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The Thomas Cook UK DC Pension Scheme gives you the chance to choose how much you want to save towards your pension with the Company s help. The Company will pay a contribution into the Scheme for you as a percentage of your basic pay. Contents How your pension works 3 The cost 4 Your investment choices 6 Your benefits when you retire 7 Your benefits if you die 9 Your benefits if you leave 10 What happens if you are 11 away from work? Rules and regulations 12 Where to go for advice 15 Questions answered 17 Explaining technical words 19 Keeping you informed 21 This Booklet has been updated as at August 2014. Members of the Scheme joining prior to this date may have different levels of benefit applying to them. 2
How your pension works There are two main sections to the Scheme: Auto Enrolment Section Any employees who were not in the Scheme as at 1 April 2013, and any new employees joining the Company after this date, will be auto enrolled in the Auto Enrolment Section if classed as an eligible jobholder. Any employee who is not classed as an eligible jobholder may ask to join the Auto Enrolment Section. Standard Section This section is available following three months membership in the Auto Enrolment Section. You will need to complete a Joining Form to move from the Auto Enrolment Section to the Standard Section. This form is available from the Pensions page on HeartBeat or OneView. Who can join the Scheme? You can join the Scheme if you are a UK employee of the Company, and are aged over 16. All employees who are eligible jobholders will be automatically enrolled into the Auto Enrolment Section of the Scheme, following a postponement period, which will be 2 months after the 1 st day of the month following becoming an eligible jobholder. It is possible to commence membership of the Scheme prior to the end of the postponement period, by Opting In via Employee Self Service (ESS) or requesting a form by emailing pensions.auto-enrolmentopt-in@thomascook.com Do I have to join the Scheme? Please note that if you do not wish to join the Scheme, you are able to opt out of the Scheme using the Opt out form. Details of the requirements and timescales will be included in your letter issued to you when you are auto enrolled. It is possible to subsequently opt back into the Scheme and in any case you may be automatically enrolled into the Scheme again in the future as the Company complies with the requirements of legislation. This exercise will take place approximately every 3 years and you will be told when this is taking place. Overview of the Scheme On joining the Scheme, both you and the Company will pay a contribution into the Scheme. The level of this contribution depends on which section of the Scheme you are a member of. These contributions are paid into your own Personal Account and invested on your behalf by professional investment managers. You choose where to invest your Personal Account from a range of options available through the Scheme. The return on your investments, along with the amount of contributions that are paid into your Personal Account, will determine how much money is available in your Personal Account to provide you with income during your retirement. You can increase the amount you are paying into the Scheme (only if you are in the Standard Section), contribute to other pension arrangements or consider other saving options such as tax-efficient ISAs if you need to increase the amount you are putting aside for your retirement. If you are interested in arranging additional savings outside of the Scheme, you should take Independent Financial Advice to help you. Under current legislation, you can start to take your benefits from the Scheme from the age of 55 (but this minimum retirement age is likely to increase in the future). However, you will need the Company and Trustees to agree to you retiring before age 65. It is important that you review how much you are paying into the Scheme and how well your investments are performing on a regular basis to ensure you are saving enough for your own financial needs in retirement. 3
The cost The cost will be dependent on the membership section to which you belong as the contribution structures are different under each. Auto Enrolment Section If you are in the Auto Enrolment Section, you and the Company will pay contributions based on your normal contractual basic pay in line with the following table: Up to 30 September 2017 1 October 2017 to 30 September 2018 1 October 2018 onwards YOU PAY THE COMPANY PAYS TOTAL CONTRIBUTION 1% 1% 2% 3% 2% 5% 5% 3% 8% To make additional contributions to the Scheme, you would need to join the Standard Section. Your contributions to the Scheme will be deducted from your pay so that you will receive tax relief. Note that you can not contribute using SMART. Standard Section If you are in the Standard Section, you can choose to pay 4%, 5%, 6%, 7% or 9% and the Company will match this amount. The Company will also offer higher contributions if you have been a member for a certain length of time: (Note if you are a pilot or work for Travel and Financial Services Limited you may have different terms) The SMART way to pay If you are a member of the Standard Section of the Scheme your contributions to the Scheme are paid through SMART (Save More and Reduce Tax), a salary sacrifice arrangement that is designed to reduce the National Insurance contributions that both you and the Company pay. It works like this:- > Your normal contractual pay is reduced by the amount you decide you want to pay into the Scheme before you pay tax or National Insurance. The Company pays this amount into your Personal Account in the Scheme on your behalf > You pay National Insurance based on your reduced level of basic pay, which saves you money. > The Company will match your SMART contribution and pay this into your Personal Account in the Scheme. Reducing your pay through SMART does not affect any other salary-related payments or benefits that you receive from the Company. Your Joining Form for the Standard Section gives your consent to participating in SMART and you will automatically be included in SMART once you join the Standard Section. If, however, you are one of the few people for whom SMART is clearly not right, the Company will let you know, and will deduct your contributions to the Scheme from your pay (as under the Auto Enrolment Section). YOU PAY THE COMPANY PAYS TOTAL CONTRIBUTION 4% 4% 8% 5% 5% 10% 6% 6% 12% 7% 7% (9%*) 14% (16%*) 9% 9% (13%*) 18% (22%*) 10% 9% (13%*) (15%**) 19% (23%*) (25%**) The higher contribution rates marked * are available to members with more than 5 years continuous pensionable service and those marked ** are available after 7 years continuous pensionable service (unless you are notified of a different amount) 4 4
