CHANGES TO YOUR PENSION SCHEME FREQUENTLY ASKED QUESTIONS

Transcription

1 CHANGES TO YOUR PENSION SCHEME FREQUENTLY ASKED QUESTIONS

2 BACKGROUND TO THE CHANGES 1 Why is Sony Europe Limited (the Company) making these changes and why now? There are increasing requirements on employers to review and maintain the quality of their defined contribution (DC) pension arrangements to make sure they are fit for purpose. In addition, it is becoming increasingly difficult to keep pace with the new regulatory requirements and to accommodate the new flexibilities introduced from 6 April 2015 within the Sony United Kingdom Pension Scheme (the Current Scheme), in particular about how you can now access your retirement account. In view of this, we felt it was time to carry out a review of our pension arrangements. As part of our review of the Current Scheme, we have looked at the services you currently receive and the value for money that they represent. We believe this is particularly important in light of the new flexibilities, which extend the options you have for taking your DC benefits, including the removal of any requirement for you to use your retirement account to buy a pension for life (an annuity) at retirement. Whilst it may be possible to use the Current Scheme to give you access to some of the flexibilities, it would require changes which would be complex. 2 CHANGES TO YOUR PENSION SCHEME

3 As a result, we believe that more choice and flexibility could be offered to members through the New Scheme. Based on our initial investigations, the New Scheme would offer you the following benefits that are not currently available to you under the current DC Section of the Scheme: Easy access to the pensions flexibilities that came into force from April 2015; Online access to educational tools to help you manage your savings and plan for your retirement; A wider range of funds in which to invest and the ability to make changes to your investment choices online; and Improved online support channels. 3

4 2 What are the proposed changes? FAQ s The Company is proposing to close the Current Scheme to new contributions from 31 December 2017 and set up a new DC pension arrangement (the New Scheme) on 1 January Following the closure of the Current Scheme, we envisage that all existing DC Section retirement accounts (including those of ex-employees and deferred members of the Current Scheme) retained in the Current Scheme will be automatically transferred by the Trustee of the Current Scheme (the Trustee) to the New Scheme before 31 March This FAQ document, along with the enclosed letter, is sent on behalf of the Company to its respective affected members and outlines the Company s proposal. It marks the start of a formal 60-day pension consultation process with all affected members, during which we would welcome all your comments and views on our proposals. To allow time for these letters to reach you, we are starting the 60-day consultation period on 6 October 2017 to 6 December We will not make our final decision until after the consultation period has elapsed. 4 CHANGES TO YOUR PENSION SCHEME

5 3 How will this affect me? ACTIVE MEMBERS OF THE DC SECTION OF THE CURRENT SCHEME: If you are an active member of the Current Scheme, the proposal is for you to join the New Scheme from 1 January All future contributions on and from 1 January 2018 will go into the New Scheme. For the retirement account that you have built up under the Current Scheme, the proposal is for the Trustee to organise an automatic transfer to the New Scheme it is proposed this will happen by 31 March NON-PENSION SCHEME MEMBERS: If you are a current employee of the Company who is not a member of the Current Scheme, you may be automatically enrolled into the New Scheme on 1 January Please see question 8 for further details. MEMBERS OF THE CURRENT SCHEME WITH BENEFITS IN THE DEFINED BENEFIT SECTION OF THE CURRENT SCHEME (THE DB SCHEME): If you have deferred benefits in the DB Scheme, any benefits you have already built up within the DB Scheme will not be affected by this proposal. 5

6 4 What are my benefits in the Current Scheme? Your DC pension account in the Current Scheme builds up each year based on contributions paid in by you and the Company. The total amount in your DC pension account is invested until retirement, when you ll have a DC pot to provide a retirement income. 5 What is a Master Trust? The New Scheme is proposed to be a Master Trust. Like the Current Scheme, a Master Trust is a trust-based pension scheme. This means that there is a board of trustees responsible for the scheme. The Current Scheme is only for employees of Sony, whereas a Master Trust is a multi-employer trust-based scheme. The Company, in conjunction with the Trustee, ran an exercise to select a new Master Trust, and Aviva has been appointed in principle. It was felt that Aviva was the best match for the Company and its employees. The Scheme name will remain the same - mypension. We re proposing to only pay contributions into the Aviva Master Trust going forward. 6 CHANGES TO YOUR PENSION SCHEME

