THE HEWLETT-PACKARD LIMITED RETIREMENT BENEFITS PLAN HP PLAN

THE HEWLETT-PACKARD LIMITED RETIREMENT BENEFITS PLAN HP PLAN BANK OF IRELAND SECTION Explanatory Member Booklet March 2004 Version

Hewlett-Packard Limited Retirement Benefits Plan - HP PLAN Introduction The Hewlett-Packard Limited Retirement Benefits Plan (the HP PLAN ) is made up of selfcontained benefit sections and this booklet concerns the benefit section relevant to you the Bank of Ireland Section. Although you will be a member of the HP PLAN, your contributions will be paid to, and benefits paid from, the Bank of Ireland Section of the HP PLAN. This booklet gives a summary of the benefits under the Bank of Ireland Section of the HP PLAN as at 1 April 2004. More details are contained in the formal Rules of the HP PLAN. It is the formal Rules that set out the full details of your benefits under the HP PLAN. In the event of any inconsistency between this booklet and the Rules, it is the Rules that will be followed. What does it cost? If you join the HP PLAN, you will have to pay 5% of your Contributory Salary as a condition of membership. However, the HP PLAN is approved by the Inland Revenue. This means that, under current tax law, you get full tax relief on your contributions, so the reduction in your net take-home pay is actually less than 4% (and only 3% for members who pay higher rate tax). What do I get? The Bank of Ireland Section provides: a retirement pension for you; the option of giving up part of your pension for a cash sum; and benefits for your dependants on your death. 1

1 Meaning of words used Your main benefits under the Bank of Ireland Section are based on your Pensionable Service, Pensionable Salary and Final Pensionable Salary. Your contributions are based on your Contributory Salary. You need to know what these terms mean. Contributory Salary means, in any pay period, your base salary plus any other amount which your employer decides is to be included. Final Pensionable Salary means the highest average amount of your Pensionable Salary for a period of twelve consecutive months in the 120 complete and consecutive months immediately before you leave service or your 65th birthday, whichever occurs first. Final Pensionable Salary will be limited to the earnings cap. The amount of the earnings cap is 102,000 for the 2004-05 tax year but is increased annually in line with inflation. Pensionable Salary means the yearly rate of your base salary plus any other amount which your employer decides is to be included. Previous Schemes means the Final Salary Section of the Bristol and West Staff Pension Fund, the Bank of Ireland Staff Pensions Fund, the Bank of Ireland Home Mortgages Limited Retirement Benefits Scheme or the NIIB Group Limited (1975) Pension Scheme. Pensionable Service means your service after joining the HP PLAN. If you have transferred in benefits from a Previous Schemes to the Bank of Ireland Section, this will include the added years of pensionable service credited to you in respect of the transfer. Pensionable Service does not include any period during which you opt-out of the Bank of Ireland Section or any service after you have reached age 65. 2 How do I join the Bank of Ireland Section? Who can join? You are eligible to join the Bank of Ireland Section of the HP PLAN if: immediately before 1 April 2004 you were accruing benefits under one of the Previous Schemes; or you were entitled to join one of the Previous Schemes and have been invited to join the Bank of Ireland Section of the HP PLAN. When can I join? If you satisfy the eligibility conditions described above, you will be invited to join the Bank of Ireland Section with effect from 1 April 2004. Please note, you will not be offered membership at a later date if you chose not to join at 1 April 2004. 2

3 What does it cost? How much does the Company pay? Your employer contributes to the Bank of Ireland Section at a rate agreed with the Trustees of the HP PLAN, after considering advice from an actuary. These contributions must be at least sufficient to satisfy the statutory Minimum Funding Requirement applicable to the Bank of Ireland Section. Your employer also pays the cost of life assurance cover. The employer s contributions may go up and down from time to time, depending on how much is needed (on top of the contributions from members) to meet the expected future cost of benefits under the Bank of Ireland Section. How much must I pay? As a member of the Bank of Ireland Section, you must contribute 5% of your Contributory Salary. However, special provisions apply in two cases. If you were an active member of the Bank of Ireland Staff Pensions Fund on 31 March 2004 you will only have to contribute 3½% of your Contributory Salary during the first year (i.e. until 31 March 2005). After that you will have to contribute at the normal rate of 5%. If you were an active member of the Bank of Ireland Home Mortgages Limited Retirement Benefits Scheme on 31 March 2004, you will have to contribute at the following rates: Percentage of Contributory Salary 1 April 2004 to 31 March 2005 2% 1 April 2005 to 31 March 2006 4% 1 April 2006 onwards 5% Your employer will deduct these contributions from your earnings and pay them to the Trustees. Can I pay more to increase my benefits? You may also pay additional voluntary contributions ( AVCs ) to the Bank of Ireland Section on a basis agreed with the Trustees. AVCs are normally made through payroll and as such get immediate tax relief. However, the Trustees may allow you to pay a lump sum as an AVC. If the Trustees so require, you must give notice before starting to pay AVCs or changing the amount you pay. Your employer does not match any AVC payments you make. The proceeds of your AVCs are used to provide additional benefits for you, on a money purchase basis. The Trustees take account of any wishes notified to them in writing when deciding what additional benefits to provide. Normally you cannot take these benefits as a lump sum. However, there are certain exceptions and if these apply to you, you will be individually notified. If you would like more information about paying AVCs, please look at the HR Portal website. 3

