Members booklet Defined Contribution Section Retirement Account (Applicable to those who are a member of the 100+ section)

Transcription

1 Members booklet Defined Contribution Section Retirement Account (Applicable to those who are a member of the 100+ section) From 1 October 2015 GKN Group Pension Scheme 2012

2 GKN Group Pension Scheme 2012 Members Booklet (Applicable from 1 July 2015) Index 1. Introduction 3 2. pensave 4 3. Pension Freedom 2015 General 5 4. Level 100+ Retirement Account 7 5. Transfers in 9 6. Financial Advice Important Information 11 Page 2

3 1. Introduction Welcome to your guide to the Defined Contribution Section ( the DC Section ) of the GKN Group Pension Scheme 2012 (the Scheme ). It is an arrangement in which your and GKN s contributions are invested into your individual pot until you retire. This booklet explains how the arrangement works. You can decide where to invest your individual pot, and you can change: > > how much you contribute > > your investment choices, both for future contributions and the amount you have already built up in your individual pot and > > your Target Retirement Age You can do this at any time either by requesting a copy of the DC Section Option Form which is available online through BenPal or from your HR department. You will need to refer to the appropriate section of this booklet for your benefits, and read this information carefully, along with the Investment Options booklet. This booklet is only a guide and does not cover every aspect of the Scheme. Full details are set out in the Trust Deed which will always overrule this booklet if any question of interpretation should arise. This booklet does not automatically grant any rights to benefits. A copy of the Scheme s Trust Deed is available from your HR manager at your Employing Company. When you retire, you will be able to convert your individual pot into a pension and, should you choose to do so, you can take part of it as a tax-free cash lump sum. You may have heard about Pension Freedom, if you wish to take your benefit in a different way to that outlined in the GKN Scheme then you will need to transfer your benefit elsewhere. For more details on Pension Freedom please see Section 3. Each of the choices above will affect the final value of your individual pot and therefore the amount of your pension or cash in retirement. We encourage you to regularly review your options to get the most benefit from the Scheme. Page 3

4 2. pensave pensave is a salary sacrifice arrangement. Participating in pensave will reduce your National Insurance contributions and GKN s National Insurance contributions. pensave works in the following way: Your regular contributions to the Scheme Your gross contractual pay GKN Your take home pay Your Terms and Conditions of Employment AVCs Will no longer be paid by you Will be reduced by the amount of your regular pension contribution to the Scheme Will pay an amount equivalent to your regular pension contribution to the Scheme Will increase as you pay lower National Insurance Will change because you will be giving up part of your gross contractual pay in return for increased GKN pension contributions Certain types of AVCs are included in pensave (please see AVC booklet) You will automatically be included in pensave, however you may opt out of pensave at any time. If you opt out of pensave, you will be required to make regular pension contributions to the Scheme. If you change your mind, you can only opt back into pensave in April each year. Regular contributions are defined as the monthly amount being payable in April each year. Lump sum and transfer in payments will not attract National Insurance savings. Page 4

5 3. Pension Freedom General There have been significant changes to pensions resulting from the Government s changes to pension laws implemented in April The Government reforms mean that you will be able to transfer the money out of your pension fund and use it as you choose. Your pension options are:- A guaranteed income for life You could get a set amount every month for the rest of your life, so you ll know exactly how much you re getting and when. You could: > > Combine the value of your pension pots from GKN and elsewhere > > Take up to 25% tax free > > Use the rest for a guaranteed income Example: Fund of 100,000 at retirement > > 25,000 is tax free, the rest can be exchanged for a pension Converting 75,000 into pension may give approximately 3,500 a year * * Based on July 2015 conditions. Flexible access You can take out what you like when you like. The rest is left invested. You could: > > Take some money tax free (25%) > > Leave the rest invested > > Take other amounts when you need it (subject to tax) Example: Fund of 100,000 at retirement > > 25,000 is tax free, the rest is taxable Each amount taken from the 75,000 is then taxed at the tax rate applicable for your total earnings in the tax year (6th April to 5th April) so includes any earnings you have earned when tax is calculated. For a basic rate tax payer, if you took 10,000 as a second payment after the tax free cash, this would result in 2,000 tax leaving a net 8,000 payable to you. The remaining 65,000 ( 100,000-25,000-10,000) would be treated in the same way but taxed at a rate determined using all of your earnings in the tax year so might move you into a higher tax bracket. If you do cash in your pension pot but then want to continue to pay into a pension, any future contributions that receive tax relief will be limited to 10,000 per annum. Page 5

