BANK OF CHINA PENSION & LIFE ASSURANCE SCHEME. Explanatory Booklet

BANK OF CHINA PENSION & LIFE ASSURANCE SCHEME Explanatory Booklet August 2014 I

BANK OF CHINA PENSION & LIFE ASSURANCE SCHEME EXPLANATORY BOOKLET VERSION CONTROL Amendment Effective Date Responsibility Amendments to booklet to reflect changes to the consolidation of the Trust Deed & Rules August 2014 Trustees and the Bank II

INTRODUCTION You are a member of the Bank of China Pension & Life Assurance Scheme (the Scheme) which is a defined benefit pension scheme that will provide guaranteed benefits for you when you retire calculated by reference to salary at and pensionable service to retirement or the date you leave your Employer (if earlier). In addition, the Scheme provides death benefits. The Scheme has been closed to new entrants since 1 January 2005. The greater part of the cost of providing the benefits will be met by your Employer. The Scheme will help provide the financial security, so essential for an enjoyable retirement. It is important that you know as much as possible about the Scheme, and this booklet will aim to provide the information you will normally need about it. Please retain the booklet in a safe place, for future reference. The Scheme is set up as a trust fund and is governed by a trust deed and rules. It is administered by Trustees who have a legal responsibility for the investments in the fund. The fund does not form part of your Employer s assets. The full trust deed and rules contain all the details of the Scheme and how it operates and should be referred to if there is any uncertainty or dispute. A copy is held by the Trustees and is available to Scheme members. It is important to remember that the provisions of this booklet are subject at all time to the provisions in the Scheme's trust deed and rules. If there is any conflict, inconsistency or disparity between this booklet and the provisions of the trust deed and rules, the provisions of the trust deed and rules will prevail including in relation to any benefit payable under the Scheme. This booklet is consistent with the provisions of the current trust deed and rules of the Scheme which govern the rights and entitlements of persons who were Active Members of the Scheme after 4 April 2011. Different provisions may apply in respect of those persons who ceased to be Active Members prior to that date. The Trustees will also make available a copy of the annual report and audited scheme accounts. The Scheme is a registered pension scheme under the Finance Act 2004. For ease of reference, all terms which are used throughout this booklet are printed in italics and are defined in Section 13. III

CONTENTS 1. MAIN FEATURES OF YOUR SCHEME 2. WHAT WILL IT COST? 3. BENEFITS FOR ACTIVE MEMBERS 4. BENEFITS ON DEATH FOR ACTIVE MEMBERS AND PENSIONER MEMBERS 5. WHAT HAPPENS TO YOUR BENEFITS IF YOU LEAVE YOUR EMPLOYER OR CEASE TO BE AN ACTIVE MEMBER? 6. OPTING OUT OF THE SCHEME 7. WHAT IF YOU ARE AWAY FROM WORK FOR ANY REASON? 8. TRANSFER OF BENEFITS FROM A PREVIOUS EMPLOYER S PENSION SCHEME 9. ADDITIONAL INFORMATION 10. PAYMENT OF CASH SUM DEATH BENEFITS 11. MODIFICATION OF THE SCHEME 12. DATA PROTECTION ACT 1998 13. DEFINITIONS APPENDIX A PENSIONS ACT 1995 PROVISIONS FOR EMPLOYEES INCLUDED IN THE SCHEME PRIOR TO 6 TH APRIL 1997 APPENDIX B NOMINATION FORM IV

