United Utilities Pension Scheme

Transcription

1 United Utilities Pension Scheme Members Guide for benefits up to 31 March 2010 Local Government section Please keep this booklet for reference

2 Contents Glossary of terms Some of the words and phrases used in this Guide have special meanings. These are highlighted and explained at the back of this Guide About this Guide Your choice in brief UUPS Local Government section at a glance Joining Contributions Ways to increase your benefits Transfers from other schemes Retirement benefits State benefits and your UUPS pension Benefits payable on death Expression of Wish forms Leaving UUPS Pension increases Family questions Variable pay option Inland Revenue limits General information Contacts useful names and addresses Glossary of terms

3 About this Guide This Guide tells you about the Local Government section of the United Utilities Pension Scheme (UUPS) and is intended as an easy reference to all the provisions of this section of UUPS. Nothing in the Guide, however, can override the legal position which is set out in the Trust Deed and Rules, copies of which are held by your employer and available for your inspection. Some of the words and phrases used have special meanings that are set out in the Glossary of terms at the back of the Guide. Where these appear in the text they are shown in bold print. This Guide reflects UUPS Trust Deed and Rules as at 8 June 1998 and subsequent amendments up to and including 30 May 2002 and is applicable to employees who are invited to join the Local Government section of UUPS. October 2002 The Company and the Trustee are not allowed by the Financial Services and Markets Act, 2000 to advise you whether a particular pension plan is appropriate for you, or which choice you should make. Keep this Guide in a safe place you or your next of kin may need to use it. United Utilities Pension Scheme Members Guide 1

4 Your choice in brief Glossary of terms Some of the words and phrases used in this Guide have special meanings. These are highlighted and explained at the back of this Guide. You have a choice about whether to become a member of UUPS and receive a range of benefits for you and your family or to make your own arrangements through a personal pension or rely on the Additional State Pension. Please consider the options very carefully before you make your choice. You might also wish to consult an Independent Financial Adviser for further guidance. Your pension choice Membership of UUPS is not compulsory. The alternatives to being a member are: to take out a Personal Pension with an insurance company or other financial body (NOTE: that the Company will not make any contributions towards a Personal Pension); and/or to pay full National Insurance contributions to the Additional State Pension. UUPS provides valuable benefits to you and your family. It is unlikely that the above alternatives will be better and you should think carefully before making a decision not to join UUPS. Why you should be interested in UUPS Because it provides benefits for you and your family when you retire, and in addition: protection if you have to retire early due to Incapacity, protection for your family in the event of your death, protection of the retirement benefits you have earned if you leave, the opportunity to receive your benefits early, and a cash lump sum when you retire. 2 United Utilities Pension Scheme Members Guide

5 UUPS Local Government section at a glance The following list shows the main benefits and provisions of the Local Government section of UUPS. You will find a fuller explanation later in the sections of this Guide. Minimum age of entry 16 Member s contribution level 6% of Pensionable Earnings 5% of Pensionable Earnings (Lower Rate Rights Member) Retirement benefits Pension 1/80th of Final Pensionable Earnings for each year of Pensionable Service, plus Lump Sum usually 3/80th of Final Pensionable Earnings for each year of Pensionable Service. Voluntary retirement From age 50 (subject to your employer s agreement if you are under age 60): Unreduced pension and lump sum (at NRD, or earlier if the Rule of 85 is satisfied); Reduced pension and lump sum subject to GMP requirements (if retirement is before NRD and the Rule of 85 is not satisfied). Redundancy retirement From age 50: Unreduced pension and lump sum. Incapacity retirement Pension and lump sum benefits based on actual Pensionable Service increased by the lesser of 10 years Pensionable Service and the amount of Pensionable Service which you would have completed had you remained an active member of UUPS until age 65 (maximum of 40 years to count). Death in service Spouse s pension: 50% of the pension payable to you if you were to retire due to Incapacity and Children s pensions (if applicable) and Lump sum: 3 times your Pensionable Earnings. Death after retirement Spouse s pension: 50% of your retirement pension in payment and Children s pensions (if applicable) and Lump sum: balance of the first 5 years of your retirement pension in payment. Pension increases In line with the annual increase in the RPI. United Utilities Pension Scheme Members Guide 3