7 DETAILS OF THE CHANGES 6 Will my contributions change? No, we are not proposing a change in contribution rates. As a reminder, the contribution rates available to you are: EMPLOYEE EMPLOYER 2% (default) 4% (default) 3% 6% 4% 8% 5% 10% 6% 12% 7% 13% 8% 14% Contributions above 8% are considered Additional Voluntary Contributions (AVCs) and are not matched by the Company. You will join the New Scheme on the same contribution rate that you are currently paying. 7

8 7 I currently pay my contributions by salary sacrifice. Will this change? No, if you currently pay contributions by salary sacrifice, you will continue to do so. 8 I am not a member of the Current Scheme, what will happen to me? Automatic enrolment is a Government initiative to help more people save for later life through a pension scheme at work. On 1 October 2013, we were required to automatically enrol all eligible employees not already in the current Scheme. All eligible new joiners have subsequently been automatically enrolled into the Current Scheme and in 2016, in line with legislation, we re-enrolled anyone who had opted out. Due to the nature of the change, we will be required to automatically enrol all eligible employees into the New Scheme. This includes members who have previously opted out. At 1 January 2018, we will therefore automatically enrol all employees into the New Scheme who are: At least 22 years old; Not yet at State Pension age; Earning a salary of at least 10,000 p.a. (under current rules); and Normally working in the UK under a contract of employment. 8 CHANGES TO YOUR PENSION SCHEME

9 If you re not a member of the Current Scheme at the moment, you will be automatically enrolled into the New Scheme on the default rate (2% employee and 4% employer). You will be able to opt out of the New Scheme; however, if you choose to stay in the New Scheme, you will have a pension account which will always be yours, even if you leave the Company in the future. The Company is committed to helping our employees save towards their retirement, so you should think carefully before opting out of the New Scheme. If you choose to opt out, you will not receive any contributions from the Company. Please note that if you choose to opt out, you will be automatically re-enrolled in roughly three years time as per auto-enrolment legislation. 9 What happens if I opted out of the Current Scheme due to the Fixed or Individual Protection against the Lifetime Allowance? If you opted out of the Current Scheme for tax reasons, for example, because you have Fixed or Individual Protection, you will not be automatically enrolled into the New Scheme. 9

10 10 Will I be exposed to any cost in moving my pension account from the Current Scheme to the Master Trust? There will be no explicit costs or charges for transferring your existing investments to the New Scheme. Any costs will be allowed for within the ongoing fund charges. 11 I am a deferred DB member. Will I be able to use my DC pot towards my tax-free cash if the changes go ahead? Yes, we have agreed with the Trustee of the New Scheme (the New Trustee) that this option will continue to be offered to you at retirement. 10 CHANGES TO YOUR PENSION SCHEME

11 12 What will happen to my nestegg account? These currently fall outside of the scope of what the Master Trust is able to administer and so these will continue to be held outside of the New Scheme and will operate as normal. 13 Will I lose my protected pension age? No, if you currently have a protected pension age, you will not lose this protection. 14 I currently have a Guaranteed Minimum Pension (GMP) linked to my retirement account what will happen to this? Your GMP will be protected. The Company and Trustee are currently exploring options and further information will be provided to those with GMPs in due course. 11