1. MAIN FEATURES OF YOUR SCHEME What the Scheme provides A pension payable during your retirement Life assurance payable on death (for both Active and Deferred members) A pension payable in the event of your death You will find full details below regarding benefits the Scheme will provide. Each year (in April), Active members will be sent a statement of benefits, which should be kept in a safe place with this booklet, for future reference. Your future pension On your retirement you will be entitled to a pension linked to your earnings at retirement or date of leaving your Employer (if earlier) and length of Pensionable Service in the Scheme. Part of your pension may be exchanged at retirement for a tax-free cash sum up to 25% of the value of your pension benefits. As the Scheme is contracted-out of the Additional State Pension you will receive benefits under this Scheme that are better than or equal to those under the Reference Scheme. Under new laws contracting-out on a defined benefit basis is due to end on 5 April 2016. This means that from 6 April 2016 the Scheme will no longer be contracted-out of the Additional State Pension and it will therefore not be required to provide benefits that are better than or equal to those under the Reference Scheme. Since 1 January 2005, the Scheme has been closed to new entrants. 2. WHAT WILL IT COST? In order to participate in the Scheme you are currently required to contribute 5% of your Pensionable Salary per annum. Any contributions you make will be deducted from your pay before tax and you will receive tax relief on them. This contribution represents only a portion of the cost of your pension benefits, as the greater part of the cost of providing benefits under the Scheme will be met by your Employer who will pay contributions to the Scheme at the rates which in the opinion of the Trustees are required to secure the benefits arising from participation in the Scheme. Although you are required to contribute to the cost of your benefits, you should also be aware that you may benefit from the following: Income tax relief on your contributions. Contributions are deducted from your gross earnings before income tax is calculated. This means that if you are a basic rate tax payer and your current rate is 20%, every 1 you contribute to the scheme will only reduce your take home pay by 80 pence. 1

Lower rate National Insurance contributions. Whilst the Scheme remains contractedout of the Additional State Pension you will pay National Insurance contributions at a lower rate (assuming you currently pay the full rate). This lower rate will not affect your basic state pension and you won t lose any Additional State Pension benefits, which you have earned. Under new laws contracting-out on a defined benefit basis is due to end on 5 April 2016. This means that from 6 April 2016 the Scheme will no longer be contractedout of the Additional State Pension and your National Insurance Contributions will increase. This is timed to coincide with the introduction of the Single-tier state pension, which replaces both the basic state pension and the Additional State Pension. Completion of the application to join the Scheme gives the Employer authority to deduct your contributions from your pay. 3. BENEFITS FOR ACTIVE MEMBERS How much pension will I receive? If you take your pension on your Normal Retirement Date You will be entitled to a pension (normally payable monthly) which will continue for the rest of your life. The annual amount of your pension will be 1/60 th of your Final Pensionable Salary for each complete year of Pensionable Service and a proportionate amount for each additional month (to the higher month) of Pensionable Service, until your Normal Retirement Date. For example; if you retire after 20 years, 2 months and 20 days of Pensionable Service, on a Final Pensionable Salary of 35,000 you will receive a pension of: 20 ¼ years x 1/60 x 35,000 = 11,812.50. Can I take my pension before Normal Retirement Date? Provided you leave Service, with the agreement of your Employer and the Trustees, you can take your pension any time after your 55 th birthday, or earlier, if you are seriously ill or incapacitated and cannot carry on doing your job. The amount of your pension will be advised to you at the time. It will be actuarially reduced from the pension you would have received at Normal Retirement Date to reflect that it is based on less service, is payable earlier and for a longer period. Can I take my pension after Normal Retirement Date? If you remain in Service after Normal Retirement Date you may: Take your pension and cease to be an Active Member. From the date you take your pension, you will be treated as though you are a Pensioner Member and as having left Service for all purposes under the Scheme 1 ; or 1 If you remain in Service after Normal Retirement Date and opt to take your pension, you are entitled to join and contribute towards your Employer's Group Stakeholder Pension Scheme. 2