6 Joining Membership of the Local Government section of UUPS is available to all employees of the Company who meet the conditions shown below. Glossary of terms Some of the words and phrases used in this Guide have special meanings. These are highlighted and explained at the back of this Guide. Who can join the Local Government section of UUPS? Employees who, having previously been members of the LGPS, were continuously employed in a business activity, previously run by a Local Authority, or other organisation participating in LGPS, and now run by the Company or one of its subsidiary companies. New employees in the same business activity may also join the Local Government section of UUPS if they are invited to by their employer and the Company agrees. Contracting-out of the Additional State Pension On joining UUPS you will be contracted-out of S2P and, as a consequence pay lower National Insurance contributions. UUPS is contracted-out of S2P on the reference scheme test basis under the Pensions Act This means that UUPS has to provide benefits of at least a minimum level as specified in the contracting-out regulations. Opt out Once you have joined, you can opt out of UUPS at any time by giving 60 days notice in writing to the Trustee. Joining or rejoining UUPS at a later date You can only join or rejoin at a later date if the Company agrees and you will have no automatic right to Local Government section benefits. In addition the Company s agreement may be subject to the production of medical information and special conditions may be imposed. 4 United Utilities Pension Scheme Members Guide

7 Contributions As a member you will be eligible for tax relief on contributions and also pay reduced National Insurance contributions. Your employer also makes contributions to UUPS. How much you pay You pay either 6% of your Pensionable Earnings or 5% of your Pensionable Earnings as a Lower Rate Rights Member. Under current tax rules, full tax relief is allowed on your contributions. What your employer pays Your employer s contribution rate can vary and is usually higher than your contribution rate. The Scheme Actuary values the assets and liabilities of UUPS at least every three years and advises on the level of employers contributions required to ensure that the benefits can be paid in the future. Members on maternity leave If you take paid maternity leave then you will continue to accrue benefits based on a notional Pensionable Earnings figure equivalent to the Pensionable Earnings which you would have received had you not taken maternity leave. Your contributions will be calculated as 6%, or 5% if you are a Lower Rate Rights Member, of your actual Pensionable Earnings (including statutory maternity pay). If you take any unpaid maternity leave you will have the option of continuing contributions during this period (based on your Pensionable Earnings immediately before the start of maternity leave). These contributions can either be paid during maternity leave or when you return to work. Your unpaid maternity leave will then count as Pensionable Service. Otherwise, the unpaid maternity leave will not count as Pensionable Service, but the two periods before and after your unpaid maternity leave will be treated as continuous. Other periods of absence If you are absent from work for any other reason on reduced or no pay, you will be informed individually by the Company as to how this affects your benefits and contributions for the period of absence. United Utilities Pension Scheme Members Guide 5

8 Ways to increase your benefits You have the option to pay Additional Voluntary Contributions (AVCs) which can be used to increase your pension benefits. Contributions to recognised AVC arrangements receive tax relief. Glossary of terms Some of the words and phrases used in this Guide have special meanings. These are highlighted and explained at the back of this Guide. Additional Voluntary Contributions (AVCs) Using UUPS in-house arrangements most members can pay AVCs, which also attract tax relief. Shared Cost Additional Voluntary Contributions (SCAVCs) Any SCAVCs which commenced under LGPS may, if you wish, be continued under UUPS. Your employer can, at its discretion, offer SCAVCs to any other member. Alternatively, you can pay Free Standing Additional Voluntary Contributions (FSAVCs) to some insurance companies and other financial organisations. (NOTE: If you set up FSAVCs, neither your employer nor UUPS will be involved but you will still be entitled to tax relief.) 6 United Utilities Pension Scheme Members Guide Subject to the limits set by the Inland Revenue, AVCs, SCAVCs and FSAVCs may be used to: increase your own retirement pension, but not your lump sum (unless your AVCs/ SCAVCs commenced prior to 8 April 1987), increase your spouse s and dependants pensions. Additional Pensionable Service If you are a former member of LGPS, you may if you wish, pay additional contributions on a regular basis to increase your period of Pensionable Service. For some members, the scope for further provision may be restricted by the limits on benefits imposed by the Inland Revenue. In addition, the total contributions made in any one tax year including your normal UUPS contributions must not exceed 15% of your earnings (see page 18 for further details on Inland Revenue limits). Elimination of reduction in lump sum benefits If you are a married man whose Pensionable Service commenced before 1 April 1972, then your lump sum benefit on retirement or on death is reduced in respect of the period of your Pensionable Service before that date. You may eliminate these reductions, subject to the limits set by the Inland Revenue, by paying additional contributions on a regular basis, or as a lump sum. If you think this may affect your benefits you should contact the Scheme Administrator (see page 22) for more information. Information Full details of in-house AVC arrangements are available from the Group Pensions department (see page 22).

