UPS Pension Investment Plan. A guide to the Plan

Transcription

1 UPS Pension Investment Plan A guide to the Plan

2 2 UPS Pension Investment Plan Contents Introduction 3 PIP at a glance 4 Technical terms 4 Joining PIP 6 How PIP works 7 Benefits at retirement 8 Death benefits 10 Leaving PIP 11 Paying for PIP 12 Periods of absence 13 Investment choices in PIP 14 Other information 15

3 A guide to the Plan 3 Introduction Welcome to the UPS Pension Investment Plan, or PIP for short. PIP provides a range of benefits designed to improve your financial security after retirement and protection for your dependants on your death. The purpose of this guide is to help members understand the main provisions of PIP and how to go about making decisions on their choices in PIP. It should be used in conjunction with the other information in your PIP Information Pack. UPS uses a pension Salary Sacrifice arrangement and this handbook also describes how this arrangement affects aspects of the Plan. Most, but not all, members have been automatically included in the arrangement, with the ability to withdraw for those who do not wish to participate. You will have been notified if you have not been automatically included. The Company contributes towards the benefits of PIP, along with those members who do not participate in the Salary Sacrifice arrangement. Contributions are paid into a special trust fund. The Company has established the framework for PIP and intends to meet its running expenses (excluding investment management charges) and monitor its suitability for UPS employees. But, for your security, the PIP trust fund is legally separate from the Company. In addition to the benefits from PIP, both you and the Company pay towards your pension benefits from the State through national insurance contributions. Pensions are complex and this booklet is intended only as a guide. Your legal entitlement is governed by the Trust Deed and Rules of PIP and by pension law. UPS intends that PIP will be a valuable part of your employment package. If you have any questions, please contact the UPS Pensions Department at UPS House. November 2015

4 4 UPS Pension Investment Plan PIP at a glance A summary of the main features of PIP: Contributions from the Company to your Primary Account in PIP Contributions from you to your Primary Account. If you participate in the Salary Sacrifice arrangement, the Company will make these contributions instead of you Investment of the PIP funds in your Primary Account until benefits are paid A range of investment choices which are regularly reviewed by the Trustee Tax relief on your contributions and on PIP investments PIP funds are portable on leaving before retirement After age 55, PIP funds can be used to provide a pension paid for life a lump sum option at retirement part of which is tax free different combinations of the above, or a transfer to an alternative arrangement Life assurance benefit on death in service PIP funds provide additional benefits on death The option for you to invest Additional Voluntary Contributions (AVCs) State benefits as well as PIP Technical terms Annual Allowance This is the maximum amount of pension savings that can be built up in any one tax year before a liability for a tax charge arises. The Annual Allowance for the 2015/16 and 2016/17 tax years is set at 40,000, although can reduce to as little as 10,000 in certain circumstances. Annual Pay The definition of Annual Pay depends on whether or not you participate in the Salary Sacrifice arrangement. If you do participate in the Salary Sacrifice arrangement Annual Pay means your notional annual rate of basic salary at the date of your death, or earlier termination of membership, or, if higher, the basic salary received in the preceding tax year, calculated as though you had not sacrificed part of your salary for UPS making an equivalent contribution to the Plan. If you do not participate in the Salary Sacrifice arrangement Annual Pay means the annual rate of your basic salary at the date of your death, or earlier termination of membership, or, if higher the basic salary received in the preceding tax year. Auto-enrolment A statutory duty placed on UPS to enter workers into a pension arrangement and make/deduct contributions on their behalf. Auto-enrolment Date A date on or within three months, of the date you first meet these conditions: you are at least 22 and under State Pension Age; and you are earning at least 10,000 p.a. (in 2015/16, but this figure may change over time). Additional Voluntary Contributions (AVCs) AVCs are paid by you to PIP in addition to your contributions to supplement your benefits from the standard contributions from you and the Company. AVC Account The part of your Personal Account in PIP for your AVCs.

