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Schedule 2

Summary of Schedule 2:

·         Final Salary pension - Best of three calculation methods

·         Life Assurance

·         Employee Cost 8% (less tax)

Schedule 2 is closed to new members and covers employees who transferred their benefits from the BAE Systems 2000 Pension Plan and previously from the GEC 1972 Retirement Plan.

Schedule 2 provides a pension based on your Final Pensionable Earnings, plus financial protection for your family if you die in service, or an immediate income if you have to give up work permanently due to serious ill-health.

Visit Your Core Pension Record to get secure access to view your own pension record, run retirement quotes and update your Expression of Wish nomination (for the life assurance).

If you pay AVCs, these are now invested with Legal & General.  You can visit the Legal & General website to check the value of your AVCs and change your investments.

Please see below for more information and FAQs:

Your core pension record
Legal & General – Manage your Account and AVCs
FAQ

Schedule 2 - Scheme Booklet 

How it works

How your Pension is Calculated

Schedule 2 provides a pension which is calculated using the best of three calculation methods: two linked are to your salary and the other is based on a value for money test. See the basis below.

Basis 1

2% x Final Pensionable Earnings x Completed months of Pensionable Service/12 Less

2% x Relevant Basic Deduction (i.e. 3 year average basic state pension) x Completed months of Pensionable Service/12 Less

Relevant Earnings Related Deduction (i.e. a calculation similar to the old SERPS State pension)

Basis 2

1.5% x cumulative Pensionable Earnings over total Pensionable Service.

Basis 3

17.5% x your basic contributions of 3% over total Pensionable Service plus Credited Interest.

Your pension will be the highest of these three calculations.

Contributions

The cost of providing the benefits is shared. Employees currently pay 8% of their pensionable earnings, and the Company pays the balance of the cost.

Additional Voluntary Contributions (AVCs)

You can pay extra contributions to build up a fund to buy extra benefits at retirement. Under the legacy version of the Scheme such contributions (called SBS) were invested within the main pension Scheme. Since 2003 these funds together with any further payments have been invested outside of the main Scheme (called AVCs). Scroll down to the Saving more for your Retirement section below for more information.

Tax Law gives you relief against income tax on your contributions through the payroll as a before tax deduction. Your employer also operates a salary sacrifice arrangement called Smart Pensions, which gives relief against National Insurance Contributions (NIC).

Transfer In Benefits - Some members may have Transfer In Benefits from other pension Schemes or previous legacy Schemes. These provide additional benefits.

We no longer accept transfers into the Scheme.

Protection for you and your Family

If you die in service you will be covered for Life Assurance.

If you have to stop work permanently due to serious ill health you may receive an immediate enhanced pension.

Protection for your family on death

Death In Service

Life Assurance

2 x your Pensionable Earnings and a refund of your 3% contributions plus Credited Interest

Plus

1/2 x your Pensionable Earnings for each of your dependants (up to a maximum of four) as follows:

·         your Spouse

·         qualifying children

·         your Dependant (see below)

A Dependant is someone whom the Trustee finds financially dependent on you at the date of your death.

Expression of Wish

The lump sum does from part of your estate as the Trustee has discretion to decide who receives the payment. You should therefore complete an Expression of Wish nomination for the Trustee to take this into account. Please access Your Core Pension record to make or update your Expression of Wish.

If you have left the Scheme or you are already in receipt of a pension please email ukpensions@airbus.com for details of the benefits payable on death.

Early retirement due to ill health

Immediate Pension

An immediate pension could be payable to you if you are forced to give up work at any age as a result of permanent ill-health.

The circumstances in which you could retire due to ill-health, and the level of pension are subject to certain conditions and you must have consent of both the Trustee and your employer.

Incapacity

If ill-health prevents you from carrying out your normal job you might be considered for an incapacity pension. This could provide you with an immediate pension based on your accrued benefits and the Trustee may decide to waive or reduce the reduction factor usually applied on early retirement.

Chronic Ill-Health

If ill-health prevents you from ever carrying out any regular employment for any employer you might be considered for a chronic ill-health retirement. This could provide you with an immediate unreduced pension based on what you would have received had you remained in service to age 65 (if you are in Schedule 1 half of your future service would be included in the calculation).

