GLOBAL AEROSPACE UNDERWRITING MANAGERS PENSION SCHEME. Defined Benefit Section

Transcription

1 GLOBAL AEROSPACE UNDERWRITING MANAGERS PENSION SCHEME Defined Benefit Section MEMBER'S HANDBOOK SEPTEMBER 2015

2 PENSION AND LIFE ASSURANCE ARRANGEMENTS Trustee Address: Trustee of the Global Aerospace Underwriting Managers Pension Scheme c/o Global Aerospace Underwriting Managers Limited Fitzwilliam House 10 St. Mary Axe London EC3A 8EQ

3 CONTENTS 1. About the Scheme Page Introduction Page 4 3. Terms which have a Special Meaning Page Contributions Page 7 5. Your Retirement Benefits Page Benefits Payable on Death Page Leaving Service Page Payment of Benefits Page Miscellaneous Matters Page Appendix Pre April 1997 Contracted out Pension Rights Page Expression of Wish Form Page 26

4 ABOUT THE SCHEME Summary of benefits Benefits on Retirement (see page 13) Members will receive a pension based on a proportion of Final DB Pensionable Salary each year of Pensionable Service (see Terms Which Have Special Meaning on Page 5); Plus the option to exchange part of this pension for a lump sum (currently tax free). Option to increase Benefits (see Page 9) Benefits on Death after Retirement (see Page 18) Should Members wish to increase their benefits they may do so by paying additional voluntary contributions. A Spouse s or Dependant's pension. An option to surrender part of your pension for an increased Dependant s pension A lump sum should death occur within the five year period following retirement. Increases to Pensions (see page 19) Benefits on Death in Service before Normal Pension Date (see page 16) Pensions in payment increase each year in line with inflation (subject to a maximum of 5% per annum). A lump sum equal to 4 times the Member s basic annual salary; plus A refund of the contributions you have paid. A Spouse s or Dependant s pension. 1

5 Cost to the Member Members whose benefit accrual is 1/60 th pay 12.5% of pensionable salary towards the cost of their pension benefits. Members whose benefit accrual is 1/75 th pay 7.5% of pensionable salary. The amount of contributions payable will be dependent on your accrual rate and will be calculated as a percentage of your DB Pensionable Salary. STATE PENSION BENEFITS AND CONTRACTING-OUT Basic State Pension Provided you have paid sufficient National Insurance contributions you will, in addition to the pension payable from the Scheme, be entitled at State Pension Age to a basic flat-rate pension. The amount of your Basic State Pension will be reviewed yearly, in payment, by the Government, to take account of increases in prices. With effect from 1 January 2002 the Defined Benefit Section of the Scheme was closed to new members. IMPORTANT NOTICE: This booklet highlights the main provisions of the Scheme without setting out every detail of its operation. The Member's Handbook is intended to give you a straightforward explanation of how the Scheme is operated and every effort has been made to ensure its accuracy. The Scheme is constituted by a formal legal document called a Definitive Trust Deed and Rules, which is amended from time to time. The Definitive Trust Deed and Rules will prevail in the event of any discrepancy. Rights to benefits are conferred by the Definitive Trust Deed and Rules, which will always overrule this booklet if any questions of interpretation arise. 2

6 ABOUT THE SCHEME The Scheme As a member of the Defined Benefit Section of the Scheme you will be provided with benefits at retirement expressed as a proportion of your earnings shortly before you retire. (These earnings are referred to as your Final DB Pensionable Salary). The actual proportion of your Final DB Pensionable Salary on which your benefits will be based is determined by the length of your Pensionable Service completed up to retirement, and the level of contributions you have paid to the Scheme. This type of scheme is commonly known as a 'final salary' scheme. Since your retirement benefits are expressed as a proportion of your earnings these benefits automatically increase, up to your retirement date, in line with your earnings (subject to inflation where salary capping applies and the Scheme Earnings Cap). This link between benefits and earnings is invaluable and means that: your benefits at retirement will be a known proportion of your Final DB Pensionable Salary, which is very important when planning ahead for retirement; because your expected retirement benefits increase with your earnings (subject to inflation where salary capping applies and the Scheme Earnings Cap), the real value of your pension at retirement (relative to your earnings at that point) is at least partly protected; and the amount of your benefits will not depend on investment conditions at the time you retire, nor on the investment performance of the Scheme. Financial Security The Scheme is established under a trust which is managed by the Trustees. The assets of the Scheme are therefore entirely separate from the assets of the Company. In normal circumstances the contributions made by you and the Company are expected to be sufficient to provide the benefits detailed in this handbook. The Definitive Trust Deed and Rules are available for inspection from the Human Resources Department as are various other Scheme documents. As a member of the Scheme you may ask to see copies. 3