5 A guide to the Plan 5 Basic State Pension The flat rate State Pension payable where you have sufficient National Insurance contribution credits. For a single person it is currently kept by the Government broadly in line with the LEL at which S2P credits start to build up. The Basic State Pension will be replaced with a new single tier pension. Company UPS Limited, or UPS SCS (UK) Limited. Dependant Any person financially dependent on you, subject where appropriate, to the requirements of HM Revenue & Customs. Lifestyle option This is a combination of investment funds selected by the Trustee to accept contributions in respect of members. Where a member has not made an investment choice on entry into PIP, the Trustee will use the Lifestyle option to invest contributions in respect of these members. Investment in the Lifestyle option should not be regarded as advice as to which fund is most suitable for your needs; this is simply the default fund that contributions will be directed to, should you elect not to make an investment decision. Lifetime Allowance (LTA) The maximum overall value of pension benefits (excluding State Pensions) set by the Government, which any individual can build up over their working lifetime without further tax penalties applying. The LTA is set at 1.25 million for the 2015/16 tax year and will reduce to 1.00 million for the 2016/17 tax year. It is unlikely to have any impact on most members. Lifetime Annuity The contract through which an insurance company or other suitable institution (which may include the UPS Pension and Life Assurance Plan) provides pension payments to you or your dependants in exchange for a capital sum paid from PIP. Normal Pension Age Age 65. Opt-out Notice A form obtained from the Trustee and signed by you. Ordinary Contributions The standard rate of contributions made into your Primary Account by you and the Company. The standard rate of contributions are set out in the Contribution Leaflet. Pensionable Salary The definition of Pensionable Salary depends on whether or not you participate in the Salary Sacrifice arrangement. If you do participate in the Salary Sacrifice arrangement Pensionable Salary means your notional basic salary in each pay period, calculated as though you had not sacrificed part of your salary for UPS making an equivalent contribution to the Plan. If you do not participate in the Salary Sacrifice arrangement Pensionable Salary means basic salary, in each pay period. Personal Account The Account opened for you in PIP, including your Primary Account and your AVC Account, if you pay AVCs. If you bring a transfer of funds into PIP you will also have a Transfer-in Account. Primary Account Your Personal Account in PIP for the standard rate contributions payable by you and those paid by the Company - see page 8. Re-enrolment Date This is a date chosen by UPS (and notified to you) that comes round broadly every three years. Salary Sacrifice A voluntary agreement, whereby pension scheme members give up part of their basic salary for an equivalent employer contribution to PIP. SERPS State Earnings Related Pension Scheme. SERPS ceased in State Second Pension (S2P) This is paid in addition to the Basic State Pension and replaced the SERPS from 6 April It builds up each year on different rates based on different salary bands. S2P will cease on 6 April 2016 when the State Pension reforms introduce a single tier pension. State Pension Age This differs for men and women and depends on when you were born. For women: Born before April 1950, it is age 60 Born between 6 April 1950 and 5 December 1953, there is a sliding scale in which it increases from 60 to 65. For men born before 6 December 1953, it is age 65. For anybody, whether man or woman, born between 6 December 1953 and 5 October 1954, there is a sliding scale in which it increases from 65 to 66. State Pension Age will increase to 67 by 2028.