The cost How will I know the impact on my pay? The following table shows the impact of a 1% of your own contributions based on the normal contributions method (Example B), or the SMART contributions method (Example C) note it is only possible to make SMART contributions under the Standard Section of the Scheme and it is not possible to only contribute 1% under that section but this example is only to provide an indication of the impact on pay. Example A is not a member of the Scheme. A B C Basic contractual pay 15,000 15,000 15,000* Basic pay less SMART pension contribution N/A N/A 14,850 Income tax 1,000 970 970 National Insurance contributions 846 846 828 Your pension contribution 0 150 0 Your take home pay 13,154 13,034 13,052 Company pension contribution Total amount paid into your Personal Account 0 150 300 0 300 300 So in this example, a 300 contribution to the Scheme costs you only 120 (or only 102 for a SMART contributor). Can I pay more into the Scheme? Yes, if you are a member of the Standard Section you can choose to pay higher SMART contributions into the Scheme than the ones set out on the previous page by choosing a higher contribution rate. You can increase the percentage rate of your SMART contribution at any time but you may only reduce them once every 12 months unless there is a change in your personal circumstances. This then allows the Company to deduct this amount from your Reference Salary. The Company will only match contributions to the extent as described in the table on page 4 under Standard Section. Note it is not possible to pay additional contributions under the Auto Enrolment Section. If you wish to make additional contributions you will need to join the Standard Section. Tax relief For most members, any employee pension contributions attract full tax relief at their highest marginal rate, provided the total contributions do not exceed the Annual Allowance (see Explaining technical words). With SMART contributions, you still enjoy the same tax savings, and save on National Insurance too. However, if your total pension savings for a particular tax year exceed the Annual Allowance, you may be subject to a tax charge on any excess. The income tax and National Insurance contribution figures relate to basic pay only in this example and it is based on the rates for the 2014-15 tax year. *Your basic salary before any adjustment for SMART contributions becomes known as your Reference Salary. All future pay rises and pay related benefits such as overtime, bonus and life assurance benefits will be calculated on your Reference Salary. Mortgage reference letters will also refer to your Reference Salary. 5 5
Your investment choices Choosing where to invest your Personal Account is a very important decision. Details of the investment options available (including the charges) and the further information to help you make a decision are set out in the Investment Choices leaflet. Charges There is an annual management charge to pay for the investment management of the fund(s) you have chosen. This is deducted on a daily basis via a reduction in the unit price of the fund(s) within your Personal Account. The charges will vary depending on the fund you have chosen; the differing levels of annual investment charge are outlined in the Investment Choices leaflet. There may also be a deduction from your Personal Account to help pay for administration costs see the Rules and regulations section for more details. You can change the way you invest your Personal Account once a year. Any costs arising from selling and buying the funds investments are met from your Personal Account, while the Company meets the administrative cost of this switch. If you want to change your investment options more often, the additional administrative cost will also be deducted from your Personal Account. Keeping an eye on your Personal Account You should review your investment choices regularly, even if you are no longer a contributing member. You can use OneView to:- see how much is in your Personal Account see how your Personal Account is invested get information on the investment choices available access an Investment Choices form to change your choices or alter your Target Retirement Date See the Keeping you informed section for details on how to access OneView. 6 6
