GROUP PERSONAL PENSION

GROUP PERSONAL PENSION Employee booklet Medway Community Healthcare CIC Registered Office: Unit 5 Ambley Green, Bailey Drive, Gillingham Business Park, Gillingham, Kent ME8 0NJ Tel: 01634 382777 Registered in England and Wales, Company Number: 07275637

Contents Introduction........3 Contact Details..... 3 Section 1 Group Personal Pension..4 Section 2 Life Assurance...... 19 Section 3 Income Protection...... 20 Important information..... 21 Employee booklet 18 7 2011 Page 2 19/07/2011

Introduction Medway Community Healthcare provides a bespoke Employee Benefits Programme for you. One of the key benefits provided is a sponsored pension arrangement the Medway Community Healthcare Group Personal Pension (GPP). As a member of the GPP you will benefit from Medway Community Healthcare Group Life Assurance (GLA) scheme. This handbook has been prepared in conjunction with our employee benefit consultants, Willis Employee Benefits Limited (WEBL) to provide you with an overview of these benefits. Contact Details WEBL WEBL act as employee benefit advisers for Medway Community Healthcare and are available to explain the details of the benefit arrangements and answer any questions you may have at the time of joining and throughout your employment. Willis Employee Benefits Limited The Willis Building, 51 Lime Street, London EC3M 7DQ Sarah Culver Client Relationship Manager Employee Helpline: 0203 124 8516 Email: sarah.culver@willis.com Employee booklet 18 7 2011 Page 3 19/07/2011

Section 1 Group Personal Pension (GPP) Planning in advance for your retirement is very important because, for many people it will bring a major change in financial circumstances and lifestyle. The GPP has been established to help you save for retirement. Medway Community Healthcare will pay contributions on your behalf, in addition to your normal salary. You will have your own plan within the group arrangement and have control over how much you contribute, where your money is invested and when you start to receive your pension. This booklet complements the Key Features documents and investment information available from Scottish Widows, the chosen pension provider. The Scottish Widows website contains up to date information relating to the GPP, and has been designed so that you can easily access the information that you require. If you prefer paper copies of the literature please contact Willis Employee Benefits Limited (WEBL), details are of which are below. Please ensure that you read thoroughly this booklet and pension plan literature from Scottish Widows before joining. To join, simply complete the short application form and return this to the Human Resources department - Unit 7 Ambley Green, Bailey Drive, Gillingham Business Park, Gillingham, Kent, ME8 0NJ. Should you decide not to join the Medway Community Healthcare CIC GPP an Opt Out Form should be returned. Contact Details Scottish Widows Scottish Widows 15 Dalkeith Road, Edinburgh, EH16 5BU www.scottishwidows.co.uk/medwaycommunityhealthcare Member Helpline: 08457 556 557 (open 8am 6pm) Employee booklet 18 7 2011 Page 4 19/07/2011

What are the possible benefits? leading the way in excellent healthcare 1. Contributions from Medway Community Healthcare and tax relief Medway Community Healthcare will make a contribution to your plan Tax Tax relief on contributions for all UK employees all UK employees 2. 25% Protection of your fund for your as a tax-free family lump sum when you take your pension 2. Protection for your family In addition to benefits paid under the life assurance scheme The option to secure a dependants income when you take your pension Your fund is payable as a cash lump sum on death before retirement 3. Personal Ownership Your plan and all contributions belong to you, not your employer You can suspend membership at any time You do not need to stop working to start receiving your pension Your fund is transferrable to other suitable pension arrangements Provider Founded in 1815 as Scotland's first mutual life office, Scottish Widows has gone from strength to strength and is now one of the top providers in the UK life, pensions and investment market. Scottish Widows demutualised and became part of the Lloyds TSB Marketing Group on 3 March 2000 As of January 2009, they became part of Lloyds Banking Group Employee booklet 18 7 2011 Page 5 19/07/2011

