Metal Box Pension Scheme (the Scheme ) DB Section and Metal Box AVC Plan (the Plan ) Annual Allowance

Metal Box Pension Scheme (the Scheme ) DB Section and Metal Box AVC Plan (the Plan ) Annual Allowance The Annual Allowance is the amount of savings individuals can make each year to registered pension arrangements which benefit from income tax relief. If you exceed the Annual Allowance you will have to pay a tax charge. The way it works is complex and many members will not be affected. Examples of when you might be affected include, but are not limited to, the following: You are contributing to the AVC Plan at a high rate A large one off contribution is paid to the AVC Plan You receive a significant pay rise such as being promoted to a higher paid role You are a high earner and earn pension at a higher rate of accrual You have a reduced Money Purchase Annual Allowance (MPAA) because you have flexibly accessed pension savings You have a reduced Annual Allowance because you are subject to the Annual Allowance tapering This factsheet provides an overview of the Annual Allowance and how this works in relation to the Scheme and AVC Plan. The Annual Allowance is a complex matter and this factsheet is not intended to provide detailed advice and should not be relied upon as such. Neither the Company nor the Trustee can give you financial or tax advice. If you think that you may be affected by the Annual Allowance and require further clarification you should seek the help of a financial adviser. More information on the types of financial adviser and how to find one can be located at https://www.moneyadviceservice.org.uk/en/articles/choosing-a-financial-adviser Further information is also available online at: https://www.gov.uk/tax-on-your-private-pension/annualallowance 1) Background The Annual Allowance is the amount of savings individuals can make each year to registered pension arrangements which benefit from income tax relief. If your pension savings exceed the Annual Allowance (after allowing for any carry forward) you must declare this on a Self-Assessment tax Return and you will need to pay an Annual Allowance tax charge. The Annual Allowance test relates to pension savings in all registered UK pension schemes and so you should ensure you take into account any other pension provision you are making, apart from the State Pension, to establish whether you may be liable for a tax charge. Page 1 of 11 Issued: 1 September 2016

In relation to your savings in the Scheme and Plan, the Annual Allowance test needs to be carried out: a) each year that you are an active Member of the Scheme, and b) in the year that you leave pensionable service. However, it does not have to be carried out if you retire on the grounds of serious ill health (e.g. you are awarded a Category 1 ill health pension from the Scheme). Your annual benefit statement shows the amount of Annual Allowance used up through your membership of the Scheme and AVC Plan over the year. This is called your Pension Input Amount (PIA). 2) Pension Input Period (PIP) The period over which your pension savings are measured is called the Pension Input Period (PIP). When the Annual Allowance was introduced in 2006, the PIP for both the Scheme and Plan was set to start on 1 April each year and to end on the next 31 March. In July 2015, the UK government announced that from the 2016/2017 tax year, all pension input periods will run from 6 April to the following 5 April. In order to align the pension input periods across all schemes, transitional arrangements were in place for the 2015/2016 tax year see below. Pension Input Amounts shown on benefit statements for the Scheme Years ending 31 March 2016 and later have been calculated with reference to the Aligned PIPs that now end on 5 April each year. In the year that employees join the AVC Plan, their PIP for the Plan starts on that date, rather than 6 April. 3) Your Pension Input Amount (PIA) If your PIA is more than the Annual Allowance limit you may incur a tax charge. This will depend on whether you have sufficient unused allowance from the 3 previous tax years (see the section on Carry Forward). If you think your Pension Input Amount (PIA) might exceed the Annual Allowance limit in the future you may wish to plan in advance or adjust how much you contribute to the AVC Plan. Pension Input Amounts (PIA) are calculated differently for the DB Section and AVC Plan as follows. DB Section The increase to your pension during the PIP is determined by comparing your pension at the end of the PIP with your uplifted pension at the start of the PIP. Your Pension Input Amount (PIA) is calculated by multiplying the increase by a factor determined by the UK government (currently 16). Please be aware that pensions shown on your annual benefit statements continue to be shown at the Scheme Year end which is 31 March each year. Pension at the end of the PIP Whilst you are an Active member, the pension at the end of the PIP is your deferred pension earned up to the end of the current PIP. As noted above, your deferred pension at each 31 March is shown on your annual benefit statement in the section called Leaving Service Benefits. If you leave pensionable service and become a deferred pensioner (or subsequently transfer your pension to another provider), the pension at the end of the PIP is your deferred pension earned up to your leaving date and will be confirmed to you on your leaving service statement. Page 2 of 11 Issued: 1 September 2016

