Your Guide to the Electronic Data Systems 1994 Pension Scheme. (Employees transferred from the National Health Service)

Transcription

1 Your Guide to the Electronic Data Systems 1994 Pension Scheme (Employees transferred from the National Health Service) Version 1/1998

2 CONTENTS 1 INTRODUCTION 2 DEFINITIONS 3 WHO CAN JOIN THE SCHEME? 4 CAN BENEFITS BE TRANSFERRED? 5 WHAT ARE MY CONTRIBUTIONS? 6 WHAT DOES THE COMPANY PAY? 7 WHAT HAPPENS TO THE CONTRIBUTIONS? 8 WHAT ARE MY NORMAL RETIREMENT BENEFITS? 9 CAN I RETIRE EARLY? 10 WHAT BENEFITS ARE PAID IF I HAVE TO RETIRE EARLY BECAUSE OF ILL HEALTH? 11 CAN I PROVIDE FOR MY DEPENDANTS? 12 WHAT BENEFITS ARE PAYABLE ON DEATH? 13 DO PENSIONS INCREASE DURING PAYMENT? 14 WHAT HAPPENS IF I LEAVE SERVICE OR OPT OUT OF THE SCHEME? 15 WHO ARE CASH SUMS PAID TO AFTER I DIE? 16 HOW ARE PENSIONS PAID? 17 CAN I INCREASE MY BENEFITS? 18 WHAT HAPPENS IF I AM ABSENT FROM WORK? 19 WHAT ELSE SHOULD I KNOW? 20 WHAT FURTHER INFORMATION IS PROVIDED? 21 APPENDIX - State Pension Scheme and Contracting- Out NOMINATION OF BENEFICIARY FORM

3 1 INTRODUCTION This booklet describes the benefits provided by the Electronic Data Systems 1994 Pension Scheme ("the Scheme"), the conditions attaching to the benefits and the manner in which they are paid. The booklet is intended to apply from 6th April 1997 and you should accordingly note that it takes into account the provisions of the Pensions Act 1995 ("the Act"). The Company and the Trustee have as a result taken the steps necessary to ensure that the Scheme complies with all the requirements of the Act. In particular, it should be pointed out that under the provisions of the Act changes have been introduced which alter the requirements schemes must meet so they can remain or be contracted-out of the State Earnings-Related Pension Scheme. This is set out in greater detail in the Appendix but essentially from 6th April 1997 a new reference scheme test is introduced. Accrual of Guaranteed Minimum Pension ( GMP, see Appendix) will cease from that date but for existing members GMP accrued to that date will be maintained. This means that benefits built up in respect of service prior to 6th April 1997 will continue to be subject to the requirements to meet the GMP. However, you should note that on leaving, GMP will continue to be revalued but this will now be at a rate of 6.25% per annum. The Scheme provides continuity of benefits for employees who are transferred from the Civil Service, Local Government or the National Health Service. Contributing members of the Scheme will continue to be contracted-out of the State Earnings Related Pension Scheme on a salary-related basis and the effects of this is explained in the Appendix. The Scheme is governed by a Trust Deed and Rules which specifies how the Scheme must be operated. A copy of this document is available for inspection from EDS Pensions Administration, at the address shown on the next page. This booklet is intended to be an accurate summary in ordinary language of the main features of the Scheme. It does not attempt to describe all the circumstances that may arise. The full terms and conditions of the Scheme are contained in the Trust Deed and Rules and only that document can be used for legal interpretation. If there is any discrepancy between this booklet and the Trust Deed and Rules, the latter will prevail.