6 6 UPS Pension Investment Plan Joining PIP Who is eligible? You are eligible to join PIP provided you are age 16 or over. When can you join? You can join PIP as soon as you become eligible, but in any event, you will be automatically enrolled as a member as soon as you reach your Auto-enrolment Date. UPS will provide written confirmation of your date of entry into PIP when you join the Company. How you join If you are eligible to become automatically enrolled into PIP, you don t need to do anything. There are no forms to complete, but after you are auto-enrolled, you should consider completing the following: Investment Choices form Expression of Wish form If you are not eligible to become automatically enrolled or you want to join PIP before your Auto-enrolment Date, you may do so by completing and returning the following forms to the UPS Benefits Officer in the envelope provided: Application/Investment Choices form Expression of Wish form Your membership of PIP will start in the earliest pay period following verification of your membership forms by the Pensions Department. When you join PIP, you will be included in the Salary Sacrifice arrangement unless you either fall outside the eligibility criteria (in which case, you will be informed) or you notify the Pensions Department that you wish to opt-out. Opting-out of PIP If you have been automatically enrolled (or re-enrolled) into PIP, you have the right to opt-out by giving the Company an Opt-out Notice within one month of being auto-enrolled (or re-enrolled). If you do this, then any contributions paid will be refunded and you will be treated as not having joined PIP. If you wish to leave PIP at any time after the one month period, any contributions paid will stay invested in PIP on your behalf until you take your benefits or transfer them elsewhere. In either case, if you meet the automatic enrolment criteria, you will be re-enrolled in PIP at the next Re-enrolment Date. IMPORTANT Workers with Enhanced or Fixed Protection will lose that protection if they do not elect to opt-out of PIP within one month of being enrolled or re-enrolled. If you are not a member of PIP If you are not a member of PIP: you will not be covered for the life assurance benefit (see page 10) the Company will provide no alternative retirement or death benefits. Your State benefits and options will not be affected. Re-joining PIP If you opt-out of PIP within one month of being automatically enrolled or you withdraw at any other time, there are three ways in which you may rejoin: provided you have not opted-out in the last 12 months, you may submit an Application/Investment Choices form, requiring us to make arrangements for you to become an active member of PIP again and entitling you to Company contributions you will be automatically re-enrolled at the next Re-enrolment Date, provided you are eligible and have not opted-out in the last 12 months the Company may invite you (at its discretion) to join If you want to transfer other benefits into PIP PIP can generally accept a transfer of funds from certain other employer or personal pension plans. However, because of regulations this is not always possible. Also, a transfer may or may not be in your interests. You should always consult a financial adviser authorised by the Financial Conduct Authority before requesting a transfer. To find out more please contact the UPS Benefits Officer. Any transfer in would form part of your Personal Account. State benefits Your State Pension benefits will not be affected by whether or not you join PIP. However, participation in the Salary Sacrifice arrangement may reduce your entitlement to State benefits. For more details see pages 9 and 10.

7 A guide to the Plan 7 How PIP works PIP provides the funds for your retirement options through a Personal Account which is opened for you when you join. The funds in your Personal Account are built up by contributions paid into it during your UPS employment and by the returns from investment of the funds. When you take benefits the funds in your Personal Account provide retirement capital which can be used to: buy a pension in the form of a Lifetime Annuity The benefit you can get from the PIP depends on the following factors: the contributions to your Personal Account the return on the investment of the funds in your Personal Account when you elect to receive your benefit, and if you want a pension, the cost of purchasing a Lifetime Annuity. provide a cash lump sum (some of which would be tax free) provide a combination of the options above or can be transferred to an alternative arrangement. Your Personal Account is divided into three sections: Your Primary Account Both you* and the Company will contribute to your Primary Account at a set standard rate. *By participating in the Salary Sacrifice arrangement your basic salary will be reduced by the amount of your standard contributions to the Plan, and the Company will provide additional pension contributions equal to that reduction. Your AVC Account You may choose to increase your own contributions, if you wish, through your AVC Account. Note: You may not pay AVCs through the Salary Sacrifice arrangement. Your Transfer-in Account If you bring a transfer of funds into PIP you will also have a Transfer-in Account. Salary Sacrifice arrangement. The more you contribute and the longer it is invested, the greater the scope to provide a higher pension.