Continue to accrue Pensionable Service as an Active Member. Your pension will be calculated in the same way as described above, except that it will be based on your Pensionable Service up to the earlier of the date you take your pension or leave Service; or Stop accruing Pensionable Service and postpone payment of your pension until after your Normal Retirement Date. From the date you postpone your pension, you will be treated as though you have left Service under the Scheme and as such you will be entitled to the death benefits of a Deferred Member set out in Section 5. The amount of your pension will be actuarially increased to reflect that it came into payment after your Normal Retirement Date 2. Notes: (i) (ii) (iii) Your total pension cannot exceed certain limits. You will be notified if these limits apply to you. Your actual amount of pension will be advised to you when you retire. Once payment of your pension has commenced, it will be increased per annum on the anniversary of the due date of the first payment of pension by: (a) (b) 5% in respect of Pensionable Service up to and including 31 December 2005; and the lesser of 5% and the increase in the Index in respect of Pensionable Service from 1 January 2006 onwards. Can I exchange any of my pension for a cash sum? You may take a cash sum, by giving up part of your pension. The cash sum is entirely free of tax and you can take up to 25% of the value of your benefits as a cash sum payment. The Trustees have recently amended the terms by which pension is exchanged for cash (the commutation factors ). The new factors are as follows: Age Factor Age Factor 65 16.95 62 18.21 64 17.38 61 18.61 63 17.80 60 19.00 The new commutation factors are higher than those used previously which means that less pension has to be given up for the same amount of cash as can be shown in the examples below: 2 If you remain in Service after Normal Retirement Date and opt to defer your pension, you are entitled to join and contribute towards your Employer's Group Stakeholder Pension Scheme. 3

A member retires aged 60 entitled to a pension of 8,000 per annum. Example 1 The member elects to receive 20,000 cash and a reduced pension. Previously, the Trustees would have used a commutation factor of 10.20 per 1.00 of pension per annum if the member had been male and 11.00 if the member had been female. This means that a male member s pension would have been reduced by around 1,960 per annum to 6,040 per annum and a female member s pension would have been reduced by just under 1,820 per annum to 6,180 per annum. The Trustees are now using a commutation factor of 19.00 for members retiring at age 60. This means that both male and female members pensions will now be reduced by around 1,050 per annum to 6,950 per annum. That is an improvement of around 15% for a male member and around 12% for a female member. Example 2 The member elects to commute 25% of the pension for a cash sum. Previously, a male member would have received a cash sum of 20,400 and a female member would have received 22,000. Now both members would receive a cash sum of 38,000. That is an increase of around 86% for a male member and around 73% for a female member. You should seek your own independent financial advice in deciding whether or not to commute part of your pension. If you exchange part of your pension for a cash sum, your remaining pension will be reduced. 4. BENEFITS ON DEATH FOR ACTIVE MEMBERS AND PENSIONER MEMBERS How will my dependants be helped? If you die whilst still an Active Member If you die whilst still in Service as an Active Member, the following death benefits will be payable:- a return of any contributions you have made to the Scheme (including AVCs and any contributions paid and included in a transfer of assets to the Scheme); a cash sum equal to four times your Pensionable Salary; 4

if you die before Normal Retirement Date, a pension to your Spouse, equal to 50% of the pension you would have received had you continued in Pensionable Service until your Normal Retirement Date, based on your Final Pensionable Salary at the date of death; if you die on or after your Normal Retirement Date, a pension to your Spouse equal to 50% of the pension you would have received had you taken your pension on the day immediately before the date of death (ignoring any reduction in the pension surrendered in exchange for a tax free cash lump sum or reduction for providing an additional pension for your dependant in accordance with Note (vi) overleaf). If you die as an Active Member and do not leave a Spouse, a pension to a Child equal to the Spouse s pension that would have been payable as detailed above will be provided and if you have more than one Child in such shares as the Trustees may decide. If you die after you take your pension, as a Pensioner Member If you die as a Pensioner Member, the following death benefits will be payable:- If you die before your pension has been paid for five years, a single payment equal to the discounted value of the total pension payments which would have been paid after the date of death and during the unexpired balance of the 5 year period, had you survived and the amount of the payments had remained unchanged, will be paid, as a cash sum. A pension to your Spouse equal to 50% of your pension entitlement at your date of death (ignoring any reduction in the pension surrendered in exchange for a tax free cash lump sum or reduction for providing an additional pension for your dependant in accordance with Note (vi) overleaf). Notes: (i) (ii) (iii) (iv) Any pension payable to a Spouse, will be payable from your date of death and for the rest of their life. A pension payable to a Child will be payable until age 18, provided that a Child who began receiving their pension before age 18 may continue to receive their pension while in full-time education or vocational training until his 22nd birthday. If your Spouse is more than ten years younger than you at the date of death, any Spouse s pension payable will be reduced by 2.5% for each complete year of age difference subject to a maximum reduction of 25%. If marriage takes place after Normal Retirement Date or, in the case of a Deferred Member who dies before Normal Retirement Date, after you leave Service, and within six months of your death, no pension will be payable to your Spouse. If you die as an Active Member and do not leave a Child or Spouse, no death in Service pension will be payable. In addition, if you die as a Pensioner Member and do not leave a Spouse, no death after retirement pension will be payable. 5