4 If you require assistance concerning your benefits, need more information or wish to ask questions, you should contact: EDS Pensions Administration Paymaster (1836) Limited Sutherland House Russell Way Crawley West Sussex RH10 1UH 2 DEFINITIONS Certain terms are used in connection with the Scheme and their meanings are given here for ease of reference. Company is Electronic Data Systems Limited and any subsidiary or associated company which has elected to participate in the Scheme. Final Pensionable Pay is the greater of total Pensionable Pay in the year ending on your Normal Retirement Date or earlier date of retirement or leaving and the highest total Pensionable Pay in one of the last three years prior to your Normal Retirement Date or earlier date of retirement or leaving. Lower Earnings Limit is an amount fixed by the State at the beginning of each tax year. It is approximately equal to the single person s Basic State Pension. Normal Retirement Date is the earliest date at which you can retire voluntarily to receive immediate and unreduced benefits. It is the 60th birthday for both men and women. Pensionable Pay is your basic pay plus allowances which were pensionable under the Previous Scheme on the day immediately before your employment transferred to the Company. Overtime is excluded. You should note that if you are included in a profit-related pay scheme of the Company your Pensionable Pay will also take account of, and include, the salary or wages you have given up because of your inclusion in the Scheme. Previous Scheme is the NHS Pension Scheme.

5 Qualifying Service is Reckonable Service plus certain other categories of service including pensionable service in a former scheme from which benefits have been transferred. Your period of membership in the Previous Scheme will count for Qualifying Service whether or not it has been transferred. Reckonable Service is the number of years and complete days of your contributory membership of the Scheme. Any service after your 65th birthday is not taken into account. Part time service is counted proportionately on the basis of hours worked. Reckonable Service is limited to a maximum of 40 years if you leave Reckonable Service on or before age 60, 45 years at age 65. If you opted to transfer your benefits from the Previous Scheme, your Reckonable Service will include the pensionable service granted in respect of the transfer value received from that scheme. SERPS is the State Earnings-Related Pension Scheme. State Pension Age is the age from which State pensions are paid and is currently the 65th birthday for men and the 60th birthday for women. The Trustee is a Trustee Company, EDS 1994 Trustee Ltd. 3 WHO CAN JOIN THE SCHEME? You will be eligible for inclusion on the commencement of employment with the Company if, on the day immediately prior to that date, you were a contributing member or eligible for membership of the Previous Scheme. Membership of the Scheme is not a condition of employment and you can opt out whenever you wish. There is no specific period of notice but you must let EDS Pensions Administration know that you wish to leave and they will arrange for your contributions to cease from the month following the date of notification. If you do opt out you will continue to be covered for lump sum death in service benefits. If, after opting out, you subsequently change your mind and wish to re-join the Scheme, this will be subject to the agreement of the Company and the Trustee and it will be subject to such conditions, including the provision of

6 satisfactory medical evidence, as the Trustee may require. A month s notice to re-join must be given. It will not be possible to re-join the Scheme more than once. Note: Death in service benefits will be subject to such medical and other conditions as may be required in connection with any insurance policies the Trustee has effected to secure these benefits. Normally, no medical evidence will be required from members who join when first eligible. If you are affected by this requirement you will be advised personally. 4 CAN BENEFITS BE TRANSFERRED? Benefits earned under the Previous Scheme can be transferred and it may also be possible to transfer benefits earned in an earlier employer s scheme. You should obtain details from the scheme in question and the Trustee will arrange for you to be given a quotation of the additional benefits that could be secured in the Scheme. This quotation will enable you to decide whether a transfer will be to your advantage. Transfer is subject to the Trustee s agreement but this will normally be withheld only where the Trustee is advised that the amount available is insufficient to secure the benefits the Scheme would be required to provide. 5 WHAT ARE MY CONTRIBUTIONS? Your contribution to the Scheme is 6% of your Pensionable Pay. These contributions are deducted from your pay before your income tax is assessed, which means that you receive full tax relief, at the highest rate you pay, on the contributions. Contributions are payable until your Normal Retirement Date or earlier date of retirement, leaving service or death or should you continue employment after your 60th birthday, to the date of your subsequent retirement or death, but not beyond age 65. Because the Scheme is contracted-out of SERPS, your National Insurance contributions are reduced.