6 3. Pension Freedom General (continued) Take it all in cash You could: > > Combine the value of all your pension pots > > Take up to 25% tax free > > Get the rest of your pot back in one go, subject to income tax Example: Fund of 100,000 at retirement > > 25,000 is tax free, the rest is taxable Leave it for now and take it at a later date > > Do nothing now > > Decide what to do later > > The same options will apply at the later date In all circumstances the tax treatment depends on your individual circumstances. If the remaining 75,000 is taken at once this could result in 30,000 of tax being paid as higher rate tax will apply, whereas for a normal basic rate tax payer who spreads the taking of cash over more than one tax year, the tax might be 15,000 as basic rate tax would be due. Page 6

7 4. Level 100+ Retirement Account In addition to your DB Section benefits, you are entitled to a Defined Contribution top-up benefit. This additional part of your pension is called your Retirement Account. Your employing company allocates an amount equal to 2% of your Pensionable Earnings (calculated as your Basic Salary plus Job Related Allowances, subject to the Scheme Earnings Cap (currently 123,600)) to your Retirement Account each year. You may choose to pay AVCs into your Retirement Account in addition to your contributions to the Scheme (please see AVC booklet). You can choose, by completing the separate DC Section Option Form, how your Retirement Account contributions are invested from a range of investment options. These details are provided in the separate Investment Options booklet. Over the years, the value of your Retirement Account will depend on your contributions (if any) and GKN s contributions, as well as how well the investment funds have performed. Benefits On Retirement The value of your Retirement Account can normally either be taken as a lump sum or used to buy a pension using the Pension Rate applicable when you retire. > > The maximum tax free lump sum depends on the circumstances, but is typically about 25% of the total value of your Scheme Pension and your Retirement Account > > The Pension Rate is set by the Trustee on the advice of the Scheme Actuary. Alternatively you may purchase an annuity from an external provider (the Open Market option) The risk that the value of your investments will fall, or that the cost of buying a pension may increase, is with you, not GKN, although you will also benefit directly from any positive investment performance or change in the cost of buying a pension. Death before Retirement If you die whilst still contributing to the Scheme, a lump sum equal to the value of your Retirement Account will be payable as explained above. On leaving service Contributions to your Retirement Account will cease on the date you leave Level 100+, but your Retirement Account will remain invested (please remember that investments may go down as well as up). Your Retirement Account can normally either be taken as a tax-free lump sum on retirement, be used to purchase a pension or included in a transfer payment to a new employer s scheme or other pension arrangement. Page 7

8 4. Level 100+ Retirement Account (continued) The options available if you decide to leave the Scheme are dependent on your Qualifying Service in the Scheme. For an existing member:- > > If you have 2 or more years Qualifying Service, you will be entitled to a deferred pension payable when you reach Normal Retirement Date or you may transfer your Retirement Account to another pension arrangement. The options available if you decide to leave the Scheme are dependent on your Qualifying Service in the Scheme. > > You will be entitled to a deferred pension payable when you reach Normal Retirement Date or you may transfer your Retirement Account to another pension arrangement. Limits Under HM Revenue & Customs rules, it is possible to pay pension contributions of up to 100% earnings (subject to some restriction for very high earners). Page 8

9 5. Transfers In It may be possible to transfer your previous pension arrangements into the Scheme. You may transfer other registered UK pension benefits in to the GKN Defined Contribution section only. The Defined Contribution Section will only accept transfers in on a Defined Contribution basis. Current members of the defined benefit sections of the Scheme may also consider transferring previous pension arrangements in to the Scheme. If you wish to investigate a transfer of your existing pension rights into the Scheme, you should contact the Scheme Administrator for further information. However, transferring benefits from other pension arrangements may not always be in your best interests. It is strongly recommended that you obtain independent financial advice. See below. Page 9