4 What are the pension benefits? How much will my pension be? If you leave service at or after your 60th birthday, you will receive a pension for life at a yearly rate equal to 1/60th of your Final Pensionable Salary for each complete year of your Pensionable Service, plus an additional 1/720th for each additional complete month. This pension will increase in each year after it starts as described in Section 13 of this booklet (pension increases). Example: You retire at age 61. Your Final Pensionable Salary is 30,000. You have completed 5 years Pensionable Service whilst in the Bank of Ireland Section and have been credited with a further 7 Added Years as a result of the transfer made from your Previous Scheme. Your pension will be: 12/60ths of 30,000 = 6,000 per year. If you retire after your 65th birthday, your pension will be calculated as if you retired on your 65th birthday but will then be increased to take account of its late payment. What if I want to retire early? Your 60th birthday is your normal pension date ( NPD ) under the Bank of Ireland Section. You may retire early with the consent of your employer and the Trustees provided you have reached age 50. The pension will be calculated as for retirement at your 60th birthday, but will then be reduced to take account of its early payment. However, the cash value of your benefits is the same as if you had waited until age 60 before drawing your pension. What if I have to retire early because of incapacity? If the total period of your membership of the Bank of Ireland Section and your Previous Scheme is at least 5 years and you leave service before your 60th birthday because of Incapacity, you may choose an immediate pension. The pension will be calculated as for retirement at your 60th birthday but as if Pensionable Service included the period between you leaving service and your 60th birthday. Incapacity means physical or mental incapacity which prevents you from following your normal occupation or seriously impairs your earnings capacity. The Trustees will decide whether or not you are suffering from Incapacity for this purpose. Evidence of Incapacity, such as a medical certificate and a full consultant s report will be required by the Trustees. Example: You retire at age 48 due to Incapacity (i.e.12 years before your NPD). Your Final Pensionable Salary is 30,000. You have completed 5 years Pensionable Service whilst in the Bank of Ireland Section and have been credited with a further 7 Added Years as a result of the transfer made from your Previous Scheme. Your pension will be: 24/60ths of 30,000 = 12,000 per year. 4

If you retire because you are suffering from Incapacity and your health later improves, your pension may be reduced or suspended. 5

5 Can I take a cash sum at retirement? You may give up pension for a lump sum payable when your pension is due to start. At present you can choose a lump sum of up to 3/80ths of Final Pensionable Salary for each complete year of Pensionable Service, plus an additional 1/320th for each additional complete month. Example: You retire at age 61. Your Final Pensionable Salary is 30,000. You have completed 5 years Pensionable Service whilst in the Bank of Ireland Section and have been credited with a further 7 years as a result of the transfer made from your Previous Scheme. The maximum lump sum will be: 3 80 x 12 x 30,000 = 13,500 The amount of pension that you would have to give up for the maximum lump sum will depend on the actuarial factors in use when you retire (to ensure that the lump sum reflects the value of the pension given up). 6

6 What benefits are payable on my death? Lump sum death benefit A lump sum death benefit will be paid if you die: in service; within 5 years after starting to receive a pension; or after leaving service but before your pension starts. Spouse s pension If you are married when you die, your spouse will receive a pension for life. Children s pension If you die leaving Pensionable Children, a children s pension will be paid. 7

