Pension plan Member booklet

Transcription

1 Pension plan Member booklet

2 Member booklet How do I maintain a good standard of living in retirement, and ensure I am protected if I have to stop working due to ill health and that my family are financially secure when I die? The Edinburgh Airport Pension Plan helps you with all the above, offering: a pension income at retirement an optional tax-free cash lump sum at retirement protection for your family after your death pension benefits should you be forced to retire early through illness or injury Over 12 million people in the UK are not saving enough to have a good standard of living at retirement and many of these have no insurance to cover them for ill-health or to help support their family in the event of their death. We can help you make sure that you are not one of them. NOTE This booklet describes the benefits in the Edinburgh Airport Pension Plan for staff members who joined the BAA Pension Scheme on or after 1st April If you are a fire service member and / or you joined the BAA Pension Scheme before 1st April 1991 please refer to the separate leaflets for details of the key differences that apply to you. 1

3 Useful Contacts The Plan is administered on behalf of the Trustee by Lane Clark & Peacock LLP. Please contact the Pensions Team at LCP: for any questions relating to benefit illustrations if you are considering drawing your pension to update your personal details, for example if you move house for copies of the Plan s official documents, such as the Report & Accounts, Statement of Investment Principles or Trust Deed & Rules. Edinburgh Airport Pensions Lane Clark & Peacock LLP 30 Old Burlington Street London W1S 3NN Tel: team-edinburgh@lcp.uk.com Please contact: Edinburgh HR Capital House Edinburgh Airport Edinburgh EH12 9DN Tel: edinburghhr@edinburghairport.com for any queries relating to payroll deductions if you wish to opt out of the Plan; if you wish to complete or update your Expression of Wish to register who you would like to receive benefits in the event of your death. 2

4 Contents This is the explanatory booklet for the Edinburgh Airport Pension Plan. It is based closely on the wording in the BAA Pension Scheme booklet. This should make it easy for all those who transferred their benefits from the BAA scheme when the Plan was created to understand the basis on which the benefits and contributions have been replicated at the time of transfer. Further information for Fire Service employees and members who joined the BAA Pension Scheme before 1st April 1991 is included in additional leaflets provided to these employees. Confused about pension terminology? At the back of this booklet in the glossary you will find definitions of some key terms. Every time these terms appear they are capitalised. 1. Rewarding your hard work 6 2. In sickness and in health 8 3. Protecting your family 9 4. Supporting your membership Special information for part-time employees Your questions answered General Information State Pension Benefits Glossary 16 Every effort has been made to ensure that this booklet is an accurate summary of the Plan at the date of issue (March 2013). It is, however, only a summary and precise details of the benefits and the provisions governing the Plan are contained in the Trust Deed and Rules of the Plan (as amended from time to time). In the event that there are any differences between the provisions described in this document and the Trust Deed and Rules, it is the Trust Deed and Rules which take precedence. You can obtain a copy of the Trust Deed and Rules from the Plan administrator, Lane Clark & Peacock LLP, whose details can be found opposite. 3

