A message from the Trustees

Transcription

1 A message from the Trustees Welcome to the Luxfer Group Pension Plan. The Plan gives you an easy and cost-effective way to arrange your pension provision in retirement and to provide security for your family in the meantime. Should you become seriously ill or even die, there are a range of benefits available for you and your dependants. Please note that this booklet gives you a straightforward guide to the Plan, the benefits you get and the way they work. However, the legal constitution of the Plan is contained in the Trust Deed and Rules, which is available on request from the Pensions Manager. If there are any questions of interpretation between this booklet and the Trust Deed and Rules, the provisions of the Trust Deed and Rules will apply. We have tried to avoid using too many technical terms; those that we do use are explained on pages 4 and 5. This version of the booklet reflects the Trustees' understanding of tax, pensions and employment as at September Some aspects of these laws are subject to change and clarification and therefore the contents of this booklet may require amendment in future. We would like to remind you that the Plan is for your benefit. If there are any questions you have or if there is anything you don t understand about the Plan or your pension arrangements, please contact your Local Pensions Administrator, Local Pensions Committee or Group Pensions Council Representative, who will be able to help you. The Trustees of the Luxfer Group Pension Plan Anchorage Gateway, 5 Anchorage Quay, Salford M50 3XE Booklet updated September 2013 LUXFER GROUP PENSION PLAN 1

2 About the Plan The Luxfer Group Pension Plan (the Plan) was established in 1996, following the acquisition of various businesses from British Alcan Aluminium plc. Members of the British Alcan Retirement Income and Life Assurance Plan (the RILA Plan) at the time of the acquisition were given the opportunity to transfer their entitlements under the RILA Plan into the new Luxfer Group Pension Plan. From 1 June 1998 the Plan closed to new members and currently new employees are eligible to join the Luxfer Group Retirement Savings Plan, a money purchase scheme. In 2004 the way pensions are calculated changed to a Career Average Revalued Earnings ( CARE ) basis, as described on page 9 of the booklet. The Plan was amended again with effect from 6 October 2007, following the 2006 actuarial valuation, to enable members to continue to enjoy the benefits of the CARE Plan, but at an affordable cost. The Plan is established under trust which means that the Plan is looked after by Trustees who are responsible for the administration of the Plan. Amongst their other duties, this includes investing the Plan s assets, which are completely separate from the assets of the Company. The actual investment is carried out by independent investment managers appointed by the Trustees. There are eight Trustees, five of whom are appointed by the Company, two elected by members of the Group Pensions Council and one elected by the pensioner members (see page 25 Do I have any say in the running of the Plan? ). This booklet provides a guide to the Plan s main provisions. The benefits to which you are entitled are governed by the Trust Deed and Rules, a copy of which may be obtained on request to the Pensions Manager. If there are any questions of interpretation between this booklet and the Trust Deed and Rules, the provisions of the Trust Deed and Rules will apply. The Plan is registered as a pension scheme under the Finance Act 2004 which governs the way contributions and benefits are treated for tax purposes. While you contribute to the Plan, at the present time you are contracted-out of the State Second Pension (S2P) on the Salary Related basis, which means that you and the Company pay lower National Insurance contributions. LUXFER GROUP PENSION PLAN 2

3 Contents Common Terms... 4 State Benefits and the Plan Contributions Normal Retirement Benefits Normal Retirement Cash Sum Early Retirement Ill Health Inflation Protection Death in Service Death in Retirement Leaving Service Important General Information Help and Advice LUXFER GROUP PENSION PLAN 3

4 Common terms Every care has been taken to avoid using technical terms in this booklet, but, it is sometimes unavoidable. The following are terms and phrases you will see throughout this booklet, with an explanation of their meaning. For ease of reference these appear in the text in italics. Plan means the Luxfer Group Pension Plan. Company means Luxfer Group Limited or any other associated company by which you are employed. LPC Representative is your Local Pensions Committee Representative (see page 25). These are elected by members of the Plan. There is at least one LPC Representative at every site. GPC Representative is your Group Pensions Council Representative. One representative is elected by each Local Pensions Council. The Trustees are responsible for running the Plan. There are eight Trustees, five of whom are appointed by the Company, two elected by members of the Group Pensions Council and one elected by the pensioner members. Pre-92 Member is a member who joined the RILA plan before 1 January 1992 and who transferred their benefits into the Plan. Post-92 Member is a member who joined the RILA plan or the Plan on or after 1 January Salary is your gross earnings which are defined as pensionable by the Company. For this purpose if your basic salary is 76,000 1 or more (or the higher figure determined by Luxfer Group Limited and notified at any 6 April) none of your earnings above this figure will be pensionable under the Plan (but may be pensionable under the Luxfer Group Retirement Savings Plan). Plan Salary at each 6 April is your Salary in the last 12 months less the State Pension Deduction for the same 12 months. Final Plan Salary (as used to calculate your accrued pension at 5 April 2004) is the sum notified to you on your personal benefit statement as at 6 April This is equal to your gross earnings which are defined as pensionable by the company, excluding non-contractual overtime earnings, in the 12 months up to 5 April 2004, PLUS the annual average of your non-contractual overtime earnings (if any) in the 36 months up to 5 April 2004, LESS a State Pension Deduction of 4004 (reduced pro-rata if employed part-time). If greater, the annual average of your Plan Salary over the 36 months up to 5 April 2004 or the average of the highest three consecutive tax years Plan Salaries in the last ten years ending 5 April 2004 will be used (note: Plan Salary has the meaning used in the September 2005 version of this booklet). Notional Earnings are contractual pay and are used if you suffer a loss of earnings because of certified ill-health absence in any year. State Pension Deduction is the lower of the basic State pension for a single person and the 1 Applicable for 2014/15 year LUXFER GROUP PENSION PLAN 4