7 How much is the lump sum death benefit (and who gets it)? How much if I die in service? If you die in service, the benefit will be equal to: four times your Pensionable Salary; plus your total contributions to the Bank of Ireland Section, with interest at the rate of 2.5% a year. How much if I die after retirement? If you die within five years after starting to receive a pension, the benefit will be equal to the pension payments which would have been made during the remainder of the five-year period if you had not died (but disregarding any future increases). How much if I die between leaving service and retirement? If you die after leaving service but before your 60th birthday or before starting to receive a pension, the benefit will be equal to your total contributions to the Bank of Ireland Section. Who gets the lump sum death benefit? The Trustees will pay any lump sum death benefit to one or more of your Beneficiaries (see below), in such shares as they decide. If the Trustees cannot pay the benefit within the two years after your death, they will transfer it to a separate account and pay it as soon as possible afterwards. Your Beneficiaries are your spouse; your grandparents and their descendants and the spouses of those descendants; your dependants; any person with an interest in your estate (but not including the Crown, the Duchy of Lancaster or the Duke of Cornwall); and any person nominated by you in writing to the Trustees. The Trustees may use all or part of the amount payable for the benefit of one or more of the Beneficiaries, instead of paying it direct to the Beneficiaries concerned. It is important that you complete an expression of wish form and return it to UK HR Operations. Although the Trustees are not bound to follow your wishes, they will always take account of them when considering payment of the lump sum death benefit. 8

8 How much is the spouse s or children s pension? What if I die whilst still employed by HP? Spouse s pension If you die before your 60th birthday, whilst still employed by HP, your spouse will receive a pension equal to 60% of the pension you would have received if you had stayed in employment with HP until your 60th birthday, but based on Final Pensionable Salary at the date of death. If you die on or after your 60th birthday, whilst still employed by HP, your spouse will receive a pension equal to 60% of the pension you would have received if you had retired immediately before your death without giving up any pension for a lump sum. If your spouse was more than 10 years younger than you, the spouse s pension will be reduced by such amount as the Trustees decide for each year of age difference greater than 10. Children s pension If you die leaving Pensionable Children a children s pension will be payable. Pensionable Children are your children, stepchildren and legally adopted children. These children remain Pensionable Children for so long as they are under age 16, or under age 21 and in full-time education or training approved by the Trustees. The amount of the children s pension will be one-quarter of the spouse s pension multiplied by the number of Pensionable Children up to a maximum of four. Any children s pension will be divided equally between the Pensionable Children. Each child s share may be paid to the child or to some other person for the child s benefit. The children s pension will stop when there is no remaining Pensionable Child. Example: You die at age 48. Your Final Pensionable Salary is 30,000. You have completed 5 years Pensionable Service whilst in the Bank of Ireland Section and have been credited with a further 7 Added Years as a result of the transfer made from your Previous Scheme. Your spouse s pension will be: 60% of 24/60ths of 30,000 = 7,200 per year. You leave five Pensionable Children. The total children s pension will be: ¼ of 7,200 x 4 = 7,200. This will be divided equally between your five children so each child will receive 1,440 per year until he or she reaches age 16 (or 21 if in full time education). 9

What if I die after retirement? Spouse s pension If you die after starting to receive a pension, the spouse s pension will be equal to 60% of the pension payable to you at the date of death or, if you gave up pension for a lump sum on retirement, 60% of the pension that would have been payable if you had not done so. If your spouse was more than 10 years younger than you, the spouse s pension will be reduced by such amount as the Trustees decide for each year of age difference greater than 10. Children s pension If you die after starting to receive a pension, the children s pension will be equal to onequarter of the spouse s pension, multiplied by the number of Pensionable Children up to a maximum of four. Any children s pension will be divided equally between the Pensionable Children. Each child s share may be paid to the child or to some other person for the child s benefit. The children s pension will stop when there is no remaining Pensionable Child. What if I die between leaving service and retirement? If you die after leaving service but before starting to receive a pension, the spouse s pension will be equal to 60% of the preserved pension described in Section 9 of this booklet (including increases in respect of the period between the date of your leaving service and the date of your death). If your spouse was more than 10 years younger than you, the spouse s pension will be reduced by such amount as the Trustees decide for each year of age difference greater than 10. 10

