AER LINGUS DEFINED CONTRIBUTION PENSION SCHEME

Transcription

1 PENSIONS INVESTMENTS LIFE INSURANCE AER LINGUS DEFINED CONTRIBUTION PENSION SCHEME MEMBER GUIDE

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3 CONTENTS INTRODUCTION 2 WHAT IS A DEFINED CONTRIBUTION SCHEME? 3 COMMUNICATION 7 IMPORTANT INFORMATION TO KNOW 9 LIMITS ON PENSION CONTRIBUTIONS 13 CHOOSING YOUR RETIREMENT BENEFITS 14 SCHEME INFORMATION 16 CONTACT INFORMATION 18 GLOSSARY 20 1

4 SECTION 1 INTRODUCTION One day, you ll retire. You won t have a salary, but you ll still need money to live on and to enjoy yourself. So it pays to save money now while you re earning. Saving for your future is sensible and worthwhile and the Trustees have designed the Aer Lingus Defined Contribution Pension Scheme (Aer Lingus DC Scheme) to help you achieve this. The Trustees have selected Irish Life to administer this scheme and Aer Lingus have agreed to pay Irish Life for the costs of the administration. Irish Life will be available to provide information on the scheme and to answer your questions. With Irish Life EMPOWER, Irish Life aim to deliver better outcomes for you at retirement. Irish Life will regularly keep you up to date with your scheme in ways the Trustees hope you will find easy to understand and will give you clear actions to help you secure a better outcome when you reach retirement. In addition to this Member Guide, the Trustees have asked Irish Life to provide you with your own Member Schedule, Annual Pension Benefit Statement and the following tools to help empower you with access to your pension scheme. Information and Communication for you as a member of the Aer Lingus DC Scheme. Pension Planet Interactive Stay up to date with your pension scheme online. My Pension App Pension Education Check your current Individual Retirement Account value, estimate your value at retirement and much more! Irish Life will be available at your workplace to go through your individual pension funding requirements. There is no cost to you; Aer Lingus meets the cost of providing pension education. There are a number of technical terms used throughout this guide, you can find an explanation of these terms in the Glossary on page 20. If you have any questions, Irish Life are happy to help! Irish Life s contact details can be seen on page 18. 2

5 SECTION 2 WHAT IS A DEFINED CONTRIBUTION SCHEME? FIRST LET S LOOK AT THE BASICS Your pension scheme is a Defined Contribution (DC) Scheme because the regular contributions into the scheme are known, or defined. These contributions are made to your Individual Retirement Account within the scheme. To grow your Individual Retirement Account, you will have a choice of investment options. At retirement, you will use the accumulated value of your Individual Retirement Account to provide retirement benefits. With a Defined Contribution Scheme, the value of your Individual Retirement Account at retirement will depend on a few things: Regular contributions (including the amount you contribute and the amount Aer Lingus contribute as your employer). The tax relief you get from the Government. Any returns on your investment. Any additional contributions that you might make which are known as Additional Voluntary Contributions (AVCs). REGULAR CONTRIBUTIONS TAX RELIEF VALUE AT RETIREMENT INVESTMENT RETURN AVCS 3

6 REGULAR CONTRIBUTIONS The regular contributions to your scheme are made up of your own contributions and the contributions Aer Lingus make on your behalf. Below is an example for a member whose basic salary is 40,000 per year. CONTRIBUTIONS PERCENTAGE OF SALARY AMOUNT Your regular contributions 6.375% of your salary 2,550 Aer Lingus contributions 10% of your salary 4,000 Total contributions % your salary 6,550 You make a regular ordinary contribution of 6.375% of your salary to help fund your benefits. For employees that contribute 6.375% of salary, Aer Lingus will more than match your rate of regular ordinary contributions and will pay 10% of salary. Employees who joined the scheme before 1 January 2015 are permitted to retain the contribution structure they were using immediately before 1 January 2015, this also involves receiving a lower Aer Lingus contribution rate. No further contributions can be made by you or Aer Lingus after you leave Aer Lingus or retire. TAX RELIEF The Government will also help by giving you tax relief on any contributions that you make to the Aer Lingus DC Scheme. The example below shows how this works. If your salary is 40,000 a year this is what it means to your contributions on a fortnightly basis. YOU AER LINGUS TAX RELIEF TOTAL The example above is based on someone who pays tax at 40%. In total 6,550 is invested in your Individual Retirement Account every year. This is made up of an Aer Lingus contribution of 4,000 for the year plus the member contribution of 2,550. If you pay tax at 40% then you will receive tax relief of 1,020 for 4