8 8 UPS Pension Investment Plan Your benefits at retirement You may draw your benefits at any time after reaching age 55, or at any earlier age if you have stopped work and the Trustee has received appropriate medical evidence that you are (and will continue to be) incapable of carrying on your occupation because of ill-health. The later you take your benefits, the more time you will have to build up your PIP funds from contributions and investment returns. When you decide to take your benefits, the contributions to your Personal Account will stop, and the investments held will be sold to provide the capital sums for your retirement benefits. Your benefits and options with the retirement capital will be as follows. Primary Account Your Primary Account may be used to: buy a pension in the form of a Lifetime Annuity provide a cash lump sum provide a combination of the options above or can be transferred to an alternative arrangement. If you elect to buy a pension through the purchase of a Lifetime Annuity, you can choose a Lifetime Annuity in one, or a combination, of the following forms: a pension payable to you for life, but normally guaranteed to be payable for a minimum period of 5 years a spouse s or civil partner s pension payable on your death a pension for another dependant payable on your death. You can choose whether to purchase a Lifetime Annuity that provides a pension that increases each year during payment or that remains level. If you elect to take a cash lump sum, the first 25% of your retirement capital will normally be tax free and any balance would be subject to income tax through PAYE. Under PIP you can take any part of your retirement capital as either a lump sum or to purchase a Lifetime Annuity, as long as you elect to do so in a single event. You may not take part of your retirement capital and defer payment of any balance. Alternatively, you may transfer your Primary Account to an alternative arrangement as long it is a registered pension arrangement for tax purposes and meets the criteria set by the Trustee in order to protect members from pension scams. Before making any decisions regarding your financial future you should make every effort to understand the options that are available to you. The Pension Wise service, established by the Government, provides a free and impartial guidance service to help you understand your options. Pension Wise can be contacted through your local Citizens Advice Bureau, or you can obtain further information and book an appointment via their website at or by ringing them on

9 A guide to the Plan 9 Your AVC Account and Transfer-in Account The retirement capital from your AVC and Transfer-in Account can be used to provide benefits in the same way as your Primary Account. Payment and tax Your benefits will be paid to you as soon as possible after your chosen payment date. As the final contributions are paid toward the end of the month your final benefit can often be decided only after those contributions are invested, this may mean you have to wait for a short time before payment begins, which could be one or two months. However, should you chose to buy an annuity, your pension payments will be due effectively from the first day of the month after your chosen payment date and will be paid monthly. The organisation chosen to provide your Lifetime Annuity will be responsible for the payments. Your cash lump sum will be paid directly to you by the PIP administrator. Your pension is taxed as earned income. If you are taking a cash lump sum, up to 25% is currently tax-free; any cash lump sum above this level will be taxed as earned income through PAYE. If the value of your Personal Account, together with the value of pensions from any other pension arrangements (excluding State Pensions), exceeds the LTA, there will be a tax charge known as the LTA Charge (currently 55%). If there are any excess funds, they will normally be paid to you as a lump sum less the LTA Charge. If you have a Personal LTA that is higher than the standard LTA you should inform the UPS Benefits Officer. If you select a Lifetime Annuity Your Lifetime Annuity will be bought in your name for the benefit of you and, if appropriate, your dependants. The current policy, in respect of members retiring is for the Company to meet the cost of finding an appropriate Lifetime Annuity. You may, if you prefer, appoint your own adviser to help you select an alternative insurance company, but neither the Trustee nor the Company will be able to advise you on this, and you will need to meet all the associated costs. Pension Forecast Your personal statement each year will include a forecast of your PIP pension, as a proportion of your Pensionable Salary, based on a projection of estimated investment returns and salary increases to retirement. You should note this can only be a forecast, and none of these figures can be guaranteed. State Pensions State Pensions are payable from State Pension Age. At that time you will receive any Basic State Pension, State Earnings Related Pension, S2P or single tier pension (depending on when you reach State Pension Age), regardless of whether you have retired from UPS employment (although you can defer the start of your State Pension if you wish). State Pensions are subject to tax as earned income, and this tax liability may be taken into account in any tax coding on your PIP Lifetime Annuity payments. When possible, a statement of your State Pensions will be included automatically with your personal statement, provided you do not object to us obtaining information from the Department for Work and Pensions (DWP) for this purpose.