(v) Once your Spouse's pension has started, it will be increased on each anniversary of the due-date of the first payment of pension by: 5% in respect of Pensionable Service up to and including 31 December 2005; and the lesser of 5% and the increase in the Index in respect of Pensionable Service from 1 January 2006 onwards. (vi) If the Trustees agree, you can choose to provide a pension for one or more named dependants by giving up part of your own pension before retirement. If you do so, your chosen dependant(s) will receive a pension when you die, which will continue for the rest of their life or lives. If you decide to do this, you must advise the Trustees at least 30 days before you retire and tell them who you wish to benefit. The total amount of pension payable to your dependants cannot be greater than the pension you keep yourself. The increases awarded as described above at note (v) will also apply to any pension you provide for your dependants. (vii) The death benefits cannot exceed certain limits. You will be notified if the limits apply to you. 5. WHAT HAPPENS TO YOUR BENEFITS IF YOU LEAVE YOUR EMPLOYER OR CEASE TO BE AN ACTIVE MEMBER? Preserved pension benefits Once you leave Service or cease to be an Active Member, you will be treated as a Deferred Member. Your pension benefits as a Deferred Member depend on how long you have been in the Scheme. If you have less than 3 months Pensionable Service and your Pensionable Service ends before your Normal Retirement Date you will not be entitled to a preserved pension from the Scheme and you will receive a refund of your contributions, AVCs and contributions included in any transfer to the Scheme and the income on these contributions. The Trustees will deduct any tax for which they are accountable from the refund of contributions. If you have at least 3 months Pensionable Service but less than 2 years Pensionable Service and your Pensionable Service ends before your Normal Retirement Date you will not be entitled to a preserved pension from the Scheme and you will have the option of a refund of your contributions as above or a cash transfer of the value of the rights you have accrued. If you have completed at least 2 years Pensionable Service and your Pensionable Service ends before your Normal Retirement Date you will have the option of a preserved pension from the Scheme commencing on your Normal Retirement Date or a cash transfer of the value of the rights you have accrued. Your preserved pension will be calculated in the same way as your normal pension, except that it will be based on your Pensionable Service up to the date you become a Deferred Member and your Final Pensionable Salary will be determined by reference to the date you became a Deferred Member. 6

Provided you are not within one year of your Normal Retirement Date when you become a Deferred Member, your pension and your Spouse s pension, will be re-valued from the date you became a Deferred Member until the date your pension comes into payment. The revaluation is based on the increase in the cost of living capped at 5% per annum in relation to Pensionable Service up to and including 5 April 2009 and 2.5% per annum in relation to Pensionable Service from 6 April 2009 onwards. Once your pension has started, it will be increased on each anniversary of the due-date of the first payment of pension by: 5% in respect of Pensionable Service up to and including 31 December 2005; and the lesser of 5% and the increase in the Index in respect of Pensionable Service from 1 January 2006 onwards. Can I take my preserved pension early or late? If you are entitled to a preserved pension from the Scheme, with the agreement of the Principal Employer and the Trustees, you can choose to take your pension any time after your 55 th birthday, or earlier, if you are seriously ill or incapacitated and cannot carry on doing your job. Your pension will be actuarially reduced from the pension you would have received at Normal Retirement Date because it is payable earlier and for a longer period. If you are entitled to a preserved pension from the Scheme, you can choose to take your pension after Normal Retirement Date. The amount of the pension will be actuarially increased to reflect that it came into payment after your Normal Retirement Date. Death benefits how will your dependants be helped? If you become a Deferred Member you will cease to be covered for death in Service benefits, described in Section 4, at the end of the calendar month in which you cease to be an Active Member. Instead, you will be entitled to the death benefits set out below. If you die as a Deferred Member before Normal Retirement Date If you die before Normal Retirement Date as a Deferred Member who is entitled to a preserved pension, the following death benefits will be payable:- a return of any contributions you have made to the Scheme without interest, your AVCs and any contributions paid and included in a transfer of assets to the Scheme; and a pension to your Spouse equal to 1/120ths of your Final Pensionable Salary for each year of Pensionable Service from 1 January 1978 or if later the 1 January on which you first qualified as a Member. If you die as a Deferred Member on or after Normal Retirement Date If you die after Normal Retirement Date as a Deferred Member who is entitled to a preserved pension, the following death benefits will be payable:- 7