7 the year. The contribution of 2,550 less the tax relief of 1,020 results in an actual cost to you of 1,530. Any contributions that you make will not receive relief from PRSI or Universal Social Charges (USC). The investment returns on your retirement contributions and the contributions made by Aer Lingus are tax free. However you may pay tax on some of your retirement benefits when you retire. ADDITIONAL VOLUNTARY CONTRIBUTIONS (AVCs) If you want to increase the value of your Individual Retirement Account you can, by making extra contributions. You can make these as regular AVCs, by saving more than 6.375% of your salary, or making a lump sum contribution. The good news is that you also get tax relief on any of these contributions (see examples on the next page). As we have already seen AVCs are the same as normal pension contributions when it comes to getting your tax relief. If your contributions are deducted from your salary then there is no need to worry about claiming tax relief either, your payroll team will sort all of this out for you. It is important to note that Aer Lingus does not match this contribution, this is an employee contribution only. If you want to start to pay, or adjust the level of, AVCs to your Individual Retirement Account you should advise AskHR. With the consent of the Trustees, you can also make a lump sum AVC at any time, to increase the value of your Individual Retirement Account. This can be a great way to maximise your tax efficient savings subject to the Revenue limits. The deadline for making end of year lump sum AVCs in respect of your previous year is 31 October each year or 30 November if you request the tax relief online. You can not make such a payment after you leave Aer Lingus or retire. 5

8 TAX EFFICIENCY TABLE 40% tax rate 20% tax rate 40% tax rate 20% tax rate AVC of Less tax relief Net cost to you Please refer to page 13 for further information on tax relief limits for contributions. You receive tax relief at your marginal rate. If you are a higher rate taxpayer this would be 40% and if you are a standard rate taxpayer it would be 20%. These rates are correct as at June INVESTMENT RETURN The investment return that your regular contributions will earn depends on your investment choice. While you will not be able to control how the investments perform, you will have complete control over which fund(s) you invest in. Please read the separate Investment Guide for details of the investment options available to you. The Trustees monitor the investment range on an ongoing basis. It is important that you also review your investment choices to ensure that you have selected an investment option that is appropriate to you. Neither the Trustees nor the company can accept responsibility for any loss which may be incurred as a result of poor performance. 6

9 SECTION 3 COMMUNICATION You are a member of the Aer Lingus DC Scheme and now it is important that you regularly check your Individual Retirement Account value against your target for retirement. If you don t have a target in mind, don t worry Irish Life will set one for you and you can check to see how you are doing against that target. This guide will now outline the tools and services Irish Life can offer to help you get the most from your scheme. You should always make sure that Irish Life have your latest contact details, including address, address and phone number to make sure that we can stay in touch with you. MEMBER ENGAGEMENT TEAM The Trustees of the scheme have arranged for the Irish Life Member Engagement Team to be available to visit you in Aer Lingus and guide you through your options. Irish Life will focus on helping you to understand how your scheme works through a number of different ways. The team supports: Group Presentations. Individual One to One sessions. A dedicated phone number: open 9am-5pm every working day. A dedicated service: dcpension@irishlife.ie. MEMBER SCHEDULE You will receive a Member Schedule with your welcome pack from Irish Life. The Member Schedule highlights the main details of your scheme. Your Member Schedule and all other correspondence for this scheme will be available on Pension Planet Interactive (PPI). This is the online system for your scheme and there are more details on this on the next page. 7