Scottish Widows has one of the most recognised brands in the UK life, pensions and investments industry (IPSOS Brand & Advertising Tracking Study, February 2009) Scottish Widows Investment Partnership manages 82.65 billion of client funds Product range includes ordinary long term insurance (such as life assurance, pensions, annuities and permanent health insurance) and savings and investment products Scottish Widows currently employs around 3,500 people: in customer service; information technology; marketing and distribution; risk, legal and compliance; finance and support Their financial strength is regularly reviewed by independent analysts, their rating takes into account a range of data, including assets, liabilities and reserves, as well as ownership and management. Scottish Widows is currently rated as A+ (strong) by Standard & Poors and Aa3 (high quality) by Moodys. As part of the Lloyds Banking Group, Scottish Widows are well capitalised and one of the strongest companies in the life and pensions industry. They are well positioned to build on the success they have as a leading pension provider and maintain its financial strength into the future. Scottish Widows have won numerous industry awards including: 2010 Financial Times Adviser Awards Five start rating awarded for Life & Pensions 2010 Moneyfacts Investment, Life & Pensions Awards Winner Best Personal Pension Provider & Commended Best Group Pension Provider 2010 E-excellence Ratings EEE Rating for Group Personal Pension Source: Scottish Widows website May 2011 Contributions Medway Community Healthcare will make a monthly contribution to the pension arrangement of 8.5% of your basic salary and certain regular allowances provided that you make a minimum contribution of 3%. You can elect to pay any percentage of your salary, up to 100% as a personal contribution. Employee booklet 18 7 2011 Page 6 19/07/2011

Making personal contributions to the GPP is a tax efficient way for you to invest for your retirement because your contributions will qualify for tax relief (subject to certain limits detailed in the following sections). When contributions are invested by Scottish Widows, Her Majesty s Revenue & Customs (HMRC) adds basic rate tax relief (20% for 2011/2012) to your contribution. You are entitled to tax relief on your personal contributions at your marginal rate, meaning if you pay tax at a higher rate (i.e. 40% or 50%), you will be entitled to additional tax relief on your personal contributions. Basic rate tax relief will automatically be added to the contributions you make into the GPP. You can claim the additional tax relief via your annual self-assessment tax return or by contacting your local tax office to change your tax code. You need to bear in mind that tax rules and rates of tax may change in the future, and the tax relief you get will depend on your personal circumstances. Examples of how tax relief is applied are shown below: Annual Salary 20,000 50,000 Personal net monthly contribution 40.00 (3%) 100.00 (3%) HMRC add basic rate tax relief (20%) 10.00 25.00 Higher rate tax relief reclaimed HMRC (20%) - 25.00 Employer Contribution (8.5%) 141.66 354.17 Total monthly contribution invested 191.66 479.17 Net cost to you 66.67 75.00 In addition to making monthly contributions, you are able to make single contributions. Details of how to do so can be provided on request from WEBL. You can stop paying, or take a contribution holiday and restart later if your circumstances change. However, you should be aware that the contribution payable from Medway Community Healthcare is dependent on the minimum contribution from you. Should you wish to stop paying into the GPP or take a contribution holiday you should complete an Opt Out form and return this to Human Resources. Employee booklet 18 7 2011 Page 7 19/07/2011

Contribution limits leading the way in excellent healthcare Contributions to all pension plans in your name are subject to an overall limit known as the Annual Allowance. This is set at 50,000 for the 2011/2012 tax year. Contributions made by or on behalf of individuals that are in excess of 50,000 will trigger an annual allowance charge. This charge effectively removes tax relief on pension contributions in excess of the Annual Allowance. From April 2011, the Annual Allowance will apply for the tax year in which benefits are taken. Carry Forward An unused Annual Allowance can be carried forward for up to three tax years. This provision operates with effect from 2008/2009 and assumes that the Annual Allowance was only 50,000 in those earlier tax years. This provision is only available if an individual was a member of a registered pension scheme in the tax year from which the relief is to be carried forward. Investment choices Your plan is invested through Scottish Widows, who provide a wide range of investment options for you to choose from. Making the right investment choice is important because the investment returns that your individual plan achieves will have an impact on the size of your fund from which retirement benefits are provided. Understanding Investment Risk Investment risk is the chance you take of making or losing money on any investment you make. Generally the level of risk and eventual reward are closely linked the greater the investment risk you take the more you stand to gain or lose. Conversely, lower risk investments are likely to give lower returns but the chance of loss is also lower. When considering your investment options you will need to consider the length of time to your eventual retirement. The further away you are from retirement the greater the level of risk you might be prepared to take. Employee booklet 18 7 2011 Page 8 19/07/2011