Your benefits when you retire The Scheme is designed around a target retirement age* of 65 but you can retire from age 55. Both the Company s and the Trustees consent is required if you want to retire before age 65. At this time, your Personal Account in the Scheme can be used to buy you a pension. How much pension this will be depends on:- > the value of your Personal Account at the time you retire, and > the cost of buying an annuity (pension) from an insurance company. How much is in your Personal Account when you retire will depend on the amount of contributions that have been paid into the Scheme over the years, the amount of the charges that have been deducted, and the level of investment returns achieved. When you retire, you can choose to:- > Take all of your Personal Account in the form of pension > Take up to 25% as a tax-free lump sum and the rest as pension > Take a pension that increases each year > Have a guaranteed minimum payment period for your pension so that your pension is paid for a minimum number of years even if you die within that period > Provide a pension for your spouse, civil partner or any dependants after your death > Transfer your Personal Account to a personal pension arrangement under which Drawdown is available (see page 19) When you come to take your benefits, these options will be explained to you in more detail. If the value of your benefits from all sources (i.e. other pension arrangements as well as the Scheme) is above the Lifetime Allowance (a limit on the amount of benefits that can be paid without further tax charges as set by the Government) then this amount will be subject to additional tax. If you think this is likely to apply to you, then you should seek Independent Financial Advice. Once your pension is being paid, the income is taxable as earned income. Important The Company is committed to paying contributions to the Scheme at the levels previously described in The Cost section on page 4, however it is your responsibility to pay enough contributions into the Scheme for you to have a pension that meets your needs when you retire. To help you make this decision: > There is a tool on Mercer OneView that shows the pension you may receive depending on the contributions you make and a number of other assumptions like investment returns and inflation. You can use this tool to show the impact of changing your contributions and the assumptions. > You may wish to take Independent Financial Advice. Flexible retirement This involves taking some or all of your benefits from the Scheme while you are still working for the Company. Your written application will need to get the Company s and the Trustees agreement. If you want to phase your retirement in this way, you will need to move your Personal Account into another pension arrangement outside the Scheme. You can do this by either purchasing a Lifetime Annuity or taking a transfer out and you will be informed about terms and conditions of these options when you apply. You can, however, also continue to be a member of the Scheme and pay into the Scheme for future benefits until you retire fully. The Company would also continue to contribute and you would be covered for death benefits until you leave or reach age 75. *Target Retirement Age You can choose your own target retirement age, between age 55 and 75. If you are invested in the lifestyle option, the timing of automatic switching of investments will be based upon your target retirement age. It is important that you keep this up to date so that the investment switches take place in line with your personal planning. Setting your target retirement age does not commit you to leaving/retiring at that age. You can change your target retirement age via OneView. 7 7
Your benefits when you retire The earliest age you can start to draw your benefits is currently 55 and you will need the Company s and Trustees consent to receive your pension before age 65. The minimum retirement age is expected to increase beyond 55 in the future. Lump sum payments You can usually take up to 25% of your Personal Account as a tax-free lump sum at retirement. If the value of your Personal Account is less than 10,000 and you are aged between 60 and 75 then you may be able to take all of your benefits as a lump sum. This is called Trivial Commutation. If the value of your Personal Account is more than 10,000 you might still be able to take your benefits as a lump sum, depending on the value of the benefits you hold in other pension arrangements. If you do take all of your Personal Account as a lump sum, one quarter of your lump sum will be tax-free with the rest subject to income tax. State benefits In order to understand the Company s pension arrangements fully, it is important to know what the State Pension Scheme provides for you and your dependants. The State currently provides a two-part pension the Basic State Pension and the Additional State Pension. You will qualify for the State Pension even though you are making some National Insurance savings by paying your contributions the SMART way. You will only be allowed to pay SMART contributions if you are a member of the Standard Section and your earnings do not fall below the Lower Earnings Limit after the SMART adjustment. This is to protect your state benefits including the State Pension. State Second Pension However, from April 2016, there will no longer be two elements to the state pension. The Government have announced a flat pension of approximately 144 per week will be payable, subject to transitional arrangements and qualifying conditions being met. State Pension Age State pensions are payable from State Pension Age, which was 65 for men and 60 for women but which is being equalised at 65 for both. This change is expected to be phased in by 2018. The State Pension Age for both men and women is then expected to increase from 65 to 68 and possibly beyond with each change being phased in gradually. The phasing in period for the increase in State Pension Age is subject to ongoing Government review. You can find the latest information regarding State Pension benefits, including an online calculator to estimate your State Pension Age at:- www.direct.gov.uk/en/pensionsandretirementplan ning/statepension/index.htm State Pension forecast You can obtain an estimate of your State Pension entitlement by completing Form BR19, available from your local Benefits Agency or online at:- www.gov.uk/calculate-state-pension 8 8