9 Transfers from other schemes Retirement benefits The following section explains how your pension and cash lump sum benefits are calculated at retirement, and when your pension benefits can be paid. If you have built up benefits in another pension scheme, you may have the option to transfer the value of those benefits into UUPS. The Trustee may, with the consent of the Company, accept a transfer payment from another pension scheme. Pension rights in a previous employer s scheme or a personal pension plan transferred to UUPS in this way will provide additional benefits. If you are interested in a transfer please contact the Scheme Administrator (see page 22). Benefits at Normal Retirement Date You will receive an annual pension calculated as follows: 1/80 x Final Pensionable Earnings x Pensionable Service You will also receive a cash lump sum calculated as follows: 3/80 x Final Pensionable Earnings x Pensionable Service Your cash lump sum benefit may be reduced, however, if you are male and your Pensionable Service commenced before 1 April 1972 (see page 6). Under current tax rules, the cash lump sum will not be subject to tax. Your total pension and lump sum benefits from UUPS cannot be based on more than 40 years of Pensionable Service at age 60 (increasing to 45 years at age 65). Your total pension and lump sum benefits from UUPS and any other pension scheme or pension arrangements, excluding benefits paid by the State, will be subject to the maximum limits imposed by the Inland Revenue. It may be necessary to restrict your UUPS benefits to comply with these limits (see page 18). Subject to this overall test on your total benefits, you will also receive from UUPS: any additional benefits arising from a transfer value received into UUPS from another pension scheme on your behalf, any benefits purchased by AVCs or other additional contributions. United Utilities Pension Scheme Members Guide 7

10 Retirement benefits (continued) Glossary of terms Some of the words and phrases used in this Guide have special meanings. These are highlighted and explained at the back of this Guide. Early retirement in normal health On early retirement and with at least two years Qualifying Service, your benefits can be paid as follows: Age at retirement Between 60 and under 65 Between 50 and under 60 Benefits payable Without employer s consent: 1. Rule of 85 satisfied: unreduced pension and lump sum. 2. Rule of 85 not satisfied: reduced pension and lump sum payable subject to GMP requirements. With employer s consent: 1. Rule of 85 satisfied: unreduced pension and lump sum. 2. Rule of 85 not satisfied: reduced pension and lump sum payable subject to GMP requirements. 8 United Utilities Pension Scheme Members Guide The percentages by which pensions are reduced for retirement before age 65 when the Rule of 85 is not satisfied (calculated in years and days) depend on the extent to which your retirement precedes the earlier of your NRD or the date the Rule of 85 would have been satisfied. These percentages may be subject to review from time to time. No reduction applies if you retire, at age 50 years or over, due to redundancy or reorganisation and you have at least two years Qualifying Service. Retirement after Normal Retirement Date (NRD) If, with the consent of your employer, you continue to work after NRD you will be able to count your period of service after this date as Pensionable Service and will continue to pay contributions, subject to the overall limit of 45 years Pensionable Service. Retirement because of Incapacity If whilst an active member of UUPS you suffer Incapacity, you may be able to retire with an immediate pension providing you have at least two years Qualifying Service. If granted, your Incapacity retirement benefits will be calculated using the same formula as at NRD using your Final Pensionable Earnings at your actual date of retirement. The pension will be payable without reduction for early payment. The Pensionable Service which counts on Incapacity is calculated as actual Pensionable Service increased by the lesser of: 10 years Pensionable Service; and the amount of additional Pensionable Service which you would have completed had you remained an active member of UUPS until age 65. The total Pensionable Service which counts if you retire because of Incapacity cannot exceed 40 years in any of the above circumstances.

11 Things to remember when considering retirement If you have between one and two years Qualifying Service you may receive a one-off ill-health retirement grant as an alternative to a refund of contributions (see page 14), if you retire because of Incapacity. The ill-health retirement grant shall be 1/12th of your Final Pensionable Earnings for each year of Pensionable Service. There are a number of factors you should also take into consideration when you are approaching retirement or thinking about retiring early. Once in payment, your pension will usually be payable for life. Incapacity retirement benefits, however, are subject to review by the Trustee. The total pension benefits payable when you retire will be subject to Inland Revenue limits (see page 18). Benefits paid on voluntary retirement between age 50 and 65 will usually be reduced if the Rule of 85 is not satisfied. You may give up part of your own pension to provide a pension for any dependant or an additional pension for your spouse. An option to give up part of your pension cannot be reversed after pension payments commence even if your beneficiary dies before you. Contact the Scheme Administrator for further details (see page 22). Special rules cover those cases where employment continues after NRD. Where appropriate, please discuss with the Scheme Administrator. All pensions, including your own and any dependant s, are paid monthly in arrears and taxed as earned income on a Pay As You Earn basis. United Utilities Pension Scheme Members Guide 9