Process for making an application

Agreement for ill-health retirement is required from both your employer and the Trustee. The decision will be based on medical evidence and taking into account your particular circumstances. Please speak to your HR department if you think this may apply to you.

Once an ill-health pension has been granted the Trustee may carry out periodic reviews and could reduce, suspend, or stop the ill-health pension if your health improves.

Retirement

Core Pension

Your Pension at retirement is calculated as indicated in the picture 

Airbus Retirement Calculation 2014 07 24
 

How to calculate your pension

Pension Increases

Increases will apply after you retire. 

Spouse's Pension

Your surviving Spouse would receive a pension equal to 50% of your pension on your death. Also, if you die within five years of retirement a lump sum would be paid. 

Cash Allowance

Under current tax rules, you may exchange part of your pension for a tax free cash sum at retirement. The cash sum allowance is broadly equal to 25% of the capital value of your pension. You can decide how much cash you want (if any) up to the cash allowance. If you give up your pension for cash, the Spouse's pension is unaffected and remains 50% of the pension value before the cash was taken.

Retirement Age

The normal retirement age of the Scheme is 65, you may retire earlier than age 65 with Company consent, the earliest age is 55. Your pension will be reduced on early retirement because the pension will be paid for longer. The current reduction factor is 4% for each year before age 65 with complete months pro rata. If you wish to continue in employment beyond age 65 please contact the Pensions Team to discuss your options.

Late Retirement

You cannot draw your pension until you leave the Company and retire but you need to decide at age 65 whether to:

(a) Continue paying contributions and build up extra pension. You will be covered for life assurance as before age 65. This is the default option if you do nothing.

or

(b) Opt out of the Scheme at age 65, and become a Deferred Member and your pension will be calculated at age 65, and then increased by a late retirement factor, until your actual retirement.

The death benefits for a Deferred Member in these circumstances are similar to those of a pensioner, e.g. no life assurance, but a lump sum equal to the cash allowance you could have received plus a 5 year guarantee based on the residual pension and there would also be a Spouse's pension entitlement.

Benefits from Additional Voluntary Contributions

The fund at retirement of any AVCs you have paid (this includes any funds transferred from the former SBS arrangement) can normally be taken as part of your cash allowance, or it can be used to "buy" extra pension from the Scheme. The Scheme offers you two rates of pension; either for your lifetime only, or to include 50% of your pension to a surviving Spouse on death. In either case the AVC pension will increase whilst in payment and the pension is guaranteed to be paid for at least 5 years, so a balance of 5 years payments would be paid on early death.

Alternatively you may transfer your AVC fund at retirement to buy a pension outside of the Scheme to another registered annuity provider.

The Retirement Process

You can plan for your retirement by visiting Your Core Pension Record to run retirement quotes. Also if you have Additional Voluntary Contributions (AVCs) you can include your fund into your retirement quote by getting the value from the Legal & General website. If you wish to consider retirement please speak to a member of the Pension Team or email ukpensions@airbus.com.

Leaving

Leaving the Company

If you leave the Company you stop paying contributions to the Scheme and the following options will apply.

You will have a deferred pension entitlement.

or

You may transfer the capital value of your deferred pension to another registered pension Scheme.

The deferred pension is calculated using the same method as for retirement but based on your earnings and service to your date of leaving, and increases are added between your leaving date and retirement. If you have AVCs thet will remain invested until your benefits come into payment.

You can run a calculation of your estimated deferred pension using the Your Pension Record link.

The Scheme administrator will contact you automatically to inform you about your benefits, normally within two months of your leaving date.

Opting Out of the Pension Scheme

If you opt out of the Scheme but remain in employment the same options as described above will apply.

If you subsequently wish to rejoin the Scheme you could only join the Airbus UK Retirement Plan and there would be restrictions on death in service and ill health benefits.

See Opting Out of the Scheme page for more details.

Moving to another Airbus company

If you transfer to another Airbus company in the UK that participates in the Scheme you may be able to continue your membership without a break in pensionable service.

If you transfer to another Airbus company overseas you may be able to stay in the Scheme if your employment is treated as a secondment. Please contact your HR Department if this may apply to you.

Saving more for your retirement

Additional Voluntary Contributions / AVCs

You can pay Additional Voluntary Contributions (AVCs) to build up higher benefits at retirement under the Scheme. It is also possible for you to save extra money for your retirement outside of the Scheme in private pension arrangements.