10 PENSION BENEFIT STATEMENT Each year Irish Life will send you your pension benefit statement with key information on your Individual Retirement Account. Amounts you and Aer Lingus have paid. What it is worth. What it is invested in. How much it is likely to be worth in the future. Additional scheme information such as Trustees details and much more. PENSION PLANET INTERACTIVE You don t need to wait for your pension benefit statement to arrive in the post. Pension Planet Interactive gives you instant online access to your scheme information such as: How you are doing versus your target. The current value of your Individual Retirement Account. Your transactions. How to switch your funds online. Your fund selection and fund information. Correspondence from Irish Life for example your benefit statements. Retirement planning tools and information about investment choices. Pre-retirement support. MY PENSION APP You can use this app on your smartphone or ipad to check the current value of your Individual Retirement Account, interactively estimate the value of your Individual Retirement Account at retirement, read about your fund options, and much more. Irish Life will send you details of how to register for Pension Planet Interactive and My Pension App. 8

11 SECTION 4 IMPORTANT INFORMATION TO KNOW QUALIFYING SERVICE Qualifying Service means service completed as a member of the scheme for retirement benefits. Similar service completed in another company scheme, or in another scheme from which a transfer value has been paid to the Aer Lingus DC Scheme, will also be counted as Qualifying Service. WHAT HAPPENS IF I LEAVE AER LINGUS? The rules around accessing your Aer Lingus DC Scheme benefits depend on your Qualifying Service. When you are leaving you will receive a letter with all of the options available to you and guidance on how to select the most appropriate one for you. Less than 2 years Qualifying Service If you have less than two years Qualifying Service you cannot leave your Individual Retirement Account invested in the scheme. Within three months of leaving, you have a choice of two options: 1. You may decide to transfer the full value of your Individual Retirement Account (including all employer contributions) to a new employers pension scheme or to an appropriate personal pension arrangement. 2. Alternatively, you can get back the value of the money you ve put in, including transferred-in member contributions, (minus 20% tax) but you will lose the money Aer Lingus put in on your behalf. If three months have passed since leaving, option 1 above is no longer available. At this stage the Trustees may decide that you have elected to receive a refund of contributions, where appropriate. You will get back the value of the money you ve put in, including transferred-in member contributions, (minus 20% tax) but you will lose the money Aer Lingus put in on your behalf. 9

12 More than 2 years Qualifying Service Within two years of leaving (or within such other longer period as the Trustees decide), you have a choice of the following options: A You can usually leave the value of your Individual Retirement Account in the scheme until you retire. This is known as a deferred pension. It may be possible to draw your benefits from age 50 onwards, for more details please see the section on What Happens If I Want To Retire Early on the next page. B You may be able to transfer the value of your Individual Retirement Account to a new employer s pension scheme (if your new employer s scheme permits). C If you do not join another company pension scheme and you decide to set up a Personal Retirement Savings Account (PRSA) you can, in certain circumstances, transfer the value of your Individual Retirement Account into it. You can then continue with your PRSA. D You can take the value of your Individual Retirement Account when you leave and invest in what is known as a Buy-Out Bond or Personal Retirement Bond (PRB) but you can not make further contributions to this PRB. This is an individual lump-sum investment in respect of your employment with Aer Lingus only and you can not make further contributions to such an arrangement. Under legislation at the date of publication, if you had two or more years Qualifying Service, once you have left Aer Lingus for more than two years, the Trustees can transfer the value of your Individual Retirement Account to an approved Buy Out Bond or PRSA in your own name. This may, depending on the value of your Individual Retirement Account, require regulatory approval - but it can happen without your consent. Efforts will be made to notify you 30 days in advance of any such transfer in accordance with the regulations. Regardless of which option you choose, you will not have access to your Individual Retirement Account until you retire. The options outlined in this section are subject to agreement by the Trustees of the Aer Lingus DC Scheme. For further information, contact Irish Life. It is important to note that all of your Aer Lingus benefits must be taken at the same time. This includes any benefits from the Irish Airlines Supplementary Personal Pension Plan (SPPP) and the Irish Airlines (General Employees) Superannuation Scheme (IASS). WHAT HAPPENS IF I NEED TO RETIRE EARLY DUE TO ILL HEALTH? If you are unable to continue in the service of Aer Lingus because of ill health it may be possible for you to access your retirement benefits in the scheme, subject to the agreement of the company and the Trustees of the scheme. However, this will mean that your retirement benefits will be much lower than if you had continued in employment and continued making contributions up until your normal retirement date. 10