9 What happens if I move to another job? What if I change jobs within HP? You can continue to be a member of the Bank of Ireland Section for as long as you remain in employment with HP, even if you change jobs within HP. What if I leave HP? If you leave employment with HP and subsequently return, you will not be eligible to rejoin the Bank of Ireland Section. If I leave HP what happens to my pension? If you leave employment with HP before your 60th birthday without becoming entitled to an immediate pension, you will be entitled to a pension for life from your 60th birthday. The pension from your 60th birthday will be calculated as 1/60th of your Final Pensionable Salary for each complete year of Pensionable Service, plus an additional 1/720th for each additional complete month. It will then increase before payment by the percentage required by law (which is approximately equal to the percentage rise in the cost of living between your date of leaving and your 60th birthday, with a maximum of 5% a year compound). This pension will also increase in each year after it starts as described in Section 13 of this booklet. If the Trustees agree, you may choose to start receiving your deferred pension before or after your 60th birthday, (but not before reaching age 50, unless you are suffering from incapacity or after reaching age 75). The amount of the pension will then be adjusted for early or late payment. If you leave with a deferred pension, you will be able to choose a lump sum at retirement as described in Section 5 of this booklet. Can I transfer my deferred pension? If you leave employment with a deferred pension at least a year before your 60th birthday, you can require the Trustees to transfer the cash equivalent of all your benefits (including death benefits, transferred in benefits and AVCs) to an insurance company, or to another occupational pension scheme or a personal pension scheme. You can ask for a statement of entitlement to a guaranteed cash equivalent transfer payment at any time between leaving service and reaching age 59. However, you cannot transfer your benefits after they have started to be paid. The transfer payment will be calculated on a basis approved by the actuary appointed by the Trustees and as required by legislation. You should note (and point out to your financial adviser) that the Trustees have directed that transfer payments shall not take into account any benefits that might have been paid at the discretion of the employer or the Trustees but which are not guaranteed. If you would like more information about transferring your benefits to an insurance company or another pension scheme, please look at the HP Portal website. 11

10 What happens if I am away from work? If you are away from work, you will normally stop accruing pension if you stop receiving contractual pay. However, special rules apply to family leave. 11 What if I take family leave? Statutory family leave You will be treated as still in service during any period of ordinary maternity leave, ordinary adoption leave or paternity leave. You will only have to pay contributions on the pay you are actually receiving (if any) but your benefits will be based on your normal pay. Additional paid family leave You will be treated as still in service during any period of additional maternity leave, additional adoption leave or parental leave, for which you receive pay from your employer. In the case of paid additional maternity leave, your benefits will be based on your normal pay. In the case of paid additional adoption leave and parental leave, your benefits will be based on the pay you actually receive. Additional unpaid family leave Your employer and the Trustees may agree to treat you as still in service for some or all purposes of the HP PLAN during any period of unpaid additional maternity leave, additional adoption leave or parental leave. If you require any further information on how your benefits will be affected if you are away from work, please look at the HP Portal website. 12 Can I opt out of the Bank of Ireland Section? You may opt out of the Bank of Ireland Section at any time by giving one month s notice to your employer and the Trustees. You will be treated as having left service on the day the notice expires. If you opt out of the Bank of Ireland Section you will not be allowed to rejoin the Bank of Ireland Section again. 12

13 Does my pension increase? Payment of pensions Pensions are payable monthly, except that the Trustees may pay small pensions less often. Tax is deducted under the Pay as you earn (PAYE) system. Pension increases Pensions will increase in each year on a date decided by the Trustees. The part of your pension which relates to your Pensionable Service from 6 April 1997 will increase in accordance with the relevant legislation. Currently this means that this part of your pension will increase in line with the Retail Prices Index up to a maximum of 5%. Your guaranteed minimum pension (which is the pension you are entitled to as a result of being contracted out of the State earnings related pension scheme prior to 6 April 1997 - see Section 14 of this booklet) will be increased by the rise in the Retail Prices Index each year. These increases will be paid partly by the HP PLAN and partly by the State. The remainder of your pension will increase by the lower of: the percentage increase in the Retail Prices Index during a reference period agreed between your employer and the Trustees; and 3%. Pensions that have been in payment for less than a year may be increased by a smaller amount. Pensions payable to your spouse or children will increase in the same way. Your employer, with the consent of the Trustees, has the power under the Bank of Ireland Section to provide extra discretionary increases to pensions. Note: Increases to pensions derived from AVCs or transferred assets from other pension arrangements (other than from one of the Previous Schemes listed in Section 1 of this booklet) may be different from the increases described here. 13

