Questions and Answers Section A provided at the Forums HEADLINES 1. Your pension will continue to be paid on the same day 2. Your pension will continue to be paid by the current administrators, Ensign 3. The amount of your pension which has been secured under your individual policy document(s) will reflect the value of your benefits under the Old Section. 4. A one-off discretionary increase will be applied to all Old Section pensions at the point that individual policies are issued, payable from the date on which you receive your first payment under your individual policy 5. You will continue to have one single contact point - your main and first point of contact is mymnopfpension 6. A final version of the Q&As will be posted on the MNOPF website at www.mnopf.co.uk after the Forums. Hard copies will also be posted to all Old Section members in April. 7. The Nautilus Pension Association will remain available to you. BACKGROUND Members The Trustee went to considerable efforts to ensure that there was meaningful engagement with members before its decision to buy-out the Old Section. This was to give members the opportunity to raise any concerns or questions they may have had regarding the buyout. As you will be aware, there has been on-going communication with members regarding the plan to buy-out and numerous pension Forums (in conjunction with Nautilus International) were held around the country. The Trustee wishes to reiterate that it was neither necessary nor appropriate to ballot members in respect of the progression to buy-out. It was the responsibility of the Trustee to assess the appropriateness of the buy-out from the members perspective, which has been done through the direct engagement with members referred to above and by consulting with Nautilus International. The Trustee's objective, and indeed its legal obligation, is to ensure that it acts in the interests of the members of the MNOPF and provides maximum security for members' benefits. The Trustee believes, having taken into account all relevant factors and after consulting widely with members and employers, that the buy-out meets that objective. In addition, the Trustee's approach throughout has been supported by expert legal advice and this has confirmed it was not necessary to obtain individual consent from members before taking the decisions that have now been made and cannot be reversed.
Why has the Trustee made these changes? The Trustee has now secured all of the pension liabilities of the Old Section of the MNOPF through insurance policies with Legal & General (formerly Lucida plc) and Rothesay Life. This means that members enjoy additional security, thanks to the strict regulations and capital requirements imposed on insurers by the Financial Conduct Authority and the Prudential Regulation Authority (previously the Financial Services Authority). A significant proportion of UK pension scheme members do not enjoy this added level of protection. The security for members is greater than before when reliance was placed on the Old Section participating employers and the Pension Protection Fund. Given the specific nature of the Old Section, as explained in earlier communications, neither of these sources were considered to provide satisfactory security for members' benefits. What does the Pension Regulator think of this? The Pension Regulator is fully aware of what is happening in the Old Section and has been provided with copies of the last correspondence sent to members. The Pension Regulator supports the de-risking of pension scheme liabilities by methods such as pension scheme buy-outs. What will happen next? The next step is for individual policies to be issued to all members. Once individual policies are issued, the future payment of member benefits will be the responsibility of the insurers rather than the MNOPF. However, the Trustee has worked hard to streamline communications for members through mymnopfpension, as well as to streamline the payment of pensions. What will happen to the Old Section of the Fund once individual policies are issued? As all of the assets will have been used to purchase benefits for members, the Trustee will wind-up the Old Section of the Fund. mymnopfpension will continue to operate for the benefit of members after the Old Section has wound up. What are the advantages of the Trustee s plans? The Trustee believes that this course of action provides enhanced security for members' benefits and so is positive for members and has also enabled a small increase in pensions. There may be some practical aspects which are less straightforward for members, which is why the Trustee has established mymnopfpension. The Trustee believes that whilst it has taken steps to minimise the impact of the changes on members' experience, where there are any changes, these are more than offset by the positives. After the individual policies are issued, your contact for queries about your pension will be mymnopfpension who will liaise with the insurers on your behalf as necessary. How will having an individual policy affect me? Who is responsible? When the individual policy is issued to you, the insurance company providing the policy will become responsible for paying your pension. The policy document will explain the pension benefits payable - it will be based on the principles included in MNOPF s Trust Deed and Rules. The policy will also cover any dependants eligible for a benefit upon your death, as provided for under the MNOPF Trust Deed and Rules.