Your benefits if you die Before you retire As an active member of the Scheme you receive life assurance cover subject to any restrictions on the provision of insurance. For Auto Enrolment Section members this is 2x your basic salary. For Standard Section members, this is up to 8x your Reference Salary unless you have been notified otherwise. For example:- If your Reference Salary is 25,000, your beneficiaries would receive a tax-free cash sum of either 50,000 for Auto Enrolment Section members; or 200,000 for Standard Section members should you die whilst employed by the Company and before the age of 75. The funds in your Personal Account will be used to provide an additional lump sum or a spouse s, civil partners or dependant s pension. The total lump sum can currently be tax free on amounts up to the Lifetime Allowance. The Trustees will decide who should receive the lump sum death benefit and will take into account anyone you have put forward in your Expression of Wish form. It is therefore very important that you complete this form and send this to the Scheme Administrator. You should keep the information up to date and you can complete and submit a new form at any time. After you retire Once you have retired and are taking your pension, the benefits that will be paid after your death will depend on the type of pension you chose to take at retirement. Your options include:- > Providing a pension on your death for your spouse, civil partner or other dependant > Selecting a guarantee period that will ensure your pension is paid for a minimum number of years (usually five or ten) even if you die within that period. Full details on these options will be given to you when you retire. It s important to keep your Expression of Wish form up to date, so the Trustees know to whom you would like the death benefits paid. You can find the Expression of Wish form on OneView or HeartBeat. 9 9
Your benefits if you leave If you opt out of the Scheme within one month of joining (within the auto enrolment opt out period) If you choose to opt out of the Scheme within the opt out period, you will receive a refund of contributions deducted from your pay. This will be paid by the Company through payroll and will be subject to tax and National Insurance. You will not be entitled to any contributions paid by the Company on your behalf. Any entitlement under the Scheme will be extinguished by this payment. If you leave the Scheme with less than three months membership If you leave, having been a member of the Scheme for less than three months, then you will not receive any benefit from the Scheme. You will receive a refund of your contributions, less tax. For Standard Section members, this takes the form of a special payment from the Company (on an ex gratia basis) equal to the SMART contributions you have paid, less tax and National Insurance. Any entitlement under the Scheme will be extinguished by this payment. Note if you have transferred any benefits into or have a previous benefit in the Scheme, you may not be entitled to a refund in this way. If you leave the Scheme with three months to two years membership If you leave with between three months and two years membership, you can choose to transfer the full value of your Personal Account to another registered pension scheme. Full details will be given to you at the time you leave the Scheme. Any entitlement under the Scheme will be extinguished by such a transfer. If you do not transfer your Personal Account, you will receive a refund of the value of your contributions, less tax, or for Standard Section SMART members a special payment from the Company (on an ex gratia basis) equal to the SMART contributions you have paid, less tax and National Insurance. Any entitlement under the Scheme will be extinguished by this payment. Note if you have transferred any benefits into or have a previous benefit in the Scheme you may not be entitled to a refund. Note Legislation changes expected to be introduced in 2014/15 may mean that it will no longer be possible to pay refunds if leaving with short service after the auto-enrolment opt out period. If you leave the Scheme with more than two years membership If you have been a member of the Scheme for at least two years (or you have transferred benefits in from a personal pension arrangement), you can either:- > leave your Personal Account in the Scheme and continue to make investment decisions for that Account, or > you can transfer your Personal Account into another registered pension arrangement. If you leave your Personal Account in the Scheme you become a deferred member and your benefits will be paid to you as described in Your benefits when you retire. If you die before you retire, the value of your Personal Account will be paid as a lump sum at the discretion of the Trustees. They will consider the information you have given them on your Expression of Wish form. Leaving the Scheme but not the Company If you decide to leave the Scheme while still employed by the Company then the lump sum life assurance benefit payable if you die in service will be 2 x your Reference Salary, plus a refund of your Personal Account if it is still held in the Scheme. If you are not in the auto enrolment opt out period you may leave the Scheme at any time by completing a Leaving the Scheme whilst not Leaving the Company form which is available from HeartBeat or OneView. If you change your mind, you may be able to rejoin the Scheme at a later date by making a request to the company. If you are an eligible jobholder, you will be automatically enrolled back into the Scheme in line with legislative requirements approximately every three years. Leaving the Company If you leave the Company then your active membership of the Scheme will automatically cease. 10 10