14 Is there anything else I should know? Deduction of tax The Trustees may deduct from any payment under the Bank of Ireland Section any tax for which they may be liable in respect of it. Evidence of health Benefits payable on your death will be subject to any restrictions imposed by any person with which they are insured. The Trustees may decide that these benefits payable on your death or early retirement will also be reduced if you are unable to produce satisfactory evidence of good health. Benefits not assignable You cannot assign or charge your benefits under the Bank of Ireland Section (e.g. as security for a loan). If you try to assign or charge your benefits, you may lose them. Revenue Approval The HP PLAN is approved by the Inland Revenue under Chapter I of Part XIV of the Income and Corporation Taxes Act 1988. This approval has tax advantages for the HP PLAN and the members. In particular, under the present law: you get tax relief on your contributions; you are not taxed on your employer s contributions; and the HP PLAN s investments benefit from favourable tax treatment. Approval also means that the benefits are subject to limits imposed by the Inland Revenue as a condition of approval. Contracting-out The HP PLAN is a salary-related contracted-out scheme. This means that members of the HP PLAN are contracted-out of the state second pension and the benefits under the HP PLAN have to satisfy a statutory standard. Broadly speaking, the statutory standard makes sure that benefits under the HP PLAN are better than the benefits under the state second pension. The details are in the Pension Schemes Act 1993 and other legislation applicable to schemes that are contracted-out by virtue of section 9(2) of that Act. Before 6 April 1997, schemes had to provide a guaranteed minimum pension to contract out of the state earnings related pension scheme (the predecessor of the state second pension). If you have chosen to transfer your benefits from a Previous Scheme, the Bank of Ireland Section will provide this guaranteed minimum pension. Data Protection The Trustees have to keep personal information about you and your dependants for the purposes of managing the HP PLAN. The Trustees may have to disclose this information 14

to other people (such as their professional advisers) from time to time. However, this information will only be used for the purposes of the HP PLAN and will not be used for any other purpose. 15

15 Can I transfer in benefits from other schemes? The Trustees may accept a transfer of your benefits from another occupational pension scheme or a personal pension scheme, or the surrender value of a buy-out policy or retirement annuity contract bought in your name. The Trustees have discretion about whether to accept a transfer of benefits in any particular case. If you would like more information about transferring benefits from another pension arrangement, please ask the Pensions Manager. 16 Can the Bank of Ireland Section be terminated? Your employer may terminate the Bank of Ireland Section by written notice to the Trustees. If this happens, the Bank of Ireland Section will be wound up. You will be entitled to benefits as described in Section 9 of this booklet as if you had left service at the date of termination. You will be given more information if this happens. 17 Can the Rules of the Bank of Ireland Section be changed? HP may, with the consent of the Trustees, change the Rules of the HP PLAN at any time. You will be told about any changes that affect your benefits. 16

18 What if I have a problem? Complaints procedure If you have any complaints about the HP PLAN, please address them to the Pensions Manager. If the Pensions Manager does not deal with your complaint to your satisfaction, there is a formal procedure for resolving internal disputes that you can use. You must put in writing the details of the nature of the complaint and address your application to the Secretary to the Trustees who will investigate the complaint. You will normally receive a formal response to your complaint within two months. If your complaint is not dealt with within two months, you will be sent a letter explaining the reason for the delay. This letter will also tell you when a formal response will be provided. If you are not satisfied with the Secretary s decision, you will be able to raise the matter with the full board of trustees. Further details will be provided with the Secretary s decision. OPAS If you are unable to resolve your difficulties with the trustees, OPAS (The Pensions Advisory Service) may be able to help. OPAS is available at any time to assist members and beneficiaries of the HP PLAN in connection with any pensions query they may have, or difficulty which they have failed to resolve with the trustees. OPAS may be contacted at 11 Belgrave Road, London SW1V 1RB. The Pensions Ombudsman The Pensions Ombudsman appointed under Section 145(2) of the Pension Schemes Act 1993 may also be able to help. The Ombudsman may investigate and determine any complaint or dispute of fact or law in relation to an occupational pension scheme. The complaint or dispute must be made or referred to the Ombudsman in accordance with the Act. The Ombudsman may also be contacted at 11 Belgrave Road, London SW1V 1RB. Occupational Pensions Regulatory Authority The Occupational Pensions Regulatory Authority (OPRA) is able to intervene in the running of schemes where trustees, employers or professional advisers have failed in their duties. OPRA may be contacted at Invicta House, Trafalgar Place, Brighton BN1 4DW. 17

19 Where can I get more information about the HP PLAN If you want more information about the HP PLAN, please ask the Pensions Manager. The Pensions Manager can provide a copy of the HP PLAN s annual report (with information about the Trustees and the HP PLAN finances), and also a copy of the formal Rules if you would like to inspect one. If you have any questions about the HP PLAN generally or your personal entitlement to benefits, you should write or telephone the Pensions Manager at: Worton Grange Imperial Way Reading RG2 0TE Telephone: 0118 916 0717 E-Mail: ukpensions@hp.com Information about the HP PLAN has been given to the Registrar of Occupational and Personal Pension Schemes. If you lose track of any pension benefits, the Registrar may be able to help you to find them. The Registrar may be contacted at PO Box 1NN, Newcastle upon Tyne, NE99 1NN. 18