10 10 UPS Pension Investment Plan Death benefits Death in Service before State Pension Age If you are an active member of PIP and you die whilst still in the Company s employment, before State Pension Age, the following benefits will become payable: lump sum life assurance that is three times your Annual Pay, subject to the Trustee obtaining satisfactory insurance terms a lump sum equal to the value of the funds in your PIP Personal Account. If the total of these payments exceeds your LTA, then in order to avoid a LTA charge a Dependant s Annuity will be purchased by the Trustee. The Trustee of PIP has the discretion and responsibility for deciding who should receive these benefits. This allows some flexibility and also means that the lump sum benefits are normally paid tax-free. It is important that you let the Trustee know your own wishes by completing an Expression of Wish form and keeping this updated if your circumstances change. Although your Expression of Wish form will not be binding on the Trustee, it will help to guide their decision. Any Dependants Annuity will be subject to income tax just as for retirement pensions (see page 9). Death in service after opting out of PIP If you die before State Pension Age whilst still in UPS employment, but after opting out of PIP, no lump sum life assurance benefit will be payable. Any funds remaining in your PIP Personal Account for any period of active membership will be dealt with, as described in the above section on Death in Service before State Pension Age. Death after leaving service and before retirement If you die after leaving the Company s employment but before retirement, any funds in your PIP Personal Account will be dealt with, as described in the above section on Death in Service before State Pension Age. No lump sum life assurance benefit will be payable. Death after retirement On death after retirement the benefits will depend on whether you buy a Lifetime Annuity or not and also the type selected by you when you draw benefits (see page 9). If you die within five years of purchasing a Lifetime Annuity, there may be a lump sum payable equal to the value of the outstanding instalments. The lump sum is tax free if you die before age 75, but is subject to tax (currently 45%) if you die after age 75. If you chose a Lifetime Annuity which continued on your death to a dependant, then this will normally be paid from the first day of the month following your death. State pensions On your death after State Pension Age, State Pensions may be payable to a legal spouse (or registered civil partner) in respect of the Basic State Pension, SERPS, S2P or the single tier pension. State Pensions are payable on top of the PIP benefits. Under the Salary Sacrifice arrangement, as you pay lower National Insurance contributions you may receive a lower benefit from S2P, noting S2P will cease in April 2016.

11 A guide to the Plan 11 Leaving PIP If you leave UPS employment before retirement, or leave PIP, your lump sum life assurance cover will cease. Pension contributions will normally stop with the pay period immediately before your leaving date. Your PIP pension options will depend on your period of completed Pensionable Service, that is your active membership of PIP plus any service in a previous employment for which you have transferred funds into PIP. The provisions detailed above will change for individuals joining the PIP on and after 1 October The following table illustrates how the options will change: Benefit option on leaving Joiners prior to 1 October 2015 Joiners on or after 1 October 2015 Deferred benefit, or transfer value On completion of two years Pensionable Service On completion of 30 days Pensionable Service Transfer value, or refund of contributions Between three months and two years Pensionable Service Not available Refund of contributions Less than three months Pensionable Service Less than 30 days Pensionable Service * references to completion of Pensionable Service will include linked qualifying service where members have more than one period of Pensionable Service from each employment The options available to you depend on your date of joining PIP and your length of membership. The options are: Deferred benefit, or transfer value Your funds may be kept in your Personal Account in PIP until you retire. The funds will remain invested in accordance with your investment choices and will grow in line with the return on the investments. Before you reach Normal Pension Age, the Trustee will contact you and advise you of your options. These will broadly be to use your funds to buy a Lifetime Annuity for you and your Dependants, and to take all or part of your funds as a cash lump sum, as described for retirement benefits on page 8. Alternatively you may transfer the realisable cash value of your funds in your PIP Personal Account to a suitable alternative arrangement as long it is a registered pension arrangement for tax purposes and meets the criteria set by the Trustee in order to protect members from pension scams. The cash value will reflect the dealing costs of selling the investments in your Personal Account, but there will normally be no other charges. You may take a transfer at any time between leaving service and retirement. You may request an estimate of the cash transfer value once a year. Transfer value, or refund of contributions You will be given the option of either: taking a refund of the value of the funds built up in your Primary Account from your own contributions, plus the whole value of your AVC Account. Note that the value may be less than the contributions you paid, depending on the investment performance of the funds your contributions were invested in. This will be subject to a tax deduction, currently at the rate of 20% on the first 20,000 of the refund and 50% on any refund in excess of this amount. In addition, for any period that you have participated in the Salary Sacrifice arrangement, the Company, will make a payment to you of the contributions you would have made had you not participated in the Salary Sacrifice arrangement. This payment will not be made through the Plan but paid through payroll and be subject to income tax and National Insurance deductions, or transferring the realisable cash value of your funds in your Personal Account to a suitable alternative arrangement as long it is a registered pension arrangement for tax purposes and meets the criteria set by the Trustee in order to protect members from pension scams. The cash value will reflect the dealing costs of selling the investments in your Personal Account; there will normally be no other charges. When you are notified of these options you will be notified of the date by which you must respond. If you do not respond within this