7 INTRODUCTION This handbook describes the main details of the Defined Benefit Section of the Scheme which commenced on 1 January On page 1 you will find a summary of the benefits provided by the Defined Benefit Section of the Scheme and on pages 5 to 7 an explanation of terms which have special meanings throughout the handbook. Those terms are printed in bold type when they appear in the text. All members of the Defined Benefit Section of the Scheme are contracted-out of the State Second Pension and as a result pay reduced National Insurance contributions. Contracting out will cease from 6 th April The Company aims for members to receive an adequate income during retirement and for Dependants to be financially secure in the event of an employee's death whilst in service, after leaving service before retirement, or after retirement. To help meet these needs the Company makes contributions to the Scheme in addition to any contributions that you pay (see page 7). If, following your becoming a member of the Scheme on 1 January 1991, the Scheme received a transfer payment in respect of your membership of any of the schemes listed below, you should refer to the letter(s) issued to you detailing the additional benefits granted as a result of that transfer payment. 1 Aviation and General Insurance Co. Ltd. Section of the Legal & General Pension Trust 2 British Aviation Insurance Company Limited Staff Pension Scheme 3 Eagle Star Staff Pension Scheme 4 General Accident Companies UK Pension Scheme (1980) 5 Guardian Royal Exchange Pension Fund and Death Benefits Scheme 6 Norwich Union Group Pension and Life Insurance Non Contributory Plan (1971) 7 Royal Insurance Group Pension Scheme 8 Sal Pension Scheme NOTE: If you joined the Scheme for the full range of benefits before 6th April 1997 you should refer to the Appendix to this handbook for details of the special provisions which apply to you. 4

8 TERMS WHICH HAVE A SPECIAL MEANING Throughout this handbook you will come across terms which require explanation and these are set out below. They appear in bold type in the text of the handbook. Civil Partner Company DB Pensionable Salary means a person who is registered as the civil partner of a member in accordance with the Civil Partnership Act means Global Aerospace Underwriting Managers Pension Scheme (i) at any date, other than for a DB Restricted Member, basic annual salary (before deducting amounts sacrificed under a Salary Sacrifice Arrangement); (ii) for a member who became a DB Restricted Member on 31 December 2008, basic annual salary (before deducting amounts sacrificed under a Salary Sacrifice Arrangement) as at 31 December 2008 increased, immediately after each pay rise which your employer gives you after 31 December 2008, in line with the lower of the increase to your basic annual salary and the relevant increase to the Index; and (iii) for a member who became a DB Restricted Member at any time on or after 1 January 2009, 50,000 increased, immediately after each pay rise which your employer gives you after you become a DB Restricted Member, in line with the lower of the increase to your basic annual salary above 50,000 and the relevant increase to the Index. For most members DB Pensionable Salary is restricted to the Scheme Earnings Cap. DB Restricted Member Dependant Final DB Pensionable Salary (a) a member whose basic annual salary, (before deducting amounts under a Salary Sacrifice Arrangement), is under 50,000 but who has a pay rise taking the figure above 50,000 and whose new salary will be more than 50,000 plus the Index OR (b) a member whose basic annual salary, before deducting amounts under a Salary Sacrifice Arrangement, exceeds 50,000 and who has received increases of salary above the Index. any person who in the opinion of the Trustees, is financially dependent on you. DB Pensionable Salary at the rate in force on 1 January on or following your 61st birthday, or if earlier, the date you either leave the Scheme, die or retire. 5

9 GMP Index Life Policy Member Contributions Normal Pension Date Pensionable Service Qualifying Child Guaranteed Minimum Pension is the benefit payable by the Scheme in place of the State Earnings Related Pension Scheme ( SERPS ) for periods to the Retail Prices Index published by the Office for National Statistics or, if such index ceases to be published or becomes in the opinion of the Company unsuitable, any other index of retail prices in the UK adopted by the Company for the purposes of the Scheme. the policy held by the Company in respect of life assurance for certain employees. An amount a member contributes to the Scheme in exchange for an entitlement to a particular level of benefit for themselves and their dependants. Your 62 nd birthday. Years and months of active membership of the Defined Benefit Section of the Scheme completed before your Normal Pension Date (excluding any period of membership whilst you were included in the Scheme for life assurance purposes only). means a child of yours (whether natural, step-child, adopted or conceived) who either is under age 18, or is below age 23 and is (in the opinion of the Trustees) continuing to receive full time education or training. Salary Sacrifice Arrangement the Company operates an arrangement under which a member may sacrifice earnings. The Company at its discretion may choose to provide the member with a Company pension contribution equivalent to the amount the member would have made to the Scheme in the absence of the agreement. Currently this arrangement may be used for member contributions and Additional Voluntary Contributions. Scheme Scheme Earnings Cap Scheme Year Spouse State Pension Age Global Aerospace Underwriting Managers Pension Scheme. means the Scheme s upper limit on the earnings that count for pension contributions and benefits where appropriate (this information is available from the Human Resources Department). a period of one year commencing on 1 January. the person to whom you are married. It includes a Civil Partner for your contracted-out benefits (see page 25) and for your benefits that have built up since December The date at which a member s State retirement pension first becomes payable. 6