However, if you are close to retirement it might be sensible to take very little risk. Each of the funds on offer from Scottish Widows and their external investment partners have been allocated a risk classification relative to the full fund range, they are categorised by their degree of risk and potential return. Further information and guidance on determining your attitude to risk to assist in your selection of fund(s) can be found in the Scottish Widows Investment Choices Guide and through an interactive tool on their website. Asset Classes Different asset classes have different levels of risk and reward attaching to them, as do individual funds within a particular asset class. Equity (shares or stock market) based funds have the highest levels of risk. It is important that you read the Scottish Widows Investment Choices Guide and understand the risk associated with any fund(s) in which you choose to invest. This chart is designed to illustrate the level of risk and reward across the asset classes. Core Offer Investment Approaches At the heart of the proposition sit three, risk-based Pension Investment Approaches. Employee booklet 18 7 2011 Page 9 19/07/2011

These options have been designed to appeal to the majority of employees who only want minimal involvement when making investment decisions. Scottish Widows will manage the investment of the plan for you, with the aim that your plan always has a combination of investment risk and reward that both: Matches your chosen Pension Investment Approach, and Manages your investment to your selected retirement date As you get closer to retirement, Scottish Widows will gradually adjust and move your plan into lower risk investments. Although this reduces the growth potential of your plan, it also helps to protect the value of your plan as you near your selected retirement date, this is often called Lifestyle Switching. By your selected retirement date, Scottish Widows would have automatically adjusted your plan so that it will be invested approximately: One quarter (25%) in the Cash Fund, and Three quarters (75%) in the Pension Protector Fund If your circumstances change, you can change your Investment Approach, helping you to ensure that your plan continues to meet your needs. Scottish Widows provide an online investment decision tool that helps members select an Investment Approach to match their individual attitudes to risk and reward, and their term to selected retirement age. Further information on the three Investment Approaches can be found in the Scottish Widows Pension Investment Approach Guide. The default fund for the GPP is the Balanced Investment Approach. Please note that the default fund does not represent a recommendation by the Company or WEBL and you should select appropriate funds to suit your own objectives and attitude to investment risk. Employee booklet 18 7 2011 Page 10 19/07/2011

Full Fund Range Some members will have more sophisticated investment requirements. Scottish Widows offer a wide range of funds, covering the majority of sectors and asset classes worldwide. The comprehensive fund range includes: Scottish Widows in-house funds Externally managed funds Retail-style external manager funds Multi-manager funds via an alliance with Russell Investment Group, voted Multi-Manager of the Year in 2010 by Global Pensions. (source: Russell) Full details of the fund range on offer can be found in the Scottish Widows Pension Fund Investors Guide. Changing your investment decision There are a number of reasons why you may wish to switch investment funds, such as a change to you attitude to risk or as a reaction to fund performance. You are able to switch in and out of investment funds, including the Investment Profiles at anytime to change the mix of investments. There is no charge for making up to 20 fund switches a year. A switch form can be obtained from WEBL, or changes can be made via the Scottish Widows website once you have registered to view your plan online. Charges The GPP has been established with a competitive charging structure. Charges are levied against the value of your plan, through an Annual Management Charge (AMC). The AMC is dependent on which investment fund/s you choose to invest in. For the default fund and core range of funds the AMC is 0.46% per annum. Some externally managed funds may carry an additional AMC. Where different AMCs apply to different funds, the AMC applicable for a particular fund will only be levied against the value of the monies invested in that particular fund. A list of funds and their AMC can be found in the Scottish Widows Member Fund Choice and Charges Sheet. Employee booklet 18 7 2011 Page 11 19/07/2011