How many people are members in the Old Section? Approximately 40,000. What is the average pension paid per annum? Around 3,000 a year. What are the assets of the Old Section? The assets of the Old Section are currently valued at 1.3 billion and largely consist of the bulk insurance policies with Legal & General and Rothesay Life. Will Guaranteed Minimum Pensions (GMPs) continue? There are no GMPs in the Old Section. SECURITY OF YOUR PENSION There has been a lot in the news about problems with banks. Can we trust insurance companies to provide security in the event that things go wrong? An insurance policy provides security for members benefits because of the strict requirements imposed on the insurer by the Financial Conduct Authority and the Prudential Regulation Authority. Insurers are required to hold significant capital to protect their policyholders if things go wrong. The Financial Services Compensation Scheme also provides protection for eligible policyholders. Why is an insurance policy safer? At present, the participating employers could, in theory, be required to cover any shortfall in funding through deficit contributions. However, it would be extremely difficult and maybe even impossible, in practice, for the Trustee to enforce the payment of deficit contributions, particularly given the small number of Old Section participating employers that remain in business (relative to the total number of participating employers which have participated in the MNOPF since its inception in 1937). In the unlikely event that all of the participating employers were to go out of business, the Pension Protection Fund would provide a level of protection for members benefits. Broadly, the Pension Protection Fund provides 100% cover for members over Normal Pension Age (or in receipt of survivors' or ill-health retirement benefits), and 90% cover for other members subject to a cap (currently approximately 34,000 per annum). A spouse s pension of 50% of the member s pension is also covered by the Pension Protection Fund. Following buy-out, members benefits will be provided by the insurance companies and the insurance policy provides security that your pension will be paid. Insurance companies are regulated by the Financial Conduct Authority and Prudential Regulation Authority, and are required to hold significant capital to protect their policy holders if things go wrong. In the unlikely event that the insurance company (or companies) was to go out of business the Financial Services Compensation Scheme would provide a level of protection for eligible policyholders. Will my pension be exposed to the movements in the stock market? No. Movements in investment markets will have no effect on your pension.
Will my pension go down? No. Will there be any future pension increases? No. Once an increase has been applied to all Old Section pension at the point that individual policies are issued in July 2014, there will be no further increases. What assistance will be available to me in dealing with the insurance companies? You should contact mymnopfpension with any questions you may have. Once you are covered by a policy in your own name, in addition to mymnopfpension, the insurers will remain contactable if necessary, and, importantly, Nautilus International will continue to be available to all Fund members and dependants to help with any individual or collective problems you may have. FOCUS ON YOUR NEEDS - mymnopfpension Can we still speak to Ensign if the first payment from the insurance companies is less than it should be? The insurers will make certain the payments are exactly as now. As explained above, mymnopfpension should be your first point of contact for any queries. Once individual insurance policies are issued, will members be locked in even if they are not satisfied? The Trustee does not anticipate that members will have any issues with the insurance policies. If they do, there are official channels of communication noted at the end of this document that can be followed, in much the same way as would happen if there was a complaint against the MNOPF now. If members have such issues, they can still contact Nautilus International which will continue to remain a source of support and contact for all members. Nautilus will receive information on the performance of mymnopfpension, and will act as a sounding board and liaison for members who feel that they need it. If I am married will there still be an automatic widow s pension if I die before my spouse? In such circumstances, a widow will be entitled to the same benefit as they would under the terms of the MNOPF. Contact should be made as soon as possible with mymnopfpension in order that the member s pension can be stopped and the widow s pension set up as smoothly and efficiently as possible. The same applies to all widowers and children as defined under the Rules. In the event of my death, would the person dealing with my affairs need to provide more than one copy of the original death certificate? No. Only one copy of an original death certificate needs to be provided to mymnopfpension, who will in turn provide certified copies to the relevant parties for all elements of your MNOPF pension.