a lump sum equal to the lesser of: the capital value of the total benefits which would have been payable to you had you taken your pension on the day of your death, less the cost of providing the pension to your Spouse set out immediately below; and 4 times your Pensionable Salary calculated at the date you left Pensionable Service; and a pension to your Spouse equal to 50% of the pension you would have received had you taken your pension at the date of death. Notes: (i) (ii) (iii) (iv) (v) Any pension payable to you or your Spouse, will be payable from your date of death and for the rest of their life. If your Spouse is more than ten years younger than you at the date of death, any Spouse s pension payable will be reduced by 2.5% for each complete year of age difference subject to a maximum reduction of 25%. If marriage takes place after Normal Retirement Date or, in the case of a Deferred Member who dies before Normal Retirement Date, after you leave Service, and within six months of your death, no pension will be payable to your Spouse. If you die as a Deferred Member and do not leave a Spouse, no pension on death will be payable. Once your Spouse's pension has started, it will be increased on each anniversary of the due-date of the first payment of pension by: 5% in respect of Pensionable Service up to and including 31 December 2005; and the lesser of 5% and the increase in the Index in respect of Pensionable Service from 1 January 2006 onwards. (vi) If the Trustees agree, you can choose to provide a pension for one or more named dependants by giving up part of your own pension before retirement. If you do so, your chosen dependant(s) will receive a pension when you die, which will continue for the rest of their life or lives. If you decide to do this, you must advise the Trustees at least 30 days before you retire and tell them who you wish to benefit. The total amount of pension payable to your dependants cannot be greater than the pension you keep yourself. The increases in pensions awarded to Pensioner Members described above will also apply to any pension you provide for your dependants. (vii) The death benefits cannot exceed certain limits. You will be notified if the limits apply to you. 8

Transfer Value You can request the Trustees to transfer the value of your benefits, at any time, up until one year prior to your Normal Retirement Date. The benefits can be transferred to: your new employer s scheme (provided its trustees will accept the transfer value); a personal pension plan; or an approved policy with an insurance company which will provide a pension for you when you retire. The Trustees will on request provide you with a written statement of your transfer value at a Guarantee Date. The Guarantee Date will fall within 3 months from your request and you will be given the statement within 10 days of that Guarantee Date. You then have the right to the amount of the transfer value stated if you make an application for its payment within 3 months from that Guarantee Date. You can only apply for a written statement once a year, unless the Trustees agree otherwise. 6. OPTING OUT OF THE SCHEME You may elect to opt out of the Scheme at any time whilst remaining in Service. Once you cease to be an Active Member, you will be treated as a Deferred Member and be entitled to the benefits, including death benefits, described in Section 5. You will cease to be covered for any death in Service benefits, as described in Section 4, at the end of the calendar month in which you exercise this option. If you do elect to opt out of the Scheme, you will only be able to rejoin at a later date with the consent of the Principal Employer and the Trustees. 7. WHAT IF YOU ARE AWAY FROM WORK FOR ANY REASON? Maternity, Paternity, Parental and Adoption Leave If you are absent from Service due to a Qualifying Absence you will remain an Active Member provided you have a definite intention of returning to work. If you are absent due to a Qualifying Absence in which you receive contractual or statutory pay you will continue to make contributions to the Scheme based on your actual pay (for example, if a member is on maternity leave, contributions will be based on the maternity pay she receives). The Employer will continue to make contributions to the Scheme based on Pensionable Salary which would have applied had you not been on a Qualifying Absence and Pensionable Service will continue during such absence. 9