What happens if you are away from work For as long as you are being paid during your absence from work, your membership and contribution rates will remain unchanged and your life assurance cover will remain in force, subject to any conditions imposed by the insurer. The Company s contributions will be based on your Reference Salary as if you were working normally. If you take Statutory maternity, paternity or adoption leave then the SMART contributions and Company contributions paid into your Personal Account while you are receiving Statutory Pay will be based on your Reference Salary before you went on leave. If you do not pay your contributions by SMART then the employee contributions payable whilst you are absent will be based on the actual pay you receive. If your absence is due to maternity, and this extends beyond the initial 39 weeks, all contributions will stop until you return to work. If you return to work, membership will recommence on the same basis as before you went on leave. If you decide not to return to work after your maternity leave, you will be treated as having left the Scheme on the date your paid maternity leave ended. Life assurance cover during maternity leave will continue for up to the first 12 months of absence, and will be based on your Reference Salary before you went on leave. If you are away for any other reason, you will be advised about whether your absence affects your membership or not. 11 11
Rules and regulations This guide gives you a summary of the benefits provided by the Thomas Cook UK DC Pension Scheme. Full details about the Scheme are in the Trust Deed and Rules. This guide must not be taken in any way as modifying or interpreting the Scheme s Trust Deed and Rules which legally govern your rights and obligations in connection with the Scheme. If there is any conflict between this guide and the Trust Deed and Rules, the terms of the Trust Deed and Rules will apply. Tax The Scheme is a Registered Pension Scheme under Part 4 of the Finance Act 2004. As a result, favourable tax rules apply to the Scheme. HM Revenue & Customs has established allowances for the amount of benefits an individual can build up in a tax-efficient way in each tax year as well as over their whole working life. Annual Allowance If, in any tax year, the total payments into all your pension plans exceed the Annual Allowance, an Annual Allowance tax charge on the excess amount will be applied based upon your marginal rate. Pensions savings to be compared with the Annual Allowance are measured over a Pension Input Period which can vary by pension scheme. For the Scheme, the Pension Input Period runs in line with tax years, i.e. from 6 April to 5 April. The Annual Allowance (which was fixed at 50,000 from the 2011/12 tax year to the 2013/14 tax year) has reduced to 40,000 from the 2014/15 tax year. Where the Annual Allowance is exceeded in a particular tax year, it may be possible to offset the excess by the unused element of the Annual Allowance (subject to certain restrictions) from up to the previous three tax years. Lifetime Allowance If the value across all your pension funds exceeds the Lifetime Allowance at the time you take your benefits, a tax penalty will be payable on the excess amount. The Lifetime Allowance reduced to 1.25m from 6 April 2014. If you think you might be affected by the Lifetime or Annual Allowance, you should speak to a financial adviser as soon as possible. Questions relating to the Annual Allowance and Lifetime Allowance appear on annual tax returns. Helpful information will appear on your annual benefit statement which can be easily transposed onto a tax return. Capital Gains Tax You don t pay capital gains tax on your pension funds. Income tax Any pension income will be taxed as earned income. (Pensions are not subject to National Insurance.) Divorce In divorce cases, courts may take pension rights and benefits into account and may order part of your benefits to be paid to your ex-spouse. Whether or not pension rights are shared depends on the settlement itself. If you are getting divorced, please contact the Scheme Administrator. Note You may request a copy of the Scheme s current Trust Deed and Rules at any time by contacting the Scheme Administrator. 12 12
Rules and regulations Changes to this guide This guide is based on current understanding of legislation, which may change in the future. The booklet may be amended from time to time to reflect changes in legislation or the Rules of the Scheme. Assignment of your benefits You may not sell or assign your Scheme benefits nor may you use them as security for a mortgage or loan. Financial Services & Markets Act 2000 The Financial Services & Markets Act requires independent financial advisers to give you best advice when talking to you about personal pensions. You should remind salespeople of this obligation (particularly if you made the initial enquiry). You should also make sure that they take account of the benefits you could get from the Scheme when assessing your personal position. As neither the Company nor the Trustees are authorised as financial advisers under the Act, they are prevented from providing specific financial advice. However, they will make available whatever information they can to help you reach your own pension decisions. Data Protection Act 1998 Information about present and former members of the Scheme is held by the Company and the Trustees for the purposes of administration. The Trustees comply with the requirements of the Data Protection Act, which allows you to check that personal details held are correct. (There may be a fee of 10 to do this.) Some of the personal data held may include data such as medical and health details or membership of a trade union, which is deemed "sensitive personal data" under the Data Protection Act 1998. The Trustees may arrange for any data, including sensitive personal data, to be processed by third parties, who may be located either inside or outside of the European Economic Area. Any organisation that processes personal data on behalf of the Trustees is subject to contractual restrictions and practical measures to ensure that data confidentiality and security is maintained and to ensure compliance with the obligations imposed by the Data Protection Act 1998. The Trustees are the data controller under the Data Protection Act 1998. Your personal data is kept secure and only disclosed in limited circumstances. For example information may be disclosed to your employer in connection with the operation of the Scheme and insurance companies to arrange particular entitlements. It is important that you tell the Trustees of any changes in your personal details to ensure the information held is accurate. How the Scheme is managed Ultimate responsibility for the administration of the Scheme rests with the Trustees. The Trustees hold all the contributions and other assets they receive and all the income on trust for the purposes of the Scheme. The assets of the Scheme are kept quite separate from those of the Company in order to provide security for the benefits of the Scheme members and their dependants. Advisers The Trustees employ the services of solicitors, administrators, bankers, auditors, investment advisers and investment managers and other advisers as appropriate. 13 13