5 State Lower Earnings Limit, the earnings level at which you become entitled to State benefits. For part-time employees a pro-rated State Pension Deduction will be applied. Pensionable Service is the period (measured in years, with completed days counting proportionately) for which you have been a contributing member of the Plan or which has been transferred from the RILA Plan. In addition, any period credited as a result of a transfer value in respect of your membership of a previous employer s plan will count towards Pensionable Service. There is no limit on the period of service which counts. Normal Retirement Date is your 65th birthday. S2P" or "SERPS are names given to the additional State pension. SERPS stands for "State Earnings Related Pension Scheme" which was the name given to the additional State pension up to April This was then modified and renamed the State Second Pension (S2P). State Pension Age will depend on when you were born. For full details go to the State pension section on GMP (Guaranteed Minimum Pension) corresponds to the pension you would have earned from SERPS had you not been contracted-out during your membership of the Plan (and possibly of a previous pension plan) before 6 April Widow s GMP for female spouses is half the member s GMP, subject to Social Security requirements being met. Widower s GMP for male spouses is half the member s GMP earned from 6 April 1988, subject to Social Security requirements being met. Protected Rights Fund is the value at the relevant time of the sum of : (i) your own contributions to the Plan between 6 April 1997 and 5 April 2012 (excluding any additional voluntary contributions); (ii) part of the Company s contribution to the Plan in respect of you between 6 April 1997and 5 April 2012, equal to its saving in National Insurance contributions; (iii) the further payment to the Plan in respect of your earnings between 6 April 1997 and 5 April 2012 by the Government which depend on your age (both the Company s and the Government s payments arise from the method by which you were contracted-out of S2P between 6 April 1997 and 5 April 2012); the investment growth earned by the Plan assets in respect of these contributions until further notice, this will be in line with the FT-SE All Share Index with income re-invested. Annual Allowance is the amount of benefits and contributions you can accumulate each year free of tax (see page 8). Lifetime Allowance is the total value of benefits that may be paid to you without a tax penalty (see page 12). Registered Pension Arrangement means a pension scheme, whether an occupational scheme or a personal arrangement, which is approved for tax purposes under the Finance Act Reference Scheme Pension means the minimum pension accrued from 6 April 2012 (see page 6). LUXFER GROUP PENSION PLAN 5

6 State benefits and the Plan The State provides a basic level of retirement income from State Pension Age. The basic State pension is set at a fixed amount and does not take your earnings into account. This is increased by SERPS and S2P which are related to earnings, and since 2002 has become geared towards providing a larger pension for the lower paid. In addition the State provides a Pension Credit, which is a means tested benefit designed to increase the retirement income for pensioners with few savings or no pension benefits. For full details go to the State pension section on www. gov.uk The Plan generally provides better benefits than SERPS and S2P and the Company has decided to contract-out employees that contribute to the Plan. This means that both you and the Company pay lower National Insurance contributions (see page 7) but the pension you receive under SERPS and S2P is significantly reduced. You will also receive the maximum basic State pension to which you are entitled. Being contracted-out, the Plan provides benefits which are at least as good as those that would have been provided under SERPS and S2P and generally are substantially better than SERPS and S2P could have provided. The Plan also provides better death benefits than are provided under the Social Security system. In respect of service prior to 6 April 2012, the Trustees maintain a record of your Protected Rights Fund as your underpin fund. As a result of a change in the method of contracting-out from 6 April 2012, the Protected Rights Fund will not apply to benefits building up from 6 April No further contributions will be added to this Fund, but notional interest will still be added and at retirement your pension for service between 6 April 1997 and 5 April 2012 will be at least equal to the pension that could be secured by your Protected Rights Fund. However, in order to be able to contract out of S2P on the salary related basis after 6 April 2012, the Plan must provide benefits which are broadly equivalent to (or better than) the benefits provided by a Reference Scheme which, very broadly, consists of a pension of 1/89th (1.12%) of taxable earnings (between 5,668 and 40,040 in 2013/14) for each year of service from 6 April The Trustees expect that the majority of members benefits will be better than those provided by the Reference Scheme. However, to ensure that this is the case, members will be provided with a guarantee that their benefit entitlement earned after 5 April 2012 will be at least as high as the Reference Scheme level this guarantee is the Reference Scheme Pension. A forecast of your State pension entitlements may be obtained online from the State pension section on or from the Department for Work and Pensions using Form BR19. This form is available from all local DWP offices, or you can download Form BR19 from the State pension section on www. gov.uk LUXFER GROUP PENSION PLAN 6