5 1. Rewarding your hard work 1.1. Benefits at retirement What pension will I receive? The Edinburgh Airport Pension Plan offers you valuable benefits at retirement, including a regular pension income and the option of a tax-free cash lump sum. You may retire from the Company and take your pension on your 60th birthday (your Normal Pension Date), although you may choose to stay in service after this date. You will receive a proportion of your Final Pensionable Salary for each year of service, up to a maximum of 36 years. The pension will be paid for the rest of your life and will increase each year by 5% or by the change in price inflation if less. The trustees may grant additional increases if they choose, with the Company s consent. As your Pensionable Salary does not include any shift pay, if you are a shift worker you will build up an additional Shift Credit each year which will add to the level of Pensionable Service to increase the pension you will receive at retirement. You may exchange some of your pension income in return for a tax-free lump sum at retirement As a shift worker, how will the additional amount of pension I will receive in relation to my shift pay be calculated? Your Pensionable Salary does not include any shift pay. Therefore, to ensure your pension takes into account the additional amount you earn in shift pay, you will receive a Shift Credit each year, that is added to your Pensionable Service when calculating the pension benefits you will receive at retirement. This Shift Credit is calculated as follows: 365 (days) x Annual shift pay = number of days Pensionable Salary shift credit Shift Credits will be added each year that you receive shift pay. If you stop shift work, then you will not earn any more Shift Credits, but credits you have already built up will count towards your Pensionable Service. Example: A member has an annual salary of 20,564 (excluding shift pay). The Lower Earnings Limit is 5,564. You can use the following calculation to work out the pension you will receive at retirement: Final Pensionable Salary x Pensionable Service (max 36 years) 54 Don t forget that you will pay tax on your pension income, in the same way that you do on your income from employment. The tax will be deducted from your pension payments before you receive them. Example: A member has an annual salary of 20,564. For the purposes of the example, it is assumed that the salary figure does not change over the year and that the Lower Earnings Limit is 5,564. The member s Pensionable Salary is worked out as: At the end of the year, Pensionable Salary is 15,000 and the member has received shift pay of 3,000. The additional amount of Pensionable Service earned (Shift Credit) over that year would be calculated as follows: 365 x 3,000 = 73 days 15, How do I work out what cash sum I might receive? You may exchange some of your pension income in return for a tax-free lump sum at retirement. The amount of cash you can take is restricted by HM Revenue & Customs. The maximum amount of tax-free cash you can receive from the Edinburgh Airport Pension Plan is restricted to 25% of the total value of your benefits after any cash is taken, or 4.4 times your first year s pension income. You will be provided with details of the maximum tax-free cash sum that you can take near to your retirement. 20,564-5,564 = 15,000 a year A member whose Final Pensionable Salary is 15,000, who retires at age 60 with 36 years Pensionable Service. The retirement pension is: 15,000 x 36 = 10,000 a year 54 Technical details If you are a shift worker, Shift Credits can take your Pensionable Service over the normal maximum of 36 years. 4

6 Guideline figures: First year s pension income Maximum tax-free cash Reduced first year s pension 10,000 or 44,000 and 6,615 15,000 or 66,000 and 9,923 20,000 or 88,000 and 13,230 25,000 or 110,000 and 16, If I take a cash lump sum, how will this affect the pension I will receive? For each 13 of cash taken your pension will be reduced by 1 a year Can I retire early? Yes. You can start taking your Edinburgh Airport pension at any time after the age of 55. If you joined the BAA Pension Scheme before 6th April 2006 and retire directly from service you can start taking your Edinburgh Airport pension at any time after the age of 50. The pension you will receive will be based on your Pensionable Service and Pensionable Salary when you retire. However, as you are retiring early and your pension will therefore be paid for longer, your pension will be reduced by 1/3% for each complete month by which you are under the age of 60 (that is 4% for each complete year) What if I work for Edinburgh Airport past the age of 60? You can continue to contribute to and earn benefits in the Plan (up to a maximum of 36 years Pensionable Service) and take your pension when you stop working How will I receive my pension? Your pension will be paid monthly in arrears, directly into your bank or building society account. Example: A member retires after 27 years Pensionable Service aged 57, with a Final Pensionable Salary of 15,000. The early retirement pension is: 15,000 x 27 = 7,500 a year less early 54 retirement deduction For 3 years early retirement, this deduction is 12% (4% x 3 yrs): What increases will my pension receive in payment? Once in payment, your pension (other than any Guaranteed Minimum Pension) will be increased each year by 5% or in line with the change in price inflation if less. If you joined the BAA Pension Scheme before April 1997 then part of your pension earned before that date will be what is called Guaranteed Minimum Pension ( GMP ) as a result of being contracted out of the State Second Pension. This will represent only a small part of your total benefit, and the increases in payment are prescribed by statute. In general, GMP earned before 1988 will not be increased by the Plan, and GMP earned between 1988 and 1997 will be subject to a maximum increase of 3% pa. The interaction of GMP and your State benefits is complex, but in some cases you may receive additional increases on your State pension as a result of having GMP in the Plan. Please contact LCP if you need further assistance with this. The Trustees and the Company may agree to grant additional increases. Technical details Because pensions are a tax-efficient way for you to save for your future, the Government restricts the amount of pension savings that you can build in your lifetime without incurring additional tax. This is known as the Lifetime Allowance. This allowance is high enough not to affect most people in April 2013, the limit was 1.5 million, it is due to fall to 1.25 million from April To calculate the value of your pension savings you should multiply the annual pension income you expect to receive by 20. Using the example on this page, an annual pension income of 6,600 would equate to a total pension saving of 132,000. If you are approaching the Lifetime Allowance you may wish to take financial advice on the best course of action for you. 7,500 x 12% = 900. Therefore, the pension will be 7, = 6,600 a year 5