Will long term partners still get discretionary payments through the insurance companies? The Trustee of the Old Section has always exercised its discretion to make payments, which are equivalent to a widow s pension, to a partner where, in practice, the relationship resembles marriage, such as where you and your partner are living together, jointly paying household bills etc. This discretion, which is routinely granted, has been codified with the insurers and will continue as previously. I do not live in the UK, and I am not a British subject. Some insurance companies in Britain do not accept non-british subjects. What will happen in such as case? There are about 5,000 Old Section members living outside the UK and their benefits will be covered by the individual policies in the same way as any other member. As is currently the case, tax treatment will depend on the reciprocal tax agreements in place between the UK and the country of residence. Who is responsible for my tax being accurate? Whilst the Trustee, Ensign and the insurers have created a way for your tax code relating to your MNOPF pension to remain unchanged, following the issue of individual policies, you will remain responsible for ensuring that any tax relating to, or arising from, other sources of income, including pensions and other income from sources outside the MNOPF, is properly paid to HM Revenue & Customs. The Trustee has also ensured that existing arrangements whereby HM Revenue & Customs does not deduct tax continue for existing pensioners who are tax resident abroad. Can I waive my pension, or assign it to another party such as a charity? No, it is not possible to assign your pension benefits to anyone else nor can you waive your pension entitlement. How will mymnopfpension be funded? Special arrangements have been made for mymnopfpension to be funded by the MNOPF. Do we need to be fee paying members of Nautilus International to be represented by them? If you are or were a member of the Old Section and have personal issues with the insurers, Nautilus will always assist you. DOCUMENTS YOU WILL RECEIVE Will members be the owner of the policy or just a certificate holder in a group policy? At present the policy is owned by the Trustee but the Trustee is in the process of converting this policy to provide each member with their own individual policy, or policies. You mentioned that some of us will get policies from only one source and some from more than one source. Why is this? The Trustees took out the first policy with Legal & General (previously known as Lucida plc) in 2009. Broadly speaking, that policy only covers 65% of member benefits for those (and their spouses and dependants) who were receiving a pension before 1 September 2009. The later policy with Rothesay Life covers the remaining 35% of benefits for those beneficiaries, as well as all other benefits due from the Old Section in respect of beneficiaries not covered by the Lucida policy.
Will there be one insurance policy to cover both myself and my spouse? Yes, your individual policy, or policies, will cover both your benefits and the benefits payable to your spouse in the event of your death. Is there anything to stop the insurance company from selling these policies on? It is not possible to guarantee that the insurer(s) will not be taken over by other insurer(s) and the Trustee will not be able to control this. Any such change would be overseen by the Prudential Regulation Authority, and any future insurer(s) would also be regulated by the Financial Conduct Authority and Prudential Regulation Authority. The terms of the policy, and therefore your benefits, would remain unchanged. If one of the insurance companies is taken over, will our rights still be protected? Yes, your benefits will continue to be regulated and protected by the Financial Conduct Authority and the Prudential Regulation Authority and the Financial Services Compensation Scheme will continue to provide the same level of protection as described earlier. Can you reassure us that the insurer(s) will not suddenly request payments from members for administration and charges etc.? Yes. The whole of the administration cost is covered by the insurance policy purchased by the Trustee. There will be no future charges to the member. Are these individual policies designed to benefit the members of the Old Section? Yes. The Trustee has a duty to act in the interests of the members of the Old Section and has worked with a range of professional advisers to achieve this aim for the benefit of the members. The Trustee s main objective has always been to provide security for members. What do I need to know about payments being made to my bank account? Members' payments will continue to be made into the bank account into which payments are currently made, unless the member requests a change. The account into which your benefits are to be paid will need to be a personal account in your name, or a personal joint account of which you are one of the account holders. Payments cannot be made into a business account or by cheque. It should be noted that there may be occasions when payments cannot be made to certain bank accounts due to country sanction controls. What is the difference between my discharge notice and my individual policy document/s? The discharge notice issued to you in January 2014 is a statement from the Trustee. The Trustee included in that notice confirmation that the wind-up of the Old Section has commenced. This is required by law. Your individual policy document/s are a statement from the insurers confirming the benefit bought for you with that insurer in your own name. The individual policy is your legal evidence of your benefit entitlement with that insurer, and the terms and conditions relating to it. Please keep this document in a safe place.
