Issue 3 June 2014 On track with The Wrigley Pension Plan
Yes it s a marathon, but... We ve all heard the phrase, It s a marathon not a sprint and on the face of it that does seem to apply to saving for retirement. After all, although for some of you retirement may be just around the corner, for many it will still be a long way off. But the Wrigley Pension Plan isn t just about paying distant benefits: along with the Life Insurance Plan it also provides substantial financial security right now for your family and dependants. It s not something we like to think about, but it s important nevertheless. So in this issue of On Track we take a detailed look at the benefits payable to your loved ones if you were to die and remind you of what you need to do now to avoid unnecessary delays at such a difficult time. You ll see how the Trustees have an important role to play when paying these benefits, and there s an interview with Sharne Dodds explaining a bit more about what being a Trustee actually involves. Finally, we ve just had a number of changes to pensions announced in the 2014 budget. These won t affect your primary benefits or choices under the Wrigley Pension Plan, as it is a final salary pension scheme. However they could affect other pension benefits you have if they are from defined contribution or money purchase plans like a personal pension. Many of the details are still being confirmed. When we know exactly what s planned we ll share the news with you. A copy of this newsletter is on the Trustees website www.wrigleypensionplan.co.uk and details of how you can get in touch with us to request topics to be covered in future editions are on the back page. No need to put your head in the sand! It s actually a myth that ostriches put their head in the sand when they re frightened they actually run away from predators and at speeds faster than Usain Bolt can manage! The Trustees website has added a new video If there are topics you want to see covered in the future, let us know, using the contact details on the back page It s also a myth that you need a degree in pension jargon to understand how your Pension Plan works. Nevertheless, we know pensions can seem a tricky subject, that s why we re building a library of bite-size videos on the Trustees website. Each one will cover a different element of pension saving. There s a new video online now, which looks at the proposed changes to State pensions. It s just won an Award of Excellence at the Institute of Internal Communication s Central Awards. Log on to www.wrigleypensionplan.co.uk and have a look.
Trust in me: what does a Member Nominated Trustee do? All the money in the Pension Plan is held under Trust. That way it s kept separate from Wrigley s money and can only be used to pay benefits and the cost of running the Plan. It s the Trustees job to look after the money, making sure the Plan is run according to the formal, legal documents The Trust Deed and Rules. They act impartially to ensure that the interests of all members are taken into account. But, importantly, the Trustees are all just normal people (well, they like to think they are!). We spoke to Sharne Dodds, who became a Trustee in April 2012 and she answered our questions about what being a Trustee is really like. Where do you work? Sharne: I work in the Service and Finance team and I m currently on assignment to Mars Financial Services. Why did you want to be a Member Nominated Trustee? Sharne: When the vacancy arose I d already begun to give some thought to planning for my future retirement. It seemed an ideal opportunity to take an active role in preparing for all of our futures. How often do the Trustees meet? Sharne: We have formal Trustee meetings every quarter, but if there s an issue that requires immediate attention then we also hold meetings over the phone or by email. How do you fit in being a Trustee with your day job? Sharne: There s a fairly steep learning curve to begin with and that can be quite time consuming, but typically my Trustee duties now take up a few hours a month so it doesn t interfere with my work for Wrigley. Is there any training? Sharne: Thankfully, yes. At the start I went on a number of courses run by our advisers. That gave me a chance to meet Trustees from other companies so I could see how things worked elsewhere, too. We also used the online training that the Pensions Regulator makes available on their website. Even after completing that I still need to keep up to date as nothing stands still with pensions. So, there will sometimes be a conference I go to and there are always briefing papers to read up on. The Trustees are legally responsible for looking after the Pension Plan Sharne Dodds, Member Nominated Trustee, explains what this means in practice So are you a pension expert now? Sharne: I wish! It covers such a wide area and is always changing, so it would be impossible to ever call yourself an expert. Fortunately I don t really have to be. We have advisers and we re there to manage them. Once you have a good grasp of the basics, you know what questions to ask. Seeing things from a member s perspective is useful when it comes to communications like the Plan booklet we issued last year: if something makes sense to me, then I hope it ll be clear for the rest of the membership. Do the Trustees decide on the benefits? Sharne: We don t decide on the level of future benefits members earn. Our main role is to look after the benefits members have already built up in the Plan. It s Wrigley who decide on the future benefits offered to members, although any changes would need to be agreed by the Trustees (and members would be consulted, too). However, in some cases we do have the discretion to decide who receives a particular benefit there s some detail about this in the article on benefits for your family and dependants that s in another part of this newsletter. Do you have to make decisions about investments? Sharne: We don t have to take day-to-day investment decisions, like which particular company shares to buy or sell. We have professionals to do this for us. But we do set the overall strategy and we ve got a Statement of Investment Principles, which sets out things like the kind of investments our mangers can hold and what sort of return we expect. Members can see this if they want. Are you glad you became a Trustee? Sharne: Definitely. I ve learned a lot and I understand a good deal more about how the Plan is managed and, importantly, how well it s managed on behalf of all the members.