12 INVESTMENTS 15 Where will my contributions be invested? A range of investment options will be available to you in the New Scheme. Initially, you will be automatically invested in fund/s which are most closely aligned to those in which you are invested in the Current Scheme. There may be some exceptions to this, however, as legislation does not permit employees to be automatically invested in funds which carry a charge of more than 0.75% p.a. If this applies to any of the funds in which you invest, alternative funds will be selected. Further detail on funds will be provided during the consultation process. The presentations to be held by Aviva will also cover this topic in detail. Please see question 19 for information on presentations. 16 Can I choose to invest in something other than the fund in which I am automatically invested? Yes, if you don t want to invest in the fund/s initially selected, you can choose one or more funds from the wider fund range available. You will be able to do this by switching your investment fund/s at any time after your membership has been confirmed to you by Aviva. Further detail on this fund range will be provided during the consultation process and the presentations by Aviva will also cover this topic in detail. Please see question 19 for information on presentations. 12 CHANGES TO YOUR PENSION SCHEME

13 17 Will there be a charge for switching between self-selected funds? No, there will be no charge for switching between self-selected funds. 18 Is it more expensive in the Master Trust? When selecting a new provider, we worked hard to ensure that your charges would not be impacted. If you are invested in the default fund, we can confirm that your charge will not increase. If you are invested in one of the self-select range funds, you may see a change in the charges you pay. We are currently finalising the charges that will be payable and a list of the available funds will be provided during the consultation. PENSION REPORT 13

14 OTHER INFORMATION 19 Where can I find out more information about the New Scheme? Aviva will be giving presentations in Weybridge, Basingstoke and Pencoed. Further details will be provided on the dates and times of the presentations in due course. How can I ask questions about What happens if I die in service? the New Scheme? You can give feedback or ask questions on the proposed changes by: mypension@eu.sony.com Should you die in service whilst a member of the New Scheme, the benefit payable would be in line with the benefit payable within the Current Scheme. Post: Roy Douglas, Benefits and Pensions Manager, Sony Europe, The Heights, Brooklands, Surrey KT13 0XW We will collate any frequently asked questions and update these FAQs during the consultation. 14 CHANGES TO YOUR PENSION SCHEME

15 22 How safe is my money in the Master Trust compared with the Current Scheme? Aviva will invest members assets via an insurance policy, giving the same protection that is available under the Current Scheme. 23 Can I stay in the Current Scheme? No, we believe that the Aviva Master Trust offers a much better benefit to members than the Current Scheme. Due to the changing pensions landscape, and the introduction of greater flexibilities, it is the Company s and Trustee s belief that the Current Scheme can no longer provide enough choice for members at retirement. Additionally, if the proposals go ahead after the consultation, we will only pay contributions into the New Scheme going forward. 24 What happens if I don t want to join the Master Trust? If the proposals go ahead and you decide you don t want to join the New Scheme, you can choose to opt out. Please note that if you do opt out of the New Scheme, your assets will still be transferred to the New Scheme unless you choose to transfer your assets elsewhere. You will not be able to remain in the Current Scheme. If you choose to stay in the New Scheme, you will have a pension pot which will always be yours, even if you leave the Company in the future. The Company is committed to helping our employees save towards their retirement, so we would recommend that you think carefully before opting out of the New Scheme. If you choose to opt out, you will not receive any contributions from the Company. Please note that if you choose to opt out, you will be automatically re-enrolled in roughly three years time in line with auto enrolment legislation. 15

16 GLOSSARY The Current Scheme The DC section of the Sony UK Limited Pension Scheme (mypension) is a defined contribution scheme, which Sony employees are eligible to join. Master Trust The Master Trust is a multi-employer, trust-based, defined contribution scheme. The Aviva Master Trust The Aviva Master Trust is a Master Trust administered by Aviva. The New Scheme The New Scheme is the Aviva Master Trust, which it is proposed members join from 1 January Retirement Account A Retirement Account is the pot of money you have built up in a pension scheme and is made up of contributions you have paid, contributions from the Company and any investment returns earned over time. Defined Benefit This is a type of pension scheme where your pension at retirement is based on your length of service with the company and your pensionable salary. Defined Contribution This is a type of pension scheme where your pension at retirement is based on the amount paid in and any investment returns. The Company The Company is Sony Europe Limited. Trust A trust is a legal structure where the ownership of the pension scheme assets is with the trustee. Trustee A trustee is the legal owner of the pension scheme assets in a pension scheme under trust. A trustee can only use the pension scheme s assets to provide a pension to the member