fact that we will be paying it for longer. This is called actuarial reduction. Normal retirement If you retire after fifteen years Pensionable Service with a Final Salary of 18,000 per year, your pension is: 15 x 18, = 4,500 per year Your pension will currently be reduced by around 5% for each year you draw it before pension age. This is a permanent reduction in pension, not just a reduction up to pension age. The actuarial reduction factor is subject to review and will change in the future. You will be advised of the current factor when you retire. You should be aware that your early retirement pension must not fall below the level of any Guaranteed Minimum Pension (GMP), payable from your Normal Pension Date. You will be advised at the time if this will affect your pension. Anyone seriously considering early retirement should always check the current benefit structure with the Secretary to the Trustees, as the above basis may be subject to change. Early retirement through ill health If you have accrued 30 years pensionable service by 31 March 2016, you may apply for ill health retirement. If you are unable to carry on working because of serious ill health or disability you may be eligible to receive your pension from the date your employment ceases. Supporting medical evidence will be required and the Trustees have nominated their own Medical Advisor to confirm that you are unlikely to be able to work again. The calculation of this pension will be based on your Final Salary at your date of early retirement. There will be no reduction for early payment. Part-time workers Suppose you joined the Scheme at age 30 and worked 28 hours per week instead of 35 hours for 20 years, and then reduced your hours to 21 per week for the remaining 15 years. If your Final Salary is 10,800, your pension is calculated as follows: Adjusted pensionable service is 20 x 28/ x 21/35 = 25 years Adjusted Final Salary is 10,800 x 35/21 = 18,000 per year So your pension is 25 x 18, = 7,500 per year Early retirement If you retire on your 60th birthday after 20 years Pensionable Service, with a Final Salary of 18,000 per year, your early retirement pension is: 20 x 18, = 6,000 reduced by 25%* for early payment = 4,500 per year * 5% reduction for five years between 60 and 65 (5% is the current rate and this may change). 08 Your Pension Your Pension 09

6 BENEFITS BENEFITS Ill health Suppose you become too ill to continue working on your 55th birthday after 30 years Pensionable Service (accrued before 31 March 2016), with a Final Salary of 16,500 per year. Your pension will be based on the 30 years Pensionable Service you completed: 30 x 16, = 8,250 per year Cash option You are entitled to the pension of 4,500 per year calculated in the example for normal retirement on page 7. You can take cash up to: 20 x 4, (20/13.6) = 20,131 For every of cash, you have to give up 1 per year of pension, so your reduction in pension is: 20, = 1,480 per year This leaves a pension of 3,020 per year, together with a cash sum of 20,131. Cash option You will normally be able to exchange some of your pension for a cash sum when you retire. Currently, this is paid free of tax. The amount of cash you can take is limited by HM Revenue and Customs, but is usually: 20 x Pension 3 + (20/Commutation Factor*) The amount by which your pension is reduced will depend on the amount of cash taken and the Commutation Factor when you retire. Currently, men retiring at their Normal Pension Date give up 1 per year of pension for every of cash taken; women give up 1 a year of pension for every of cash. These rates of exchange are set by the Scheme s Actuary and may be changed in the future. Please note: your pension may not fall below the level of any Guaranteed Minimum Pension (GMP) you may have. If you have paid Additional Voluntary Contributions during your membership, in most cases you will be able to use some or all of the accumulated funds to provide cash on retirement. Details of this option will be provided to you on retirement. 10 Your Pension Your Pension 11

7 BENEFITS Death benefits The benefits payable on your death depend on whether you die while you are receiving your pension, or as a former employee who has a pension preserved in the Scheme. Death in service The are no death benefits payable from the Scheme. However, there may be a death in service lump sum paid by the NT. Death as a pensioner After retirement, death benefits payable are: a spouse s pension of two-thirds of your own pension at retirement (for this purpose, we ignore the fact you may have taken part of your pension as cash), plus any increases awarded since retirement; if you die within five years of retirement, a cash sum equal to the balance of the five years pension instalments. If you are not married, a pension may be payable to a dependant at the Trustees discretion or, in respect of children, as described above. Death as a deferred pensioner Benefits are payable if you die after you have left the Scheme and have kept a deferred pension. The benefits are: a spouse s pension of one-half of your deferred pension including increases to the date of your death; a refund of your contributions to the Scheme. If you wish to change your current nominations, you must complete a new Expression of Wish form and send it to the Pensions Department. Death as a pensioner Suppose that three years after retiring, you die leaving a widow. When you retired your pension, before you exchanged part of it for a cash sum, was 8,000 per year. By the time you died, this would have increased to 8,400 per year. The pension you are actually receiving is 6,300 per year when you die, therefore the benefits payable are: A widow s pension of two thirds of 8,400 = 5,600 per year; and A cash sum of the balance of five years pension instalments of 2 x 6,300 = 12, Your Pension Your Pension 13

