The Hewlett-Packard Limited Pension Scheme (the HP Scheme) The HP Scheme is a money purchase pension arrangement provided through the company s Flexible Benefits Programme. Eligibility You are eligible to join the HP Scheme if: you are either a permanent employee or a Fixed Term Contract Worker of the Company; How it works Individuals do not pay contributions into the Scheme but have their salary reduced by the level of contribution they wish the company to make into the arrangement. As a result of reducing the salary the company pays individuals, it currently reduces its National Insurance payments by 12.8% of the reduction. Of this saving, 10% is paid by the company into the Scheme. The balance of this saving, amounting to 2.8%, goes towards the costs of administering the arrangement. You have the opportunity to select a reduction in your salary equal to 0% to 25% of your Pensionable Salary. The default option within the Flexible Benefits programme is 4%. You need to alter this percentage if you wish to join the Scheme at a different contribution rate, or select 0% if you do not wish to join the Scheme. Contributions will be deducted at the first opportunity after your flexible benefit options have been selected and processed. This may be up to 10 weeks from the date you join, depending on the process cycle. Please note that HP will automatically backdate those contributions which would have been paid on your behalf by HP, to the date that you joined the Company. Should you wish to backdate your own contribution please complete an AVC form to pay a one-off lump sum at the next available opportunity. If you choose a level between 1% and 25% (whole percentages only), the Company will reduce your salary by this amount, and in return will make a payment into the Scheme. The reduction to your salary and the corresponding amount which will be paid by the company is shown overleaf: Page 1 of 5
Your Salary will reduce by Resultant company contribution* Percentage of Pensionable Salary 0% (Opt out) 0.0% 1.0% 6.1% 2.0% 8.2% 3.0% 10.3% 4.0% 12.4% 5.0% 13.5% 6.0% 14.6% 7.0% 15.7% 8.0% 16.8% 9.0% 17.9% 10.0% 19.0% 11.0% 20.1% 12.0% 21.2% 13.0% 22.3% 14.0% 23.4% 15.0% 24.5% 16.0% 25.6% 17.0% 26.7% 18.0% 27.8% 19.0% 28.9% 20.0% 30.0% 21.0% 31.1% 22.0% 32.2% 23.0% 33.3% 24.0% 34.4% 25.0% 35.5% *This includes the amount deducted from your pay, i.e. if you have 15% deducted from your salary the Company pay 24.5%, 15% plus an additional Company contribution of 9.5%. Your Pensionable Salary is defined under the Scheme Rules and is your Annual Salary, or where applicable On Target Earnings (OTE), excluding shift payments, overtime and any other fluctuating payments. You can increase or decrease the level of contributions during the Flex enrolment period and any changes will be effective from January. Thereafter changes can also be made in the event of a Lifestyle change or at subsequent Flex enrolment periods. Page 2 of 5
Additional Voluntary Contributions (AVCs) Should you wish you can still pay AVCs outside of the Flex system to the HP Scheme. These will be over and above the contribution level you select through Flex. To do so please complete the relevant form available on the Scheme s web site www.hppension.co.uk AVCs are deducted from your salary and will, as a default, be invested in the Scheme in the same way that you elect to have the Company contribution invested. If you wish for your AVCs to be invested in different vehicles to those in which the normal contributions are invested, please complete the AVC application form accordingly. You will receive income tax relief at source at your highest rate on any AVCs that you pay. Investments Your investment choices will remain unchanged once you have selected your options by completing the application form. You may, however, change these at any time of the year by completing a form which may be found on the pensions website. New Joiners Please ensure that you have completed the enclosed application form any contributions you make will be invested in the Schroders Diversified Growth Fund Lifestyle option until you do so. Investment Options To decide which of the HP Scheme investment options suits you best, you will need to consider the following:- Lifestyling Vs Self-Select. The different investment style of the fund managers (Active Vs Passive). The role of a manager of managers. Please refer to the Investment Guide for full details. This may also be found on the HP Scheme website www.hppension.co.uk. The Way Forward You need to decide what level of contribution you wish to make to the Scheme together with any AVCs you wish to pay. In addition you need to decide whether to Page 3 of 5
LifeStyle or Self-Select your investments and then complete the application form, and AVC form if relevant, and return it/them to Capita Business Services Ltd, Radio House, John Wilson Business Park, Chestfield, Whitstable, CT5 3QP or by email to hp@capita.co.uk. You will also need to confirm the reduction in salary you will be taking, in order that the Company may make the relevant contribution on your behalf, when selecting your Flex Program options. The default rate is 4%. Retirement benefits The HP Scheme s Normal Retirement Date is age 65. Under the rules of the HP Scheme you can choose to retire between age 50 and 75 if your date of birth is on or before 5 th April 1955, or between 55 and 75 if it is after this date. If you wish to take your pension before age 65, you will need the consent of the Company. The value of your Member Retirement Account will be used to provide your retirement benefits. Shortly before your retirement you will be given the opportunity to tell the Trustees the type of Annuity you wish to receive. You can take part of the value of your Member Retirement Account as a cash lump sum, which is currently tax-free. Death Benefits Before Retirement If you die in service before age 75, the Trustees will provide the following benefits: A lump sum equal to four times your Annual Salary/OTE at the date of your death. (You can reduce this benefit to three or two times through the flexible benefits system). If you are married, your spouse will receive a pension equal to 25% of your Annual Salary/OTE at the date of your death. (You can increase this benefit to 33% or opt out of this benefit altogether through the flexible benefits system). This pension is payable for the remainder of their life. If you are not married, but have a relationship with someone which, in the Trustees' opinion closely resembles marriage, the Trustees have discretion to pay the spouse's pension to that person. A pension is also paid to your children if they are under age 18 or in some circumstances under age 23. The pension is equal to 25% of the spouse's pension for each child, up to a maximum of four. This pension will be payable until the child reaches age 18. If the child is in full time education or training approved by the Trustees then the pension may be paid to age 23. Transfers in Page 4 of 5
If you have benefits in a previous employer's pension arrangement or in a personal pension, you may wish to consider transferring the cash value into the HP Scheme. This can only be done with the consent of the Trustees and the Company on a basis agreed with the Company. Where to get further information If you have any queries about the HP Scheme or about your entitlement to benefits, then Capita will be happy to help. Your first point of contact should be the website www.hppension.co.uk, which has been developed by Capita, and includes an online booklet. Capita can be contacted at the following address if you are unable to find the required information on the website: Capita Business Services Ltd Radio House John Wilson Business Park Chestfield Whitstable Kent CT5 3QP Telephone 01227 771445 Fax 01227 771466 Please note that this booklet does not consider your individual circumstances and does not constitute individual investment advice. If you are not sure what action you should take or if you require advice, please seek independent financial advice. Page 5 of 5