12 12 UPS Pension Investment Plan Refund of contributions If you leave employment shortly after joining (within the timescales indicated in the above table), you will receive a refund of the value of the funds built up in your Primary Account from your own contributions plus the whole value of your AVC Account. Note that the value may be more or less than the contributions you paid depending on the investment choice you made. This will be subject to a tax deduction, currently at the rate of 20% on the first 20,000 of the refund and 50% on any refund in excess of this amount. In addition, for any period that you have participated in the Salary Sacrifice arrangement, the Company will make a payment to you of the contributions you would have made had you not participated in the Salary Sacrifice arrangement. This payment will not be made through the Plan but paid through payroll and be subject to income tax and National Insurance deductions. How to leave PIP If you wish to leave PIP, but you remain in UPS employment, you should request a leaving form from the UPS Pensions Department. Pension contributions will stop in the earliest pay period following verification of your completed form by the UPS Pensions Department. If you opt-out in the initial auto-enrolment opt-out period of one month, you will receive a refund of the contribution you have made (or restoration of earnings if through the Salary Sacrifice arrangement) and you will be regarded as never having joined PIP. In any other instance, your pension options will be as described above. Remember, in either case, you will cease to be covered for life assurance benefits. Paying for PIP If you are not participating in the Salary Sacrifice arrangement, you are required to pay contributions into PIP, and the level of these contributions is set out in the Contributions Leaflet that is available with this booklet. National Insurance contributions for State Pensions In addition to the contributions you and the Company make through PIP, you will both make provision for your retirement through the National Insurance contributions you pay towards the cost of your State Pension. You will pay the full rate of National Insurance contribution (unless you are paying the married woman s reduced rate) and, so will the Company. These will earn you credits in the State Second Pension (S2P) as well as credits for the Basic State Pension. With effect from 6 April 2016 S2P and the Basic State Pension will be replaced with a single tier pension. Other costs Investment management and dealing costs will normally be met from your Personal Account as described on page 13. The other costs of running PIP, including keeping records of your Personal Account, observing the regulatory requirements and providing the Trustee with professional advice, will normally be met by the Company in addition to its contributions to your Primary Account and to your State benefits. The Company also pays the entire cost of the life assurance benefits described on page 10. Participation in the Salary Sacrifice arrangement is intended to reduce your National Insurance contributions. Whilst this may impact on the level of benefit payable from S2P from State Pension Age, it should have no impact upon the single tier pension.