8 PAYMENT ARRANGEMENTS Payment arrangements There is a comprehensive range of payment options available under the Scheme, from cash sums to dependants. To ensure the Trustees know what you would like to do, fill in the relevant parts of the Expression of Wish form and keep them up-to-date with your personal circumstances. Payment of pensions Your pension will be paid monthly in advance for the rest of your life. PAYE tax will be deducted before payment in the same way as it is for your salary now. Spouses and dependants pensions are payable in exactly the same way and commence from the date of your death. They may be reduced if your spouse or dependant is more than ten years younger than you. The Trustees will only pay a dependant s pension if you die while unmarried and they can establish that another person was: financially dependent on the Member or; in a financial relationship of mutual dependence with the Member, or; dependent on the Member because of physical or mental impairment. To help them, you are encouraged to complete Section B of the Expression of Wish form. If your circumstances change, please fill in a new form. Your pension will be paid monthly in advance for the rest of your life, with PAYE tax deducted before payment in the same way as it is for your salary now. Pension increases Your pension in payment may consist of all or some of the following elements (see box on the right). In addition to the automatic pension increase described on the right, increases may also be granted at the discretion of the Trustees and the National Trust. The following discretionary increases have been awarded in the last five years. These were all in line with CPI for relevant year: 1st January % 1st January % 1st January % 1st January % 1st January % Cash sums If, when you retire, you exchange part of your pension for a cash sum, this will normally be paid free of tax. All cash sum death benefits are paid under discretionary trust. This means that the Trustees have discretion to pay any cash sum due to anyone nominated by you, or to one or more of your relatives or dependants or to people named in your will. It also means that benefits can be paid promptly and, under current legislation, are unlikely to attract inheritance tax. To assist the Trustees, please ensure that you complete Section A of the Expression of Wish form. If your wishes change, please fill in a new form. The Trustees will take account of your wishes although you should be aware that they cannot be bound by them. Period of service Pension in excess of GMP earned before April 1997 Increase No guaranteed Scheme increases GMP earned before No Scheme increases. (The state fully 5 April 1988 inflation proofs this element as part of your State Pension) GMP earned after 5 April 1988 to 5 April 1997 Post April 1997 to February 2007 March 2007 onwards The Scheme provides increases of up to 3% (or CPI if less), on this element, any balance of inflation proofing above 3% is payable by the state via your State Pension Guaranteed at the rate of 5% or the increase in the RPI if less Guaranteed at the rate of 2.5% or the increase in the RPI if less 14 Your Pension Your Pension 15