7 Contributions How much do I pay? You contribute a percentage of your Salary less the State Pension Deduction for the current year. You have the choice of two contribution rates and these determine the rate at which you accrue pension during the year (see page 9). The rates of contribution are: Contribution Rate Pension Scale 1 9.8% Pension Scale 2 7.4% You may change the rate of contribution you pay (and so the Pension Scale you accrue) with effect from 6 April each year. A form notifying your Local Pensions Administrator of a change in contribution rate may be downloaded from the Plan website. Note that the Company reserves the right to withdraw the option to switch to the 9.8% contribution rate. If you pay income tax, you will get full tax relief on your contributions. This means you will effectively pay less than 9.8% or 7.4% of your Salary. For example, if your Salary is 32,000 per year ( 2,667 per month), and the State Pension Deduction is 5,668 (the amount applying during 2013/14) your contribution to the Plan would be: Salary 32,000 Less State Pension Deduction of 5,668 26,332 Contribution rate 9.8% 7.4% Actual contribution (per month) Less tax relief at 20%* Less NI saving of 1.6% Net contribution (per month) The net contribution is equal to 5.1% of Salary 3.6% of Salary *Standard rate of tax at April 2013 (higher rate tax payers receive tax relief at the higher rate) Contributions will be deducted from each earnings payment, before tax is calculated, and the deduction will be noted on your payslip. How do I get my tax relief? Automatically, with each deduction. For how long do I contribute? You contribute until you retire or leave the Plan. If you remain in service after Normal Retirement Date you will continue to contribute (as will the Company) until you actually retire. LUXFER GROUP PENSION PLAN 7

8 Contributions (cont) What does the Company pay? Luxfer Group Limited and the Trustees agree the contributions payable by the Company, based on the advice of the Plan Actuary following an actuarial valuation. These contributions will include the following: an ordinary contribution to meet the cost of the benefits accruing in the current and later years, after taking account of members own contributions; contributions to meet the cost of death in service benefits and the expenses of running the Plan; a contribution to eliminate over an agreed period, any funding deficit; a contribution to reimburse the Trustees for the cost of levies paid to the Pension Protection Fund. Can I pay extra contributions? If, on 28 February 2006, you were paying Additional Voluntary Contributions (AVCs), you may continue to pay AVCs through the Plan (subject to the conditions set out below). 1. You will be allowed to pay an AVC of up to 10% of your Plan Salary for the year. 2. If you stop paying AVCs (whether weekly, monthly, annually or at some other frequency) you will not be permitted to re-start at a later date. 3. You will be required to pay a minimum AVC of 10 per week or 40 per month (or annual equivalent) Information about the AVC investment options may be obtained from your Local Pensions Administrator. Additionally, or as an alternative, you may pay additional contributions to the Luxfer Group Retirement Savings Plan or to another Registered Pension Arrangement. Other members will not be permitted to pay AVCs to the Plan, although you may pay additional contributions to the Luxfer Group Retirement Savings Plan or to another Registered Pension Arrangement. For information about the Luxfer Group Retirement Savings Plan ask your Local Pensions Administrator for details or go to the pensions website. Annual Allowance Although the Plan contribution is limited as noted above there is no limit to the contribution you make through other Registered Pension Arrangements (including the Luxfer Group Retirement Savings Plan) but you will be liable for tax if the total of: the value of the annual growth in your Plan accrued pension and any AVCs or other contributions (by you or your Company) on a money purchase basis to other Registered Pension Arrangements exceeds an amount set by HM Revenue & Customs. For the year from April 2013 this amount is 50,000, reducing to 40,000 per year from April LUXFER GROUP PENSION PLAN 8

9 Retirement benefits When do I retire? You have the right to draw your benefits at Normal Retirement Date whether or not you retire from service. If you remain in service after Normal Retirement Date and you do not draw your benefits you will remain in Pensionable Service and you will continue to accrue pension. In some circumstances you may be able to retire from service and draw your pension before Normal Retirement Date. What benefits are payable? A pension is payable on the 1st of each month for the rest of your life, with a subsequent pension for your widow(er) (see page 20). How much will my pension be? For each year of Pensionable Service (and any additional part year) up to 5 April 2004 you have accrued a pension of: 1.75%* x Final Plan Salary x Pensionable Service * For service pensionable in the BACO 1983 General Scheme up to 30 April 1984 this is 1.4%. For the period of Pensionable Service between 6 April 2004 and 5 October 2007 you have accrued a pension of: 1.75% x Plan Salary for the years to 5 April 2005, 5 April 2006 and 5 April 2007, and for the six months to 5 October 2007 For the period of Pensionable Service from 6 October 2007 you will accrue a pension: based on the Pension Scale you select in the table below x Plan Salary for the six months to 5 April 2008, for the year 5 April 2009 and for each subsequent year ending 5 April up to 5 April before you retire. The Pension Scale depends on the rate of contributions you select (see page 7) as follows: Contribution Rate Pension Scale Pension Scale 1 9.8% 1.50% Pension Scale 2 7.4% 1.31% You may change the Pension Scale you accrue (and so the rate of contribution you pay) with effect from 6 April each year. A form notifying your Local Pensions Administrator of a change in contribution rate may be obtained from the Plan website Note: (i). the Company reserves the right to withdraw the option to switch to the 9.8% contribution rate: (ii). changing Pension Scale will also affect the pensions payable after your death (see pages 18 and 20). LUXFER GROUP PENSION PLAN 9