7 2. In sickness and in health 2.1. Ill-health benefits Not everyone is lucky enough to remain in good health throughout their working life. The Edinburgh Airport Pension Plan enables you to take a pension should you have to retire early due to ill health or injury. If you are retired by the Company because you are unable to continue with your current employment or any other occupation, you will be able to take your pension benefits early without penalty. Your pension will be based on your Pensionable Salary at the time of your ill-health retirement and the length of service you would have completed had you continued working for the Company until your Normal Pension Date. If you are retired by the Company because you are unable to continue to work in your current role or any other role with Edinburgh Airport due to ill-health or injury, but you could work for another employer, you will receive a pension based on your Pensionable Salary at the date of your ill-health retirement and an enhanced period of Pensionable Service What pension benefits would I receive if I can no longer work for Edinburgh Airport, or in any other occupation? This is referred to as total incapacity. If you are retired by the Company because of total incapacity the benefits you will receive are calculated as for normal retirement, but using your Pensionable Salary at the date of ill-health retirement and the level of Pensionable Service you would have completed if you had worked for Edinburgh Airport until your Normal Pension Date. As with normal retirement, you will be able to give up some of your pension in return for a tax-free lump sum And what might I receive if I couldn t work for Edinburgh Airport, but may be able to take another job or do some other form of paid work? This is known as partial incapacity. If you are retired by the Company due to partial incapacity the benefits you will receive are calculated, using your Pensionable Salary and completed Pensionable Service at the date of your ill-health retirement, but assuming you had completed an extra five years Pensionable Service (or up to your Normal Pension Date if you are within 5 years of that date) Will the pension I receive if I retire early due to ill-health take into account any shift pay I might have received had I not retired due to ill health? Yes. If you are a shift worker your Pensionable Service will be calculated assuming that you would have continued to receive the same amount of shift pay and build the same level of Shift Credits that you received in the year to the date of your ill-health retirement. So, if you received 73 days Shift Credits in the year to the date of your ill-health retirement, your ill-health pension would be calculated assuming you receive 73 days Shift Credit for each year of enhanced Pensionable Service Will my age affect whether I can receive an ill-health pension? No. If you are suffering from serious ill-health or incapacity, you can be retired by the Company and start receiving an ill-health pension at any age. Technical details The Company and Trustee will take full medical advice before agreeing to the payment of an ill-health pension. If you are retired due to total incapacity and then become able to undertake further employment, the level of ill-health pension may be reduced or, in the case of your ability to return to full work, stopped. There is an overall maximum of 36 years of Pensionable Service that can be used to calculate your ill-health pension. If you are a shift worker, Shift Credits can take your Pensionable Service over the normal maximum of 36 years. The enhanced period of Pensionable Service must not exceed the Pensionable Service that you could have completed up to your Normal Pension Date had you not had to retire early through ill health. 6