If, in any period of Qualifying Absence, you receive no pay you will not pay any contributions. However, the Employer will continue to make contributions to the Scheme and your Pensionable Service will continue to accrue unless otherwise decided by your Employer. If you do not return to work after a Qualifying Absence, you will be treated as a Deferred Member. Temporary Absence If your absence is due to illness or accident, your Pensionable Service will continue for six months or, if later, until liability ceases on the Employer and you to make National Insurance Contributions. Pensionable Service may continue for longer if agreed between you and your Employer as long as your contributions are paid. If you are absent from work due to illness or accident and are no longer treated as being in Pensionable Service but are still treated as remaining in employment, your membership of the Scheme for death benefits will continue until your Normal Retirement Date. If you do not return to work after illness or accident, you will be treated as a Deferred Member. If you are absent for any reason other than illness or accident, your Pensionable Service will continue for six months. After this period, you will be treated as a Deferred Member. 8. TRANSFER OF BENEFITS FROM A PREVIOUS EMPLOYER S PENSION SCHEME It is not possible to transfer the value of any benefits that you have accrued as a member of a pension arrangement with a former employer into the Scheme. 9. ADDITIONAL INFORMATION The Trustees will always do their best to resolve any problems or complaints concerning the Scheme, and will act impartially. If you have a complaint relating to the operation of the Scheme you should follow the Scheme s Internal Dispute Resolution Procedure in the first instance. If you require further details of this procedure you should write to:- The Trustees of the Bank of China Pension and Life Assurance Scheme 1 Lothbury London EC2R 7DB The Pensions Advisory Service (TPAS) If you have concerns about your pension rights and are not satisfied with the information or explanation you have been given after having used the Scheme s internal dispute resolution procedure, you can consult TPAS. 10

You should either contact a local TPAS adviser through a Citizens Advice Bureau, or contact TPAS headquarters at the following address:- TPAS 11 Belgrave Road London SW1V 1RB Tel: 0845 601 2923 If TPAS fails to resolve the problem, you can contact the Pensions Ombudsman. Pensions Ombudsman The Pensions Ombudsman can investigate complaints of maladministration and disputes of fact or law. Cases must be referred to the Pensions Ombudsman by the Scheme members or their beneficiaries. The Pensions Ombudsman is at the same address as TPAS. Tel: 0207 630 2200 The Pensions Regulator (TPR) TPR can intervene in the running of pension schemes where trustees, employers or professional advisers have failed in their duties. TPR s address is:- Napier House Trafalgar Place Brighton East Sussex BN1 4DW Tel: 0845 600 0707 10. PAYMENT OF CASH SUM DEATH BENEFITS It is important that you know who may benefit in the event of your death. The Trust documents for the Scheme contain a rule giving discretion to the Trustees regarding the distribution of any cash sum payable on your death. This has the advantage of making the cash sum payment free from Inheritance Tax. The Trustees have the discretion to pay the benefit to one or more of your beneficiaries. The beneficiaries could be:- a) your Spouse; b) your children (including step-children) whether by birth or adoption; c) a person who was formerly your wife or husband; d) other relatives; 11

