Hbos Final Salary Pension Scheme Scheme Benefits Summary
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HBOS FINAL SALARY PENSION SCHEME SCHEME BENEFITS SUMMARY This document has been prepared on behalf of Lloyds Banking Group Pensions Trustees Limited (the “Trustee”) to provide a summary of some of the benefits available to Active and Deferred members of the HBOS Final Salary Pension Scheme (“the Scheme”). If after reading this document you have further queries about your benefits under the Scheme there is further information available on the Group Pensions website (www.lloydsbankinggrouppensions.com) or you can contact the administrators for the Scheme. You can find contact details and useful links at the back of this document. HOW TO USE THIS BENEFIT SUMMARY The benefits that the Scheme will pay to you or your beneficiaries will often depend on whether you are an Active Member of the Scheme or a Deferred Member of the Scheme. An Active Member of the Scheme is a Group employee who is currently building up benefits in the Scheme. This includes any colleagues who are currently on long term absence who are still building up benefits in the Scheme. A Deferred Member of the Scheme is a person that is not an Active Member of the Scheme or being paid a pension, but who still has benefits in the Scheme (typically a former employee who has yet to start to receive their pension or a current employee who has chosen to leave the Scheme). This benefit summary provides a guide to the main differences between the benefits you might receive from the Scheme as an Active Member or a Deferred Member. However, please note that this is not a complete summary of the benefits payable from the Scheme. Please also note that if you leave the Scheme: you will not be able to rejoin it at a future date, and you don’t have to join the Group’s Defined Contribution scheme, ‘Your Tomorrow’. If you do leave the Scheme and decide not to join ‘Your Tomorrow’ straight away, you can join it at a later date. Legislation introduced by the Government means that in some circumstances you may be automatically enrolled into ’Your Tomorrow’ even if you choose not to join immediately, however you can then opt out if you wish. Additionally, the Group will not contribute to any alternative pension scheme and you will not be entitled to any cash payment instead. At the end of this document you will find a glossary of terms and links to find more information about ‘Your Tomorrow’. PAYING CONTRIBUTIONS Feature or While you are an Active Member of the Scheme If you leave pensionable service and If you join the Group’s Defined Contribution benefit become a Deferred Member scheme ‘Your Tomorrow’ Member You currently pay 4% of your Pensionable Pay to the Scheme, You will not have to pay anything to the You choose how much you would like to contributions unless you are a Non-Contributory Member (in which case you Scheme. contribute each month. The lowest amount you do not have to pay anything to the Scheme). can contribute to the scheme is 3% of your base pay. The Group also pays contributions into your account up to a maximum of 13% depending on the rate you contribute at. Your Group Total contribution contribution invested in rate rate your account 3% 8% 11% 4% 10% 14% 5% or higher 13% 18% + Deductions are made from your pension account within ‘Your Tomorrow’ to meet certain investment and administration expenses. Additional You can boost your pension by paying Additional Voluntary You will be unable to make Additional You can choose to contribute more than 5% if Voluntary Contributions (AVCs) to the Scheme. Voluntary Contributions (AVCs) to the you wish, although the maximum contribution Contributions Scheme. from the Group is 13%. Your AVCs are used to build up an individual AVC account like (AVCs) in a defined contribution scheme. This fund is invested and when you retire you use it to buy a pension or take some (or all of it) as a cash lump sum (currently payable tax free), subject to legal limits. You can make AVCs to the Scheme via the Group’s Flexible Benefit Scheme, Flex. If you do this you can make National Insurance contribution savings on the value of your AVCs. In addition, unless you are a Non-Contributory Member, paying AVCs entitles you to a further enhancement to your contribution of up to 4% of Pensionable Pay (paid for by the Group). March 2017 For internal use only BUILDING UP PENSION Feature or While you are an Active Member of the Scheme If you leave pensionable service If you join the Group’s Defined Contribution benefit and become a Deferred Member scheme ‘Your Tomorrow’ How your Each year that you remain an Active Member of the Scheme If you leave you will be entitled