9 BENEFITS THE SCHEME & STATE PENSIONS BENEFITS The Scheme & state pensions It s good to know that you will receive benefits from the National Trust Scheme in addition to the State Basic Pension. Find out how payments in your retirement years depending on status and type of contribution are protected from the effects of inflation here. State retirement pensions The State currently provides retirement income from State Pension Age through two separate arrangements: The State Basic Pension is a flat-rate pension payable to everyone who has paid sufficient National Insurance contributions during the course of their working life. The amount payable depends on how many years an individual has been contributing. This pension is paid from State Pension Age and is increased each year in line with the rise in the Consumer Price Index. You receive this pension in addition to your benefits from the National Trust Scheme. The State Earnings Related Pension Scheme (SERPS) was introduced in It provides a pension which is based on your earnings between two limits the lower earnings limit, which is approximately equal to the Basic Pension for a single person, and the upper earnings limit of about seven-and-a-half times that amount. The State Second Pension (S2P), a second-tier pension designed primarily to benefit low earners, replaced SERPS in April You will not earn an S2P pension during your membership of the National Trust s Scheme because it is contracted-out of the second level of state pension. However, you and the National Trust pay reduced rate National Insurance contributions as a result of this. Contracting-out Since the Scheme was contracted-out of S2P, certain statutory minima have to be satisfied. The basis for contracting-out changed on 6 April 1997 and consequently there are two elements: FOR SCHEME MEMBERSHIP FROM 6 APRIL 1997 The Scheme is contracted-out on a salary-related basis, which means that it has to satisfy a quality of benefit test set by the Government. The Scheme more than meets this test in respect of benefits for both members and their spouses. FOR SCHEME MEMBERSHIP TO 5 APRIL 1997 Any part of your pension relating to service up to 5 April 1997 must be at least equal to your Guaranteed Miminum Pension (GMP), when you reach age 60 if you are a woman or age 65 if you are a man. (You will not have a GMP if you are a married woman who has paid reduced rate National Insurance contributions). This is roughly the amount which you would have built up in SERPS if the Scheme had not been contracted-out. Similarly, the Scheme guarantees to provide a spouse s GMP of one half of your own GMP. From age 60 for women or age 65 for men, GMPs are protected against inflation partly by the Scheme and partly by the State. The Scheme guarantees to increase any GMP earned after 5 April 1988 by 3% per year (or CPI, if less). The State provides the extra increase when the increase in the Consumer Price Index (CPI) exceeds 3% in a year, as well as providing the full CPI increase on any GMP earned between 6 April 1978 and 5 April GMP elements of deferred pensions are increased by a statutory amount during the period before they are paid. The Scheme more than meets the quality of benefit test set by the Government in respect of benefits for both members and their spouses. 16 Your Pension Your Pension 17

10 LEAVING THE SCHEME Leaving the Scheme Your membership of the Scheme will end automatically if you leave the National Trust. Of course, you will still be entitled to a deferred pension when you retire, calculated from your Final Salary and completed Pensionable Service. Get in touch The contact details for the Pension Service are: W: service.gov.uk T: Pension Tracing Service The Pension Service Tyneview Park Whitley Road Newcastle upon Tyne NE98 1BA. On leaving the National Trust You will be entitled to a pension payable from your Normal Pension Date. This is called a deferred pension and will be calculated as for retirement at your Normal Pension Date, but will be based on your Final Salary and your completed Pensionable Service when you leave. Your deferred pension will be increased during the period between leaving and drawing your pension. The amount of the increase will be the cumulative increase in the Consumer Price Index for each complete year, up to a maximum limit each year. As an alternative to a deferred pension, you may transfer the value of your pension to the scheme of your new employer, to a personal pension or to another approved pension arrangement. The amount available for transfer will be calculated in accordance with certain statutory methods. The amount can vary from time to time, but will be guaranteed not to change for a period of three months from the effective date of calculation. You can ask for a statement of your transfer value once a year. It is most important that you keep the Pensions Department informed of any change in your contact details so that you can be contacted when your benefits are due. The National Trust will not make contributions on your behalf to any alternative pension arrangement you may establish, nor will it be able to provide benefits for you or your family if that arrangement proves to be inadequate. Keeping us informed If you do leave a deferred pension in the Scheme to be paid at a later date, it is most important that you keep the Pensions Department informed of any change in your name or address so that you can be contacted when your benefits are due. Information about the Scheme, including the address at which the Trustees can be contacted, has been given to the Pensions Regulator and added onto a central register. The Pension Service (part of the Department of Work and Pensions), acts as a tracing agency and can help you trace benefits you may have in schemes with which you may have lost contact. 18 Your Pension Your Pension 19