e) any person or charity nominated by you which nomination was deposited with the Trustees before your death or named as a beneficiary under any will made by you; f) any other person who was dependent or interdependent on you; or g) your personal representatives. Whilst the Trustees have the ultimate discretion in the distribution of benefits, the Trustees suggest that you give them some guidance, where possible. You should do this by completing the nomination form in the back of this booklet. If your circumstances or wishes change do not forget to update your nomination form. In most cases, the Trustees will try to follow your wishes, as given on the nomination form. However, the Trustees always take into consideration any additional relevant information. Further copies of the nomination form are available from the Human Resources Department, 1 Lothbury, London, EC2R 7DB. You may wish to keep a record of your nominees for future reference. The name(s) and Address(es) of the person(s) who is/are to benefit and the proportion (if applicable) 11. MODIFICATION OF SCHEME Whilst your Employer seeks to continue the Scheme it should be recognised that because future conditions cannot be foreseen the Employer must reserve the right to change or even discontinue the Scheme at any time. 12. DATA PROTECTION ACT 1998 The Data Protection Act came into force in March 2000. Under the Act the Trustees are data controllers in relation to your personal data. Your personal data is information personal to you, and which identifies you, such as your name, address and National Insurance number. Some of this information may be sensitive (such as details of your health and personal relationships). As data controllers, the Trustees will process your sensitive and non-sensitive personal data and that of other members and beneficiaries for purposes associated with the Scheme. The Trustees may process your personal data themselves, or use carefully selected advisors and third parties ( data processors ) to help them. Under the Act, as a data subject, you have certain rights in relation to the data we process about you. Processing personal data about you and others may involve transferring this personal data to third parties who advise or assist the Trustees, your Employer and any business associated with it, prospective purchasers of any of them, Government bodies and persons associated with you. Under the Data Protection Act 1998, you consent to the Trustees (and any data processors or other data controllers they use) processing any personal data about you for any purposes associated with the Scheme. 12

13. DEFINITIONS Active Member Active Member means an Employee in Service who is accruing pension benefits under the Scheme or who would be accruing benefits but for a period of absence. Additional State Pension Now known as the state second pension (S2P), the Additional State Pension was known as SERPS until 2002. S2P is calculated primarily according to an employee's length of service and salary, but since 6 April 2012 the calculation also includes a flat-rate element. Employees contribute to S2P through payment of class 1 National Insurance contributions (NICs). It provides benefits in addition to the basic state pension. AVCs AVCs mean additional voluntary contributions made or treated as having been made to the Scheme by a Member. Child Child means, in relation to a deceased Member, your legitimate, adopted or step child who was under age 18 at the date of your death. Deferred Member Deferred Member means a person who has a preserved pension in the Scheme. Employee Employee means an employee (including a director or officer) of the Employer. Employer Employer means any employer participating in the Scheme. Final Pensionable Salary Your Final Pensionable Salary will be your Pensionable Salary at the 1 January coinciding with or immediately preceding the date Pensionable Service ceases. Guaranteed Minimum Pension Guaranteed Minimum Pension means the minimum scheme benefit entitlement that the scheme must provide, which broadly equates to what your Additional State Pension benefit would have been, had you not been contracted-out of the Additional State Pension for the period up to 6 th April 1997. This element of your pension will be revalued in accordance with Social Security Legislation and the Pensions Act 1993. Index Index means the UK Index of Retail Prices published by the Office for National Statistics (or such other agency or department or person appointed by the UK government), or any similar permissible cost of living index which supersedes or replaces the UK Index of Retail Prices and which the Principal Employer and the Trustees agree shall be used for the purpose of the Scheme. Member Member means an Active, Deferred or Pensioner Member 13

Normal Retirement Date Your Normal Retirement Date is your 60 th birthday. Participating Employer Participating Employer means any Employer who has been admitted to participation in the Scheme. Pensioner Member Pensioner Member means a person who was an Active Member or a Deferred Member and who is in receipt of or due payment of pension from the Scheme. Pensionable Salary Your Pensionable Salary is the salary on which your cash sum death benefits and contributions are based. It is equal to your basic annual pay on 1st January each year. Pensionable Salary may be restricted for higher paid employees. You will be notified, if this should be the case. Pensionable Service Pensionable Service means Service since the Member reached age 24, or since the Member was admitted to membership of the Scheme if later, and during which the Member was an Active Member. Principal Employer Principal Employer means the Bank of China. Qualifying Absence Qualifying Absence means absence due to any of the following: (a) (b) (c) (d) pregnancy; paternity leave; adoption leave; or parental leave. Reference Scheme Whilst the Scheme remains contracted-out of the Additional State Pension after 6 th April 1997, it must provide benefits that are broadly equivalent to, or better than those provided under the Reference Scheme which include:- A pension for life payable from age 65; A pension accrual rate of 1/80 th of qualifying earnings for each year of contractedout employment; Qualifying earnings that are 90% of the member's band earnings - his earnings between the lower earnings limit and the upper accrual point for the three tax years immediately before the member's employment ended; A spouse s pension of at least 50% of the member s own pension. Under new laws contracting-out on a defined benefit basis is due to end on 5 April 2016. This means that from 6 April 2016 the Scheme will no longer be contracted-out of the Additional State Pension and it will therefore not be required to provide benefits that are better than or equal to those under the Reference Scheme. 14