10 Normal retirement benefits (cont) At each 5 April your total accrued pension will be revalued (if necessary) by the percentage that the Retail Prices Index has increased over the 12 month period up to the preceeding 30 September, limited in any year to a maximum increase of 5%. In the period from the last 6 April before you retire or leave service up to the date you retire or leave service, you will accrue a further pension of your selected Pension Scale x the Plan Salary earned in this period, but no further revaluation will be added to your accrued pension. Longevity Adjustment All pension schemes are affected by improvements in life expectancy. Pensioners in general are living longer than previous generations and this means more funds are required to pay their pensions. To afford some protection for the Plan the longevity adjustment has been introduced to allow for any improvement in life expectancy above that provided for in the actuarial valuation as at 5 April The adjustment will be applied to members retiring after 27 April 2010, in respect of pension accrued from 6 October The adjustment factor is the ratio of Base Life Expectancy and Current Life Expectancy. Base Life Expectancy means at retirement or earlier death, the average future life expectancy (weighted by the number of male and female members of the Plan) of an individual, using the mortality assumptions employed for the actuarial valuation as at 5 April Current Life Expectancy means at retirement or earlier death, the average future life expectancy (weighted by the number of male and female members of the Plan) of an individual, using a mortality assumption appropriate in the year of retirement. The longevity adjustment factors are reviewed by the Trustees each April. Benefit Statements Each year you will receive a benefit statement showing the growth in the amount of your accrued pension. Your 2004 benefit statement showed the amount of your accrued pension at 5 April Subsequent benefit statements will show the amount of revaluation (if any) on your accrued pension and the additional pension accrued in the past year. Each statement will also give an estimate of the pension you will accrue in future years, up to Normal Retirement Date, based on your latest Plan Salary and your current Pension Scale. From 2010 the statement will also show the effect of the Longevity Adjustment Factor (see page 12). Example The table overleaf illustrates the way your pension will build up over the period between 2005 and 2014 assuming a 1.31% accrual rate after 6 October 2007 (but the same principle applies at either accrual rate). In this table Plan Salary is assumed to increase at the same rate as RPI 2.5% a year. The initial pension accrued up to 5 April 2004 is taken to be 4,520. LUXFER GROUP PENSION PLAN 10

11 Normal retirement benefits (cont) Date (5th April in year) Accrued pension (from previous year) Accrued pension revalued* Plan Salary In last 12 months Pension accrued in year Total accrued pension ,520 4,633 17, , ,944 5,068 18, , ,387 5,521 18, , ,848 5,994 19, , ,288 6,445 19, , ,703 6,871 20, , ,135 7,313 20, , ,584 7,774 21, , ,052 8,253 21, , ,537 8,750 22, ,042 * based on RPI at previous 30 September Guarantees: The pension from your State Pension Age for Pensionable Service before 6 April 1997 will be at least equal to your GMP. The pension for Pensionable Service between 6 April 1997 and 5 April 2012 will be at least equal to the pension which can be secured by your Protected Rights Fund. For Pensionable Service from 6 April 2012 your pension will be at least equal to your Reference Scheme Pension. You may ask the Trustees to use the value of the Protected Rights Fund to purchase an annuity from an insurance company chosen by you. If you take this option your Plan pension will be reduced to take account of the benefits secured by your annuity. LUXFER GROUP PENSION PLAN 11

12 Normal retirement benefits (cont) Is my pension taxable? Your pension is taxed as income in the same way as your earnings. What about my AVC fund? Your AVC fund will be used to increase your Plan benefits when you retire. You will have a number of options: To include your AVC fund as part of your tax free cash sum (see page 13). To increase the pension payable from the Plan: in this case the AVC fund (or the part remaining after taking a cash sum) will be used to buy a pension payable on the same terms as your Plan pension (with the option to continue the pension after your death to a spouse or dependant) using rates approved by the Plan Actuary. To use your AVC fund (or the part remaining after taking a cash sum) to purchase an annuity from the insurance company chosen by you. Lifetime Allowance When you retire your benefits will be tested against your Lifetime Allowance. If the value of your benefits exceeds the Lifetime Allowance (which in most cases will be unlikely) any excess benefits will suffer an additional tax charge. The Lifetime Allowance applies to the total of your benefits from all Registered Pension Arrangements and when any benefits start you will be notified of the amount of the Lifetime Allowance used. You will be asked to provide this information to the administrators of other Registered Pension Arrangements before they start your pension. Currently the Lifetime Allowance is 1.5 million, reducing to 1.25 million from 2014/15 and subsequent years. The value of your benefits will be taken as the face value of any cash sum plus 20 times your initial pension. So, if when you retire you take a cash sum of 35,000 and a reduced pension of 6,000 the Lifetime Allowance used will be: 35,000 + ( 6,000 x 20) = 155,000 If you retire early your bridging pension will be included in this calculation. LUXFER GROUP PENSION PLAN 12

