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:
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.
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)
1.5% x cumulative Pensionable Earnings over total Pensionable Service.
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.
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
2 x your Pensionable Earnings and a refund of your 3% contributions plus Credited Interest
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 firstname.lastname@example.org for details of the benefits payable on death.
Early retirement due to ill health
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.
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.
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.
How to calculate your pension
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 email@example.com.
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 firstname.lastname@example.org
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.
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 email@example.com.
Full details of how Smart pensions work are included in the Smart booklet.