8 3. Protecting your family 3.1. Death benefits The Edinburgh Airport Pension Plan offers a generous level of life cover to help you provide for your family after your death. The benefits that would be payable depend on whether you die while employed by the Company, after leaving the Company (but before retirement) or after retirement. A pension will be paid to your Spouse or a Registered Civil Partner and any Eligible Children. If you die while you are still working for the Company and contributing to the Plan, a cash sum will also be payable. If you die leaving Eligible Children but no Spouse or Registered Civil Partner, then the rate of any children s pensions payable will be increased by one third What if I die while employed? Cash lump sum A cash lump sum equal to four times your annual salary at the date of your death will be payable. If you are a shift worker, an additional amount equal to four times the rate of your shift pay at the date of your death will also be payable. You can nominate who you would like to receive this benefit and how you would like the cash sum to be split between them. Partner s pension Your Spouse or Registered Civil Partner will be paid a pension of two-thirds of the pension you would have received had you continued working until your Normal Pension Date. If you are a shift worker, this pension will be calculated taking into account additional Shift Credits you would have received had you continued with the same level of shift work you were undertaking as at the date of your death. Children s pensions Eligible Children will receive a pension of up to one quarter of your partner s pension. And, if you die leaving children but no Spouse or Registered Civil Partner, the rate of the children s pension will be increased by one third What if I die in retirement? Your Spouse or Registered Civil Partner and any Eligible Children will receive a pension from the Plan. Your partner s pension will be two-thirds of the pension you were receiving at the date of your death. Any children s pensions are calculated in the same way as they would have been if you had died while employed. If you die within five years of retiring, the pension you were receiving, together with any increases that would have been applied, will be paid to your Spouse or Registered Civil Partner for the remainder of the five years, before these terms apply What if I die after I have left the Company but before retirement? Both a partner s pension and children s pensions are payable. A partner s pension would be based on 50% of the benefits you have built up in the Plan at the date of your death; children s pensions would be calculated in the same way as they would have been if you had died while employed How do you know who I would like to receive any lump sum benefits if I die? To ensure that the Trustee knows who you would like to receive these benefits should you die, you should complete an Expression of Wish form. You can change your mind about who you would like to receive these benefits by completing a new form at any time. Technical details While the Trustees will take into account the information you give on your Expression of Wish form, they are not legally bound by it. This means that they can determine who is to receive the cash sum and it enables payment to be made very quickly directly to your beneficiaries. Normally, this sum is not subject to Inheritance Tax. You should be aware that common law spouses, partners who are not Registered Civil Partners and other dependants have no automatic entitlement but may be granted a pension at the Trustee s discretion (subject to the Company s consent). If you wish to inform the Trustee of your personal circumstances, you should write to the Pensions Team using the address in Useful Contacts on page 4. If you have more than two Eligible Children, the benefit that is payable will be split equally between all Eligible Children. The partner s pension is payable for life and is therefore unaffected by remarriage. Partner s and children s pensions will be paid monthly in arrears and will be subject to the same increases as retirement pensions. 7