If you leave pensionable service and commence payment of your pension immediately, the pension at the end of the PIP is the pension payable to you from the Scheme, reduced by the early retirement factor if you are retiring before your Normal Retirement Age, but before any pension is given up to provide a cash sum. Uplifted pension at the start of the PIP The deferred pension at the start of each PIP is uplifted for inflation by the increase in the Consumer Prices Index (CPI) over the 12 months ending on 30 September in the year prior to the start of the PIP. For example, for the PIP that started on 1 April 2014 and ended on 31 March 2015, the increase in CPI was for the 12 months ending 31 September 2013, i.e. 2.7%. For the transitional year which ended 5 April 2016, a special rate of 2.5% applied instead of the CPI increase. For the PIP that started on 6 April 2016 and will end on 5 April 2017, the increase in CPI will be for the 12 months ending September 2015. This was -0.1% which is treated as zero so there will be no increase to the opening pension figure. Your deferred pension at each previous 31 March can be found on your previous year s annual benefit statement in the section called Leaving Service Benefits. AVC Plan Your Pension Input Amount (PIA) to the AVC Plan is the total contributions paid to your AVC Plan Account in the Pension Input Period (PIP): i.e. 1) your contributions (including those paid via Salary Exchange) 2) contributions added to your AVC Plan Account by the Company You can track the contributions paid to your AVC Plan Account via Employee Zone using the link from the home page of the Scheme website. Please note that this only displays contributions paid from August 2012 when the current fund range was introduced. Whilst you are an Active member the total contributions paid to the AVC Plan (your PIA), is shown on your annual benefit statement. It will also be confirmed to you in the first year after leaving pensionable service. Termination exchange payments The amount of any termination exchange payment paid to the DB Section and/or AVC Plan must also be included in the calculation of the PIA. Page 3 of 11 Issued: 1 September 2016

Example 1 Steven is an active member of the DB Section and contributes to the AVC Plan. His DB Section pension at the end of the PIP ending 31 March 2015 was 21,665 per annum. His DB Section pension at the end of the previous PIP ending 31 March 2014 was 20,000 per annum. The uplift rate is the increase in CPI for the 12 months ending 30 September 2013 (2.7%). His uplifted pension at the start of the PIP was therefore 20,540 per annum ( 20,000 x 1.027) The increase to his DB Section pension was 1,125 per annum ( 21,665-20,540). The Pension Input Amount (PIA) in relation to his membership of the DB Section of the Scheme is 18,000 ( 1,125 x 16). Steven s contributions to the AVC Plan, plus those added to his AVC Plan Account by the Company, during the PIP add up to 24,000. His total PIA from the Scheme and AVC Plan was therefore 42,000 ( 18,000 plus 24,000). 4) Annual Allowance limits. The Annual Allowance is the amount of savings individuals can make each year to registered pension arrangements which benefit from income tax relief. Annual Allowance limits are set by the UK government and have changed over the years, as illustrated below. The Money Purchase Annual Allowance (MPAA) and Tapered Annual Allowance are explained further below. Tax year Standard Annual Allowance (AA) Money Purchase Annual Allowance (MPAA) Notes 2016/2017 40,000 10,000 Tapered Annual Allowances will apply for some individuals see section 7. 2015/2016 Transitional arrangements apply see section 5. 2014/2015 40,000* N/A* 2013/2014 50,000* N/A* 2012/2013 50,000* N/A* 2011/2012 50,000* N/A* *Nil if benefits drawn via flexible drawdown before 6 April 2015. Page 4 of 11 Issued: 1 September 2016