The MNOPF has a privacy policy regarding members information. Will this information be passed to the insurers and what safeguards do we have that it will be used responsibly? The insurers have to comply with the Data Protection Act, just as the Fund does. However, the insurers are not allowed to use the information to cross-sell i.e.; the insurers cannot use the information on members to try to sell you pet protection or funeral plans etc. How often will I receive a payslip? There is a legal requirement that your payslip will be provided by the insurer and payslips will continue to be issued each year in April, in line with current practice. Through the Trustee s work with the insurers to improve efficiency for members, all members will receive one payslip (where applicable, covering all elements of your MNOPF pension) and a single payment from a single source. Additionally, as currently, an additional payslip will be issued whenever total net pay changes by more than 50p. KEY EVENTS Can I take any of my benefits as tax-free cash? Provided you are not already receiving your pension: You may be able to convert some of your pension benefits to a tax-free cash sum at retirement. The cash would be paid in lieu of part of your pension, with your pension consequently being reduced. In most cases, you will only be able to take up to 25% of the total value of your benefits as tax-free cash. Any cash lump sum automatically payable counts towards this 25% maximum. You need to take your tax-free cash at the same time that you start to receive your pension and before you reach age 75. Whilst this is the situation under current tax legislation, the Government could change tax legislation in the future which could impact on your ability to take tax-free cash. What are my pension income options? These will be explained in more detail in your individual policy document(s). The overall level of pension benefits you are entitled to under your individual policy cannot be changed as it reflects your entitlement under the terms of the MNOPF. However, provided you are not already receiving your pension, you may be able to convert some of your pension into a tax-free cash lump sum, as described above. If you have not yet started to receive your pension, you can also choose when to start to receive it. In most cases, the earliest age you can start to receive it will be age 55 and the latest you can start to receive your pension will be age 75. Will we be put under pressure to take a tax-free cash sum? No, it is your choice whether to receive your entire pension as income or tax-free cash sum and a reduced income.
If there are multiple insurers, will I get multiple payments? No. The Trustee has worked hard with both insurers to ensure that only a single monthly pension payment will be made. This will also include any New Section entitlement if appropriate. This arrangement requires the ongoing collaboration of the insurers and HM Revenue & Customs. Who will issue my P60 at the end of the year? Following the buy-out, Ensign will issue your P60s, on behalf of the insurers and the New Section. Will we get multiple P60s? No. The Trustee has worked hard with both insurers and the New Section to ensure that a single P60 is issued. What will happen about the Pension Forum meetings? Will they continue? The Nautilus Pensions Association meetings will continue, but they will, over time, become more geared towards the New Section. Who will I contact if I have an issue? There are several channels of communication if you have a query about your benefits: You can refer to the MNOPF website at www.mymnopfpension.com for further information about the Old Section; in addition, there is a dedicated telephone helpline and an email address has been set up: email enquiries@mymnopfpension.co.uk or call the mymnopfpension helpline on + 44 (0) 1372 200200, or write to: mymnopfpension c/o Ensign Pensions Administration Limited Leatherhead House Station Road Leatherhead Surrey KT22 7ET