10 Trustees Trustees of the Scheme. Currently the trustee of the Scheme is a corporate body, Global Aerospace Pension Trustee Limited. CONTRIBUTIONS Company Contributions The Company and the Trustees agree what contributions are payable by the Company and when they are payable, having taken advice from the Actuary appointed by the Trustees. The Actuary reviews the level of contributions at intervals of not greater than three years. The Actuary takes a long term view of the future liabilities of the Scheme and long term prospects for scheme investments when carrying out his review. Member Contributions Active members must pay contributions in accordance with the definition of Member Contributions and in line with the Schedule of Contributions (a copy of the Schedule may be requested from Human Resources) Additional Voluntary contributions You may, if you wish, pay Additional Voluntary Contributions (AVCs) to increase your pension and any Dependant's pensions. Any AVCs will be deducted from your pay before income tax is calculated so that you benefit from the maximum tax saving. Note: There are limits on the amount of pension a member can accrue on a tax advantageous basis and it is the member s responsibility to manage their own tax arrangements. Further details of this option are available from the Trustees. Salary Sacrifice Arrangement An arrangement whereby the Company agrees to provide the member with a Company pension contribution equivalent to the amount the member would have made to the Scheme in the absence of a Salary Sacrifice Arrangement. Pensionable Salary Capping With effect from 31 December 2008 the Company restricted increases to an individual s DB Pensionable Salary to the rate of increase in the Index, for those earning an annual salary in excess of 50,000 before deducting amounts under a Salary Sacrifice Arrangement. Any basic annual salary above the DB Pensionable Salary is pensionable through the Defined Contribution Section of the Scheme. Once a Defined Contribution Pensionable Salary has been established it will be calculated as the difference between basic annual salary and the DB Pensionable Salary, before deducting amounts under a Salary Sacrifice Arrangement, in subsequent years. 7

11 YOUR RETIREMENT BENEFITS Pension Pension Your pension at your Normal Pension Date will be 1/60 th of Final DB Pensionable Salary for each year and month of Pensionable Service during which your accrual rate was 1/60 th. 1/75 th of Final DB Pensionable Salary for each year and month of Pensionable Service during which your accrual rate was 1/75 ths. If applicable members can refer to their Annual Benefit Statement which shows prospective benefits up to Normal Pension Date. Lump Sum Option At retirement on your Normal Pension Date, before your pension becomes payable, you may elect to give up part of your pension in exchange for a lump sum (currently tax free) by giving notice in writing to the Trustees. The maximum tax-free lump sum is currently 25% of the value of your benefits. The Trustees will calculate the reduction in your pension with regard to the advice of the Scheme s Actuary. Note: Taking this option will not reduce the amount of the Dependant's pension payable in the event of your death after retirement. 8

12 Option to provide an additional pension for a Dependant Before your pension becomes payable you may, with the agreement of the Trustees, choose to give up part of your pension in order to provide an additional pension for a named Dependant to be payable following your death and during that person's lifetime, by giving one month s written notice to the Trustees. The amount of this pension must not exceed your own remaining pension and will be determined by the Trustees on the advice of the Actuary, subject to such terms and conditions as the Trustees decide. Once you make an election to give up part of your pension as above, you will not be able to withdraw this election unless you or the named Dependant dies before your pension commences. 9