13 WHAT HAPPENS IF I WANT TO RETIRE EARLY? If Aer Lingus agrees, you may retire early once you have reached age 50. However, the Aer Lingus DC Scheme is designed to provide benefits at your normal retirement age and retiring earlier than this means that your retirement fund will be less than if contributions were paid up until your normal retirement date. There may be restrictions on retiring early where you also have benefit entitlements from the IASS. This arises from Revenue regulations on the alignment of different pension payments. WHAT HAPPENS IF I DIE BEFORE I RETIRE? If you die before retirement while still working for the company, the Aer Lingus DC Scheme will pay the value of your Individual Retirement Account to your beneficiaries or legal personal representatives. There may be a tax liability on these benefits. You may complete a Wishes Form to let the Trustees of the Aer Lingus DC Scheme know who should receive the value of your Individual Retirement Account. Your wishes will not be legally binding on the Trustees but they will be taken into account. This Wishes Form is an important document and you should ensure that you complete this form and that it is kept up to date as your circumstances change. You should send your completed Wishes Form to Irish Life. If you die after retirement, but before you draw your retirement benefits from the scheme, then the Trustees can only pay the benefit to your estate. There may be a tax liability on these benefits. The benefits described in this section are separate to the lump sum death benefits which are payable by the company in respect of members who die in service. WHAT HAPPENS IF I DIE AFTER RETIREMENT If you die after retirement, any benefits payable will depend on the decisions you made when you retired. WHAT HAPPENS IF I HAVE OTHER PENSION BENEFITS? It is possible that you have pension benefits from other arrangements. With some of these arrangements such as a Personal Retirement Bond (PRB), you might have the option to transfer these funds into the Aer Lingus DC Pension Scheme. You do not have to transfer in benefits from previous pension arrangements. While there are many positive reasons to consider transferring in benefits there are also reasons why it may not be appropriate, or even possible, to transfer benefits into the scheme. Funds which are received into the scheme on your behalf will be invested in line with your investment strategy for regular contributions at the time of receipt, therefore it will 11

14 be subject to investment risk in your Individual Retirement Account. This means that the ultimate value of your transfer value may be less or more than was originally received by the scheme. In some circumstances it may be possible to access your pension benefits with previous employers from age 50 whilst continuing to work for Aer Lingus. However you should note that if you transfer any previous benefits into the scheme then you will be unable to access them until you leave or retire from the scheme. The Trustees are unable to offer advice to members on what to do so they recommend that members seek out the appropriate financial advice to help them make a decision on the possible transfer of benefits. IASS/SPPP BENEFITS Any IASS or SPPP benefits, if applicable, will remain separate from the Aer Lingus DC Scheme but will be taken account of at retirement when the Revenue s limits on drawing down pension benefits must be considered. The IASS and SPPP benefits, if applicable, may also impact on when you can take benefits from the DC scheme. 12