7 6 WHAT DOES THE COMPANY PAY? The Company meets the cost of the Scheme, after taking account of the members contributions. At least once every three years the Scheme s assets and liabilities will be valued by the Scheme Actuary and a rate of Company contribution calculated which is considered sufficient to ensure that the benefits are fully funded over the long term. 7 WHAT HAPPENS TO THE CONTRIBUTIONS? Contributions from members and the Company are paid into a Trust Fund which is quite separate from the Company s business. The fund is invested by independent experts appointed by the Trustee. Investment in the Company is prohibited. All the Scheme s benefits are provided out of the fund apart from the lump sum death in service benefits which are currently covered by an insurance policy taken out by the Trustee. 8 WHAT ARE MY NORMAL RETIREMENT BENEFITS? On retirement at Normal Retirement Date you will become entitled to a pension, payable for the rest of your life, which is calculated by multiplying 1/80th of your Final Pensionable Pay by the number of years of your Reckonable Service, plus a proportionate amount for each additional complete day of such service. In addition, you will receive a cash sum calculated by multiplying 3/80ths of your Final Pensionable Pay by the number of years of your Reckonable Service, plus a proportionate amount for each additional complete day of such service. If you remain in service after Normal Retirement Date, your pension and cash sum benefits will become payable on your eventual date of retirement. You will continue to contribute and earn additional pension during such service but accrual of pension and contributions will cease at age 65 in the event of continued employment. However, if you joined the Previous Scheme prior to 1st June 1989 you may elect, with the agreement of the Company and the Trustees, to receive your benefits prior to your actual date of retirement.

8 9 CAN I RETIRE EARLY? You can choose to retire at any time after your 50th birthday provided that you have completed at least two years Qualifying Service. You will then receive immediate pension and cash sum benefits based on completed Reckonable Service and Final Pensionable Pay at that date. A reduction will be made to the accrued benefits to allow for early payment. 10 WHAT BENEFITS ARE PAID IF I HAVE TO RETIRE EARLY BECAUSE OF ILL HEALTH? If you are forced to retire because of ill health, you will become entitled to immediate benefits which, provided you have completed at least two years' Qualifying Service, will be increased to take account of the further Reckonable Service (or in the case of the cash sum, one half of the further service) you would have completed if your employment had continued to Normal Retirement Date. Evidence of continued eligibility for an ill health pension may be required. If at any time before Normal Retirement Date this cannot be provided, the Trustee has discretion to reduce or suspend the pension being paid. 11 CAN I PROVIDE FOR MY DEPENDANTS? The Scheme provides automatic pensions for eligible spouses and children of a deceased member after retirement, but you may elect to make additional provision for your spouse and/or children or provide a pension for some other dependant by giving up part of your own pension. This option must be exercised before your pension comes into payment and is subject to certain conditions set out in the Rules. If you are interested in this option you should apply to EDS Pensions Administration at the address shown in section 1 for further details. 12 WHAT BENEFITS ARE PAYABLE ON DEATH? Death Before Retirement If you die before Normal Retirement Date while employed by the Company the following benefits will be payable:

9 A lump sum of 4 x your Final Pensionable Pay. A pension for your spouse of one half of your own pension based on completed Reckonable Service at the date of death or, if you have completed at least two years' Qualifying Service, total possible Reckonable Service to Normal Retirement Date. The spouse s pension will be paid for the remainder of his or her lifetime. Children's pensions of one quarter of the spouse s pension for each child up to a maximum of 4, payable to the child s 18th birthday (or 23rd birthday where education or vocational training continues up to that age). Children s pensions will be doubled if, at your death, you are a widow(er) or are divorced or, if your spouse is alive at the date of your death, in the event of his/her subsequent death. If no spouse s or child s pension becomes payable on your death, your own accumulated contributions to the Scheme will be refunded plus interest as determined by the Trustee. The above benefits are also paid if you die after your Normal Retirement Date whilst still in service and before age 65. If you had elected to take immediate benefits prior to the date of your death, the death benefits payable will be those set out under "Death After Retirement" (see below). If you are not married at the date of your death, the Trustee may at its absolute discretion, apply the spouse s pension to any one or more of your dependants as notified by you to the Trustee prior to your death. Death After Retirement If you die within 5 years of commencement of pension, a lump sum will be paid equal in value to the instalments of your own pension which would have been paid from the date of your death to the end of the 5 year period. A pension will be paid to your spouse, if he/she survives you, of one half of your own pension for the rest of his/her lifetime. For the purpose of calculating this pension, any pension you gave up to provide a pension for a dependant when you retired will be added back to your own pension. For the first three months following the date of your death the spouse's pension will be increased to equal your own pension. Because of Inland