13 YOUR RETIREMENT BENEFITS EXAMPLE If a member retires at Normal Pension Date having completed 32 years' Pensionable Service (paying member s contributions from 1 July 2006 and accruing at 1/60th) with a Final DB Pensionable Salary of 25,000 the member's pension would be: 32/60ths x 25,000 = 13,334 per annum If the same member had paid no member s contributions contributions (before or after 1 July 2006 thus accruing a 1/75th) and had completed 32 years Pensionable Service, the member s pension would be: 22/60ths x 25,000 = 9,167 per annum; plus 10/75ths x 25,000 = 3,334 per annum Total pension = 12,501 per annum The maximum Pension Commencement Lump Sum (formerly known as the tax-free lump sum) available (based on the first member s pension) would broadly be: 25% of capital value of pension, which is a lump sum of 64,166 for a male and 65,439 for a female tax-free (under current legislation) Where the Pension Commencement Lump Sum option is taken, the reduction in the member's pension, if male, would be 3,709 ( 64,166 divided by 17.30) and his actual pension would, therefore, be 9,625 ( 13,334 less 3,709). The reduction in the member's pension, if female, would be 3,518 ( 65,439 divided by 18.60) and her actual pension would, therefore, be 9,816 ( 13,334 less 3,518). NOTES: At your Normal Pension Date the current conversion factors of pension for Pension Commencement Lump Sum are: (a) (b) for male members - for each 1 of pension given up a lump sum of is available; for female members - for each 1 of pension given up a lump sum of is available. 10

14 These are the current conversion factors and which are subject to change. The factors are different at ages other than at Normal Pension Date. Please contact the Pensions Manager in the Human Resources Department for factors and age variations. 11

15 YOUR RETIREMENT BENEFITS Questions you may ask Can I take less than the maximum Pension Commencement Lump Sum? Broadly you can take an amount from 0% up to 25% of the capital value of your pension as a Pension Commencement Lump Sum. You can see from the examples and Notes on Page 10, approximately of lump sum is equivalent to 1 of pension for a man aged 62, whilst approximately is equivalent to 1 of pension for a woman aged 62. The conversion factors are however periodically reviewed. Can I take part or all of the tax-free lump sum from AVCs? Yes. AVCs are included when calculating the total capital value of your pension and you can take up to 25% of that total as a Pension Commencement Lump Sum. Can I retire before my Normal Pension Date? You can retire at any time before your Normal Pension Date due to incapacity. Incapacity means physical or mental deterioration, which is so severe so as to prevent you from following normal employment, or which seriously impairs your earning capacity. With the Company's consent you may currently retire for any other reason on or after your 55th birthday.how would the retirement pension be calculated if I retired before my Normal Pension Date for any reason? The pension payable from the date of your retirement due to incapacity would be calculated at the accrual rate reflective of the level of contributions paid, of your Final DB Pensionable Salary for each year of Pensionable Service completed, together with a proportionate amount for the additional months. Where retirement is for any other reason (i.e. not incapacity), the calculated pension is then reduced to take account of the period taken early. Where retirement is for reasons of Incapacity, the pension will be calculated in accordance with the Scheme Rules. The Trustees must be satisfied that the member meets the criteria for incapacity. Note: Where a pension is payable on retirement before your Normal Pension Date you may still exercise the lump sum option on the date of your retirement.. Early retirement is subject to Trustee and Company consent. 12

16 What happens if I leave service before my Normal Pension Date? Please see page 17 for leaving service benefits. What happens if I remain in service after my Normal Pension Date? If you remain in service after your Normal Pension Date you will not be permitted to continue contributing to the Scheme and you will not accrue any further benefits after that date. You may however be invited to join the Defined Contribution Section of the Scheme for the time that you remain in service. Note: You may remain in service and opt to join the Defined Contribution Section of the Global Aerospace Underwriting Managers Pension Scheme whilst receiving a pension from the Defined Benefit Section of the Scheme. Alternatively you may choose to defer drawing your benefits from the Defined Benefit Section (subject to Company consent), or you may choose to take your pension from both the Defined Benefit and Defined Contribution Sections of the Scheme at retirement from service but in any event, currently no later than your 75th birthday, subject to Trustee consent. How would the retirement pension be calculated if I retired after my Normal Pension Date? The pension payable from the Scheme from the date of your retirement would be your normal retirement pension calculated in the manner described on page 10, increased to take account of the period of deferment after your Normal Pension Date. Note: Late retirement factors are agreed by the Trustees on advice from the Scheme Actuary, and are subject to change. Check with the HR Department for current factors and age variations You may exercise the Lump Sum Option on the commencement of your late retirement pension. 13