10 6. Financial Advice The Trustee, GKN and its employees are not authorised under the Financial Services and Markets Act 2000 to give you investment advice. The information in this and the Investment Options booklet is intended to help you make your own decision. If you are in any doubt you should consult an Independent Financial Adviser (IFA) who may charge a fee for the service. Further details can be found at or via the Association of Independent Financial Advisers ( ). A new guidance website has been set up between the Citizens Advice Bureau and the Pensions Advisory Service. This website is available at Alternatively you can contact your Scheme Administrators JLT by contacting the support team using the details on page 13. Page 10

11 7. Important information HM Revenue & Customs The Scheme is a registered scheme for HM Revenue & Customs purposes. As a registered scheme, the Scheme enjoys various tax advantages: > > contributions paid into the Scheme are generally subject to tax relief > > the investments in the Scheme largely accumulate free of tax and > > lump sum benefits are usually payable tax-free, up to a certain limit No limits are imposed by HM Revenue & Customs on the amount of benefits that can be provided from the Scheme nor on the amount of contributions that can be paid in. However, after a certain level the benefits and contributions paid will become taxable. Any benefits paid in excess of the Lifetime Allowance or contributions paid in excess of the Annual Allowance will be taxed. You can see the current limits on the HM Revenue & Customs website: Any statements about tax made in this guide are subject to any changes made from time to time by legislation or HM Revenue & Customs practice. You are responsible for monitoring your own position regarding the Lifetime Allowance and the Annual Allowance (across all of the registered pension arrangements where you hold benefits) and submitting the relevant information to HM Revenue & Customs. You will be provided with information from the Trustee to assist with the completion of tax returns. Shortly before your benefits become payable the Trustee will ask you for information about the amount of Lifetime Allowance you have used in respect of other pension arrangements. Once your benefits start to be paid, you will then receive a certificate from the Trustee detailing the amount of your Lifetime Allowance your benefits from the Scheme have used up. You should keep all certificates issued to you concerning the Lifetime Allowance in a safe place. Periods of absence During periods of paid maternity, paternity, parental, or adoption leave, GKN will continue to pay contributions based on your normal Pensionable Earnings; however, your own contributions will be based on the actual amount of pay you receive during this period. Your life insurance and ill health benefit cover continues during this period. Page 11

12 7. Important information (continued) Divorce or dissolution of a civil partnership If you get divorced or dissolve your civil partnership, your benefits under the Scheme may become subject to a Court Order. In this event, the Trustee would be required to allocate a specified part of your retirement benefits and death benefits under the Scheme to your ex-spouse or your ex-civil partner. Your state pension benefits may also be affected. If a Court Order applies to your Scheme benefits, information will be provided of any reduction that will impact you. Any pension deducted from your own entitlement will count towards your ex- spouse s or ex-civil partner s Lifetime Allowance rather than your own. You should tell the Trustee about the changes in your personal details as result of divorce or dissolution. You may also decide to change your Expression of Wish Form. The Trustee may charge you for the cost of any work to do with a divorce or dissolution of a registered civil partnership. Part-time service If you switch from part-time to full-time service, or from full-time to part-time service, or if your hours of part-time service change, you will be advised by your HR Manager of the effect on your benefits and contributions at the time. Data Protection Strict regulation is followed by the Trustee and the Scheme administrators acting on the Trustee s behalf to ensure the information about you and your entitlements is kept secure and is only disclosed in limited circumstances. For instance, information may be disclosed to: > > the Administrator to advise you and GKN in connection with entitlements under the Scheme > > to insurance companies to arrange particular entitlements > > to advisors to advise the Trustee; and to GKN and any future potential employers If the Trustee is obliged to do so, information may also be given to the Government or other regulatory organisations in accordance with the law. Some of this data is categorised as sensitive data under the Data Protection Act By joining the Scheme you agree to this data being held and used in this way. The Annual Report and Accounts the Scheme s Annual Report and Accounts are available upon request from your HR Manager. Page 12