9 4. Supporting your membership 4.1. Who pays You make a fixed contribution towards your pension and the balance of the cost of providing all these benefits is the responsibility of Edinburgh Airport Limited. You contribute 5% of your Pensionable Salary and if you are a shift worker you also contribute 5% of your shift pay each month, but the cost to you is less than this as you normally don t pay tax on pension contributions. The Company pays the balance of the costs of providing all the benefits as well as the expenses of running the Plan How do I pay? Your contributions are deducted from your salary on a monthly basis before tax. This means that you will pay less tax as you will not be taxed on the amount contributed to the Plan. While you will receive a Basic State Pension at retirement, the Plan replaces part of the additional retirement benefits (State Second Pension) that would normally be paid to you by the State, so you will also pay a reduced rate of National Insurance (NI). Example: A member has an annual salary of 20,564. For the purposes of the example, it is assumed that the salary figure does not change over the year and that the Lower Earnings Limit is 5,564. The member s Pensionable Salary is worked out as: 20,564-5,564 = 15,000 a year Member contributions to the Plan are calculated as: 15,000 x 5% = 750 a year But there are two savings to reduce the actual cost: i) Tax relief 750 x 20% = 150 ii) Reduced NI contributions 15,000 x 1.4% = 210 Total saving = = 360 a year The actual (net) cost to the member is therefore: = 390 a year, or each month Can I make additional contributions to the Plan? If you were paying additional contributions to the BAA Pension Scheme to secure added years of service at the time of your transfer to the Plan, then you may continue to do so. However it is not possible to commence or increase added years contributions. If you wish to increase your overall pension provision, then it is possible to join a personal pension plan and still remain a member of the Plan How much does the Company pay? The Company pays the balance of the cost of providing the pension and life assurance benefits and the expenses of administering the Plan, after employee contributions have been paid into the Plan. The cost of the pension and life assurance benefits provided by the Plan is significantly more than the cost of your contributions. The level of contributions required is determined on the advice of the Plan s actuary who carries out regular reviews of the financial position of the Plan What happens to the contributions? Your contributions, along with those of the Company, are paid into a fund which is invested to provide benefits for you and other Members of the Plan when they become due. The fund is set up under trust and its finances are kept quite separate from those of any of the participating employers. Technical details The Government has set an Annual Allowance or limit to the amount of pension savings you can make in a year, before being subject to tax. For the 2012/13 tax year the Annual Allowance is 50,000. The Annual Allowance is expected to reduce to 40,000 from 2014/15.. For defined benefits schemes like the Plan, pension savings means the HMRC valuation of the benefits being earned, not just your personal contributions. While this will have no effect on the overwhelming majority of Plan Members, if you believe that you could be affected, or intend to make large contributions to other pension arrangements outside the Plan, you should seek your own tax advice. Your contributions will cease when you have completed the maximum of 36 years of Pensionable Service. The level of contributions you are required to pay may change in future, but if this happens, you will be consulted in advance. The Trustee of the Plan is required to publish and keep under review a Statement of Investment Principles, which explains its thinking behind how the assets of the Plan are being invested. You can obtain a copy of this document by contacting the Pensions Team. 8

10 5. Special information for part-time employees Overview You are eligible for the full range of benefits offered by the Plan. To ensure you receive a full and fair level of pension benefits, the Pensionable Salary and Pensionable Service for part-time workers are expressed as a proportion of the full-time equivalent Pensionable Salary Your Pensionable Salary will be expressed in terms of your equivalent full-time Pensionable Salary. This means that your pensionable salary will be higher than your annual basic salary. Your contributions will be based on your salary before it is multiplied to reflect full-time hours (ie your annual basic salary less the appropriate proportion of the Lower Earnings Limit). Technical details These calculations are no different to simply using parttime salary for Members who have part-time service only on constant hours, but ensure that a Member with both full-time and part-time service, or whose contractual hours change, is credited with the correct total period of Pensionable Service. Your Pensionable Salary will be calculated as follows: Your Annual Basic Salary - A proportion of the Lower Earnings Limit (reflecting the proportion of parttime hours worked) x Contractual hours for the equivalent full-time position Actual contractual hours 5.2. Pensionable Service Your Pensionable Service will be expressed in terms of your equivalent full-time Pensionable Service. This means that your pensionable service will be lower than the number of years you have been a member of the Plan. Your Pensionable Service will be calculated as follows: Your length of membership (in years, counting days) Actual Contractual Hours x Contractual Hours for the equivalent full-time position 9