13 A guide to the Plan 13 Periods of absence Maternity Leave, Paternity Leave and Adoption Leave Whilst you are on the statutory 52-week maternity leave, paid paternity leave or paid adoption leave your pension contributions will be deducted and paid into your Primary Account. These contributions will be based on the contribution rate in place immediately prior to the start of your maternity leave, paid paternity leave or paid adoption leave but applied to the level of your contractual pay or statutory pay actually paid to you. Whilst you continue to receive pay, the Company will pay its contribution to your Primary Account at the rate of contribution immediately prior to the start of your maternity leave, paid paternity leave or paid adoption leave. But this will be based on the level of Pensionable Salary it decides would have been paid if you had not been on maternity leave, paid paternity leave or adoption leave. You may continue or suspend AVCs during this period, but these will not be subsidised by UPS. For those participating in the Salary Sacrifice arrangement immediately prior to beginning maternity leave, paid paternity leave or paid adoption leave the Company will continue to contribute at the rate prior to the start of your leave until your pay ceases. Under Salary Sacrifice, your pay will not fall below statutory levels. After your maternity pay, paternity pay or adoption pay has ceased, all pension contributions will also stop until you return to work. Once you return to work, contributions will return to normal levels based on your Pensionable Salary at the time. During any period of suspension of contributions your funds will continue to be invested as usual. Lump sum Life Assurance cover will continue at the full rate of three times Annual Pay, as determined by the Company, provided you remain in the Company s employment. Absence due to sickness Whilst you are absent due to sickness, both your own and the Company s contributions to your Primary Account will continue, as determined by the Company at the time. If your contributions are suspended for any period, the funds already built up in PIP will continue to be invested as usual. If you participate in the Salary Sacrifice arrangement you may be withdrawn if your earnings fall below the eligibility levels. However, you will be re-entered when you return to work. Lump sum life assurance cover will continue at the full rate, based on your Annual Pay immediately before sickness absence started, so long as you remain in UPS employment.

14 14 UPS Pension Investment Plan Investment choices in PIP The Trustee s role The Trustee of PIP is responsible for deciding the types and range of investment funds that should be available for you to choose from, for investing your Personal Account. The Trustee is also responsible for deciding the investment managers whose investment funds will be used for this purpose. The Trustee takes independent professional advice in reaching its decisions, and also reviews the suitability of the investment funds and the managers on an ongoing basis. From time to time, changes in investment funds or managers may be made. The Lifestyle option The Lifestyle option is a combination of investment funds that has been specifically formulated by the Trustee, having taken appropriate investment advice, to provide a reasonable mix of assets, balancing the need for growth against the need for security. If you do not make a decision on how to invest your Personal Account, all contributions will default to the Lifestyle option. The Lifestyle option should not be regarded as advice as to which investment fund is most suitable for your needs, this is simply the fund that contributions will be directed to should you elect not to make an investment decision. However, that is not to say that you should not make a positive decision to use the Lifestyle option. Your role You can decide which of the investment funds made available by the Trustee should be used for the investment of your Personal Account. It is important that you take decisions which are suitable for you as far as possible. Neither the Trustee nor UPS can provide advice on or accept responsibility for your choice. In your Information Pack, you will find an Investment Guide booklet, which gives you guidelines for making your investment choices. You can find fact sheets about each of the investment funds on offer on Zurich s website at PortfolioPriceTable.aspx?SchemeID=41 Investment values and charges Many of the investment funds are funds which are used by a number of employer pension plans, and each plan s share of the overall assets of the funds are usually expressed as units in the fund. The total value of the units adds up to the overall market value of the assets of the fund. The investments will generally be credited to your Personal Account in the form of a number of units purchased in each investment fund. The value of each unit will vary with the market values of the underlying assets held in the investment fund. The following investment charges will normally be deducted: The investment manager s own fees will be deducted from the overall assets of the fund, and so reduce the value of each unit, or may be deducted from your contributions prior to investment, so that fewer units are bought. When you sell a unit, its cash value may be lower than the price of buying a similar unit on the same day. This difference reflects the dealing costs which can arise from buying and selling the type of underlying investments used by the funds. As well as the investment charges, PIP will incur additional charges for administration, including the recording of units to your own Personal Account. These charges will be met by the Company. However, administration charges for switching investments more than once a year may be charged to your Personal Account by reducing the number of units bought for, or credited to, you. Investment information Once a year, you will receive a statement of your Personal Account, showing the number of units held in each of the funds and their current value. It will also include, for each of the funds, a review of past investment performance based on commentary by the Trustee s advisers. You can ask further questions through the help line to the UPS Pensions Department. If you want advice about your investment choices, you should obtain this from a financial adviser authorised by the Financial Conduct Authority at your own expense. Please read all the information carefully as soon as possible. You are encouraged to complete the Investment Choices form, to let the Trustee know how you want your Personal Account to be invested. Failure to complete the Investment Choices form will result in the Lifestyle option being selected. You should also keep your investment choices under review and complete an Investment Switch form if you wish to change them in future.