5) The Money Purchase Annual Allowance (MPAA) and Alternative Annual Allowance If you decide to take advantage of the new flexible options for accessing your pension savings that became available from April 2015, you may trigger the Money Purchase Annual Allowance (MPAA). This restricts the level of future tax-relieved savings you can make to a defined contribution pension arrangement, like the AVC Plan, to a lower limit, currently 10,000 per tax year. If you have a MPAA your Annual Allowance for savings in the DB Section and AVC Plan will also be adjusted. This is called the Alternative Annual Allowance see below. There are carry forward provisions for the Alternative Annual Allowance but not the MPAA. Tapering and the transitional arrangements for the 2015/2016 tax year apply to both the Alternative and Standard Annual Allowances - see below. Money Purchase Annual Allowance (MPAA). Examples of when you would trigger the MPAA are as follows. Please note this is not an exhaustive list and that you would also trigger the MPAA if you flexibly access benefits from pension savings other than those arising from the Scheme and AVC Plan. Taking your cash in stages Taking your cash in one go when it cannot be paid as a Small Pot (usually because the gross payment is more than 10,000) Payment of a tax-free lump sum and income under flexi-access drawdown Taxable payments under a flexible annuity This option is not available from the Scheme or the AVC Plan. You would need to transfer your benefits to another pension arrangement to access this type of payment This is called an Uncrystallised Funds Pension Lump Sum (UFPLS) and is available from the AVC Plan (provided certain conditions are met) but not the Scheme. This option is not available from the Scheme or AVC Plan. The 25% tax free cash sum does not itself trigger the MPAA. This is a certain type of annuity contract that can be purchased which allows the annuity payments to fluctuate. You will not trigger the Money Purchase Annual Allowance if you transfer your savings to another pension arrangement and purchase a conventional lifetime annuity, or take a Small Pot commutation. If you flexibly access pension savings and become subject to the MPAA, your pension provider should provide you with a statement within 31 days confirming the trigger event. You should then notify all defined contribution / money purchase schemes to which you pay contributions that you have received that statement and also notify any new schemes that you join in the future. For more information about the options available to you please read the factsheet My pension my choices DB and AVC which can be downloaded from the documents area of the Scheme website or obtained from Equiniti. Alternative Annual Allowance If you are subject to the MPAA and exceed this via savings in the AVC Plan or other private defined contribution pension arrangements, the Standard Annual Allowance that would apply to your pension in the DB Section is reduced to 30,000. This is called the Alternative Annual Allowance. If you are subject to the MPAA and your savings in the AVC Plan and other private defined contribution arrangements are less than the MPAA limit, the Standard Annual Allowance would remain at 40,000 for all your pension savings (DB Section, AVC Plan and any other private pension savings combined). Page 5 of 11 Issued: 1 September 2016

6) Tapered Annual Allowance 2016/2017 tax year onwards From April 2016, individuals will have their annual allowance tapered if their adjusted income is greater than 150,000 and their threshold income is 110,000 or more. Members who have high levels of income may therefore need to consider this carefully. Adjusted Income and Threshold Income are understood to include the following (with different treatment for Salary Exchange and Non Salary Exchange members in respect of the calculation for Threshold Income). Adjusted Income includes: All members Taxable earnings from employment plus other taxable income, e.g. rental income, share dividends, taxable payments made on termination of employment (holiday pay, redundancy pay) etc plus the value of pensions savings in the DB Section and all contributions added to your AVC Plan account calculated in the same way as the Pension Input Amount (PIA). Note taxable earnings are quoted on your P60 and are net of your pension contributions Threshold Income includes: Salary Exchange members (old arrangement see below) Salary Exchange members (new arrangement see below) Non Salary Exchange members Taxable earnings from employment Taxable earnings from employment but adding back your Salary Exchange Pay Reduction Taxable earnings from employment All members Other taxable income, e.g. rental income, share dividends, taxable payments made on termination of employment (holiday pay, redundancy pay) etc less pension contributions you pay to any arrangements outside of Crown. Note taxable earnings are quoted on your P60 and are net of your pension contributions New Salary Exchange arrangement Under the legislation a new salary sacrifice arrangement for pension provision has to be treated differently in respect of the calculation of Threshold Income. However, as HMRC has not provided guidance on what new means this is subject to some uncertainty. In the absence of HMRC guidance, this could mean that all contributions paid via Salary Exchange to the DB Section and AVC Plan would need to be included in Threshold Income if, after 8 July 2015, the rate at which regular contributions are paid to the AVC Plan increase or decrease, or if you pay a one-off contribution to the AVC Plan. Page 6 of 11 Issued: 1 September 2016