Retirement age The GPP has an initial selected retirement age of 65. However, you can choose any retirement age from 55, regardless of when you actually expect to retire. You can draw your pension even if you are still working although the earlier you start to receive payments, the smaller your initial pension is likely to be. In the event of serious ill health, HMRC may allow you to take your benefits earlier than age 55. Ill health is defined by HMRC as a permanent incapacity and the decision to allow you to take benefits early lies with them. Retirement benefits The benefits provided are dependent on the size of your pension fund and terms upon which pension benefits are purchased at retirement. No guarantee is given by Medway Community Healthcare or WEBL regarding the future value of benefits. The size of your individual Personal Pension Plan fund will be determined by the total value of contributions, which have been paid in, the term over which you have been contributing and the investment return achieved by your chosen fund(s). Most of these factors are unknown and therefore your final pension benefits cannot be guaranteed. Your personal illustrations from Scottish Widows will however, be able to give you an idea as to the possible level of benefits, after making certain stated assumptions. It is recommended that you obtain independent financial advice about your retirement options as you approach your retirement date. For impartial information relating to your retirement options please refer to the following document: www.moneymadeclear.org.uk/pdfs/pensions_choose.pdf When you decide to take the pension benefits from the GPP, you will have various options. Under current legislation, up to 25% of the fund will be made available to you in the form of a tax free lump sum; this will be subject to a maximum of 25% of Employee booklet 18 7 2011 Page 12 19/07/2011

the Lifetime Allowance from all plans. You will then use the rest of your fund to buy a pension or take income drawdown. Buy a pension (annuity) The remainder of the fund is used to provide an income for you for the rest of your life and if chosen, your spouse/civil partner/dependants following your death. You should note that the more options you add to your pension, the lower your initial pension will be. The income is taxable at your marginal rate of tax at the time of taking the benefits. You do not have to purchase your retirement benefits from Scottish Widows. There will be the option to purchase your pension benefits from any other provider offering terms to you. This is referred to as an open market option. Take an income (income drawdown) As an alternative to an annuity, you can take an income from your fund. You will have the option to choose and change the level of income that you take. You can take an income anywhere between the minimum and maximum limits set by HMRC. The limits that apply will depend on your age, sex and the returns from Government securities and are calculated from the Government Actuary s Department s (GAD) tables. Trivial Commutation If the value of all your combined pension funds is below a certain level, it may be possible to exchange these for a cash sum, this is know as triviality. This option is only possible where the total of all your pension benefits does not exceed 1% of the Lifetime Allowance (see below). Lifetime Allowance In 2006 the Lifetime Allowance was introduced. The Lifetime Allowance is the maximum pension fund that can be accrued without a tax charge being incurred at the time benefits are taken. Total pension funds (from all plans) in excess of the Lifetime Allowance at the time benefits are taken or upon death will be subject to a tax charge. Employee booklet 18 7 2011 Page 13 19/07/2011

To date the following Lifetime Allowances have been set by HMRC: Tax Year Lifetime Allowance 2011/2012 1,800,000 2012/2013 1,500,000 If you believe you may be affected by the Lifetime Allowance further information can be provided by WEBL on request. You may also wish to seek independent financial advice. Death benefits before Retirement In the event of your death before you take benefits, the full value of your fund will be payable. You may nominate individuals who can benefit from your fund and Scottish Widows will provide you with a death benefit nomination form to complete. The nomination form will be followed wherever possible but is not legally binding. Should you wish to update your nomination, a death benefit nomination form can be obtained from WEBL or Scottish Widows. Cancellation rights Legally you have the right to cancel your contract, up to 30 days from date of receipt of your Cancellation Notice and Policy Documents from Scottish Widows. After 30 days you will be bound by the terms and conditions of the Personal Pension Plan and whilst you can cease payment of contributions, no refunds of contributions already paid will be allowed. Change of employment From the moment you join the GPP, your pension policy belongs to you. When you leave you will retain your plan and the full value of pension fund invested within it. Employee booklet 18 7 2011 Page 14 19/07/2011

The payment of contributions via payroll will cease, although you will be able to continue to pay into it directly from your own bank account. The contributions from Medway Community Healthcare will of course cease. You will have the following options: Leave the fund invested in the plan until you retire paid up Continue paying into it yourself Draw some or all of your benefits (if aged over 55) Elect to transfer the value of the fund to another registered pension arrangement Scottish Widows will write to you on leaving to confirm your options in writing and provide the necessary forms should you wish to continue paying into your plan or transfer the value of your fund elsewhere. Scottish Widows will automatically make your plan paid up should you not elect to continue paying into your plan or transfer the value of your fund elsewhere. You can elect to continue contributions or transfer the value of your fund elsewhere at anytime before taking retirement benefits. This is a long-term investment and aims to provide an income when you retire; therefore you cannot cash it in beforehand. Existing pensions You may be a member of, and pay into, as many pension plans as you wish, at the same time, regardless of the contract type. You can transfer the value of benefits from other pension arrangements into the GPP. Transferring benefits from other pension arrangements may not always be in your best interests. If you are in any doubt, WEBL strongly recommend that you seek independent financial advice. Temporary absence With the consent of the Company you will remain a member of the GPP. However, the Company does reserve the right to pay contributions on your actual earnings, should these be reduced during your absence, or to suspend contributions during periods of unpaid absence. Employee booklet 18 7 2011 Page 15 19/07/2011