13 Resolving disputes Internal dispute resolution procedure Most disputes stem from a misunderstanding of information and normally can be sorted out quickly and informally, and without the need for any formal procedures. However, where this is not possible a formal complaint can be made using the Scheme s internal dispute resolution procedure. You should put the complaint in writing to The Secretary to the Trustee of the GKN Group Pension Scheme 2012, PO Box 55, Ipsley House, Ipsley Church Lane, Redditch, Worcestershire B98 0TL, and you will be contacted directly. The internal dispute resolution procedure applies to matters concerning the Scheme that affect members and others who may have an interest in the Scheme. They do not apply to disputes between employees and GKN. Useful addresses The Scheme Administrator If you have any queries about the Scheme or your benefits, please contact: GKN Group Pension Scheme 2012 Post Handling Centre St James s Tower 7 Charlotte Street Manchester M1 4DZ Helpline: gkndc@jltgroup.com You may also seek assistance from The Pensions Advisory Service at 11 Belgrave Road, London, SW1V 1RB at any time. If neither the Trustee nor The Pensions Advisory Service can resolve the dispute to your satisfaction, you may then contact the Pensions Ombudsman. The Ombudsman s address is the same as the address for The Pensions Advisory Service noted above. Page 13

14 7. Important information (continued) BenPal The BenPal online system is available to all employees however you need to be activated on the system to access your pension and personal documents. Should you be a new joiner and you haven t received your BenPal activation as yet, please contact your HR department. For those members already activated, a reminder of your BenPal contact details; Call the GKN Support Team: support@benpal.com The support team is available Monday to Friday 8am to 6pm The Pensions Regulator The Pensions Regulator is a regulatory body which has a range of powers to help safeguard pension rights of members of pension schemes and is able to intervene where Trustee, employers or professional advisers have failed in their duties. The Pensions Regulator may be contacted at: The Pensions Regulator Napier House Trafalgar Place Brighton BN1 4DW Tel: : (Option 2) customersupport@tpr.gov.uk Page 14

15 TPAS (The Pensions Advisory Service) TPAS is an independent voluntary service that provides free help and advice to members and other beneficiaries of occupational and personal pension schemes. TPAS is available at any time to assist members and other beneficiaries with any pension query they may have or any difficulty they have failed to resolve with the Trustee or administrators of the Scheme. If you want to contact TPAS the address is: TPAS 11 Belgrave Road London SW1V 1RB Tel: Pensions Ombudsman The Pensions Ombudsman may investigate and decide upon any complaint or dispute of fact or law in relation to an occupational pension scheme referred to him. However, the Pensions Ombudsman normally insists the matter is first dealt with through the Scheme s own internal dispute resolution procedures, and raised with TPAS. If you have any complaint or dispute that cannot be resolved by the internal dispute resolution procedures or by TPAS, you may refer it to the Pensions Ombudsman at: Pensions Ombudsman 11 Belgrave Road London SW1V 1RB Tel: enquiries@pensions-ombudsman.org.uk Page 15

16 7. Important information (continued) The Pension Tracing Service The Trustee has given information about the Scheme, including details of an address at which they can be contacted, to the Pension Tracing Service. This service may be of help to you if you need to contact the Trustee of a previous employer s pension scheme and cannot trace them yourself. The service may be contacted at: The Pension Tracing Service The Pension Service 9 Mail Handling Site A Wolverhampton WV98 1LU Tel: Financial compensation in the event of insolvency The Scheme investments are managed by BlackRock, except for the Standard Life fund below. In the event that BlackRock was unable to meet its financial obligations, the Trustee would be able to claim compensation to the value of 90% of your Scheme investments on your behalf from the Financial Services Compensation Scheme (with no upper limit). For more information on the Financial Services Compensation Scheme, please visit; or call or However, if you are invested in the Standard Life Corporate Bond Fund, which is not managed by BlackRock but is offered on the BlackRock platform under the Scheme, then in the event of the insolvency of Standard Life, you would not be entitled to claim any compensation from the Financial Services Compensation Scheme. An indication of the risk of insolvency can be measured via a firm s credit rating. Standard Life s credit ratings can be viewed by visiting; Page 16

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