17 BENEFITS PAYABLE ON DEATH Death in active membership before Normal Pension Retiring Date If you die in active membership before Normal Pension Date (your 62nd birthday) the following benefits are usually payable: (1) a lump sum of four times your basic salary at the date of your death (including the amount which would have been included in your basic salary if you had not participated in the Salary Sacrifice Arrangement (together with a refund of any contributions made by you to the Scheme (or in respect of you if you have participated in the Salary Sacrifice Arrangement), or made to a former scheme which have subsequently been transferred to the Scheme); (2) a Spouse s pension equal to two thirds of the pension you would have expected to receive had you survived to your Normal Pension Date based on your Final DB Pensionable Salary (but for this purpose no salary capping applies to your Final DB Pensionable Salary). The pension will be calculated in accordance with the accrual rate applicate to the level of Member Contributions that had been paid up to the date of death. If you have no surviving Spouse (or they are not living with you or dependant on you when you die), the Trustees can pay this pension to your Dependants (including dependent children). (3)a lump sum of any Defined Benefit Member Contributions paid by you NOTES: (A) No lump sum is payable on the death of a member in respect of whom benefits are payable under the Life Policy. (B) The amount of the Dependant's pension will be reduced where an adult Dependant is more than 10 years younger than yourself. (C) Please also refer to the 'Dependant s Pension' section on page19. EXAMPLE If the member in the example on page 10 died in service before Normal Pension Date, assuming a DB Pensionable Salary and a Final DB Pensionable Salary of 25,000, the anticipated pension at Normal Pension Date would be 13,334 per annum if he had paid Member s Contributions and accrued Pensionable Service at 1/60 ths (32/60ths of 25,000) and there would be payable: 14

18 (i) a lump sum of: 4 x 25,000 = 100,000 (ii) a Spouse s pension of: 2/3 of 13,334 = 8,889 per annum 15

19 BENEFITS PAYABLE ON DEATH Death on or after Normal Pension Date On your death after Normal Pension Date the following benefits are payable. If at your death you had not started to draw your benefits, the benefits below will be paid as though you had started to draw your benefits immediately before your death: (1) where death occurs within five years of your pension payments commencing, a lump sum equal to the value of the remaining payments of your pension for the balance of the five years; (2) a Spouse s pension equal to 50% of your pension. If you have no surviving Spouse, the Trustees can pay this pension to a person with whom you were in a relationship closely resembling marriage. NOTES: (A) When calculating the Spouse s or Dependant's pension, any reduction in your pension due to either of the following circumstances will be ignored: (i) (ii) where you have exchanged part of your pension for a lump sum; where you have given up part of your pension to provide an additional pension for a Dependant under the option on page 9. (B) (C) The amount of the Spouse s or Dependant's pension will be reduced where an adult spouse or Dependant is more than 10 years younger than yourself. Where a reduced pension has become payable to you on your early retirement any pension payable to a Spouse or Dependant on your death after retirement will be similarly reduced. (D) Unless the Trustees decide otherwise the above pension will not be payable to a Spouse whom you marry after your retirement if your death occurs within the six months following your marriage. EXAMPLE If the member in the example on page 10 died after retirement at Normal Pension Date, but before any of the increases described on page 19 had been added to the pension, the member's Spouse would receive a pension of: 6,667 per annum (50% of the member's own pension of 13,334 per annum at Normal Pension Date) 16

20 LEAVING SERVICE On leaving service before your Normal Pension Date, other than on retirement or death you will be entitled to: (1) a pension payable from your Normal Pension Date or earlier (if the Company consents); (2) (a) a pension for your Spouse payable on your death of 1/160 th of your Final DB Pensionable Salary for each year of contracted-out service completed by you after 5th April 1997 (and with consideration to any Guaranteed Minimum Pension benefits you may have accrued), subject to a maximum annual pension equal to 25% of your Final DB Pensionable Salary. (b) a pension payable on your death of up to 50% of your pension payable under (1) above; (c) a lump sum of any employee contributions paid by you; and (3) any benefits credited to you in respect of a transfer payment to the Scheme from a pension scheme of a previous employer, or at the discretion of the Trustees. The benefits will be secured for you under the Scheme, or alternatively, it may be possible to arrange for your benefits to be transferred out of the Scheme. (See page 22 'Termination of Pensionable Service'.) Questions you may ask How is the retirement pension under (1) above calculated? The pension will be 1/60 th of your Final DB Pensionable Salary for each year of Pensionable Service completed before the date of your leaving service (provided you paid Member s Contributions from 1 July 2006) together with a proportionate amount for the additional months. For periods from 1 July 2006 onwards, your pension will be calculated at the accrual rate reflective of the level of contributions paid, as a proportion of your Final DB Pensionable Salary for each such year of Pensionable Service completed. NOTE: To help offset the effects of inflation your pension and the Spouse s pension payable on your death will be increased. For pension in respect of the period up to 5 April 2009, the increase will be in line with the increase in prices subject to a maximum of 5% per annum. For pension in respect of the period from 6 April 2009 the increase will be in line with the increase in prices subject to a maximum of 2.5% per annum. In both cases the increases will be for the number of years between the date of your leaving service and your Normal Pension Date, or the date of your death, if earlier. GMPs are revalued separately. 17