12 State benefits and your UUPS Pension The current State pension arrangements are in two parts: the Basic State Pension which almost everyone receives at State Pension Age and the Additional State Pension. UUPS is contracted-out of the Additional State Pension which means you will not earn full Additional State Pension benefits whilst you are an active member of UUPS. How the State pension is made up The current State pension arrangements are in two parts: Basic State Pension This is payable to almost everyone. The amount is set by the Government each year but if there is a gap in your National Insurance contribution record you may not receive the full amount (contact the Department for Work and Pensions if you wish to check, see page 22). Women who have always paid the married woman s reduced rate National Insurance contributions will not receive this pension. Your Basic State Pension is not affected by your UUPS pension. Additional State Pension As UUPS meets certain statutory requirements and provides benefits in place of S2P it is contracted-out. This means that many members will not receive any SERPS pension (for service prior to 6 April 2002) or the S2P benefit (for service after 5 April 2002), although members with earnings below 24,600 a year (at 2002/03 levels) will receive part of the S2P. Whilst you are paying contributions into UUPS, lower National Insurance contributions are deducted from your pay. However, if you have paid the higher National Insurance rate for a period (for instance, whilst in another job) you may receive the Additional State Pension for that period (contact the Department for Work and Pensions for more details, see page 22). 10 United Utilities Pension Scheme Members Guide

13 Benefits payable on death Whether you die after you retire or whilst still working for the Company, UUPS provides a range of benefits for your spouse, children and dependants. Glossary of terms Some of the words and phrases used in this Guide have special meanings. These are highlighted and explained at the back of this Guide. These include pensions and, in some circumstances, cash lump sums. Details of the benefits payable are shown in the following sections. Death in service How your family is protected There will be a lump sum payment and pensions for your spouse and dependent children. How the lump sum is calculated The lump sum will be 3 x Pensionable Earnings. Who receives the lump sum? The Trustee decides who should receive the lump sum but it takes into account your wishes, as indicated on your Expression of Wish form, and your personal circumstances at the time of your death. More information is given on page 13. Under current tax rules, the lump sum payment will normally be free of tax. How spouse s and children s pensions are calculated Spouse s pension: 1/2 x member s Incapacity pension (reduced by excluding Pensionable Service completed before 6 April 1988 if you are female). Child s pension in addition to a spouse s pension: 1/4 x member s Incapacity pension Child s pension when no spouse s pension is payable: 1/3 x member s Incapacity pension If there are two or more dependent children, the total pension payable will be calculated as if there were only two dependent children and shared amongst each of your dependent children in proportions decided by the Trustee. Who is paid spouse s and children s pensions? A legal widow or widower is entitled to a pension payable for life. Dependent children will also be entitled to a pension until age 17. If they are still in full-time education, vocational training or are suffering from physical or mental disability, their pensions will continue to be paid to age 21 or even beyond that age if the Trustee agrees. Where there is no spouse, the Trustee may, at its discretion, pay a pension to another dependant. United Utilities Pension Scheme Members Guide 11

14 Benefits payable on death (continued) Glossary of terms Some of the words and phrases used in this Guide have special meanings. These are highlighted and explained at the back of this Guide. Death after retirement How your family is protected A spouse s pension is automatically payable, plus pensions for any dependent children. There may also be a lump sum payment if you had been receiving your pension for less than five years. How much your spouse and children receive Spouse s pension: 1/2 x member s pension (reduced by excluding Pensionable Service completed before 6 April 1988 if you are female). Child s pension: Calculated in the same way as for death in service on page 11 but based on the pension you are receiving at the date of your death. Who is paid spouse s and children s pensions? The same conditions apply as for death in service (see page 11). When a lump sum is payable and how much it will be? The amount of the lump sum will be the total amount of pension that would have been paid to you during the first five years following your retirement (less the total amount of pension payments made to you since your retirement). The Trustee will decide who will receive the money in the same way as lump sums for death in service (see page 11). If you get married after the date of your retirement then the spouse s pension described above will be calculated taking into account only Pensionable Service after 5 April 1978 (if you are male) or 5 April 1988 (if you are female). 12 United Utilities Pension Scheme Members Guide

15 Expression of Wish forms It is very important that you complete an Expression of Wish form to let the Trustee know to whom you would prefer any lump sum benefit to be paid, in the event of your death. The Expression of Wish form allows you to indicate to whom you would like any lump sum benefit to be paid, in the event of your death. It is your responsibility to complete and return an Expression of Wish form and keep it up to date. When completed, your Expression of Wish form should be forwarded to the Group Pensions department for safekeeping. This will ensure the security of the information provided and guarantee that it is immediately available to the Trustee. If you wish to change the information in the future, blank Expression of Wish forms are available from the Group Pensions department (see page 22). United Utilities Pension Scheme Members Guide 13