10 Revenue requirements, it may be necessary for all or part of the enhancement for this period to be paid by the Company, outside the Scheme. If on your death you leave any eligible children, pensions will become payable to them on the same basis as those payable on death, in, service (see under "Death Before Retirement"). If you are not married at the date of your death, the Trustee may at its absolute discretion, apply the spouse s pension to any one or more of your dependants as notified by you to the Trustee prior to your death. 13 DO PENSIONS INCREASE DURING PAYMENT? The part of your pension which exceeds the GMP will be increased in line with the Retail Prices Index, subject to a maximum increase on your original pension at the date of its commencement of 7.5% per annum compound over the period from that date to the date of the increase. However, all your pension which accrues from 6th April 1997 will be increased as set out above. The maximum increase will not apply to pensions transferred from the Previous Scheme. Each year, pensions being paid will be reviewed by the Trustee and, at its absolute discretion, it may grant an additional increase above the amount guaranteed, depending on inflation, the financial strength of the fund and other relevant considerations. Pension increases will take effect on 1st April in each year. A proportionate increase will be granted in the case of pensions which came into payment during the preceding year. The increases described in this section apply equally to pensions payable to spouses or other dependants. 14 WHAT HAPPENS IF I LEAVE SERVICE OR OPT OUT OF THE SCHEME? With Less Than 2 Years Qualifying Service If you have completed less than 2 years' Qualifying Service, you will receive a refund of your contributions subject to a deduction in respect of your share

11 of the amount needed to buy you back into SERPS. Tax will be payable on the net amount, the current rate being 20%. You will also have the option of a transfer value, determined in the same way as for those with more than 2 years' Qualifying Service. With More Than 2 Years Qualifying Service If you have completed at least 2 years Qualifying Service, you will be entitled to deferred pension and cash sum benefits payable from your Normal Retirement Date based on your Final Pensionable Pay at, and Reckonable Service completed to, the date of leaving. During the period up to Normal Retirement Date the deferred benefits will be increased by the rise in the Retail Prices Index up to a maximum of 5% per annum compound. At their absolute discretion the Trustee and Company may award additional increases if inflation is higher than 5% in any year. Any part of your pension which represents the GMP will, as previously explained, be increased at a different rate. In the event of your death occurring after you leave the Scheme and before Normal Retirement Date the following benefits become payable: A spouse s pension will be paid equal to one half of your own deferred pension including revaluation up to the date of death. Children s pensions will be paid of one quarter of the spouse s pension in respect of each eligible child up to a maximum of 4. The child s pension will be doubled if at the date of your death you are a widow(er) or are divorced or, if your spouse survives you, in the event of his/her subsequent death. A lump sum of five times the annual amount of your deferred pension revalued up to the date of death. The amount of the deferred lump sum benefit revalued up to the date of death. If no spouse s or child s pension becomes payable, the accumulated amount of your own contributions will be refunded plus an allowance for interest as determined by the Trustee. Deferred benefits may, at your option, be paid prior to your Normal Retirement Date provided that you are then over the age of 50 or are forced to stop working because of ill health. The benefits will in those circumstances be