21 PAYMENT OF BENEFITS Your Pension Your pension will be paid monthly in advance throughout your lifetime unless the Trustees inform you otherwise. Payments of your pension are guaranteed for a period of five years. This means that if you die within five years of retirement a lump sum is payable equal to the value of the remaining payments of your pension for the balance of the five years. Lump Sum Death Benefits All lump sums becoming payable on your death will, at the Trustees absolute discretion, be paid either to your Spouse, children or other relatives or Dependants, persons with an interest in your estate or any person nominated and advised by you to the Trustees in writing. (Please ensure you have completed an Expression of Wish Death Nomination Form for the Trustees consideration). This method of payment avoids delays and under existing law and practice should ensure that benefits not paid to your estate, are free of Inheritance Tax. Spouse's Pension The Spouse's pension is payable monthly. Normally the Trustees will arrange for the pension to be payable to your Spouse (which includes a Civil Partner for benefits built up since December 2005 see page 5) or the person (regardless of gender) whom the Trustees consider had a relationship with you closely resembling marriage, or where financial inter-dependency exists). If your Spouse is not living with you and or is no longer dependent on you at the date of your death, the Trustees must pay a part of the pension to your legal Spouse or Civil Partner in order to comply with contracting-out requirements but the Trustees may pay the excess to any one or more of your Dependants, (see the notes on the Expression of Wish form at the end of this handbook) but they may select another Dependant to receive all or part of the remaining pension. If your Spouse does not survive you, the Trustees may pay all or part of the Dependant's pension to other Dependants, including a Qualifying Child(ren). Any pension payable to your Spouse (or to any other Dependant who is not your child) will cease on that person's death unless he or she is survived by any of your Qualifying Children when the pension will continue to be paid to the Qualifying Children so long as any child remains a Qualifying Child. 18

22 PAYMENT OF BENEFITS Questions you may ask Will pensions increase once payment commences? Yes. Your pension and any pension payable to your Dependant will increase in payment in line with the increase in prices measured by RPI over the period since the pension commenced to be paid, subject to a maximum of 5% per annum. GMPs are increased separately. NOTES: (A) (B) Increases are applicable on the anniversary of retirement. If following your becoming a member of the Scheme on 1st January 1991, the Scheme received a transfer payment in respect of your membership of any of the schemes listed on page 4, you should refer to the letter issued to you which gives details on how increases will be applied to benefits resulting from that transfer payment. Will tax be deducted from the pensions paid under the Scheme? Yes. Pensions paid under the Scheme are treated as earned income for taxation purposes. If any income tax is payable it will be deducted under PAYE before the pension is paid, in the same way as tax is deducted from your pay. Can I indicate who I would like to receive the death benefits? Yes. There is an Expression of Wish Death Nomination Form provided with this handbook for this purpose. If you wish any particular person or persons to have any part or all of the benefits, you should fill in the details on the form and send it to the Trustees for safekeeping. Your wishes are not binding on the Trustees, but will be borne in mind. If your circumstances change at any time you can complete a new Expression of Wish Death Nomination Form and the Trustees will ignore any previous form you have provided. It is advised that your wishes are updated should your personal circumstances change. 19

23 MISCELLANEOUS MATTERS Absence from work Paid absence If you are absent from work on a paid basis and remain in the Company s service, you will be treated as a continuing member of the Scheme. Contributions will continue to be paid by both yourself (if applicable) and the Company. Unpaid absence If you are absent from work on an unpaid basis and remain in the Company s service, you will be treated as a continuing member of the Scheme. If your period of unpaid absence does not exceed one calendar month, your contributions (if any) will continue, and benefits will continue to accrue at the same rate as immediately before the period of unpaid absence. If your period of unpaid absence exceeds one calendar month, your contributions will cease and benefits will accrual will be suspended until the period of unpaid absence ends. Paid Family Leave (includes some Maternity, Adoption, Paternity and Parental Leave) If you are absent from work on paid family leave and remain in the Company s service, you will be treated as a continuing member of the Scheme. Contributions will continue to be paid by both yourself (if you were a contributing member before you went on leave) and the Company. Unpaid Family Leave (includes other Maternity and Adoption Leave, Paternity Leave and Parental Leave) If you are absent from work on unpaid family leave and remain in your Company s service, you will be treated as a continuing member of the Scheme. Your contributions (if you were paying Member s Contributions) will however cease from the first day of unpaid family leave and benefits will cease to accrue as though you had not elected to. Pension Accrual After a period of absence of more than one month, when you return to service with the Company, and provided you continue contributing to the Scheme, the absence period counts for pension at the accrual rate reflective of the level of contributions paid prior to the period of absence, as long as the same level is continued on return to service with the Company 20