16 Leaving UUPS If you leave UUPS, for instance as a result of leaving the Company, you will still qualify for benefits from UUPS. Glossary of terms Some of the words and phrases used in this Guide have special meanings. These are highlighted and explained at the back of this Guide. The benefits available to you depend on your length of service at the time you leave. What happens to your pension rights if you leave UUPS? The choices available depend on the length of your Qualifying Service: Under two years repayment of your contributions plus interest less deductions to make up your National Insurance contributions in the Additional State Pension and tax (currently at the rate of 20%). Two or more years (or if you have transferred other pension rights to UUPS) preserved benefits for all your Pensionable Service (known as a deferred benefit), or transfer of your deferred benefits to another approved pension scheme, personal pension plan or a buy-out annuity policy from an insurance company, or immediate retirement benefits if you are aged over 50 (see pages 7 and 8), or Incapacity pension benefits, earlier than age 50, if you satisfy the Incapacity requirements (see page 8). What are deferred benefits? A deferred benefit consists of a retirement pension and lump sum calculated in the same way as benefits at NRD but based on Pensionable Service and Final Pensionable Earnings at your date of leaving. When are deferred benefits payable? A deferred benefit is payable without reduction in the following circumstances: at NRD at or after age 60, provided that your age plus Qualifying Service would, in total, have amounted to 85 years or more had you remained an active member of UUPS if you are suffering from Incapacity in relation to the employment in which you were engaged when you left UUPS from age 50 onwards if your employer consents on compassionate grounds. In other circumstances, your deferred benefits may be payable at any time after age 50, but they will normally be reduced to take account of early payment. Retirement before age 60 is subject to your employer s agreement. What happens to your deferred pension if you die before retirement? Pensions will be provided for your spouse and any dependent children in the same way as pensions payable on death after retirement (see page 12) although the pensions will be based on your deferred pension increased to date of death and will commence immediately on your death. 14 United Utilities Pension Scheme Members Guide

17 Also, on death before retirement, a lump sum equal to 3/80 x Final Pensionable Earnings x Pensionable Service to date of leaving will be paid in the same way as for death in service (see page 11). This lump sum may be reduced if you are male and had any Pensionable Service before 1 April 1972 (see page 6). After you have left the Company, it is important that you keep the Trustee informed of all changes in your marital status and home address. Transfer of your deferred benefits If you are entitled to a deferred benefit, you may request the Trustee to transfer a sum of money to an approved company pension scheme, a personal pension plan or a buy-out policy. You may wish to seek advice on this option from an Independent Financial Adviser. If you wish to investigate this option, you will be provided with a statement of the guaranteed cash equivalent, quoting the transfer value available and giving instructions on how to go about exercising this option. Requests for guaranteed cash equivalents can be made after ceasing employment with the Company or opting out of UUPS. If you wish to proceed with the transfer you must reply within three months of the date the quotation is provided. Members in active service are entitled, once a year, to request an estimate of their guaranteed cash equivalent. This would be calculated assuming Pensionable Service were to cease at the date the calculation is carried out. If you are interested in transferring your UUPS benefits or obtaining a transfer value quotation you should contact the Scheme Administrator (see page 22). The transfer value is calculated in accordance with instructions provided by the Scheme Actuary and is the current cash value of your deferred benefits. The transfer value is calculated by discounting the expected future benefit payments at an assumed rate of investment return, as advised by the Scheme Actuary. The Trustee has a discretion to pay a greater amount with the Company s consent. The calculation takes into account the rate at which the deferred benefits will increase both before and after the benefit becomes payable. It also takes account of the probability of each benefit payment being made, based on your, and your dependants, expected lifespan. The transfer value will allow for pensions to increase annually in line with the Retail Prices Index (RPI). United Utilities Pension Scheme Members Guide 15