13 Normal retirement cash sum Can I exchange part of my pension for a cash sum? Yes. When you retire, you may give up part of your pension for a cash sum. The maximum sum that you will be permitted to receive is calculated by multiplying your Plan pension by a factor. At September 2013 the factors to apply are shown in the table below. These factors are not guaranteed and may change at any time without notice. Age at retirement Multiple of pension & & Note: if, as at 5 April 2006, the cash sum formula then in use gave a higher cash sum, a higher maximum cash sum for the pension earned up to 5 April 2006 will be allowed. If you have paid AVCs to the Plan, the pension secured by your AVCs (for the purpose of this calculation, payable on the same terms as your Plan pension but without continuation after death to a spouse or dependant) will be added to your Plan pension before your cash sum is calculated. Your Plan pension will be reduced to allow for any cash sum taken. As an example, if you retire at age 65 and your Plan pension is 7,700 then the maximum cash sum and reduced pension will be calculated as follows (this example ignores any AVCs): Maximum cash sum: 7,700 x 4.3 = 33,110 Reduction in pension: 1 for every cash taken 33,110 / = 2, Reduced pension: 7,700-2, = 5, NB: The rate of is not guaranteed and may be changed by the Trustees at any time without notice. At lower ages the rate will be greater. Page 17 explains how increases to your pension relate to your reduced pension. Your remaining pension must not be less than the pension secured by your GMP earned before 6 April 1997; this may restrict the amount of cash you can take. If you have an AVC fund, you will be able to take it as part of your cash sum. Under current legislation any cash sum taken on retirement is tax-free. Benefit Statements Each year your benefit statement will show the maximum cash sum payable (ignoring any AVC s) and the amount that your pension would be reduced if you took this sum. You will also be notified before retirement of the amount of cash you may take, and of the amount that your pension is reduced. LUXFER GROUP PENSION PLAN 13

14 Early retirement Can I retire early? In this section retire means to permanently and completely stop working for the Company. Pre-92 Members may retire on or after their 60th birthday (or after their 55th birthday, providing that their age plus their Pensionable Service totals at least 75 years) and receive a discounted pension. In exceptional circumstances, and provided your Managing Director and the Trustees consent, it may be possible for any other member to retire at any time after age 55 and receive a discounted pension. There may be circumstances where, by agreement with your Managing Director and the Trustees, you may be permitted to commence drawing your Plan pension while still working for the Company. The pension will be calculated in the same way as if you were retiring. It must be understood that this is not a right and will be used sparingly where it is advantageous to you and the Company. Where this is agreed you will be required to commence the whole of your pension and you will not be allowed to make further contributions to the Plan to accrue further pension, neither will you be treated as in service for the purpose of paying death benefits. As you see, in many circumstances it will not be to your benefit to draw your pension early as it will be discounted for early payment, you will cease to accrue future pension and your death benefits will be affected. How much will my pension be if I retire early? If you retire before your 65th birthday, your pension will be calculated on your pension accrued to the date of retirement, but subject to discounting because your pension is paid for a longer period. Your pension will also be subject to the Longevity Adjustment Factor (see page 10). Discounting factors For Pre-92 Members, if you retire on or after age 60, no discounting is applied to the pension for Pensionable Service before 1 July For Pensionable Service after that date the discounting is 2% pa for each year before age 65. If you retire before age 60, additional discounting of 4% applies for each year up to age 60. For Post-92 Members, your pension will be discounted by 4% for each year by which your retirement precedes age 65. In all cases discounting on a pro-rata basis will be applied to additional incomplete years. Can I exchange part of my pension for a cash sum? Usually, you will also have the option of exchanging part of your pension for a cash sum. However, this option may be restricted as a result of the requirements for contracting-out. LUXFER GROUP PENSION PLAN 14

15 Early retirement What happens until my State Pension Age? You will receive a Bridging Pension until your State Pension Age. The Bridging Pension will be calculated as: For Pensionable Service up to 5 October % x State Pension Deduction x Pensionable Service up to 5 October 2007 x Discount Factor For Pensionable Service after 5 October 2007 The Pension Scale applicable on the 6 April which is at least 12 months before you retire x State Pension Deduction x Pensionable Service from 6 October 2007 x Discount Factor If your State Pension Age is later than age 65 the bridging pension will be reduced to allow for payment to the later age. The bridging pension is not payable to Post-92 Members only entitled to a preserved pension (see page 21). LUXFER GROUP PENSION PLAN 15

16 Ill health What happens if I am seriously ill? If you are seriously ill or disabled and unlikely to ever work again, you may retire early, whatever your age, subject to the Company s and the Trustees approval. Medical evidence will also be required. You will be entitled to receive a pension payable immediately for the rest of your life. How will my pension be calculated? Your pension will be based on your pension accrued to the date of retirement, plus an allowance for Pensionable Service between the date of retirement and your Normal Retirement Date based on the Pension Scale applicable on the 6 April immediately before your retirement. There will be no early retirement reduction. The allowance for Pensionable Service will be calculated as the lower of: One half of the period of Pensionable Service between the date of retirement and Normal Retirement Date 25% of accrued Pensionable Service 5 years Your pension will also be subject to the Longevity Adjustment Factor (see page 12). Usually, you will also have the option of exchanging part of your pension for a cash sum subject to Inland Revenue rules. The bridging pension described on page 15 will not be payable. Total commutation if terminally ill If, when you retire, you are terminally ill and expect to live less than 12 months (as certified by a medical practitioner) you can ask the Trustees to pay a cash sum in lieu of the whole of your pension. The amount of the cash sum will be advised to you on request and after a medical certificate has been provided. Note that if you take this cash sum the full widow(er) s pension will not commence until the fifth anniversary of your retirement and the payments to your widow(er) will be limited to your widow(er) s GMP until this date. LUXFER GROUP PENSION PLAN 16