24 MISCELLANEOUS MATTERS Transfer payments into the Scheme At present, the Scheme does not accept transfers in from other pension arrangements. Approval of the Scheme and Revenue limits The Scheme has been established under an irrevocable trust and is a registered occupational pension scheme, registered under Chapter 2 Part 4 of the Income and Corporation Taxes Act 1988, and since April 2006 it has been a Registered Scheme under the Finance Act In certain circumstances the benefits provided under the Scheme, including any additional voluntary contributions that may have been paid to the Scheme may be restricted in line with the former Revenue restrictions (such as the Scheme Earnings Cap). Subject to benefits not exceeding HM Revenue and Customs limits, the Trustees, at the request of the Company, have a general power under the rules of the Scheme (at their absolute discretion) to increase benefits provided under the Scheme (including pensions already in payment). Scheme Annual Report and other documents Each year the Trustees produce a report on the activities of the Scheme which includes a summary of the audited accounts and statements from the Scheme's Actuary. A copy of the latest annual Scheme report is available from the Trustees, and can be found at: As a member of the Scheme you are entitled, at reasonable times, to examine the Trust Deed and Rules of the Scheme, and any annual Scheme reports relating to the previous five Scheme Years. The Trustees will, on receipt of a fee to cover the cost of disbursements, send copies of such documents to your home address. Further Information Further information about the Scheme is available from the Trustees at the address shown at the beginning of this handbook. 21

25 MISCELLANEOUS MATTERS Termination of Pensionable Service If your Pensionable Service terminates at any time, for any reason other than retirement on pension (or your death), the pension benefits to which you are entitled under the Scheme may be secured (as far as the Scheme assets permit) in either of the following ways: (1) under the Scheme (or if the Scheme is winding-up, under a policy of assurance); or (2) by making a transfer to another registered pension arrangement at your written request. Withdrawal from the Scheme You can withdraw from active membership of the Scheme at any time after giving one month's notice to the Trustees. However, if you are considering withdrawing from the Scheme you are strongly advised to discuss the matter with the Trustees first or seek to take independent financial advice prior to taking any action. If you withdraw from the Scheme you will be entitled to the preserved pensions described on page 17. Your benefits will be secured in the manner described under 'Termination of Pensionable Service' above. If the Company directs, you will continue to be covered for the lump sum death in service benefit described on page 15, provided your preserved pensions remain under the Scheme. If you withdraw from the Scheme then you will not be permitted to rejoin. Pensions and Divorce Pension sharing means that pensions may be split at the time of the divorce, allowing the former husband, wife or Civil Partner to arrange a separate pension using the share they receive. Pension sharing is not compulsory and is available as an additional option to divorcing couples. The ability to, for example, offset the value of the pension against other assets in the financial settlement remains. When a valid pension sharing order is provided through the Courts, the Trustees will generally transfer your ex-spouse s / Civil Partner, newly granted benefits from the Scheme to another registered pension arrangement. Where this is not possible, with the Company s consent, your ex- Spouse may be provided with benefits from the Scheme. As there will be costs involved in administering a pension sharing order, these will be passed on to you and your ex-spouse. 22

26 MISCELLANEOUS MATTERS Payments of Transfer Values from the Scheme Whilst you remain in Pensionable Service you may request that the Trustees to provide you with an estimate of the cash equivalent transfer value of the benefits you have earned under the Scheme. This information may only be provided once within any 12 month period free of charge. Following the termination of your Pensionable Service if you intend to transfer your benefits from the Scheme you may request from the Trustees a written statement of your transfer value entitlement, again not more frequently than annually. The transfer value amount quoted in the written statement will only be guaranteed for 3 months. Calculation of Transfer Values A transfer value is determined by the Trustees in accordance with advice received from the Scheme's Actuary and is the anticipated value at your Normal Pension Date, of the rights you have earned as at the date of the calculation, discounted to take account of the prevailing financial conditions. If you have paid additional voluntary contributions to the Scheme, these will be included in the calculation. Payments from the Scheme will take account of the benefits as guaranteed under the terms of the Scheme, but do not anticipate any other increases to pensions. Termination or amendment of the Scheme It is intended that the Scheme shall continue as an important part of your terms and conditions of employment. Future conditions cannot be foreseen, however, and the Company and the Trustees have the right to amend or discontinue the Scheme at any time. If the Scheme were discontinued and there were insufficient Scheme assets to pay all benefits in full, the Company would be responsible for contributing the extra amount needed in order to secure all benefits in full. If the Company had insufficient assets to achieve that, some benefits would have to be reduced. The Pension Protection Fund The Pension Protection Fund was set up under the Pensions Act 2004 and is designed to provide a certain level of benefits (broadly, 100% of pensioners benefits, and 90% of other members benefits up to a maximum level including increases to pensions in payment). If the Scheme was able to secure that level of benefit it would do so, and would then go on to use any remaining assets to secure members benefits as close as possible to the expected levels. Assignment of Benefits You may not assign or otherwise dispose of your benefits under the Scheme, nor can any pension be attached by creditors for payment of debts. 23