to a Your contributions, together with the Group’s pension you will build up a proportion of your Final Pensionable Pay. deferred pension. This will be contributions, are invested in your individual pension increases in based on your Pensionable Service account by the Trustees. Any positive investment size In the Scheme this proportion (known as the "accrual rate") is and Final Pensionable Pay at the return achieved on your pension account helps it grow usually 1/60th of your Final Pensionable Pay (subject to the 1 date you leave the Scheme. Your in value over time. Pensionable Pay Cap ) for each year of Pensionable Service. deferred pension would then You will have been notified if a different accrual rate applies or increase, for each full year until you The size of the pension you can buy at retirement has applied to you. retire, broadly in line with annual depends on: For example: consider a colleague with an accrual rate of increases in a National Inflation the contributions paid to your pension account, 1/60th, Final Pensionable Pay of £24,000 and 15 years of Index called the Consumer Prices Pensionable Service. Over the next year his pension builds up Index (subject to a maximum, the investment returns achieved by your pension in the following way: typically 5% a year). account, and These increases are required the cost of buying a pension at retirement and the Year Pensionable Accrual Final Pension under legislation and have type of pension you choose to purchase. Service rate Pensionable built up changed in the past. This means Pay This is difficult to predict with any real certainty as it that some of your pension which depends on a number of things which can change. 2017 15 years 1/60 £24,000 £6,000 you have already built up for earlier 2018 16 years 1/60 £24,000 £6,400 Pensionable Service may increase Using the value of your account to buy a pension from at a different rate. a provider outside of Your Tomorrow is not the only If a State Pension Reduction applies to you then your pension option at retirement. You could instead choose to take If a State Pension Reduction will be calculated as set out above but subject to the State your benefits as a cash lump sum, part tax-free and applies to you then your pension Pension Reduction. part taxed (not permitted in the Isle of Man or Channel subject to the State Pension Islands), or transfer the value of your account out of Reduction. Your Tomorrow to a drawdown plan where you can choose how much to withdrawn and when. Or a combination of these options. 1 In 2010 the Group introduced a limit (or a “cap”) to the amount your Pensionable Pay can increase each year. From 2 April 2010 to 1 April 2014, your Pensionable Pay was increased on each 1 April (where increases were awarded) by the lowest of: the actual percentage increase in your base pay over the previous 12 months ending on 1 April, the percentage increase in the Retail Prices Index (RPI) over the 12 months ending on the previous 31 December, and 2%. Following a review of the cap to Pensionable Pay and consultation with affected members, the Group reduced the cap to 0% on and after 2 April 2014. This means that your Pensionable Pay will not increase with increases in base pay on or after 2 April 2014. March 2017 For internal use only IF YOU DIE BEFORE YOU TAKE YOUR PENSION Feature or benefit While you are an Active Member of the Scheme If you leave pensionable service and If you join the Group’s Defined become a Deferred Member Contribution scheme ‘Your Tomorrow’ Pension Contributory Members Contributory Members No pension would be payable from ‘Your Tomorrow’ A spouse’s/partner’s pension equal to two thirds of the A spouse’s/ partner’s pension equal to pension you would have received if you had stayed in two-thirds of your pension at the date you service until your Normal Retirement Date, but based on left the Scheme, with increases to the your Final Pensionable Pay at the date of your death. date of death. A children’s pension equal to one third of your pension as A children’s pension equal to one third of described above would generally be paid until age 18 (or your pension as described above would 23 if in full-time education or training). generally be paid until age 18 (or 23 if in full-time education or training). Non-Contributory Members Non-Contributory Members A spouse’s/partner’s pension equal to 50% of the pension you would have received if you had stayed in service until A spouse’s/partner’s pension equal to your Normal Retirement Date, but based on your Final 50% of your pension at the date you left Pensionable Pay at the date of death (and subject to any the Scheme, with increases to the date of State Pension Reduction).