12 based on your deferred benefits at the date of leaving the Scheme, increased by the revaluation described above up to the date of early retirement and subject to a reduction for early payment based on your age at the date of retirement. As an alternative to deferred benefits you can request that the value of them be transferred to an approved contract with an insurance company or other suitable financial institution or, if you are leaving service, to a new employer s pension scheme. If you choose to transfer, the value of your rights (the cash equivalent ) will be calculated on actuarial advice, as the lump sum required for investment in order to provide, at Normal Retirement Date, the benefits to which you are entitled under the Scheme. In providing advice, the actuary will use assumptions which will comply with applicable legislation and actuarial professional guidance notes. The lump sum will reflect your age and the market conditions at the time it is calculated. The lump sum will also take into account the increases described in the booklet in respect of deferred pensions, but will not allow for any discretionary increases which might have been granted by the Trustee had your benefits remained in, and been paid from, the Scheme. You will be provided, within 3 months of your request, with details of the cash equivalent of your benefits; this figure will be guaranteed for 3 months. 15 WHO ARE CASH SUMS PAID TO AFTER I DIE? Cash sums payable on death are distributed by the Trustee for the benefit of your dependants and beneficiaries. The Trustee has discretion to decide who should receive the monies and, although they will take account of your wishes, they are not bound by them. Payment is made in this way to ensure that, normally, there will be no liability to taxation on the benefits and it should also enable the money to be transmitted to the chosen recipient(s) quickly without having to be passed through the deceased s estate. To indicate your wishes to the Trustee you should fill in the Nomination of Beneficiary Form enclosed with this booklet and return it as indicated. You are free to change your nomination at any time and this ought to be considered in the event of an alteration in your personal circumstances.

13 16 HOW ARE PENSIONS PAID? All pensions are paid monthly in advance with effect from the month following the date of retirement or death. The pension is paid into your bank account or an account with some other financial institution. Your retirement cash sum will be paid by cheque and sent to your home address. 17 CAN I INCREASE MY BENEFITS? The Scheme includes an arrangement for members to pay Additional Voluntary Contributions (AVCs) to increase their own pension and/or provide an additional pension for a dependant on death after retirement. AVCs are a tax efficient way of saving for retirement but there are limits on the amount you can pay. AVCs will be invested with a leading provider under a group policy taken out by the Trustee. However, if you were under the Previous Scheme paying AVCs in order to purchase an additional period of Reckonable Service you may continue this arrangement for the same amount of contributions under the new Scheme. Further details of the AVC facility are available on application to EDS Pensions Administration at the address shown in section WHAT HAPPENS IF I AM ABSENT FROM WORK? If you are absent from work because of ill health the period of absence will count as Reckonable Service for so long as remuneration continues to be paid by the Company. If you are absent, with the Company s agreement, for some other reason, and remuneration continues, the absence will count as Reckonable Service up to a maximum of six months. In the event of termination of Reckonable Service during absence, you will thereupon become entitled to benefits as if you had left service (see section 14). If you are absent from work due to maternity, pension contributions of 6% will be deducted from Statutory Maternity Pay or the discretionary equivalent.

14 Contributions may also be paid on certain additional remuneration provided that the month s pension contribution does not exceed the normal monthly pension contribution, which was deducted prior to maternity leave. Where you are not in receipt of Statutory Maternity Pay, you may, on your return to work, (with the agreement of the Trustee and Company) agree to make up any unpaid contributions. If contributions are not paid, the period will be treated as non-pensionable. Where Statutory Maternity Pay is no longer payable, and if you agree on your return to work, (and with the agreement of the Trustee and the Company) to make up any unpaid contributions, the period will be treated as pensionable. 19 WHAT ELSE SHOULD I KNOW? Who Runs The Scheme? Responsibility for the operation of the Scheme rests with the Trustee. The Directors of the Trustee Company are appointed by the Company and their appointment is conducted to comply with the provisions of the Pensions Act The Directors will comprise: 1. Four who are directors or senior employees of the Company. 2. Three who are active members of the Scheme appointed by a ballot of the membership of the Scheme. 3. One who is a member in receipt of a pension from the Scheme and who is not otherwise connected with the Company. 4. One who is an individual or company having expertise in pension matters who or which is not connected with the Company (the Independent Director ). The main duties of the Trustee are: To ensure that the Scheme is managed in accordance with the Rules. To arrange and monitor the administration of the Scheme. To supervise the investments of the Scheme.