Questions and Answers Section B new questions raised by members at the Forums The total spouse s pension is more than 50% of my pension why is this? If you are a member of the MNOPF (and not a spouse or dependant), you will have noticed that the value of the benefit for your spouse, in event of your death, is itemised on the letter the Trustee issued to you in early 2014 (the statutory discharge notice). Some members asked why the spouse s pension value (in total) amounts to more than 50% of your current pension. The reason is that many members chose to take a tax free lump sum at the point of retirement or chose to retire early, both of which reduced your ongoing pension your spouse s pension is however based on the value of your full pension, before any reduction for your tax free cash amount or early retirement. Why isn t my New Section pension itemised in my discharge notice (the letter that the Trustee sent to me in early 2014)? The letter that the Trustee issued to you in early 2014 (the statutory discharge notice), only covers your Old Section benefits. Your New Section benefits, if you are also a New Section member, remain unchanged and the New Section is not being wound up. When you receive your individual policy(ies), your New Section pension will not be included in your pension totals within these documents either, as the individual policies will only cover your Old Section pension benefits. What will happen to any Additional Voluntary Contributions (AVCs) I have paid? The payment of AVCs was never part of the Old Section. Any AVCs paid by members will be fully accounted for within your New Section entitlement. The Trustee has advised that a small one-off uplift will be paid to all Old Section members. How will this uplift be applied? When the individual insurance policies are issued, a one-off, non-revaluing increase will be allocated - all Old Section members, spouses and dependants pensions will receive the increase. The level of the increase will be itemised for your entire Old Section pension amount on your Rothesay Life policy document. This is because Rothesay Life will be paying the full amount of the uplift for all of your Old Section pension. For those members who are already receiving their pensions, this is payable from the date on which you receive the first payment under your individual policy (expected to be in July 2014). Deferred members will have the uplift automatically applied to the value of their Old Section pension with effect from the date on which their individual policies are issued (expected to be during July 2014).
How much will it cost me for my pension to be paid from a single source, and for me to contact the mymnopfpension service? The single source pension payments and your contact through mymnopfpension will not cost you anything (other than the cost of the telephone call and your time). How do you make sure that my pension will be paid on time? Firstly, pensions have always been paid on time. You will not be aware, but the payment arrangements required by mymnopfpension were established in 2009 when the first insurance policy was acquired. Since early 2013, these arrangements have continued to operate with both Legal & General and Rothesay Life. Secondly, the Trustee expects payments to be made on time and for the payments to be correct. mymnopfpension has been arranged so that pension payments from the insurers and the New Section (where relevant) are paid to mymnopfpension well ahead of the payroll date this gives a window of time to address promptly any possible problems with a payment. The Management Group (see next question) has also established procedures to immediately intervene and correct any issues, and take every step possible for your full payment to reach you on time. We have to plan for every eventuality, so in the extremely unlikely event of any of the parties failing to pay their share of the pension payments on time, that party s share of your pension payment could be delayed. You would be advised of which party failed to pay. What is the role of the Management Group? mymnopfpension requires the collaboration of many parties. A Management Group has been established to ensure efficient collaboration between the insurance policy providers and where applicable, the New Section. The Management Group consists of representatives of the administrators, Rothesay Life and L&G as well as having representation from the MNOPF. It is also worth noting that the Nautilus Pension Association (NPA) will remain a source of support and a contact for all members. The NPA will monitor the performance of mymnopfpension from time to time and will continue to act as a sounding board and liaison for members who feel that they need it. The NPA will continue to arrange Pension Forums. What are the Financial Services Compensation Scheme (FSCS) compensation levels? Under the current provisions of the FSCS, 90% of the value of your policy would be protected under the FSCS. Compensation would be provided via either a transfer to another solvent insurer or via compensation paid from the FSCS. The FSCS would fully recognise your entitlement for a spouse s pension to apply, if you are the main member of the Fund (and not already a spouse or dependant). There are currently also no caps on the maximum amount of compensation possible, except as noted above.