18 Pension increases Pensions which are in payment and deferred benefits are increased annually to take account of changes in the cost of living. Pensioners are notified of the increase made by the Trustee. Glossary of terms Some of the words and phrases used in this Guide have special meanings. These are highlighted and explained at the back of this Guide. How your benefits will increase Pensions in payment will be increased on 1 April each year in line with the RPI. Prior to State Pension Age, the whole of your UUPS pension will increase as described above. After State Pension Age, UUPS increases will apply only to the pension in excess of the GMP element. After State Pension Age your GMP for service to April 1988 will not be increased under UUPS as, in most circumstances, it is inflation proofed by the State. The balance of your GMP is increased by UUPS at 3% per annum (or the increase in the RPI if less) and any additional inflation proofing is normally provided by the State. That part of any deferred pension in excess of your GMP will be increased in the same way as pensions in payment. The GMP part of your deferred pension will be increased each year at a rate fixed by the State and advised to you when you leave. Pensions for spouses and dependent children will be increased in a similar way. The Company also has discretion to direct the Trustee to increase pensions in payment and deferred pensions to a higher level than that set out above, subject to Inland Revenue limits (see page 18), provided that the Trustee is satisfied that the Company can fund the proposed increase. How to find out the value of the annual award Details of pension increases are given each year in the report that is issued to members and pensioners (see page 19). In addition, pensioners are advised individually of any increase in their pensions. 16 United Utilities Pension Scheme Members Guide

19 Family questions Changes in your marital circumstances can affect the benefits payable to your spouse, partner or dependants. Variable pay option Unmarried partner and dependant s entitlements An unmarried partner or a dependant has no automatic right to a pension. However, the Trustee may, at its discretion, pay a pension to an unmarried partner or dependant. In addition, and with the agreement of the Trustee, you may give up part of your pension to provide a pension for an unmarried partner or dependant when you retire. The Trustee may at its discretion pay children s pensions to children resulting from a common-law relationship who are eligible and dependent on you at the date of death. If you divorce If you divorce, your former spouse may become entitled to part of your pension (or its equivalent value) as part of your divorce settlement. Contact the Scheme Administrator for further details (see page 22). Your employer may offer you the opportunity to build up pension benefits on earnings which would otherwise be non-pensionable. UUPS provides benefits on your Pensionable Earnings only. Your employer, at its own discretion and subject to the Company s consent, may provide members with the option to pay contributions on some or all elements of pay which would otherwise be non-pensionable. Your employer would decide which elements of pay, if any, would qualify for the variable pay option. You will be able to contribute between 1% and 5% of qualifying non-pensionable pay if you are offered this option. Your employer will match your contributions. These contributions will be invested with the AVC provider, although they will not be classified as AVCs. United Utilities Pension Scheme Members Guide 17

20 Inland Revenue limits The Inland Revenue imposes limits on contributions to, and benefits payable from, UUPS. Glossary of terms Some of the words and phrases used in this Guide have special meanings. These are highlighted and explained at the back of this Guide. The Inland Revenue lays down strict limits on the amount of benefits that can be provided for members of an exempt approved pension scheme like UUPS. These limits must be taken into account when determining all benefits and contributions and may override the normal UUPS provisions in some circumstances. The calculation of the maximum benefits which can be provided is complicated and varies according to an employee s length of service on leaving and any pension benefits from previous employments. If your continuous membership of UUPS (or LGPS if you transferred directly from LGPS) commenced on or after 1 June 1989 you are subject to the operation of the Earnings Cap. This means: 1 The Pensionable Earnings used to calculate your life cover (death in service benefit) provided by the pension scheme cannot be higher than the Earnings Cap. 2 Your pension from the scheme (calculated on your Final Pensionable Earnings when you leave) cannot be higher than 2/3rds of the Earnings Cap if you have 20 or more years Pensionable Service. If you have less than 20 years Pensionable Service when you leave, your pension cannot be higher than 1/30th of the Earnings Cap for each year of Pensionable Service. For the 2002/2003 tax year the Earnings Cap is fixed at 97,200. This limit is reviewed each April by the Government and may be increased at this time. The maximum increase which will be applied in any one year will be determined by the level of price inflation. If you require more detailed information on Inland Revenue limits and how they affect your benefits, please contact the Scheme Administrator (see page 22). 18 United Utilities Pension Scheme Members Guide

21 General information This section includes information on the legal basis of UUPS together with details of who to contact if you have a query. Who to contact if you need further information, help or advice All initial enquiries or requests for further information about UUPS should be made to the Scheme Administrator or the Group Pensions department (see page 22). All enquiries are dealt with in strict confidence Legal background The UUPS is fully tax exempt approved by the Inland Revenue under Chapter 1, Part XIV of the Income and Corporation Taxes Act This means UUPS and you, as a member, qualify for some tax relief. Constitution of UUPS The Trustee of UUPS is United Utilities Pensions Trustee Limited. The Board of Directors of the Trustee Company includes representatives from the Company, UUPS membership and an independent Director. The Trustee is bound by its legal duty to protect your interests as a UUPS member. The benefits and operation of UUPS, together with the Trustee s duties and powers, are laid down in a legal document known as the Trust Deed and Rules which is available from your employer to view on request. Annual Report The Trustee publishes a full Annual Report that is available on request from the Group Pensions department. An abbreviated version of the Report is automatically issued to members. Provision of benefits, changes and termination Your own contributions to UUPS together with the Company s contributions are invested in a Trust Fund which is held completely separate from the assets of the Company and your employer. All UUPS benefits are paid from the Trust Fund. The Fund is subject to an independent annual audit. The Company pays the balance of the cost of the benefits, as well as the cost of administering UUPS. The pension benefits are funded which means the long-term cost is assessed periodically by the Scheme Actuary who then advises the Company on the rate of its contributions. The Trustee and the Company can agree to change or amend any part of UUPS. The Company fully intends to continue the operation of UUPS but in extreme circumstances it reserves the right to reduce, suspend or terminate contributions. In this unlikely event, your benefits would be established in accordance with UUPS Trust Deed and Rules covering such circumstances. United Utilities Pension Scheme Members Guide 19