Rules and regulations Administration costs The Company meets all the administration costs of the Scheme for members who joined prior to 1 July 2013, including the cost of members switching investments once a year. For most members who joined on or after 1 July 2013, when their Personal Accounts exceed 1,500 they will incur a charge of 25 per annum deducted each April, to pay for part of the administration charge of the Scheme with the Company meeting the rest of the cost. This amount is subject to change at the discretion of the Company with the agreement of the Trustees. Separate charges may be payable in respect of the process at retirement further details will be provided on the retirement process as you approach that stage. Amendment or discontinuance Although the Company intends to continue the Scheme indefinitely, future conditions cannot be foreseen. It reserves the right, therefore, to amend or discontinue the Scheme at any time in the future. In the unlikely event of the Scheme being discontinued, the Trustees would use your Personal Account to provide benefits for you and your dependants, in accordance with the provisions of the Rules. 14 14
Where to go for advice Help and advice The Trustees aim to run the Scheme in line with best practice, but there may be times when you are unhappy about something concerning your benefits or the Scheme in general. Most queries can be sorted out informally by the Scheme Administrator see contact details on page 21. Internal disputes resolution procedure If your complaint is not resolved to your satisfaction, you may wish to consider making a formal complaint through the Internal Disputes Resolution Procedure (IDRP). There are two stages to this process:- Stage one:- Contact the Scheme Administrator to request a First Stage Application form. When completed, this form should be sent to the Scheme Administrator:- Mercer Ltd, Belvedere, 12 Booth Street, Manchester M2 4AW. The administrators will log your complaint and pass it to the first stage decision-maker. In normal circumstances you will receive a response within two months. You should receive details of the decision within 15 working days of it being made. Stage two:- If you wish to take the matter further you can appeal to the Trustees within six months of the first decision being made. Again, contact the Scheme Administrator for a Second Stage Application form, to be completed and returned. A response will be made, where possible, within two months. The Scheme Administrator keeps copies of the full IDRP process should you wish to see this at any time. The Pensions Advisory Service (TPAS) is an independent voluntary service that provides free help and advice to members and other beneficiaries of occupational and personal pension schemes. TPAS is available at any time to assist members and other beneficiaries of the Scheme in connection with any pension queries they may have or any difficulty they have failed to resolve with the Trustees or administrators of the Scheme. TPAS can be contacted at:- 11 Belgrave Road, London, SW1V 1RB. Telephone number:- 0845 6012923, website:- www.pensionadvisoryservice.org.uk The Pensions Ombudsman may investigate and determine any complaint or dispute of fact or law in relation to an occupational pension scheme made or referred to them. However, the Pensions Ombudsman normally insists the matter is first dealt with through the Scheme s Internal Dispute Resolution Procedure (where available) and that TPAS is consulted (in all cases). The Pensions Ombudsman can be contacted at the same address but has a separate telephone number:- 020 7630 2200, website:- www.pensions-ombudsman.org.uk The Pensions Regulator (TPR) is the body which oversees the running of pension schemes. TPR can intervene where the trustees, employer or professional advisers have failed in their duties and in certain other circumstances. You can contact TPR at:- Napier House, Trafalgar Place, Brighton, BN1 4DW. Telephone number:- 0845 600 7060, website:- www.thepensionsregulator.gov.uk 15 15
Where to go for advice Pensions Tracing Service The Trustees have given information about the Scheme, including details of an address at which they can be contacted, to the Pension Tracing Service. This service is run by the Department of Work and Pensions and may be of help to you if you need to contact the trustees of a previous employer s pension scheme and cannot trace them yourself. The service may be contacted at:- The Pension Service, Tyneview Park, Whitley Road, Newcastle-upon-Tyne, NE98 1BA. Telephone number:- 0845 600 2537, website:- www.gov.uk/find-lost-pension Department for Work and Pensions The Department for Work and Pensions (DWP) provides computerised versions of all DWP leaflets, brochures, and forms via it s website at www.gov.uk/government/organisations/departme nt-for-work-pensions. The information is clearly explained and sets out the options for retirement funding, along with an impartial overview of all pension arrangements in existence, the benefits and suitability of each. State Pension forecasts are also available through the DWP website. 16 16