Keeping track of your plan leading the way in excellent healthcare You will receive an annual benefit statement from Scottish Widows which among other things will show the value of your fund and provide an illustration of the benefits which may be available to you at retirement. In addition, you are able to register for online access to your plan on the Scottish Widows website. This will allow you to: Check the current value of your plan Obtain an estimated value of your plan at a date in the future Check the payments into your plan View details of your plan and make changes were necessary Use interactive pension planning tools Full details on the service available and how to register for the service will be sent with your policy documentation or can be found on the Scottish Widows website. My Money Works Scottish Widows have invested in the My Money Works online financial resource to provide employees with a new way to help manage their finances. The features of the site include a range of financial tools, guidance and information to help with various aspects of financial planning. Full details of this resource can be found on the Scottish Widows website. State Pension Scheme State Pension Age The State Pension Age (SPA) is the earliest age you can draw your State Pension. Employee booklet 18 7 2011 Page 16 19/07/2011

Changes were announced in the Government's recent Spending Review. The Spending Review changes bring forward the rise to 66 from 2026 to 2020. It is anticipated that the rises to 67 and 68 will also be bought forward. Between April 2010 and November 2018, women's retirement ages are increasing to 65. There will be an accelerated increase between April 2016 and November 2018 Between December 2018 and April 2020, retirement ages for men and women are increasing to 66 Between April 2034 and April 2036, retirement ages for men and women are increasing to 67 Between April 2044 and April 2046, retirement ages for men and women are increasing to 68 You can check your SPA at: www.direct.gov.uk (select pensions and retirement planning). This does not affect the minimum age that benefits can be taken from the GPP. Basic State Pension At SPA, as long as you have paid or are credited with paying sufficient National Insurance, you will be entitled to the Basic State Pension. For someone with a full contribution record, the basic state pension is 102.15 per week for the 2011/2012 tax year. State Second Pension In addition to the Basic State Pension, by paying full rate National Insurance contributions you can build up an entitlement to the earnings related State Pension, known as the State Second Pension (S2P). It is possible to contract out of S2P and this plan can be used to do so. By contracting out, part of the National Insurance contributions you pay will be invested in your plan rather than going towards the S2P. You will not receive the S2P payment for the tax years you were contracted out and instead receive a benefit from the plan used to contract out. The fund accumulated through contracting out is normally referred to as protected rights. The factors influencing the decision to remain contracted out or to opt back into the Government scheme are largely a matter of personal choice and attitudes (e.g. desire to have control over your pension or to rely on the Employee booklet 18 7 2011 Page 17 19/07/2011

Government, attitude to risk etc) rather than purely financial. The Government are to remove the option to contract out of the S2P from 2012/2013 tax year. You can get further details about S2P and contracting out in a factsheet prepared by the Financial Services Authority (FSA), entitled The State Second Pension should you contract out? It is available at the following website: www.moneymadeclear.org.uk. Pensions Credit Currently, the government provides a minimum income guarantee to pensioners, known as the Pension Credit. This is paid to pensioners whose pension income falls below a certain level. The Pension Credit is made up of two parts - a Guarantee Credit, and a Savings Credit. Both are designed to overcome the tension between the need to ensure there is a level below which pensioners incomes do not fall and the need to ensure that today s workers have a clear incentive to save. The minimum level of income provided under a guarantee credit will be means tested and therefore will take into consideration any private pension savings, including income arising from the GPP. The retirement benefits arising from your membership of the plan could therefore affect either Pension Credit payments. For further information please refer to the Department for Work and Pensions website: www.dwp.gov.uk. State Pension Reform With some eye-catching headlines, the Department of Work and Pensions (DWP) published a Green Paper entitled A state pension for the 21st century on 4 April 2011. This consultation seeks views on the Government s proposals for simplifying the State Pension system with a flat rate pension of 140.00 per week and the most appropriate mechanism for determining future changes to SPA to take account of increasing life expectancy. WEBL will update Medway Community Healthcare and members of the pension arrangement as announcements are made. Employee booklet 18 7 2011 Page 18 19/07/2011