15 All Directors are given a copy of the booklet entitled "A Guide for Pension Scheme Trustees". This has been prepared by the Occupational Pensions Regulatory Authority as a guide to the powers and duties of trustees. What Assistance Is Available? If you require assistance concerning your benefits or need information about the Scheme generally, you will be able to obtain this at any time from EDS Pensions Administration at the address shown in section 1. Internal Dispute Resolution Procedure If you have a complaint about any aspect of the Scheme there is an Internal Dispute Resolution Procedure in place to deal with this. It is in two stages: Stage If you have a complaint about any aspect of the Scheme you (or your representative) can write to the Secretary to the Trustee at EDS Pensions Administration, Paymaster (1836) Limited, Sutherland House, Russell Way, Crawley, West Sussex RH10 1UH. Whenever you write you must give your name, address, date of birth, National Insurance number and the full nature of your complaint, along with as much information as you possibly can about why you are aggrieved. To facilitate this process there is a formal complaint form available. The Trustee must ensure that you receive a written reply within 2 months following receipt of your complaint. The reply will state clearly the decision that has been made about your complaint and must refer to the relevant Scheme Rules or legislation, or the exercise of any discretion, which forms the basis of the decision. If the Trustee is unable to give you a full written reply within this 2 month period you will be provided with an interim response stating the reason for any delay and confirming a revised date when a full reply will be available. Stage 2 If you do not agree with this decision you should write to the Trustee, at the same address as above, asking them to reconsider the decision. You must do this within 6 months of the decision and you must send a copy of the decision, along with your name, address, date of birth, National Insurance number and stating your reasons for disagreeing with the decision. After considering your

16 disagreement the Trustee must either confirm the earlier decision or make a new decision in its place. They must do this within 2 months of receiving your letter or provide you with an interim response, stating the reason for the delay and the revised date a full reply can be expected. This written reply from the Trustee will also provide details of your right to take up your complaint with the Occupational Pensions Advisory Service and the Pensions Ombudsman, together with appropriate addresses at which they can be contacted if you disagree with the Trustee decision. Occupational Pensions Advisory Service (OPAS) OPAS operates with Government backing, a conciliation service, and a member who has a grievance which he/she considers has not been satisfactorily dealt with can seek assistance from this organisation, whose address is: 11 Belgrave Road London SW1V 1RB Pensions Ombudsman The Pensions Ombudsman deals with the more serious disputes and cases of maladministration which OPAS has not been able to resolve. His rulings have the authority of a County Court and are binding on all parties, except that an appeal can be made on a point of law to the High Court. Members may seek assistance directly from the Ombudsman (whose address is the same as OPAS) although it is envisaged that the initial contact will normally be with OPAS. Pension Schemes Registry After leaving service you should maintain contact with the Scheme for so long as you remain entitled to benefits by notifying EDS Pensions Administration at the address shown in section 1 of changes of address. To help members trace pension rights earned with previous employers the Government has set up a register of schemes. The Scheme is required to register and pay the appropriate levy. The address of the register is: Occupational Pensions Regulatory Authority Pension Schemes Registry PO Box 1NN Newcastle-upon-Tyne NE99 1NN

17 Occupational Pensions Regulatory Authority (OPRA) OPRA is able to intervene in the running of schemes where trustees, employers or professional advisers have failed in their duties and in certain other circumstances. The address of OPRA is: Invicta House Trafalgar Place Trafalgar Street Brighton East Sussex BN1 4DW Is the Scheme Tax Approved? The Scheme is exempt approved under Chapter I Part XIV of the Income and Corporation Taxes Act Approval currently gives the following benefits: Members will receive full tax relief on their contributions. The Scheme s investment return receives favourable tax treatment. As a consequence of approval for tax purposes the Scheme must comply with maximum benefit and other conditions laid down by the Inland Revenue. It may, in consequence, be necessary in certain exceptional circumstances for a restriction to be placed on the nature or amount of your benefits, as described in this booklet, to ensure that approval is not adversely affected. Can I Use My Benefits As Security For A Loan? Because of Inland Revenue requirements, benefits may not be assigned or used as security for a loan. Such action may result in forfeiture of benefits. Can The Scheme Be Amended Or Even Discontinued? The Company reserve the right to amend or discontinue the Scheme or any section of it at any time. It might, for example, be necessary to consider such action in the event of a major revision of State benefits. If it became necessary to amend or discontinue the Scheme, this would not adversely affect the benefits you had then earned and your rights to those benefits would be fully protected by the Trust Deed and Rules. Amendments must in any case be approved by the Trustee, which has power to discontinue the Scheme in certain circumstances where this would be in the best interest of the members. If, on discontinuance, there were insufficient assets to meet the liabilities, the