Questions answered What if I don t want to pay SMART contributions? SMART is the only way in which members can make contributions to the Standard Section of the Scheme unless it is clearly not right for them. If you decide that you do not wish to participate in SMART then you will not be able to join the Standard Section of the Scheme. If you would like further advice on the impact of SMART on your personal circumstances, or on any aspect of pension provision, you should contact an Independent Financial Adviser (IFA). How do I know if SMART is right for me or not? Most people will make some National Insurance savings by participating in SMART and therefore increase their take home pay as a result. However there are a small number of members who may not benefit from taking part in SMART because the reduction in their pay after taking part in SMART would take them below the National Minimum Wage or Lower Earnings Limit or they do not pay UK income tax or NI contributions. You will automatically be opted out of SMART if this is the case and your contributions will be made by a deduction directly from your salary. How will SMART affect my income tax? Contributing via SMART will not affect the amount of income tax you pay compared to a pension deduction directly from your salary. How will SMART affect maternity, paternity or adoption payments? SMART will not reduce any Statutory maternity, paternity or adoption payments you receive from the Company. In fact, the net amount you take home will be a little higher. How does SMART affect my State Second Pension? SMART will not reduce this for anyone who continues to earn more than the Upper Accrual Point after their salary has been adjusted for their SMART contribution. If your Reference Salary is between the Lower Earnings Threshold and the Upper Accrual Point, then there may be some reduction in your State Second Pension. This should, however, be compensated by the increase to your take-home pay from SMART. Any reduction in your earnings below the Lower Earnings Threshold will not affect your State Second Pension entitlement. The impact of SMART on the Second State Pension depends upon your age, sex, the salary you earn that is subject to National Insurance contributions, and the contribution you make through SMART. However, it should be noted that there are changes to State Benefits expected which may change the way in which it does impact. How does SMART affect other State benefits? Your entitlement to most State benefits are earned through your payment of National Insurance contributions. If your pensionable earnings (i.e. your basic pay) fall below the Lower Earnings Limit ( 5,772 for the 2014-15 tax year) as a result of paying your contributions through SMART, then this would affect your entitlement to these benefits. That s why you should opt out of SMART if this were the case for you and the Company will allow you to continue contributing to the Scheme via non-smart contributions in these circumstances. Otherwise, generally, there is no or very little impact on State benefits. Indeed, as earnings have decreased, entitlement to some means tested benefits will actually increase. 17 17
Questions answered Can I transfer my benefits from another pension arrangement into the Scheme? You can ask the Trustees to accept a transfer of these benefits into the Scheme and both the Trustees and the Company will decide whether or not to accept the transfer. Each case is considered on its own merits as there may be circumstances that prevent them from accepting a transfer value. However, please note that transfers will not be accepted into the Auto Enrolment Section of the Scheme. Transferring benefits is not suitable for everyone and you should seek Independent Financial Advice before making any decision to transfer. You should note that transferring benefits into the Scheme may impact on the benefits which will be available to you on subsequently leaving the Scheme. If you then decide you would like to investigate this option, please contact the Scheme Administrator. What happens if I don t choose my contribution level? You will automatically be enrolled into the level of contributions payable in the Auto Enrolment Section. If you are joining the Standard Section you will need to actively select a level of contributions. You will need to check your payslip to ensure that your move to the Standard Section has been implemented. If you think you have not been processed, you should immediately contact the Payroll team. 18 18
Explaining technical words Annual Allowance This is the yearly limit set by the Government on the amount that you and the Company can pay towards your pension before you have to pay tax. This is 40,000 from the 2014/15 tax year. This applies to all of your pension savings, including any made outside the Scheme. Where the Annual Allowance is exceeded in a particular tax year, it may be possible to offset the excess by the unused element of the Annual Allowance (subject to restrictions) from up to the previous three tax years. Currently, when an individual starts Flexible Drawdown (see below), their Annual Allowance is automatically set to nil from that tax year onwards. From April 2015, a Money Purchase Annual Allowance of 10,000 may apply under certain types of Drawdown and where individuals choose to access their DC benefits flexibly under the new options being introduced. Anyone considering accessing their benefits flexibly should consider seeking Independent Financial Advice. Annuity An annuity is a contract with an insurance company designed to provide you with regular payments in return for an initial payment. Part, or all, of your Personal Account is used as this initial payment and in return the annuity will provide you with a pension, usually for the whole of your life. Company Thomas Cook Group plc or any other company that employs you and that participates in the Scheme. Drawdown Drawdown involves taking an income from a pension fund, which remains invested, rather than by purchasing an