Will my data be shared with the insurers general insurance teams and will I be contacted to ask if I want to buy other insurance products from the insurers? To what extent will my pension data be shared within the insurers businesses? No, the insurers will not share your MNOPF data within their businesses, and you will not be contacted about other products or services offered by the insurers. Your MNOPF data will not be shared apart from to the extent strictly necessary in order for the insurers to be able to pay your pension. Your data will be protected in accordance with the Data Protection Act. I have read in the papers recently that it is currently not a good time to be buying annuities, so why is the Trustee buying my individual insurance policy now? The purchase of annuities mentioned in the press relates to people buying a pension directly with insurers, with monies built up in a different type of pension arrangement, called a money purchase or defined contribution pension plan. The Old Section is a defined benefit pension scheme and in your situation, the Trustee has bought a fixed pension amount to meet the level of benefits promised to you. I have heard about more flexibility to the way defined contribution pensions can be paid out at the point of retirement in the Government s Spring 2014 Budget. What type of pension arrangement is my Old Section pension? The most significant changes announced by the government, which are in relation to Defined Contribution (DC) schemes, are not due to take effect until April 2015. Your Old Section pension is a defined benefit (DB) pension scheme. In principle, the government would also like to extend greater choice to DB members, but it is concerned that there may be unintended adverse impacts on the economy and possibly even on individual members. The government is therefore considering whether members of private sector DB pension schemes will have access to the new flexibilities. It is also unclear to what extent transfers taken from a DB pension scheme now, in anticipation of the changes, would benefit from the new flexibilities when they come into effect.. The government will consult to seek views and it is likely to impose restrictions on the ability to transfer to the DC environment. It is not possible to transfer out if you are already receiving your MNOPF pension. The option to transfer out is however available, in most cases, if you are a deferred member but the Trustee strongly encourages all members to take independent financial advice before considering this option as it might have a very significant bearing on the level of income currently available to you throughout your retirement. What do I need to know about the acquisition of Lucida plc by L&G? In September 2009, the Trustee of the Pension Scheme (the Trustees ) secured your pension benefits by taking out an insurance policy (the MNOPF Policy ) with Lucida Limited (formerly Lucida plc) a UK annuity buy-out company. Lucida closed to new business in November 2012 and on 5 August 2013 Legal & General Assurance Society Limited acquired Lucida. Lucida is now a subsidiary of Legal & General Assurance Society Limited.
The boards of directors of Lucida and Legal & General Assurance Society Limited are proposing to combine the two companies by transferring the entirety of the long-term insurance business of Lucida (which includes the MNOPF Policy) to Legal & General Assurance Society Limited pursuant to a scheme under Part VII of the Financial Services and Markets Act 2000 (the Part VII Scheme ). The Part VII Scheme requires the approval of the High Court of England and Wales (the Court ). The Court will only approve the transfer if it is satisfied that the proposals are fair and meet the necessary legal requirements. It is currently anticipated that Lucida and Legal & General Assurance Society Limited will make an application to the Court for an order sanctioning the Part VII Scheme on or around 10 April 2014. Once this application has been made, the Trustee will be sent a "Policyholder Pack" containing further information about the Part VII Scheme. This will be considered carefully by the Trustee and the pack will be made available to you on a dedicated page of the mymnopfpension website. You do have the right to comment on and object to the proposed transfer of the business of Lucida to Legal & General, but this right is only in respect to this particular matter. This legal process is separate to the policies being issued to you and the wind up of the Old Section.. In the event that Scotland becomes independent, what effect will that have on my pension? The decision on Scottish independence is clearly outside the Trustee's control. Should Scottish independence go ahead, the precise impact on regulation will need to be thoroughly considered and understood. If independence proceeds, the likelihood is that pension payments to members in Scotland will continue to be paid in the same way that pension payments are made to pensioners in other non-uk territories. Will there be any future pension increases? No. Increases were only ever on a discretionary basis - the Trustee has advised on many occasions and can confirm again that there will be no further increases. What do I do when I get my policy? You don t need to take any action, however, please do read through your policy/ies carefully to make sure that all of the information shown is correct. Please contact mymnopfpension if you have any questions or concerns.