Paying AVCs into the Scheme

AVCs are invested with Legal & General. You can register for the Manage Your Account website to view the value of your AVCs and also switch your investments.

The Scheme employee contribution limit is 19% of your gross pay (you need to include your "core" contributions within this). Deductions must be through the payroll, and you receive tax relief at source, although AVCs do not qualify for Smart Pensions.

If you want to start to pay AVCs please contact the Pension Mailbox ukpensions@airbus.com

If you already have an AVC account, you can change the amount you pay by completing the Paying extra form for existing contributors.

The Fund Value at Retirement

At retirement the fund value of your AVCs can be taken as either cash, subject to the maximum cash allowance or converted to extra pension.

Where Can I Invest My AVCs?

You can find out about the investment options available on this page.

Smart pensions

How does Smart Pensions work?

Your earnings are reduced by the rate of your basic contributions and the employer pays the equivalent sum into the Scheme along with its employer contributions. All pay related benefits (e.g. overtime, holiday, pay reviews etc) continue to be based on your Reference Salary, i.e. your earnings before the salary sacrifice.

Does everyone benefit from Smart Pensions?

There are some employees who might not benefit from Smart Pensions including employees on very low pay.

If you believe you may be adversely affected by Smart Pensions we recommend that you take independent financial advice.

Joining Smart pensions

Employees joining the Scheme will automatically be included in Smart Pensions unless they declare they wish to opt out by emailing ukpensions@airbus.com.

Full details of how Smart pensions work are included in the Smart booklet.

Dictionary

Additional Voluntary Contributions (AVCs)

Voluntary payments made in addition to your contributions to the Scheme. They will be invested to provide extra benefits at retirement.

Basic Contributions

Contributions you are required to make towards Core Benefits.

Basic Salary

Your annual rate of basic pay received from your employer. The Scheme limits the level of pay that can count towards contributions and benefits. This is called the Scheme Earnings Cap (see Scheme booklet for details).

Credited Interest

Interest credited monthly on your contributions at a rate determined by the Trustee with the agreement of the Company, on advice from the Scheme's actuary.

Final Pensionable Earnings

One third of your total Pensionable Earnings for the best three consecutive years in the last 10 that produce the highest value.

Lifetime Allowance (LTA)

The personal limit against which the capital value of an individual's total pensions (not including State pensions) is measured. Any benefits above this limit will be liable for an additional tax charge.

Normal Pension Age

Your 65th birthday.

Participating Employer

Airbus Operations Limited, Airbus Defence and Space Limited (the Principal Employer), Airbus Limited, Airbus Helicopters UK Limited, SSTL and any other employer admitted by the Principle Employer and the Trustee to the Scheme.

Pensionable Earnings

Your gross PAYE earnings, in a complete Scheme Year before deduction of pension contributions, but normally excluding the value of any benefits in kind, bonuses, allowances and other payments and benefits. Special arrangements apply for determining pensionable earnings in any Scheme Year during which you were absent from work.

Pensionable Service

The number of years and complete months during which you have contributed to the Scheme.

Relevant Basic Deduction

2% of the Relevant Social Security Pension for each year of Pensionable Service.

Relevant Earnings Related Deduction

0.9% of the smaller of Final Pensionable Earnings less the Relevant Social Security Pension and 6 times the Relevant Social Security Pension for each year of Pensionable Service.

Relevant Social Security Pension

The annual single person's basic state pension averaged over the 3 years prior to leaving.

Scheme Year

Which is the 6th April to the following 5th April.

Smart Pensions

We use salary sacrifice instead of standard deductions from pay which means that both you and the company pay less National Insurance.

Spouse

Your legal husband or wife by marriage.

The Trustee also recognises Civil Partners in respect of benefits accrued after 5 December 2005, or the date entered into a civil partnership whichever occurs first.

The Trustee may at their discretion include a person who in their opinion is/was living with you as husband and wife but to whom you are not legally married.

UK pensions

I want to join the scheme

UK Retirement Plan

Investment options

Current News and past issues of Pension News

Schedule 1

Schedule 2

Schedule 3

FAQ

UK pensions contacts

Pension Consultative Committee

Pensioners

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