11 6. Your questions answered 6.1. How do I join? The Plan is closed to new entrants. You will be a member if you were employed by Edinburgh Airport Limited on 31 May 2012 and were a member of the BAA Pension Scheme immediately prior to that date and you elected to transfer your benefits from the BAA Pension Scheme into the Plan What if I want to opt out? You can decide to opt out at any time by informing Edinburgh Airport HR at least one month before you wish your contributions to cease. Note that if you decide to opt out you will not be permitted to re-join the Plan in future How do I know what pension I will receive? Each year you will be sent a Benefit Statement. The statement will detail the level of pension you might receive if you continue working until your Normal Pension Date. More detailed information on the options available will be provided to you should you leave the Company before retirement Where can I go if I have any more questions? If you have any more questions, please contact either the Pensions Team at Lane Clark & Peacock LLP or Edinburgh HR, Capital House, Edinburgh Airport, Edinburgh, EH12 9DN please see Useful Contacts on page 4 of this booklet Where can I go for advice about my pension? Neither the Company nor the Trustee can give you financial advice. If you would like financial advice we recommend you contact a Financial Adviser. You can find details of your nearest Financial Adviser at Will my pension from Edinburgh Airport affect the pension I receive from the Government at retirement? Your basic state pension will not be affected by payments from the Edinburgh Airport Pension Plan. The Government also provides an earnings-related top-up to this pension, known as the State Second Pension (S2P). However, as a member of the Edinburgh Airport Pension Plan, the amount you will receive (if any) in earningsrelated top up will be lower for the years that you are a contributing member of the Plan, but you will pay less National Insurance to reflect this. Further details on the pension benefits you might receive from the State are included in section 8 State Pension Benefits Can I increase the pension I will receive by transferring in benefits or pension savings from another scheme? It is not currently possible to transfer benefits or savings from other pension schemes into the Plan What happens if I leave the Company? Generally speaking, the options available to you will depend on your length of Pensionable Service: Over 2 years you can keep the benefits in the Plan until you reach retirement, or you can transfer these to another pension arrangement. 3 months to 2 years you will be offered a transfer value to enable you to transfer these benefits into another pension arrangement. Alternatively, you will be refunded the value of your contributions minus a deduction for tax and an amount to reinstate you into the state second pension. Up to 3 months your contributions will be refunded minus a deduction for tax and an amount to reinstate you into the state second pension. 10

12 7. General Information 7.1. Management of the Plan The Edinburgh Airport Pension Plan is established under a trust administered by a Trust Company with its own Board of Directors (known as Trustees). The Board comprises trustees appointed by the Company and trustees who are nominated by members. The Trustee board is responsible for ensuring the correct management of the Plan and calls upon the expertise of professional advisers in order to run the Plan. These include investment managers, actuaries, auditors and lawyers Tax approval The Plan is a registered scheme. This means that it is registered by HM Revenue & Customs. Various tax advantages are available to registered schemes: You receive income tax relief on your contributions to the Plan up to the Annual Allowance. The income received from the investment of the Plan s assets is largely free of tax. Cash lump sums payable on retirement are free of tax subject to the Lifetime Allowance. All pensions are treated as earned income and are taxed under the PAYE system. The Trustee of the Plan is liable to pay tax (currently at 20%) on refunds of contributions and a deduction to cover this liability is made from the refunds to Members who withdraw Amendments to the Plan The Company intends that the Plan should continue. However, it has the right, subject to consultation, to amend or discontinue the Plan at any time. In the event of the Plan being discontinued, the assets of the Plan would be used to provide benefits in accordance with the Trust Deed. The funding of the Plan is designed to ensure that the assets would at all times be at least sufficient to provide Members accrued rights. Legislation requires the Company to top up the Plan s resources if it falls short on a statutory measure Assignment of benefits You must not attempt to assign your future benefits to obtain cash payments or as security for loans. Under the Rules, there could be no legal claim on the Plan. Your benefits would cease to be payable and would come under the control of the Trustee for payment at its discretion Dispute procedure Complaints about the Plan are rare and are generally resolved informally. However, if you are not happy with the result of the informal process, there is a formal procedure for resolving disputes, known as the internal disputes resolution procedure (IDRP) You will need to put your case in writing to the Secretary to the Trustee at the address at the front of this booklet. You should provide as much information as you can (as well as including details such as your full name, address, date of birth and National Insurance number). You may decide to use a representative to act on your behalf. If so, you should include the name and address of your representative and state whether correspondence should be addressed to him or her. You should expect to receive a decision within two months, or the period determined by law. A full copy of the IDRP is available from the Pensions Team by writing to the address at the front of this booklet Other organisations Any member or beneficiary of a pension scheme can write to The Pensions Advisory Service (TPAS) at any time for help in connection with any pension queries they may have. TPAS is based at 11 Belgrave Road, London, SW1V 1RB (Telephone ; Website Members and beneficiaries can also approach the Pensions Ombudsman (based at the same address as TPAS, Telephone ). The Pensions Ombudsman has the power to investigate and determine complaints or disputes of fact or law in relation to occupational pension schemes. There is a further organisation involved in the proper management of pension schemes the Pensions Regulator. The Pensions Regulator was created under the Pensions Act Its top priority is to tackle risks to Members benefits. Its principal aim is to prevent problems from developing and it has powers to investigate schemes and enforce action where necessary. Together with the Trustee s professional advisers, The Pensions Regulator is responsible for ensuring that all pension schemes satisfy the terms of the Pensions Act. The Pensions Regulator can be contacted at: Napier House, Trafalgar Place, Brighton, BN1 4DW (Telephone ; Website Temporary absence Membership of the Plan is unaffected during a period of temporary paid absence (due to maternity leave, sickness or accident), provided that contributions continue to be paid and you are regarded as still being in service. In cases of temporary absence for any other reason, continued membership will depend on individual circumstances. Any unpaid absences will not count for pension purposes Data Protection Act Both the Trustee and Edinburgh Airport Limited are registered under the Data Protection Act You should be aware that various forms in relation to the Plan incorporate your specific consent to our holding and processing of data in accordance with the Act. 11