15 SECTION 5 LIMITS ON PENSION CONTRIBUTIONS It would be great if you could save unlimited amounts into your Aer Lingus DC Scheme and still receive tax relief, but because the tax breaks are so good, the Government have established limits. The table below displays the maximum percentage of your total earnings that you can receive tax relief on. This includes any compulsory contributions to the Aer Lingus DC Scheme and any AVCs you choose to make. Relief On Your Pension Contributions Age Maximum percentage of your total earnings* you can save tax on by contributing to your Individual Retirement Account Under 30 15% % % % % 60 & over 40% *The Revenue s limits are applied to your total earnings, subject to a maximum of 115,000. Please note that contributions to the Aer Lingus DC Scheme are a percentage of basic salary, rather than total earnings. The earnings limit is subject to review. There is no maximum payment that can be made, but you may only claim tax relief within Revenue limits. There are also limits on the benefits that may be provided. Under current legislation, the Standard Fund Threshold allowable for tax relief purposes is 2.0 million (this maximum amount includes any pension benefits already taken together with pension benefits yet to be taken). Any fund in excess of this amount will be liable to a once-off income tax charge at the top rate of tax (currently 40%) when it is drawn down on retirement. This limit may be adjusted annually in line with an earnings index. Please note that the Revenue Commissioners have also placed limits on the total amount that can be contributed by you and your employer to your occupational pension scheme. However, if you are concerned by these limits please consult Irish Life for further details. 13

16 SECTION 6 CHOOSING YOUR RETIREMENT BENEFITS At retirement, you will choose your retirement benefits. Before you retire you will receive a letter with all of the options available to you and guidance on how to select the most appropriate one for you. You may also have other benefits such as IASS or SPPP benefits, and it is important to remember that these benefits must be taken at the same time as the Aer Lingus DC Scheme benefits. Your normal retirement date will depend on whether you are also a member of the IASS: If you are not also a member of the IASS, your normal retirement date will fall on your 65th birthday. If you are also a member of the IASS, your normal retirement date will be on the anniversary of the first day of pensionable service that falls after your 65th birthday. OPTION 1 OR OPTION 2 1. Take a maximum cash lump sum of up to 1.5 times salary, subject to 20 years of relevant or pensionable service, in addition to having worked to normal retirement date.* AND THEN 2. The balance of your Individual Retirement Account (excluding any AVC value) must be used to buy a pension income for life/annuity. AND THEN 3. If you have chosen to contribute extra amounts as AVCs, you also have the option to use the proceeds from your AVC to purchase an Approved Retirement Fund (ARF) or an Approved Minimum Retirement Fund (AMRF). Your AVCs can also be used to buy a pension income for life/annuity. 1. Take a maximum immediate cash lump sum of up to 25% of your retirement fund.* AND THEN 2. Invest the next 63,500** of your pension fund in: - An AMRF or - Purchase an annuity to provide you with a pension income for life. AND THEN If you have a guaranteed lifetime income of at least 12,700** a year (including any State benefit applicable), you can. - Take the balance as a taxable lump sum. OR - Transfer the balance to an ARF. All benefits from your IASS, DC and SPPP will be included for these calculations and will have to be taken at the same time. Option 2 will not be available in respect of your IASS benefits, as Defined Benefit entitlements cannot be invested in an AMRF and ARF. *Please see overleaf for the tax treatment on these lump sums. **These amounts may change (up or down) as specified by the Government. The amounts quoted are correct as at 1 January

17 CASH LUMP SUM PAYMENTS - TAX TREATMENT Your cash lump sum will have the following tax treatment. IS THE VALUE OF THIS CASH LUMP SUM UNDER 200,000? NO YES Then you can take this lump sum tax-free. IS THE VALUE OF THIS CASH LUMP SUM BETWEEN 200,000 AND 500,000? NO IS THE VALUE OF THIS CASH LUMP SUM OVER 500,000? YES YES Then the excess above 200,000 can be taken as a cash lump sum, subject to tax at the standard rate, currently 20%. If you have a Personal Fund Threshold you may take additional cash lump sum benefits above 500,000, up to a total of either 1.5 times salary or 25% of your retirement fund, depending on which option you choose. Under current legislation, the Standard Fund Threshold allowable for tax relief purposes is 2.0 million (this maximum amount includes any pension benefits already taken together with pension benefits yet to be taken). This limit is in respect of all pension benefits held for an individual. In this case, any cash lump sum amount taken in excess of 500,000 is taxed at your marginal rate of tax and the Universal Social Charge and PRSI will also apply. Tax free lump sums taken on or after 7 December 2005 will count towards using up the tax-free amount. So if you have already taken tax-free retirement lump sums totalling 200,000 or more since 7 December 2005, any further retirement lump sums paid to you will be taxable. 15