15 A guide to the Plan 15 Other information You may put any questions you may have to the UPS Benefits Officer in the HR Department at UPS House, preferably in writing, but if you prefer you may call the help line number. You will find up-todate details in your PIP Information Pack. Your Information Pack contains a number of information sheets to help you understand PIP and make decisions. These will be updated from time to time, together with general news about PIP. In addition, you will receive personal information once a year in the form of a statement of your PIP Personal Account. This will include details of the contributions to your Personal Account during the year, the current values of the investments held and a forecast of your pension. Some other important points are outlined below. Security To help provide security, PIP is established under trust separate from the Company s business. PIP is a separate section of the UPS Pension and Life Assurance Plan. The Trustee has to act in the interests of PIP members and follow the provisions of the Trust Deed and Rules. An independent Actuary and other professional advisers are appointed by the Trustee to advise them on the overall adequacy of the assets of the trust and on compliance with the laws relating to trusts, pensions and tax The Trustee has the accounts of the trust independently audited once a year, and the Trustee s Annual Report and Accounts is available to members on request. Other information is provided automatically or on request as described in this guide, and this enables you to see how PIP is being run. Alteration or termination UPS Limited intends to maintain PIP as long as it continues to meet the needs of the Company. It reserves the right to request the Trustee to alter PIP in the future to maintain its suitability, or to terminate PIP if appropriate. In the event of PIP being altered or terminated, your interests are dependent on the assets set aside in PIP by the Trustee to match the values of the funds recorded in your Personal Accounts and by the Trustee s obligations to protect your rights earned to date. If PIP has to be closed or wound up the expenses may be paid from your funds unless the Company meets these separately. Registration of PIP Full details of PIP and an address at which the Trustee can be contacted form part of the registration of the UPS Pension and Life Assurance Plan with The Pensions Regulator. The registered office of the Trustee is UPS Pension Plan Trustee Limited, Pension Investment Plan Section, UPS House, Forest Road, Feltham, Middlesex TW13 7DY. Internal Disputes Resolution Procedure Hopefully, most of your questions about PIP will be answered satisfactorily through the normal administration procedures or the help line. However, as required by the Pensions Act 1995, PIP has established an internal procedure for resolving any disputes. This is a two-stage process. In the first instance, if you have a complaint, you must address it in writing to the Secretary to the Trustee, Pension Investment Plan Section, UPS Pension Plan Trustee Limited, UPS House, Feltham, Middlesex TW13 7DY. In normal circumstances, you will receive a response within two months. If you are dissatisfied with the response, within six months of receiving it, you will be entitled to refer the matter to the Trustee board as a whole at the same address. The Trustee will then reply directly to you, where possible, within two months. The Trustee hopes that the above procedure will resolve any difficulties you encounter. However, if you are still not satisfied, you may follow up your complaint in two further stages. You can contact The Pensions Advisory Service (TPAS). TPAS is an independent non-profit organisation that provides free information, advice and guidance on the whole spectrum of pensions, including State, employer, personal and stakeholder schemes. You may contact TPAS at any stage of your complaint, or at any other time, for assistance. TPAS is available to assist where members or beneficiaries are in, or have been unable to resolve, a dispute with the trustees. TPAS may be contacted at The Pensions Advisory Service, 11 Belgrave Road, London SW1V 1RB. If TPAS is unable to resolve the matter, application can be made to the Pensions Ombudsman. The Pensions Ombudsman may investigate and determine any complaint or dispute of fact or law in relation to an occupational pension scheme made or referred in accordance with the Pensions Act He may also be contacted at The Pensions Ombudsman, 11 Belgrave Road, London SW1V 1RB. Statutory supervision of PIP The Pensions Regulator (TPR) is able to intervene in the running of pension schemes where trustees, employers or advisers have failed in their duties. All those involved in the running of a pension scheme have a duty to advise TPR of any serious breach of the Pensions Act TPR may be contacted at Napier House, Trafalgar Place, Brighton, East Sussex BN1 4DW.

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