13 7. General Information 7.9. Plan information In addition to this booklet, the following items are issued to Members: Your annual benefit statement, which updates you on the level of benefits that is building up for you, and for your family following your death; and The Trustee s newsletter to Members designed to bring you news and information about the Plan and wider pension issues Plan documentation As a member of the Plan, you can ask to see the following items (and in certain cases request your own copy): Trust Deeds and Rules; The latest Actuarial Valuation; Formal Trustee s Annual Report and Accounts; The Plan s agreed Schedule of Contributions; The Trustee s Statement of Investment Principles. Internal Dispute Resolution Procedure 12

14 8. State Pension Benefits In addition to the pension you will receive from the Edinburgh Airport Pension Plan at retirement, you may also receive a pension from the State. There are two parts to the State pension: The Basic State Pension this is what most people think of as the old age pension ; and An additional earnings related top up which is currently called the State Second Pension (S2P) The Basic State Pension The maximum Basic State Pension is currently worth a week ( 5, a year) for a single person or a week ( 8, a year) for a married couple. This amount is increased by the Government each year, This is a flat rate pension paid to everyone with a sufficient National Insurance contribution record. The amount you will receive will depend on how long you have been working and paying National Insurance contributions. Membership of the Plan does not affect your eligibility to receive the Basic State Pension An additional pension This is an earnings-related top up to the Basic State Pension. On 6th April 2002, The State Second Pension (S2P) replaced SERPS (the State Earnings Related Pension Scheme), which was introduced as a top up to the Basic State Pension in the 1970s. As a member of the Plan you pay lower levels of National Insurance contributions and therefore: You will not have built up any additional pension through SERPS; and You will not be eligible to build up full S2P benefits: If you are earning more than 33,000 you will not build up any S2P pension; or If you are earning less than 33,000 you may still be able to build some S2P pension, reflecting the more generous State provision for low and moderate earners. Technical details: N.B. All figures relate to the 2012/2013 tax year. The Government may change pension benefits offered by the State. For example, the Government has announced it intends to replace the current Basic State Pension and Second State Pension (S2P) with a single flat rate state pension. The changes will happen in 2016 at the earliest. has been possible to delay taking your state pension until after this age and then receive an increased state pension. The difference between the normal rate of state pension and the increased rate of state pension is known as Extra State Pension. You can delay taking your pension benefits for a minimum of five weeks up to a maximum of five years. For every five weeks you delay drawing your pension, you will receive an Extra State Pension of 1% of the weekly state pension you would have received at your State Pension Age. This equates to an additional 10.4% for each year of delay. If you delay taking your state pension for more than 12 months you can choose to take a taxable lump sum (of the payments you missed and compound interest on the missed weekly pension payments) instead of taking the additional pension. Please note: Your state pension cannot be claimed before your State Pension Age. You must draw all the state pension benefits you are entitled to from the same date, whether this is the Basic State Pension, the State Earnings Related Pension or the State Second Pension. Although the option to delay taking your state pension may be tempting, it is not suitable for everyone. For example, it may mean you need to continue to work in order to bridge the gap between State Pension Age and the date you start claiming your state pension benefits, where you do not have an alternative source of income. The decision about whether to delay claiming state pension benefits will depend on your financial circumstances. If you are thinking of deferring your state pension, you should take independent financial advice. If you want to know what level of pension income you are likely to receive from the state at retirement, you can ask for a forecast of your likely State benefits by completing form BR19 available at your local Social Security or Pension Service Office or online at Example: The current Basic State Pension is per week. If you were to delay claiming your pension for a year you would receive per week instead. In this case the Extra State Pension would be per week Improving your state pension by retiring later Many people think that the date at which they can draw their state pension is fixed at the State Pension Age (which will be 65 for men and women by November 2018 and rising gradually to 68 by 2046). However, for some time it 13