annuity. Drawdown is not available under the Scheme, but would need to be accessed by transferring your Personal Account to a personal pension arrangement under which drawdown is available. There are currently two main forms of drawdown available:- Under Capped Drawdown there is a maximum limit on the amount of income that can be taken each year, with the limits set by the Government. Under Flexible Drawdown there is no maximum limit on the amount of income you can take each year, but there are specific conditions you must meet in order to qualify, including having pensions in payment from other sources of at least 12,000 a year. Drawdown might be attractive for some people, but the rules are complex (well beyond the descriptions above) and require regular monitoring. From April 2015, there will be a new type of Drawdown which replaces Flexible Drawdown, with no requirement for a minimum level of pensions in payment from other sources. Anyone considering drawdown should consider seeking Independent Financial Advice. Eligible Jobholder This is an employee who works (or usually works) in the UK, is aged over 22 and under State Pension Age and earns more than a minimum amount ( 10,000 per annum in the tax year 2014-15). Flexible Retirement Flexible Retirement occurs when you remain in service with the Company whilst taking your benefits. To access this you may need to transfer your Personal Account to a personal pension policy. Full Retirement This occurs when the total value of your Personal Account is used to provide you with retirement benefits and you are either fully retiring from service with the Company or have previously left service. 19 19
Explaining technical words Lifetime Allowance Tax advantages are allowed on pension and death benefits within limits set by the Government each year. The Lifetime Allowance applies to all the benefits you build up over your entire life from every pension scheme you join. It has been set at 1.25m with effect from 6 April 2014. If the value of your benefits is over this amount at retirement, the excess will be subject to a tax charge. This limit also applies to any benefits that are payable tax-free on death in service. Lifetime Annuity This is an annuity bought from an insurance company of your choice. If you would like to take Flexible Retirement or Income Drawdown then you currently have to take out a Lifetime Annuity. Personal Account The individual account within the Scheme where both yours and the Company s contributions are paid. Reference Salary Your annual rate of basic pay before taking account of any SMART contributions. SMART Contributions SMART stands for Save More and Reduce Tax and is a form of salary sacrifice. Unless you have been told that this is not right for you, you may only make SMART contributions to the Standard Section of the Scheme. Your gross salary is reduced by the contribution you choose to pay towards your pension. This amount is then paid by the Company to your Personal Account in the Scheme on your behalf. State Pension Age The age at which you can receive the State Pension, which will depend upon your date of birth and sex. An online calculator to estimate your State Pension Age can be found at:-https://www.gov.uk/calculatestate-pension Target Retirement Date You can currently draw your benefits at any time between age 55 and 75. The minimum retirement age is expected to increase beyond 55 in the future. Retirement before age 65 is subject to the agreement of the Trustees and the Company. Your Target Retirement will be assumed to be age 65 unless you inform the Scheme Administrator otherwise. Scheme The. Scheme Administrator Mercer Limited see Keeping You Informed Section for contact details. Scheme Pension This is a pension which is secured on your behalf by the Trustees. Only fixed or increasing pension payments are allowed and it will only be provided when you fully retire. 20 20
Keeping you informed Annual Benefit Statements You will receive a Benefit Statement from the Scheme Administrator on an annual basis. Whilst every effort is made to ensure the information is correct, it is important that you check all of your personal details and advise the Scheme Administrator of any discrepancies as soon as possible. OneView Mercer OneView is a secure web-site:- www.merceroneview.co.uk/thomascook where you can - get an update at any time of how much is in your Personal Account - review how your Personal Account is invested and what investment choices are available - see how much pension you might get on retirement and how that could change if you alter your contributions or the assumptions used e.g. future investment returns, when you plan to retire, etc. - access the relevant forms to change your contributions, your investment choices, your Target Retirement Date or your Expression of Wishes If you have any specific questions about your benefits or about the Scheme, please contact the Scheme Administrator:-, Mercer Limited, Belvedere, 12 Booth Street, Manchester, M2 4AW. Tel:- 0844 209 6608 Email:- thomascook@mercer.com You can contact an Independent Financial Adviser using the website www.unbiased.co.uk. You should check an adviser s charges and specialist areas before engaging them. This booklet is only intended to be a guide to your pension. Full details of how The works are contained in the Trust Deed and Rules the legal documents governing the Scheme. This guide must not be taken in any way as modifying or interpreting the Scheme s Trust Deed and Rules which legally govern your rights and obligations in connection with the Scheme. In the event of any inconsistency between this booklet and the Trust Deed and Rules, the terms of the Trust Deed and Rules will apply. Annual Newsletter Each year, the Trustees will provide a newsletter that reviews how the Scheme has developed over the year. A copy of the Trustees Report and Accounts is available to all Scheme members and beneficiaries and can be requested from the Scheme Administrator. 21 21