17 Inflation protection Will my pension be increased? As necessary, your Plan pension will increase each 6 April. The increase is based on the annual percentage rise in the Retail Prices Index (RPI) over the year to the previous November, subject to the following limits: pension for Pensionable Service up to 5 April 1997: lower of RPI and 3% 2 pension for Pensionable Service between 6 April 1997 and 5 April 2005: lower of RPI and 5% pension for Pensionable Service from 6 April 2005: lower of RPI and 2.5% Pension payable to widow(er)s increase in a similar way. If you have exchanged part of your pension for a tax free cash sum (see page 13), your pension will be reduced in the following order: (1) pension accrued between 6 April 1997 and 5 April 2005; (2) pension accrued from 6 April 2005: (3) pension accrued before 6 April 1997, and the increases to your remaining pension will be calculated after allowing for the pension reduction. If your pension has been in payment for less than a year, you will receive a proportionate increase. Your GMP is subject to statutory requirements and after State Pension Age the following applies: i) any GMP earned before 6 April 1988: no increases will be paid by the Plan: ii) your GMP earned from 6 April 1988: the Plan will pay the lower of the annual rise in the Consumer Prices Index (CPI) to the preceding September, subject to a maximum of 3%. 2 Except pensioners who have elected, with effect from 1 October 2011, to exchange increases on this pension for a higher non-increasing pension LUXFER GROUP PENSION PLAN 17

18 Death in service What benefits are payable? A cash sum (currently tax-free) and a widow(er) s pension. The GMP element of your widow(er) s pension is automatically payable to your legal spouse (if any). The Trustees have discretion to pay the excess pension to any one or more of your dependants. If you wish the Trustees to consider paying a pension to a dependant you should complete a nomination form which may be downloaded from the Plan website. If you have registered a Civil Partnership or a same sex marriage then special provisions apply and these are set out below. When are death benefits payable? On your death whilst in Company service so long as you are an active member of the Plan. How much is the cash sum? Three times your highest Salary in any tax year, as a member of the Plan. Therefore, for a member whose highest tax year s Salary at the date of death was 32,000 the lump sum would be: 3 x 32,000 = 96,000 How much is the widow(er) s pension? 60% of your revalued accrued pension at the last 6 April plus 60% x Pension Scale x Plan Salary over the period since the last 6 April up to the date of your death plus 60% x Pension Scale x Plan Salary over the 12 months prior to the date of your death x half of any remaining Pensionable Service possible to Normal Retirement Date Pension Scale means the accrual rate applicable at the last 6 April before your death. The widow(er) s pension will be subject to the Longevity Adjustment Factor (see page 12). Assuming a member dies on a Pension Scale of 1.31%, with a revalued accrued pension of 9,000, Plan Salary over the period since the last 5 April of 13,000, a Plan Salary over the last 12 months of 26,000 and 12 years Pensionable Service possible to Normal Retirement Date, the widow(er) s pension is calculated as follows: 60% x 9,000 = plus 60% x 1.31% x 13,000 = plus 60% x 1.31% x 26,000 x 12/2 = total widow(er) s pension = LUXFER GROUP PENSION PLAN 18

19 Death in Service (cont) Alternatively, your dependants will have the option of taking a higher lump sum of times your highest Salary plus a refund of your contributions to the Plan (with interest). In such circumstances, the widow(er) s pension would be restricted to the widow(er) s GMP. Will the widow(er) s pension be increased? As necessary, this pension will be increased under the Plan in the same way as your own pension. (See page 17). Civil Partnerships and same sex marriages The following special provisions apply if you have registered a Civil Partnership or a same sex marriage. Your partner will be eligible to receive the part of the widow(er)'s pension described above that relates to Pensionable Service from 5 December In addition your partner will be eligible to receive a pension equal to the Widow(er) s GMP in respect of contributions from 6 April The Trustees have discretion to increase this pension to an amount not exceeding the full widow(er)'s pension described above. What if no pension is payable? The cash sum will be increased to times your highest Salary in any tax year plus a refund of your Plan contributions with interest at 3% pa compound. Who will receive the cash? In general, the person or persons you have named on your Expression of Wish Form. You must remember to complete and forward to your Local Pensions Administrator an Expression of Wish Form and also send a new form if your circumstance change, ie in the event of your marriage, birth of children or divorce (a form may be obtained from the Plan website). Whilst legally the Trustees have absolute discretion in deciding to whom the lump sum will be paid, it is their preference to follow your wishes unless there are, in their opinion, good reasons not to do so. The reasons for this are obvious - only you know how you want the lump sum paying and you cannot expect the Trustees to "second guess" your wishes. Therefore if you do not complete an expression of wish you risk the Trustees paying the lump sum to the "wrong" persons. LUXFER GROUP PENSION PLAN 19