18 SECTION 7 SCHEME INFORMATION Formal Scheme Name The Aer Lingus Defined Contribution Pension Scheme Scheme Type This is a Defined Contribution Scheme for the purposes of the Pensions Act Employer Aer Lingus Scheme Reference Number Pension Authority Number PB Approval This scheme is approved by the Revenue authorities as an exempt approved scheme under the Taxes Consolidation Act, 1997 (as amended) Scheme Consultant Joseph G. Byrne & Sons Consulting Actuaries Limited Scheme Contact Eamon Moran, Irish Life Scheme Contact Address Irish Life, Lower Abbey Street Dublin 1 Registered Administrator Irish Life Assurance plc Trustees Aer Lingus 2009 DCS Trustee Ltd. WHO CAN JOIN THE SCHEME? All employees, other than pilots, who join the company on or after 1 January 2015 may join the scheme. Presuming they remain with the company, they must join the scheme no later than six months after commencing employment. All employees who were active members of the IASS on 31 December 2014 were automatically enrolled in this scheme from 1 January 2015 and continued membership is a condition of employment. Any employee who commenced employment with Aer Lingus prior to 1 January 2015, and that were not at the time active members of any pension scheme supported by Aer Lingus, were not automatically enrolled. Such employees who are not members, can join the scheme at any time while they remain in employment. They can contact HR to express their interest. If they do join, continued membership of the scheme from that point will then be compulsory. 16

19 BENEFITS HELD OR PROVIDED SEPARATELY TO THE AER LINGUS DC SCHEME You may also be a member of the pension arrangements listed below. The details of these schemes are not covered within this member guide: Irish Airlines (General Employees) Superannuation Scheme ( IASS ). Irish Airlines Supplementary Personal Pension Plan ( SPPP ). LEGAL PERSPECTIVE OF THE SCHEME The scheme is governed by a Trust Deed and is administered by the Trustees according to the Rules. The Trust Deed and Rules are technical, legal documents which this booklet aims to summarise. Should any difference in interpretation arise, the Trust Deed and Rules must be followed. Should you require these, you can request them from Irish Life. Changes in legislation and other unforeseen circumstances may make it necessary to amend the provisions of the scheme. The company, provided it receives the consent of the Trustees, may amend the scheme at any time. In some circumstances the company could reduce or even terminate its future contributions to the scheme. Should this happen, the units already secured by your Individual Retirement Account will normally be fully protected. However, you should be aware that where the Trustees can not recover the expenses of winding-up the scheme from the company, they do have the power to recover those expenses from the assets of the scheme. In that event, the additional cost would be shared amongst the units of the scheme members. PENSION ADJUSTMENT ORDER In the event of judicial separation or divorce, a court application for a Pension Adjustment Order in respect of the retirement or contingent benefits payable to or in respect of a married member may be made. Further information about the operation and impact of Pension Adjustment Orders may be obtained from the Pensions Authority. CAN MY BENEFITS BE USED TO OBTAIN A LOAN? No. You can neither use your benefits for this purpose nor assign them to a third party. If you attempt to do so you may lose your right to benefits. 17

20 SECTION 8 CONTACT INFORMATION WHERE CAN I FIND OUT MORE? You can contact Irish Life with any questions you may have on or dcpension@irishlife.ie. Irish Life will be happy to answer any questions you may have. You also have the option of getting independent financial advice at any time. In the unlikely event you are not happy about something to do with your scheme, please contact the Trustees. The Trustees will follow an internal disputes resolution process for sorting out disputes. You don t have to accept what is decided. The name and contact details of your pension plan contact and the Trustees are listed in your Member Schedule (issued with your welcome pack). If you re still not happy, you can take your complaint to the Pensions Ombudsman who will decide if the matter falls within their terms of reference: The Office of the Pensions Ombudsman, 4th Floor Lincoln House, Lincoln Place, Dublin 2. Phone: Fax: info@pensionsombudsman.ie Website: Certain cases may be dealt with by the Financial Services Ombudsman: The Financial Services Ombudsman, 3rd Floor, Lincoln House, Lincoln Place, Dublin 2. Lo-call: Fax: enquiries@financialombudsman.ie Website: 18