18 Company would be required, to the extent provided by law, to make good the deficiency. 20 WHAT FURTHER INFORMATION IS PROVIDED? As a member of the Scheme you are entitled to receive information on the operation of the Scheme and on your own benefits. Each year the Trustee will issue a report containing details of the Scheme s financial transactions, its investments and any important developments concerning it. A copy of the report is available on request. In addition, active members of the Scheme will receive an annual statement setting out their own expected benefits on retirement or death. On retirement, leaving service or death full details of the benefits arising will be provided to you or your dependants, as appropriate, and quotations will be provided for any options in which you are interested.

19 21 APPENDIX State Pension Scheme and Contracting-Out The State Pension Scheme is in two parts: The basic flat rate pension. An additional pension based on your earnings up to retirement. This part was introduced in 1978 and is known as the State Earnings-Related Scheme (SERPS). Employers were given the option to contract-out of SERPS provided that the benefits under their own occupational pension scheme were at least as good as or better than those of the State Pension Scheme. The benefits under the Scheme have always been more generous and members have therefore been contracted-out. Consequently, your National Insurance contributions are lower than they would otherwise have been. Up to 6th April 1997 a minimum amount of benefit had to be provided for you as a condition of contracting-out; this is known as the Guaranteed Minimum Pension (GMP). Under the Pensions Act 1995 changes have been made which alter the requirements schemes must meet so they can remain or be able to be contracted-out of SERPS. From 6th April 1997 a new reference scheme test has been introduced and accrual of GMP will cease from that date. GMPs accrued prior to 6th April 1997 are, however, maintained. To enable a scheme to be contracted-out from 6th April 1997 it must provide benefits broadly equivalent to or better than as set out below. In doing so a scheme will be looked at as a whole and a scheme can only satisfy the test if 90% or more of its active members are provided with benefits meeting the standard. The Scheme already provides better benefits than the test requires and therefore continues to be contracted-out on a salary-related basis from 6th April A pension for the member, for life and from age 65.

20 2. The annual rate of pension to be 1/80th of average qualifying earnings for each year of contracted-out pensionable service from 6th April 1997, up to a maximum pension of 50% of qualifying earnings. 3. A spouse s pension, for life, of at least 50% of the member s pension. Payable on death of a member, deferred pensioner or pensioner. 4. Annual increases on all pension benefits earned after 6th April 1997 by the lesser of increases by reference to the retail prices index or 5%. Qualifying earnings are 90% of earnings between 52 times the weekly lower earnings limit and 53 times the weekly upper earnings limit. For the purposes of the pension calculation qualifying earnings are averaged over the last three full tax years prior to retirement or leaving service. State pensions are currently payable from age 60 for women and age 65 for men but legislation now provides for the State Pension Age to be equalised at 65 for both men and women progressively over 10 years from 6th April 2010.

21 ELECTRONIC DATA SYSTEMS 1994 PENSION SCHEME NOMINATION OF BENEFICIARY FORM Name Location National Insurance Number Employee Number In the event of my death: a) I would like any lump sum benefit due to be paid as follows: Name Relationship Proportion% b) I would like any dependant's pension to be paid as follows: Name Relationship

22 I understand that this nomination is not binding on the Trustee but will be taken into account when the Trustee decides who is to receive the benefit in accordance with its discretionary powers. Signature Date Notes 1. If your personal circumstances change, you should consider completing a new form. 2. The above information will be treated as confidential. 3. The form when completed should be returned to EDS Pensions Administration, Paymaster (1836) Limited, Sutherland House, Russell Way, Crawley, West Sussex RH10 1UH in a sealed envelope. The envelope should be marked with your name, initials and National Insurance number and annotated Only to be opened in the event of my death.