20 Death in Retirement Will my widow(er) receive a pension? Yes. Your widow(er) will receive a pension equal to 60% of your pension, but based on the pension you would have been receiving if you had not given up any part for a cash lump sum, plus any inflation increases added to that pension since retirement. Therefore assuming the pension, before cash was taken, was 12,000 pa, the widow(er) s pension would be: 60% x 12,000 = 7,200 pa The GMP and Protected Rights elements of your widow(er) s pension are automatically payable to your legal spouse (if any). The Trustees have discretion to pay a pension to any one or more of your dependants. If you wish the Trustees to consider paying a pension to a dependant you should complete a nomination form (available to download from the Plan website) and pass it to your Local Pensions Administrator. Civil Partnerships and same sex marriages The following special provisions apply if you have registered a Civil Partnership or a same sex marriage. Your partner will be eligible to receive the part of the widow(er)'s pension described above that relates to Pensionable Service from 5 December In addition your partner will be eligible to receive a pension equal to the Widow(er) s GMP in respect of contributions from 6 April The Trustees have discretion to increase this pension to an amount not exceeding the full widow(er)'s pension described above. Payments within 5 years of retiring If you die within five years of retiring the pension payable to you will continue to be paid to your widow(er) or civil partner or other dependant until the fifth anniversary of your retirement. After that, it will change to the amount described above. Will the pension be increased? As necessary, this pension will be increased in the same way as your own pension (see Inflation Protection on page 17). Is a cash sum payable on my death? If you die within five years of retiring and no pension is payable to any dependant, a cash sum will be paid equal to the further pension payments you would have received had you lived for five years in retirement. This will be based on the amount of your pension at your date of death. An additional cash sum of 1,000 will be payable when your death occurs. If you left service with a preserved pension (see page 21) before retirement, a reduced amount, subject to a minimum of 250, will be payable depending on the period of Pensionable Service you had completed. This cash sum will be paid in the same way as the death-in-service cash sum (see Who will receive the cash? on page 19). LUXFER GROUP PENSION PLAN 20

21 Leaving Service What benefits does the Plan provide? If you leave you have the choice of leaving your benefits in the Plan as a preserved pension, which is revalued and payable from your Normal Retirement Date in line with the rules of the Plan, or having a transfer value paid into your new pension arrangement. How much is my preserved pension? It is calculated as in normal retirement (see page 9), based on your accrued pension at the date of leaving. Your preserved pension will then be revalued over the period to your Normal Retirement Date, or date of retirement, as required under Chapter II Part IV of the Pension Schemes Act Broadly, at the present time this means the pension will increase as follows: Pension in respect of Pensionable Service before 6 April 2009 increases in line with the rise in the Index over the period up to your Normal Retirement Date, subject to a maximum of 5% pa compound over this period. Pension in respect of Pensionable Service from 6 April 2009 increases in line with the rise in the Index over the period up to your Normal Retirement Date, subject to a maximum of 2.5% pa compound over this period. Index means, in respect of a period before 1 January 2011, the increase in the Retail Prices Index to the preceding September, and for a period from 1 January 2011, the increase in the Consumer Prices Index to the preceding September. The part which is your GMP for service before 6 April 1997, however, increases in line with the contracting-out requirements. The rate of increase, over the period up to your Normal Retirement Date, depends on the date you left service: If you left before 5 April 1997: 7.0% pa compound; If you left between 6 April 1997 and 5 April 2002: 6.25% pa compound; If you left between 6 April 2002 and 5 April 2007: 4.5% pa compound; If you left between 6 April 2007 and 5 April 2012: 4.0% pa compound If you left after 5 April 2012: 4.75% pa compound. Pre 92-Members have the option to draw their preserved pension from their 60th birthday, and also to draw their pension from age 55 if the 75 year rule applies. At retirement, your preserved pension will be subject to the Longevity Adjustment Factor (see page 12). Guarantees: The Guarantees on page 11 apply to your preserved pension. LUXFER GROUP PENSION PLAN 21

22 Leaving Service (cont) What other benefits do I get with my preserved pension? Your preserved pension has several other benefits attached, including: 1. The option at retirement to exchange part of your pension for a cash sum(see page 13); 2. Annual increases after retirement (see page 17), as well as revaluation before retirement as described above; and 3. Benefits on your death after retirement as described on page 20. If I have a preserved pension, what benefits are payable on my death before my Normal Retirement Date? 1. A cash sum (payable as described on page 19 Who will receive the cash? ) equal to the value of your preserved pension, less the value of the following benefits payable to your widow(er) or civil partner. 2. Your widow(er) will receive a pension equal to the Widow(er) s GMP. 3. Your civil partner will receive a pension equal to the Widow(er) s GMP, in respect of earnings from 6 April What happens when I leave? You will receive a letter setting out your benefits. The Plan administrators will also write to you with retirement options shortly before your Normal Retirement Date. Please notify the Plan administrators of any change of address. Where can a transfer value be paid? A transfer value may be paid to a new employer s plan, providing it is willing and able to receive it. Alternatively, the transfer value may be paid into a personal pension or an approved buy-out insurance policy of your choice. If you wish to investigate this option, you will be provided with a statement of the guaranteed cash equivalent (the term for the transfer value to which you are entitled) quoting the amount which would be payable and giving instructions on how to go about exercising the option. (Requests for cash equivalents can only be made once every 12 months.) If you wish to go ahead with the transfer, you will be required to reply within three months of the date of the quotation. Further details will be provided on request to the Plan administrator How is the transfer value calculated? The transfer value is the capital value of your preserved pension. It is calculated, using instructions provided by the Plan actuary, as the amount required to secure your preserved pension allowing for market conditions at the time of transfer. The calculation takes account of appropriate assumed rates of investment return and increases in the preserved pension before and after it comes into payment, as well as life expectancy statistics. The calculation allows for all guaranteed benefits including pension increases, but not for the possibility of discretionary benefits being granted by the Trustees at the request of the Company. Guarantee The transfer value payable will not be less than twice your own contributions to the Plan (including any contributions from a previous transfer in). LUXFER GROUP PENSION PLAN 22