Service Service means permanent employment as an Employee with the Employer. Single-tier state pension The single-tier state pension replaces the basic state pension and the Additional State Pension for those individuals reaching their State Pension Age on or after 6 April 2016. It is based on an individual's National Insurance Contributions record. Spouse Spouse means in relation to any Member or the person to whom the Member is married (including a same sex married partner) or in a Civil Partnership with, provided that in the case of benefits payable on death, it means the person to whom the Member was married (including a same sex married partner) to or in a Civil Partnership with at the time of the Member s death provided that if the marriage or Civil Partnership took place: (a) (b) after Normal Retirement Date (or the date of retirement if earlier); or in the case of a Deferred Member who dies before Normal Retirement Date, after the date of leaving employment with the Employer, it took place at least 6 months before the Member s death. State Pension Age The State Pension Age used to be 65 for men and age 60 for women, but is being gradually equalised at age 65 for both sexes by November 2018. State Pension Age will increase to age 66 by September 2020 and will continue to rise after that. State Pension Benefits State Pension Benefits means the benefits provided by the basic state pension and the Additional State Pension. From 6th April 2016, the basic state pension and the Additional State Pension will be replaced by the Single-tier state pension. Trustees The Trustees have an independent and legal responsibility for the day to day running of the Scheme, including responsibility for the Scheme investments. 15

APPENDIX A PROVISIONS FOR EMPLOYEES INCLUDED IN THE SCHEME PRIOR TO 6 TH APRIL 1997 Contracting-Out Prior to 6 th April 1997, the Scheme had to provide benefits which could not fall below a specified level known as a Guaranteed Minimum Pension. Any Guaranteed Minimum Pension which you have earned up to 6 th April 1997 will still be retained in the scheme and will continue to be guaranteed. (i) Pension payable at your Normal Retirement Date If you decide to reduce your pension, for example; to take a tax free cash sum, your pension remaining must at least be equal to the Guaranteed Minimum Pension. This may mean the amount of cash you can take is restricted. (ii) Widow's GMP If you are a male member and you die leaving a widow (not being the Member's Civil Partner), she shall be entitled to a pension from the Scheme equal to a weekly rate of not less than half of your Guaranteed Minimum Pension. (iii) Widower's GMP If you are a female member and you die leaving a widower, he shall be entitled to a pension from the Scheme equivalent to a weekly rate of not less than half that part of your Guaranteed Minimum Pension which is attributable to earnings for the tax year 1998/90 and subsequent tax years up to and including the tax year 1996-97. A like pension shall be paid where a Member of either sex dies leaving a Civil Partner. 16

APPENDIX B NOMINATION FORM Notice to the Trustees of the Bank of China Pension and Life Assurance Scheme, indicating Member s wishes. In the event of a cash sum becoming payable on my death, I would like the Trustees to pay the benefits to:-............ (Clearly state the name(s) and address(es) of the person(s) or organisation(s) who is/are to benefit and the proportion, if applicable.) I understand that the Trustees have the final discretion over the distribution of death benefits and that their decision will take account of circumstances at the time of my death. I also understand that I may alter my nomination at any time by giving written confirmation to the Trustees. Data Protection Act 1998 I consent explicitly to the Trustees (and any data processors or other data controllers they use) processing the personal data and/or sensitive personal data about me in this form for any purposes associated with the Scheme. Signed Date.. Full name i