27 MISCELLANEOUS MATTERS Dispute Resolution Procedure The Trustee has established a formal procedure to deal with complaints from those entitled to benefits from the Scheme. Full details of how the procedure operates are available on request from the Trustee. Those who wish to take advantage of the procedure should send full written details of their complaint to 'The Disputes Officer c/o The Trustee at the address shown at the beginning of this handbook. Pensions Advisory Service and the Pensions Ombudsman The Pensions Advisory Service (TPAS) is a voluntary organisation which assists members and beneficiaries of the Scheme with any: (1) pensions query they may have, or (2) difficulties which they have failed to resolve with the Trustees of the Scheme using the Scheme's formal dispute resolution procedure. If TPAS fails to solve your problem you may contact the Pensions Ombudsman to investigate and determine any complaint or dispute of fact or law in relation to occupational or personal pension schemes made or referred to in accordance with that Act. The address of TPAS and the Pensions Ombudsman is 11, Belgrave Road, London SW1V 1RB but members wishing to contact TPAS in connection with a particular problem should go through their local Citizens' Advice Bureau where a TPAS directory of advisers is available. The Pensions Regulator The Pensions Regulator is able to intervene in the running of occupational pension schemes where the Trustees, Company or professional advisers have failed in their duties. The address of the Pensions Regulator is Napier House, Trafalgar Place, Brighton BN1 4DW. Pensions Tracing Service The Government have established a register of occupational and personal pension schemes the purpose of which is to assist former pension scheme members who have lost touch with a previous pension scheme to trace their benefits. Information about the Scheme, including the address at which the Trustees may be contacted, has been given to the Pensions Regulator, who acts as the Registrar of Occupational and Personal Pension Schemes. 24

28 APPENDIX Pre - 6 April 1997 Contracted-out Pension Rights NOTES: To ensure that your Personal GMP maintains its value, when you reach State Pension Age the DWP will calculate the amount of the SERPS pension you would have been entitled to had you not been contracted-out. This amount will be increased in subsequent years in line with the Government's Index of Retail Prices. If at any time the figure calculated exceeds your Personal GMP (inclusive of annual increases in line with the increase in prices, subject to a maximum of 3% per annum on that part of your Personal GMP which accrued after 5 April 1988) the difference will be paid by the DWP with your Basic State Pension. In this way your combined pensions will never be less than they would have been had you not been contracted-out. The DWP will also make similar arrangements to ensure that your Spouse's GMP maintains its value. 25

29 EXPRESSION OF WISH DEATH NOMINATION FORM If you die in service whilst a member of the Scheme before your Normal Pension Date a cash sum will be payable to your estate. For tax reasons, the Trustees have discretion to determine who will receive this lump sum and they will normally respect your wishes as stated in this Form. By retaining this discretion, the Trustees can normally pay the lump sum free of tax. To enable the Trustees to pay the correct benefits you should complete this Form as soon as possible. To: The Trustees of the Global Aerospace Underwriting Managers Pension Scheme From: (Full Name) In the event of my death it is my wish that the lump sum benefits payable under the Scheme should be paid as follows: % Full name and address Relationship (if any) % % % These wishes supersede any previous nomination made to the Trustees. I understand that these wishes are not binding on the Trustees. I hereby give the Trustees my authorisation to use my personal details in the administration of the Scheme. I agree to keep the Trustees informed of any changes to my personal circumstances. Signed Date NOTE: You may if you wish complete this form and place it in a sealed envelope. The outside of the envelope must show your full name and the date of the completion of the form, followed 26

30 by Death Benefits Expression of Wish. It should also state that the envelope is only to be opened in the event of your death. Please complete this form and return it to: The Human Resources Department at Global Aerospace Underwriting Managers Limited, 10 St Mary Axe, London EC3A 8EQ. 27