Section 2 Life Assurance The Medway Community Healthcare Group Life Assurance (GLA) scheme provides a tax-free lump sum payment to your nominated beneficiary/ies in the event of your death. As a member of the GPP you will benefit from the GLA scheme. You will be automatically included in the scheme, from the date you join the GPP. Benefit The GLA scheme will pay a lump sum benefit equal to four times your basic salary at the date of your death. The scheme is set up under a Discretionary Trust, with Medway Community Healthcare acting as the Trustee. All benefits payments are made via the Trust at the discretion of the Trustee. Establishing the scheme in this way means that the payment will not form part of your estate and will not be subject to Inheritance Tax on payment. The Trustee is responsible for paying the benefit to your beneficiaries, often your spouse or partner, children or other dependants, relatives or beneficiaries. To help the Trustee to make payments in accordance with your wishes, you would have completed a nomination form detailing how you would like the benefit paid. Although they will normally follow your wishes, the Trustees have complete discretion over payment of benefits and can decide to override the form, if they feel it appropriate to do so, for example, if your form is out of date and does not reflect current circumstances. A nomination form will be issued on joining the GPP and should be returned to Human Resources. Should you wish to update your details; a nomination form can be obtained from WEBL or the Human Resources. Employee booklet 18 7 2011 Page 19 19/07/2011

Medical evidence If your benefit is above 1.25m, known as the free cover limit or you are over 65, you will be asked to provide personal and medical information before full cover is agreed. If this is the case, you will be notified separately, with details of the requirements which may include a medical examination. Premium The full cost of the benefit is met by the company and there is nothing for you to pay. Section 3 Income Protection The Medway Community Healthcare Group Income Protection (GIP) scheme provides you with a continued salary should you be unable to work due to long term illness or injury. As a member of the GPP you will benefit from the GIP scheme. You will be automatically included in the scheme, from the date you join the GPP. Benefit In the event of your continued absence from employment for more than twenty six weeks, and subject to any claim being accepted by the insurer, you will continue to receive an income at a rate of 50% pre-absence P60 earnings. Benefit payments are treated as salary and made via the company s payroll system. They are therefore subject to the normal tax and National Insurance deductions that apply to salary. Once the claim has been accepted, the benefit will continue to be paid for a period of two years, or the earlier of the following: Recovery; Leaving the employment of Medway Community Healthcare (including redundancy); or Death Employee booklet 18 7 2011 Page 20 19/07/2011

Benefits will only continue as long as the insurer is satisfied that you remain unable to work, for a maximum of two years. They will regularly request updated information about your condition to assess whether payments should continue. In certain circumstances, they may be able to assist with rehabilitation services to assist in your return to work. A proportionate benefit will be payable should you return to work on a part-time or restricted duties basis. At the end of the two year claim period, a lump sum of two times your preabsence P60 earnings will be payable. Medway Community Healthcare reserves the right to deduct from this amount any costs incurred during the claim period. Medical evidence If your benefit is above 120,000, known as the free cover limit or you are over 65, you will be asked to provide personal and medical information before full cover is agreed. If this is the case, you will be notified separately, with details of the requirements which may include a medical examination. Premium The full cost of the benefit is met by the company and there is nothing for you to pay. Important information It must be stressed that this booklet is a summary only and whilst every effort has been made to ensure that it is accurate, if there is any difference between the terms and conditions of the plan and this booklet, the plan terms and conditions will apply. It is based on WEBL s understanding of current legislation and practice which may change in the future. You should seek independent financial advice if you are unsure of the suitability of the plan for you. Amendment or termination Medway Community Healthcare reserves the right to amend or withdraw the schemes at anytime. This is inclusive of the right to increase, decrease or discontinue pension contributions. Employee booklet 18 7 2011 Page 21 19/07/2011

Data Protection Act The processing of data will be undertaken in accordance with the Data Protection Act 1998. Employee booklet 18 7 2011 Page 22 19/07/2011