Peace of mind benefits for your family and dependants Retirement may be a long way off, but if you are a member with family or dependants, the Wrigley Pension Plan (along with the accompanying Life Insurance Plan) offers you the security that they will be looked after financially in the event of your death. But there is something you can do now to make sure there are no unnecessary delays in providing this financial assistance. What is payable? Two types of benefit are payable. There s a once off lump sum, made up of: Life insurance* equal to four times your basic annual salary at the date of your death, plus A refund of your contributions, together with the value of any Additional Voluntary Contributions you ve paid (along with Wrigley s matching contributions) Plus there s a regular monthly pension* payable of half the pension you would have had if you had lived to your 65th birthday, but based on your Plan Salary at your date of death. Who receives these benefits and does it matter if I m not married to my partner? The Trustees decide who should receive your lump sum. It can be shared between one or more of your beneficiaries as defined in the Plan Rules. Basically this includes: Family (including step and adopted relatives) Someone who depends on you for maintenance and support Someone (or even a charity) mentioned in your will or in your Nomination Form. It s not just about retirement benefits, benefits are also payable should you die before you retire You can help the Trustees by making sure your Nomination Form is always kept up to date The pension is payable to your spouse/civil partner. If you don t have one, or if they die, the Trustees will share the pension between your children until they reach 18 (or 23 if they re in continuous full time education). The Trustees can also pay a pension to someone who was dependant on you because of disability or who was financially dependant on you (e.g. a partner you live with, even if you are not married). Why do the Trustees have to decide who gets the lump sum? It means they can pay it tax-free. Otherwise it would potentially be subject to inheritance tax. Income tax is payable on any pension paid. What do I need to do? Although it is the Trustees who decide who receives any lump sum payable on your death, they will take into account your wishes. You can tell them who you would like money to be paid to and in what proportion by completing a Nomination Form. These are available from the P&O team or, alternatively you can print off a copy from the Trustees website www.wrigleypensionplan.co.uk (look under Forms ). Keeping your form up to date particularly if your circumstances change (e.g. you marry, divorce or have children) can avoid unnecessary delays in making payments. Forms should be returned to the P&O team. * Paid through the Wrigley Life Insurance Plan.
Show me an example: Say a member dies aged 45, with a basic salary of 25,000 and with PAYE earnings from last year of 27,000 (including an on-target bonus payment). They joined the Plan aged 35, have a spouse and two children plus an AVC pot worth 1,000. The lump sum is made up of: Life assurance + Refund of contributions + AVCs Total = 4 x 25,000 say 4,000 1,000 105,000 The pension is worked out as follows: 0.835% x Plan Salary for each year of the member s potential service to age 65. With PAYE earnings of 27,000, their Plan Salary at the date of death would be this figure less the Basic State Pension (currently 5,881.20), ie 21,118.80. Having joined at age 35, their potential service is 30 years. So the pension would be: 0.835% x 21,118.80 x 30 = 5,290 So the spouse would get a pension worth 5,290 a year. It would be paid monthly and would be subject to income tax. Increases would be given each year just as a member s own pension would (so broadly by the increase in the RPI up to 5% in any year). It would be payable for the rest of the spouse life and is not affected by remarrying. If the spouse were to die with any of the member s children still under 18 (or under 23 if they were in continuous full time education) they would share the pension between them in proportions decided by the Trustees. If the member s spouse was more than 10 years younger than them, the starting pension may be reduced to take into account the longer time over which it s likely to be paid. The P&O team can tell you more about this.
An update for your booklet - keep it safe Included with this newsletter is an insert you should keep with the Pension Plan booklet we sent you last year. The insert amends your guide to cover the changes introduced from 1 April 2014 following the consultation held with members towards the end of 2013. It confirms how, for your future membership, your Plan Salary (used to calculate your contributions) and your Final Plan Salary (used to calculate your pension at retirement) will include any bonus you get, up to a maximum of your target. Wrigley wrote to you about this at the time and this insert is just to make sure your booklet is up to date. Remember this change doesn t affect your actual gross pay and will only affect the pension you earn in the future if you exceed your target bonus in the 36 month period used to calculate your benefits. A copy of the insert and a PDF of the booklet are available on the Trustees website at www.wrigleypensionplan.co.uk With this newsletter is an addendum to your booklet, confirming the changes announced at the end of last year Please keep it safely together with your booklet Contact us Next issue we re planning to look in detail at early retirement: with a worked example and an explanation of how your benefits are calculated. Is there something you want to know more about? Tell us about it and we can include it in future editions of On track. Remember, if you don t say, we won t know! Email: Paul.Martin@wrigley.com Telephone: 01752 752002 Important There are Trust Deeds and Rules which set out the benefits payable and when and how they are to be paid. Legislation and HM Revenue & Customs allowances also govern the benefits payable. This newsletter only summarises some of the benefits and it doesn t create any legal rights. The Trust Deeds and Rules will always apply if there is any difference between them and this newsletter.