23 Leaving Service Can I withdraw from the Plan? Yes. You may withdraw from membership while still employed by the Company. Your contributions to the Plan stop and you start to pay National Insurance contributions at the full rate. Note that you will not earn any further benefits in the Plan and your life assurance cover will cease. If you withdraw from the Plan you will be entitled to a preserved pension as if you had left service (see page 21) or you may transfer your pension entitlement to a new pension arrangement. If I withdraw, can I re-join the Plan at a later date? No, as the Plan is closed to new entrants, you will not be able to rejoin in any circumstances. LUXFER GROUP PENSION PLAN 23

24 Important General Information May I assign my benefits? You may not assign, charge or otherwise dispose of your benefits under the Plan. Will the Plan continue indefinitely? Luxfer Group Limited has no current intention to close the Plan, but reserves the right to amend or discontinue it at any time. In the event of the Plan being discontinued, its assets would be used to provide benefits in accordance with the Rules. What happens if the Plan is discontinued? The Trustees will use the assets of the Plan to secure members accrued benefits through insurance policies. If the assets are insufficient for this purpose and the Company is able to do so, the Company will be required to make good the shortfall. If the Company is unable to make good the shortfall, the Trustees can apply to the Pension Protection Fund (PPF) to take over responsibility for the Plan benefits, although the PPF does not guarantee total insurance for members against a shortfall of benefits provided by the Plan. What happens if I am absent from work? You remain a member of the Plan if you are away from work, but still employed by the Company, for up to a maximum of three years. This may be extended if you are absent through ill health. You will be covered for death-in-service benefits during your absence. If I am absent, what earnings figures are used to calculate my benefits? If you are absent from work through ill health or injury for a long period, the level of your Plan Salary may be lower than it otherwise would be. In such circumstances, to minimise the reduction in the amount of pension you would receive, Notional Earnings would be used to calculate your Plan Salary. Likewise, if death occurs after a long period of absence through ill health, Notional Earnings would be used to calculate your death-in-service benefits. Does all my transferred-in service provide the same benefits? No, your benefits in respect of previous bulk transfers or individual transfers into the RILA Plan will be determined in accordance with the literature issued to you at the time of transfer. In particular, the rate at which the pension is calculated (known as the accrual rate) may be less than 1.75% and the definition of Plan Salary may differ. You should contact your Local Pensions Administrator or your LPC or GPC Representative for further information on this. Are there any provisions for maternity leave? If you start maternity leave having indicated your intention to return to work at the end of the statutory period you will be regarded as continuing to earn Plan benefits. While you are absent on maternity leave your Plan contributions will be deducted from any maternity pay which is due. If, subsequently, you change your mind and decide not to return to work, you will then have the normal leaving service options described on page 21. Your benefits will be calculated up to your effective date of leaving. LUXFER GROUP PENSION PLAN 24

25 Important General Information (cont) What about a common-law relationship? The Trustees have discretion to pay a pension to a common-law widow(er) following your death. Alternatively, a pension may be paid to another dependant if there is no widow(er). It is important that if you have a common-law relationship you inform the Trustees using the Dependant s Nomination Form as well as completing an Expression of Wish Form. Notification of death Following your death, your dependants should contact the Trustees at the address shown at the front of this booklet. Before benefits can be paid, they will need to provide the Trustees with the original death certificate and copies of any marriage/dependants birth certificates, as appropriate. Do I have any say in the running of the Plan? Yes. At all Luxfer sites, Plan members elect representatives to the Local Pensions Committee (LPC), who in turn, elect the members of the Group Pensions Council (GPC). The GPC meets regularly to discuss issues affecting the Plan. Representatives are elected from the GPC to serve as member Trustees in line with the Pensions Act This system of representation makes sure that the views of Plan members are fully considered by the Trustees, who have overall responsibility for running the Plan. Could there be any additional benefits from the Plan? There is provision under the Rules of the Plan for additional benefits to be granted from time to time by the Trustees, subject to the consent of the Company and appropriate arrangements being made to fund them. In particular, the Trustees will review pension increases in the light of inflation at regular intervals, subject to the consent of the Company. Where can I obtain further information? All queries regarding the Plan should be addressed in the first instance to your Local Pensions Administrator, your LPC or GPC Representative. Annual report and accounts Each year the Trustees produce a formal annual report and audited accounts which reviews how the Plan has developed over the year. It includes statements by the actuary and auditor. A copy of the full report is available on the Plan website A summary of the Trustees report will be given to each member, annually. LUXFER GROUP PENSION PLAN 25