11 FIND OUT MORE You also need to know... How your personal data is protected, the tax advantages of the Scheme and the longevity of the Scheme find the answers to these, and other, questions here. The Scheme is established under trust law and governed by a Trust Deed and Rules which are the legal basis of the Scheme. Management of the Scheme The Scheme is established under trust law. It is governed by a Trust Deed and Rules which are the legal basis of the Scheme. Responsibility for running the Scheme rests with the Trustees, and the assets of the Scheme are kept entirely separate from those of the National Trust. The Trustees call on the expertise of a number of independent professional advisers, including investment managers, actuaries, auditors and legal advisers, to help them carry out their legal duties. Amendment or winding-up The National Trust and the Trustees currently intend that the Scheme should continue indefinitely. However, it may be amended or discontinued at any time. If the Scheme is discontinued, benefits will be secured from the Scheme s assets in accordance with the Trust Deed and Rules. Assignment of benefits You may not assign any of your benefits under the Scheme to obtain cash payments or as security for loans. Any attempt to do so could affect your benefits. Data protection The Trustees need to know a good deal of personal information about you to calculate your pension and associated benefits. This includes sex, marital status, salary and, sometimes, medical information. The Trustees are registered under the Data Protection Act of 1998 as data controllers. They must follow strict guidelines when handling your records, and can only use your data (or pass it on to their advisers), for the purposes of running the Scheme. By joining the Scheme, you give your consent to this. The Trustees cannot disclose your information under any other circumstances. You have the right to see the information the Scheme holds on you. Contact the Secretary to the Trustees if you want to do this. Find out more Finding out more Information about the Scheme and your benefits will be sent to you regularly. Contact the Secretary to the Trustees if you want to see any of the Scheme s formal documents. These include the Trust Deed and Rules, the annual Report and Accounts and the Trustees Statement of Investment Principles. In addition, you may request an estimate of how much would be available for transfer if you were to leave the Scheme. You can only do this once a year. Getting help If you have any concerns or complaints about any aspect of the Scheme, you should contact the Secretary to the Trustees in the first instance. In the unlikely event that your complaint remains unresolved, it can be referred to the Chairman of the Trustees using a complaint form available from the Secretary to the Trustees. It will then be investigated by one or more of the Trustees and reviewed by the Trustee Board at their regular meetings. External Organisations There are three external organisations available to help you. TPAS (The Pensions Advisory Service) is available at any time to help with any queries you may have about your pension arrangements or any difficulty which has failed to be resolved with the Trustees. 11 Belgrave Road, London SW1V 1RB. T: W: The Pensions Ombudsman (at the same addres as OPAS), can investigate complaints or disputes of fact or law involving occupational pension schemes. T: W: The Pensions Regulator W: T: The Pensions Regulator can intervene in the running of pension schemes where Trustees, employers or professional advisers have failed in their duties. If you have any concerns or complaints, contact the Secretary to the Trustees in the first instance. 20 Your Pension Your Pension 21

12 Glossary of terms Basic Salary is your rate of basic pay from time to time. It normally includes the notified value of any free accommodation ( Representative accommodation ), provided by the Trust. Final Salary is your best consecutive twelve months Basic Salary earned in the five years immediately before Normal Pension Date or earlier date of retirement or leaving service. Guaranteed Minimum Pension is the minimum pension that the Scheme is obliged to provide as a result of contracting-out of the State Earnings Related Pension Scheme in respect of Pensionable Service between 6 April 1978 and 6 April Normal Pension Date is your 65th birthday. Pensionable Service is the number of years and complete months of continuous service as a member of the Scheme before 31 March Scheme is the National Trust Retirement and Death Benefits Scheme. State Pension Age is currently age 65 for men and age 60 for women. However, the State Pension age is due to change, as follows: For women born after 5 April 1955, it will increase to age 65. For those born between 6 April 1950 and 5 April 1955, Sate Pension Age increases on a sliding scale between 60 and 65. For men and women born after 5 April 1960, the State Pension age will increase to 66. For men and women born after 5 April 1969, the State Pension Age will increase to 67. For men and women born after 5 April 1978, the State Pension Age will increase to 68. Key contacts The Scheme more than meets the quality of benefit test set by the Government in respect of benefits for both members and their spouses. If you have any enquiries, please contact: The Pensions Department The National Trust Heelis Kemble Drive Swindon SN2 2NA T: E: pensions@nationaltrust.org.uk If you require this information in alternative formats, please telephone Judith Alborough on or judith.alborough@nationaltrust.org.uk Picture credits: 6, 8, 10, 13 NTPL/Ian Shaw 12 NTPL/David Levenson 12 and 13 NTPL/Leo Mason 1 NTPL/David Levenson 7, 9, 11 NTPL/Matthew Antrobus 14 NTPL/Stuart Cox 15 NTPL/Jennie Woodcock 10 NTPL/Paul Harris 2 NTPL/Nick Meers 4-5 NTPL/Joe Cornish 14, 19, 22 NTPL/David Levenson 16, 21 NTPL/Paul 17 NTPL/Phil 18 NTPL/Chri 22 Your Pension Your Pension 19

13 Your Pension is printed on recycled paper. Hawthornes printers: environmental accreditation ISO Editorial and Design: Ali Stewart and Harriet Athay