Also, members of the DB Section who pay their contributions via Salary Exchange could be deemed by HMRC to be in a new salary sacrifice arrangement following the increase to contributions to the DB Section in April 2016. How the tapering works For each 2 that adjusted income exceeds 150,000, the annual allowance is reduced (tapered) by 1. The maximum reduction of 30,000 is reached when Adjusted Income is 210,000 or more, giving a reduced tapered Annual Allowance of 10,000. Any carry forward from tax year 2016/17 and subsequent tax years will be based on the tapered annual allowance. Examples: Threshold Income Adjusted Income Adjusted Income in excess of 150,000 120,000 155,000 155,000-150,000 = 5,000 130,000 165,000 165,000-150,000 = 15,000 Reduction Reduced Annual Allowance 5,000 / 2 = 2,500 40,000-2,500 = 37,500 15,000 / 2 = 7,500 40,000-7,500 = 32,500 100,000 175,000 Annual Allowance is not affected as Threshold Income is less than 110,000 If tapering applies, it will not affect the MPAA. Tapering does apply to the alternative annual allowance in respect of accrual in a defined benefit scheme which could be reduced to zero if the full MPAA of 10,000 is used. 7) Transitional arrangements for 2015/16 tax year. In the 2015/2016 tax year only, there were two Pension Input Periods and special rules for assessing Pension Input Amounts. This is so that all pension schemes could align their Pension Input Periods with tax years. These are called the pre-alignment PIP (PIP 1 in the table below) and the post-alignment PIP (PIP 2 in the table below). Started Ended Number of days Annual Allowance limit PIP 1 1 April 2015 8 July 2015 99 80,000 plus any available carry forward from the tax years ending 5 April 2013, 2014 and 2015 PIP 2 9 July 2015 5 April 2016 272 Any unused Annual Allowance from PIP 1 subject to a maximum of 40,000 plus any unused carry forward from the tax years ending 5 April 2013, 2014 and 2015 If the savings made (PIA) during PIP 2 are less than the unused Annual Allowance from PIP 1 (or 40,000 if lower) then the difference can be carried forward to one of the subsequent three tax years. Page 7 of 11 Issued: 1 September 2016

If you have a MPAA the transitional arrangements are different. The MPAA was 20,000 for PIP1 of which 10,000 could be carried forward into PIP 2. The Alternative Annual allowance was 60,000 for PIP 1 of which 30,000 could be carried forward into PIP2. 8) Carry Forward If total pension savings in a tax year exceed the Standard, Alternative or Tapered Annual Allowance it is currently possible to take account of unused allowance from the previous 3 tax years. There are no carry forward provisions for the MPAA. Example 2 Steven s total PIA from the Scheme and AVC Plan in example 1 was 42,000. This is 2,000 more than the Annual Allowance limit of 40,000 for 2014/15 and he does not have any other pension savings. This was the first time he had exceeded the Annual Allowance so he looked at the previous 3 tax years. He first looked at the tax year ending 5 April 2012 for which his PIA was 30,000. This was 20,000 less that the Annual Allowance limit of 50,000 in that tax year. Steven did not incur a tax charge in the tax year ending 5 April 2015 because he had more than enough unused allowance from a previous year to cover the 2,000 savings in excess of the Annual Allowance. Example 3: Steven now considers his PIA for the 2015/2016 tax year. His total PIA was 45,000 in the tax year ending 5 April 2016. This was more than the Standard Annual Allowance and as it was the transitional year, he was informed that 25,000 related to PIP 1 (1 April to 8 July 2015) and 15,000 related to PIP 2 (9 July 2015 to 5 April 2016). The Annual Allowance limit for PIP 1 was 80,000. Steven s PIA for PIP 1 was 25,000 and so he could carry forward the maximum 40,000 into PIP 2 ( 80,000 minus 25,000 subject to a maximum of 40,000). Steven s PIA for PIP 2 was 15,000. This meant he had 25,000 unused Annual Allowance ( 40,000 minus 15,000) available from the tax year ending 5 April 2016, which he could carry forward into the 2016/2017 tax year. Unused PIA can be carried forward for 3 years and as he is considering paying a large contribution to the AVC Plan in the 2016/2017 tax year he also looks at the PIPs ending 31 March 2015 and 31 March 2014. As noted in example 1, his PIA in the PIP ending 31 March 2015 was 42,000 compared to an Annual Allowance of 40,000. He did not incur a tax charge as he was able to carry forward 2,000 from the 2011/2012 year but has no scope to carry forward any unused Annual Allowance from the 2014/2015 year into later years. His PIA in the PIP ending 31 March 2014 was 30,000 compared to an Annual Allowance of 50,000. This means he has 20,000 available to carry forward into the 2016/2017 tax year. Page 8 of 11 Issued: 1 September 2016