22 General information (continued) Glossary of terms Some of the words and phrases used in this Guide have special meanings. These are highlighted and explained at the back of this Guide. Personal information Under the Data Protection Act 1998, the Trustee and the Company are data controllers in relation to data personal to you and which identifies you such as your name, address and National Insurance number (your personal data ). Some of your personal data may be sensitive (such as details of your health and personal relationships). The Trustee and the Company have a legitimate interest in processing your sensitive and non-sensitive personal data and that of other members and beneficiaries of UUPS for purposes associated with UUPS. In doing so, they may also use carefully selected advisers and third parties who may be necessary for the administration of UUPS. As a member of UUPS, you consent to the Trustee processing your personal data for any purposes associated with UUPS. You should note that this may involve transferring personal data about you and others to, among others, your employer, the Company (or any business associated with it) or third parties who assist the Trustee. You should keep the Trustee up to date with your personal details, including your marital status and address, otherwise delays may occur in paying benefits to you or your dependants. Assignment You may not assign, charge or use your benefits as the security for a loan. This means that you cannot promise to pay your benefits over to someone else as security if you take out a loan. What to do if you are unhappy with a decision about your pension rights If you are dissatisfied with anything to do with UUPS, you should, in the first instance, write to the Scheme Administrator (see page 22) who will attempt to resolve your query. If you remain dissatisfied, you may then write to the Group Pensions Manager (see page 22), who will provide you with details of UUPS Internal Dispute Resolution Procedure. This is a two-stage process which involves various time limits and information requirements. Under the first stage, the Group Pensions Manager will deal with your complaint. If you are not satisfied with his decision, you may appeal to the Trustee under the second stage. Other pension bodies A number of other pension bodies have been established to assist in the running of occupational pension schemes. Further details are given on page 21 and their addresses included on page United Utilities Pension Scheme Members Guide

23 The Pensions Advisory Service (OPAS) OPAS offers a free and confidential service to provide help and advice at any time for pension scheme members and beneficiaries in connection with any pensions query they may have or difficulties they have failed to resolve with the trustee of a scheme. OPAS is available at any time to assist you and will consider your complaint and appoint an adviser to deal with it, even if your complaint is being dealt with using the Internal Dispute Resolution Procedure described on page 20. Pensions Ombudsman If your query still cannot be resolved you may contact the Pensions Ombudsman. He has the power to investigate and decide any complaints or disputes of fact or law in relation to any occupational pension scheme. Occupational Pensions Regulatory Authority (OPRA) OPRA monitors the running of occupational pension schemes and is able to intervene where trustees, employers or professional advisers have failed in their duties. It has wide powers to conduct investigations and can impose penalties on those who fail to comply with the relevant legislation. Pension Schemes Registry The Registry was established to help individuals trace benefits in respect of previous employments if they have lost contact with the employer involved. Information about UUPS including current and previous employers associated with UUPS has been sent to the Registrar. United Utilities Pension Scheme Members Guide 21

24 Contacts The following contact names are mentioned throughout the booklet. Group Pensions department United Utilities PLC Dawson House Liverpool Road Great Sankey Warrington WA5 3LW Tel: Group Pensions Manager & Secretary to the Trustee United Utilities PLC Dawson House Liverpool Road Great Sankey Warrington WA5 3LW Tel: Scheme Administrator Capita Hartshead Limited Hartshead House 257 Ecclesall Road Sheffield S11 8NX Tel: OPAS The Pensions Advisory Service 11 Belgrave Road London SW1V 1RB Tel: (Local Rate) Ombudsman The Pensions Ombudsman 11 Belgrave Road London SW1V 1RB Tel: OPRA The Occupational Pensions Regulatory Authority Invicta House Trafalgar Place Brighton BN1 4DW Tel: Registrar of Pension Schemes OPRA PO Box 1NN Newcastle-upon-Tyne NE99 1NN Tel: DWP Department for Work and Pensions DWP Longbenton Newcastle-upon-Tyne NE98 1YX 22 United Utilities Pension Scheme Members Guide