21 You can also contact the Pensions Authority at: The Pensions Authority, Verschoyle House, 28/30 Lower Mount Street, Dublin 2. Phone: (01) Lo-call: Website: The contribution and benefit limits, tax relief and other details set out in this booklet are based on our understanding of the law as at January When reading this booklet you should consider that the law can change at any time. This booklet is a general guide to these matters only; therefore you should always get expert advice when you make any decisions which may affect your benefits under the scheme. This guide summarises the Trust Deed and Rules, the legal document which governs the scheme s operation. Should any difference in interpretation arise, the Trust Deed and Rules must be followed. 19

22 SECTION 9 GLOSSARY Individual Retirement Account, on any date, means the accumulated value of the contributions which have been paid by Aer Lingus on your behalf, together with your own contributions and any Additional Voluntary Contributions (AVCs) paid in to the Aer Lingus DC Scheme, taking into account investment returns earned and deducting a proportionate share of any prescribed expenses, taxes or liabilities for which the Trustee is liable. Your Individual Retirement Account may include any transfer payment to the scheme to which you are entitled as a result of a previous employment or a PRSA you may have taken out. The benefits available to you from the scheme on retirement, leaving service or death will depend on the value of your Individual Retirement Account at that time. Beneficiaries means your dependants and certain other relations either by blood, marriage or civil partnership or anyone entitled under your will. You may also nominate other beneficiaries for consideration, for example: a friend; a charity; or another company/legal entity. If you wish for the Trustee to consider your nominated beneficiaries, you should complete and return a Wishes Form. The Trustee is not bound by your wishes and will make the final decision over who should receive benefits, however, it will of course take your wishes into account. The Company means Aer Lingus (Ireland) Limited and (where appropriate) any associated company admitted to the scheme. Dependant(s) are any of the following: - your spouse/civil partner, widow or widower, - your dependent child(ren), or - any other person who, before your death, was financially dependent on you. Dependent child(ren) under 18 years of age and those children who are 18 years of age or over and under 23 years of age who are in full-time education. Earnings means your total income from all sources (including sources other than Aer Lingus) and any other taxable benefits you receive for the purposes of calculating allowable tax relief on personal contributions to all forms of pension arrangements, including PRSAs. 20

23 Your Normal Retirement Date will depend on whether you are also a member of the IASS: If you are not also a member of the IASS, your normal retirement date will fall on your 65th birthday. If you are also a member of the IASS, your normal retirement date will be on the anniversary of the first day of pensionable service that falls after your 65th birthday. Qualifying Service means service completed as a member of the scheme for retirement benefits. Similar service completed in another company scheme, or in another scheme from which a transfer value has been paid to the scheme, will also be counted as Qualifying Service. Salary, on any date, means your basic annual rate of salary or wages at that date excluding benefits, bonus, overtime, commissions or any other variable earnings. Standard Fund Threshold: There are also limits on the tax-relieved benefits that may be provided. Under current legislation, the Standard Fund Threshold allowable for tax relief purposes is 2.0 million (this maximum amount includes any pension benefits already taken together with pension benefits yet to be taken). This limit is in respect of all pension benefits held for an individual. Personal Fund Threshold: In certain circumstances, a higher threshold called the Personal Fund Threshold (PFT) may apply. Those with higher fund values than the 2m should make an application to apply for a Personal Fund Threshold. People with funds that are valued close to the current Standard Fund Threshold should review their retirement planning strategy to identify if they should alter their approach. You can contact Irish Life to help with this. IASS - Irish Airlines Superannuation Scheme. SPPP - Irish Airlines Supplementary Personal Pension Plan. What Is an Annuity? When you retire, some or all of your pension fund may be used to purchase a retirement pension which is also called an annuity. The purpose of this annuity is to provide a guaranteed income for the rest of your life, no matter how long you live. The cost of purchasing an annuity at retirement will depend on a number of factors at your retirement date. These factors include your age, the long-term interest rates and the annuity options you select. These annuity options allow you to include a provision for dependant and / or to allow for future increases linked to changes in the Consumer Price Index. Your income in retirement, including any annuity purchased, will be subject to the relevant levels of Income Tax, PRSI and USC. An Approved Retirement Fund (ARF) is a personal retirement fund where you can keep your money invested after retirement. With an ARF, you manage and control your retirement fund and can invest it in a wide range of different investment funds. You can withdraw from it regularly to give yourself an income, on which you pay income tax, the Universal Social Charge (USC) and PRSI (if you are liable for this). Any money left in the fund after your death will pass to your estate. 21