His total carry forward into the 2016/2017 tax year is therefore 45,000, as follows: 2015/2016-25,000 2014/2015 - NIL 2013/2014-20,000 Example 4: To estimate the scope he had to pay a large contribution to the AVC Plan in the 2016/2017 tax year Steven first estimates his DB Section PIA for the 2016/2017 tax year. His Ordinary Contributions to the DB Section are at the rate of 5.6% of Earnings which means he is earning 6 units a year. He looks at his annual benefit statement for the Scheme Year ending 31 March 2016. He sees in the section called Leaving Service Benefits that he had 294 units as at 31 March 2016. This means that at 31 March 2017 he will have built up 300 units (294 plus 6). He estimates that his Final Average Earnings at 31 March 2017 will be 42,000. This gives him an estimated pension at 31 March 2017, of 35,000 (300 / 360 x 42,000) His deferred pension at 31 March 2016 shown on his benefit statement was 40,000. The negative increase in the CPI over the 12 months ending September 2015 is treated as zero for the purpose of the uplift calculation and so there is no uplift to be applied this year. The estimated increase to his pension is therefore 2,000 ( 42,000-40,000). He estimates that his PIA in relation to the DB Section will be 32,000 ( 2,000 x 16). This is 8,000 less than the Standard Annual Allowance of 40,000. He has already worked out that his total carry forward into the 2016/2017 tax year is 45,000 (see example 3). This means he could have scope for contributions (employee and employer) into the AVC Plan of 53,000 ( 45,000 plus 8,000). Please note that actual PIA s will be calculated with reference to Pension Input Periods which now run from 6 April to the following 5 April. Members whose Normal Pay is different from Earnings should also remember that a comparison is made between their pension calculated by reference to Final Average Earnings, and their pension calculated with reference to Final Average Normal Pay and Fluctuating Contributions. 9) The Annual Allowance (tax) Charge If your pension savings, after utilising any available carry forward, exceed the Annual Allowance you must declare this on a Self-Assessment Tax Return. An Annual Allowance tax charge will arise which you are liable to pay. Page 9 of 11 Issued: 1 September 2016

The Annual Allowance Charge depends on the rate of tax relief that has been enjoyed on the contributions paid. To find out the amount of Annual Allowance tax charge you need to add the amount of excess pension savings to the amount of income you pay tax on. The tax will be calculated as if this excess pension saving had simply been extra taxable income. The amount of the annual allowance charge can be in whole or in part at 45%, 40% or 20%, depending on your total taxable income and the amount of your pension savings that are in excess of the annual allowance. 10) Scheme pays If your Annual Allowance (tax) Charge exceeds 2,000 you may be entitled to meet the tax charge from the benefits payable to you from the Scheme or AVC Plan. This is known as the scheme pays option. For the scheme pays option to be available to you, your savings in either the Scheme or AVC Plan must on their own exceed the Standard Annual Allowance (currently 40,000). For example, if your PIA from the Scheme is less than the Annual Allowance you will not be able to use the scheme pays option from the Scheme. This is irrespective of whether contributions to the AVC Plan in respect of the same tax year take your total pension savings over the Annual Allowance. If the scheme pays option is available you will have two options: a) cash in part of your AVC Plan Account to meet the total Annual Allowance (tax) Charge arising from the Scheme and AVC Plan; or b) reduce your benefits in the DB Section of the Scheme in respect of the part of the tax charge arising from the Scheme and cash in part of your AVC Plan Account to meet the tax charge arising from contributions to the AVC Plan. If you wish to exercise this option you must declare it on a Self -Assessment Tax Return. Paper tax returns are due by 31 October and on-line tax returns are due by 31 January after the end of the tax year in question. You must also give notice to the Scheme by the following 31 July and the Scheme will pay the tax by the following 31 December. Example timeline: Tax year ends 5 April 2016 Self-assessment on-line tax return deadline 31 January 2017 Deadline for notifying Scheme of intention to use Scheme Pays 31 July 2017 Deadline for Scheme to notify Annual Allowance tax charge to HMRC 31 December 2017 For the year in which you retire you must give notice to the Scheme before your benefits are put into payment if you wish to opt for scheme pays. If you are subject to a Tapered Annual Allowance, scheme pays is only available in relation to the Annual Allowance tax charge on excess contributions over the Standard Annual Allowance. Page 10 of 11 Issued: 1 September 2016

11) Further information HMRC Further information is available on the HMRC website: https://www.gov.uk/tax-on-your-privatepension/annual-allowance. Equiniti You can contact the administration team at Equiniti as follows: The Metal Box Pension Scheme c/o Equiniti Sutherland House Russell Way Crawley RH10 1UH E-mail: metalboxpensions@equiniti.com Tel: 01905 613133 Scheme website www.metalboxpensions.co.uk. Employee Zone You can log into Employee Zone from the home page of the Scheme website. If you do not yet have a user ID and password and wish to register for access, you can do this by calling Standard Life on 0345 278 5641. Please have your latest annual benefit statement to hand as this will include all the information Standard Life will require to register you. Financial Advice You are strongly recommended to obtain financial advice if you think you are potentially affected by the above. More information on the types of financial adviser and how to find one can be located at https://www.moneyadviceservice.org.uk/en/articles/choosing-a-financial-adviser Issued 1 September 2016 Page 11 of 11 Issued: 1 September 2016