25 Glossary of terms Some of the words and phrases used have special meanings which are set out below. Where they appear in the Guide, they are shown in bold print. Additional State Pension The State pension, based partly on earnings, that is provided in addition to the Basic State Pension. Prior to 6 April 2002 this was known as the State Earnings Related Pension Scheme (SERPS). From 6 April 2002 SERPS was replaced by the State Second Pension (S2P). Additional Voluntary Contributions (AVCs) Contributions you can choose to pay in addition to the usual scheme rate to provide additional benefits. Company United Utilities PLC or associated companies. Final Pensionable Earnings This is the greater of your Pensionable Earnings in the twelve months ending on the last day of your Pensionable Service, or your Pensionable Earnings in one of the two preceding years. If your employer has issued you with a certificate stating that your Pensionable Earnings have been reduced as a result of a material change in your circumstances outside your control, then Final Pensionable Earnings can, as an alternative, be either Pensionable Earnings in any 12 month period in the last five years of Pensionable Service, or the annual average of Pensionable Earnings in any three consecutive years in the last 13 years of Pensionable Service. Each year s Pensionable Earnings will be increased in line with the rise in the Retail Prices Index from the end of the relevant pay period to the date you leave the Scheme. Guaranteed Minimum Pension (GMP) This is the minimum pension which UUPS has to provide as a condition of being contracted-out of the State Earnings Related Pension Scheme (SERPS) for service before 6 April 1997 only. It is broadly equal to the Additional State Pension you would have earned if you had not been contracted-out of SERPS for this period. In general this will only be applicable if you have transferred benefits into UUPS and these relate to membership before 6 April 1997 of a previous pension arrangement in which you were contracted-out of SERPS. Incapacity Physical or mental ill-health which the Trustee, considers is permanent, and either prevents you from carrying out the normal duties of your employment, or seriously impairs your earnings capacity. LGPS The Local Government Pension Scheme. Lower Rate Rights Members You are a Lower Rate Rights Member if you were entitled to pay contributions at 5% of your Pensionable Earnings as a member of LGPS. Normal Retirement Date (NRD) Normally your 65th birthday. However, if you joined LGPS before 1 April 1998, NRD is the earlier of the date you will complete 25 years Qualifying Service (or your 60th birthday, if later) and your 65th birthday. Pensionable Earnings If you are a full-time employee, your annual rate of salary or wages for your contractual hours of employment and which are treated by your employer as pensionable, including bonus, contractual overtime and any specified fluctuating payments notified to you by your employer. It does not include overtime you choose to work, travelling or subsistence allowances, pay instead of holidays or notice, or the value of benefits in kind unless otherwise advised to you by your employer. If you are a part-time employee, benefits are calculated using your full-time equivalent pay and service based on the proportional hours you actually work. United Utilities Pension Scheme Members Guide 23

26 Glossary of terms (continued) Pensionable Service (used to calculate benefits) Your period of actual contributory membership of UUPS up to the date you retire or leave UUPS (calculated in years and days) including any credited service resulting from your membership of any previous scheme, including LGPS, from which you have transferred benefits, together with any additional service secured by the payment of AVCs. Qualifying Service (used to decide whether or not benefits can be awarded) This equals: Pensionable Service earned since joining UUPS (excluding purchased service) plus any period of membership of LGPS ending immediately before becoming a member of UUPS, plus the period of membership of another pension scheme (other than LGPS) which has been treated as active service under LGPS following a transfer into LGPS. Retail Prices Index (RPI) The Index of Retail Prices (All Items) as published by the Government. Rule of 85 If you are 50 or over and your age and number of years Qualifying Service add up to 85 or more, you may retire from active service with an unreduced pension, but only with the consent of the Company if you are under 60. Scheme Actuary A professionally qualified independent person appointed by the Trustee to value the fund, and to provide advice on other financial aspects of UUPS. State Earnings Related Pension Scheme (SERPS)/State Second Pension (S2P) The additional pension arrangements provided by the Government. Trustee The Trustee of UUPS is United Utilities Pensions Trustee Limited, a separate legal entity. UUPS The United Utilities Pension Scheme. 24 United Utilities Pension Scheme Members Guide

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28 United Utilities Dawson House, Great Sankey Warrington WA5 3LW United Utilities PLC Registered in England & Wales No Registered office: Dawson House, Great Sankey Warrington WA5 3LW