24 An ARF is available if: You have a guaranteed lifetime income of at least 12,700* a year. or You have a fund value in excess of 63,500*, the first 63,500 having been invested in an Approved Minimum Retirement Fund, the excess can be invested in an ARF. *The Government have indicated that these limits may be reviewed in future Finance Acts. Please note the following Revenue regulations: From the year you turn 61, tax is payable on a minimum withdrawal on the 30 November each year of 4% of the value of the fund at that date. This withdrawal is liable to income tax, Universal Social Charge and PRSI, if applicable. From the year you turn 71 the minimum withdrawal is increased to 5%. Where the fund value is greater than 2 million the minimum withdrawal will be 6%. If you have more than one ARF and these are with different managers then you must appoint a Qualified Fund Manager (QFM) who will be responsible for ensuring a withdrawal of 6% is taken from the total value of your ARF s. It is your responsibility to let your ARF providers know if you have other ARF and Vested Personal Retirement Savings Accounts with a total value of greater than 2 million. Where a greater withdrawal is made during the year, tax will be paid on the greater withdrawal amount. The minimum withdrawal rate is set in line with the required imputed distribution amount which may be altered to reflect changes in legislation. You can choose to take a higher withdrawal amount if you wish. The 6% is inclusive of any income you actually take. This applies when the ARF owner is 60 years or over for the whole of the tax year and where an ARF is set up after the 6 July *These amounts and the valuation dates may change as specified by the Government. The information is correct as at January What is an Approved Minimum Retirement Fund (AMRF)? AMRF stands for an Approved Minimum Retirement Fund. It is similar to an ARF in many ways. Every year AMRF holders will be able to make one withdrawal of up to 4% of the AMRF asset value. You can only have one AMRF at any time. An AMRF becomes an ARF when you reach 75 or on earlier death or should your circumstances change and you are in receipt of a specified income of 12,700. Money withdrawn from an AMRF is subject to income tax, the USC and PRSI (if applicable). While ARFs and AMRFs allow you to invest some of your Individual Retirement Account post your retirement they do not provide certainty or security of income for your lifetime with an annuity would. 22

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27 ABOUT US Established in Ireland in 1939, Irish Life is now part of the Great-West Lifeco group of companies, one of the world s leading life assurance organisations. Great-West Lifeco and its subsidiaries, including The Great-West Life Assurance Company, have a record for financial strength, earnings stability and consistently high ratings from the independent rating agencies. The Great-West Life Assurance Company has an AA rating for insurer financial strength from Standard & Poor s. Information correct as of April For the latest information, please see

28 CONTACT US PHONE: FAX: WEBSITE: WRITE TO: Irish Life Corporate Business, Irish Life Centre, Lower Abbey Street, Dublin 1. Irish Life Assurance plc is regulated by the Central Bank of Ireland. In the interest of customer service we will monitor calls. Irish Life Assurance plc, Registered in Ireland number , VAT number 9F55923G. 5436cb (NPI 6-16)