15 9. Glossary Annual Allowance This is the limit to the amount by which your pension savings can grow in a year, before being subject to tax. It has been set at a high level ( 50,000 at April 2013) and so is unlikely to apply to many Members. Company Edinburgh Airport Limited Eligible Children Will include any child or children of a member (including a legally adopted child or step-child) under the age of 18 or, if still in full-time education, up to the age of 23. Final Pensionable Salary This is the salary on which your benefits are based. I t is the highest one-year average of your Pensionable Salary in the last three years of Pensionable Service. Lifetime Allowance This is the limit on the amount of your overall pension savings pension that will qualify for full tax relief. This limit will apply to all of the benefits you build up over your entire life. This limit is high enough not to affect most people ( 1.5m worth of benefits as at April 2013). Any benefits in excess of this limit can be taken as a pension or cash after a deduction for tax. Lower Earnings Limit This is a figure set by the Government which is the minimum amount someone who is not in a contracted-out pension scheme has to earn before they start building up State Second Pension. Pensionable Service This is normally your period of membership of the Plan together with any period of membership of a previous employer s scheme from which benefits have been transferred to the Edinburgh Airport Pension Plan. Pensionable Service ceases when you retire and is subject to a maximum of 36 years. Plan The Edinburgh Airport Pension Plan. Registered Civil Partner A Registered Civil Partner is someone who has entered into a civil partnership with another member of the same sex. Civil Partnerships allow same sex couples to be treated for legal purposes in the same way as married couples. Shift Credits Shift Credits are earned by shift workers, and are additional periods of service, added to their Pensionable Service each year, to reflect the difference between their Pensionable Salary and the additional amount earned in Shift Pay. Shift Credits can take your Pensionable Service over 36 years. Spouse This is a person with whom you have been through a lawful ceremony of marriage. Trustee(s) This means either Edinburgh Airport Pension Trustees Limited, or the directors of that company, as the context requires. Members These are all employees who are contributing members of the Plan. You will remain a member until you stop contributing to the Plan (either because you leave Edinburgh Airport s employment or because you decide to stop contributing, or because you retire and become a Pensioner ). Normal Pension Date This is the date of your 60th birthday. Pensionable Salary This is your annual basic salary plus any other amounts that are stated as pensionable in your contract of employment, less an amount equal to the Lower Earnings Limit. 14

16 Edinburgh Airport Edinburgh EH12 9DN Scotland EDI_Airport edinburghairport edinburghairport.com Company Number SC096623