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HEWLETT-PACKARD LIMITED PENSION SCHEME
Rules effective from 1 January 2004
One Silk Street London EC2Y 8HQ
Telephone (44-20) 7456 2000 Facsimile (44-20) 7456 2222 Ref LW
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CONTENTS
Rule Page 1 Meaning of words used ...................................................................................................... 1
2 Joining the Scheme ............................................................................................................ 3 2.1 Joining for retirement benefits............................................................................................... 3 2.2 Evidence of health................................................................................................................. 3 2.3 Employees entitled to death in service benefits only ............................................................ 3
3 Contributions by Employers and Members...................................................................... 4 3.1 Contributions by Members .................................................................................................... 4 3.2 Contributions by Employers .................................................................................................. 4 3.3 Voluntary contributions.......................................................................................................... 5
4 Member’s Retirement Account .......................................................................................... 6 4.1 Value of Member’s benefits................................................................................................... 6 4.2 Allocation of assets to Retirement Account........................................................................... 6 4.3 Protected Rights Account...................................................................................................... 6 4.4 Investment of Retirement Account ........................................................................................ 7
5 Member’s retirement benefits ............................................................................................ 8 5.1 Retirement Date .................................................................................................................... 8 5.2 Using the Member’s Retirement Account.............................................................................. 8 5.3 Maximum lump sum.............................................................................................................. 9
6 Benefits on Member’s death ............................................................................................ 10 6.1 Benefits on death in Employment before age 65................................................................ 10 6.2 Benefits on death before retirement but after reaching age 65 or leaving Employment..... 12 6.3 Benefits on death after retirement....................................................................................... 12 6.4 Payment of survivors’ pensions .......................................................................................... 12 6.5 Payment of lump sum death benefits.................................................................................. 13
7 Early leavers ...................................................................................................................... 14 7.1 Preserved benefits .............................................................................................................. 14 7.2 Discretionary Refund of Contributions ................................................................................ 14
8 Right to transfer or buy-out ............................................................................................. 15
9 Members away from work ................................................................................................ 15 9.1 General principle ................................................................................................................. 15 9.2 Family leave ........................................................................................................................ 15
10 Ceasing to be eligible ....................................................................................................... 16
11 Opting out .......................................................................................................................... 16
12 Special provisions for certain Members......................................................................... 17 12.1 Members who were formerly members of the Hewlett-Packard Limited Retirement Benefits
Plan ..................................................................................................................................... 17 12.2 Members who are receiving benefits under an Employer’s long term disability benefits
scheme................................................................................................................................ 17 12.3 Members with special terms................................................................................................ 18
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13 General Rules about pensions ........................................................................................ 19 13.1 Purchase of pensions.......................................................................................................... 19 13.2 Pension increases............................................................................................................... 19
14 General Rules about benefits .......................................................................................... 20 14.1 Deduction of tax .................................................................................................................. 20 14.2 Benefits not assignable ....................................................................................................... 20 14.3 Beneficiary who is incapable............................................................................................... 20 14.4 Off-set for crime, fraud or negligence ................................................................................. 21 14.5 Revenue Approval............................................................................................................... 21 14.6 Contracting-out.................................................................................................................... 21 14.7 Pension sharing on divorce................................................................................................. 22
15 Discretionary benefits ...................................................................................................... 23
16 Transfers and buy-outs .................................................................................................... 24 16.1 Transfers-in ......................................................................................................................... 24 16.2 Transfers-out ....................................................................................................................... 24 16.3 Securing benefits with an Insurance Company................................................................... 25
17 Trustees.............................................................................................................................. 26 17.1 Appointment and removal ................................................................................................... 26 17.2 Decision making.................................................................................................................. 26 17.3 Delegation ........................................................................................................................... 27 17.4 Trustee charges .................................................................................................................. 27 17.5 Limit of liability..................................................................................................................... 27 17.6 Indemnity............................................................................................................................. 27 17.7 Trustee insurance................................................................................................................ 27
18 Assets of the Scheme....................................................................................................... 28 18.1 Assets held on trust............................................................................................................. 28 18.2 Use of assets....................................................................................................................... 28 18.3 Scheme expenses............................................................................................................... 28 18.4 Accounts and actuarial valuations ...................................................................................... 29 18.5 Surplus assets..................................................................................................................... 29
19 Participating Employers ................................................................................................... 30 19.1 Inclusion in the Scheme...................................................................................................... 30 19.2 Ceasing to participate ......................................................................................................... 30
20 New Principal Employer ................................................................................................... 30
21 Termination of the Scheme .............................................................................................. 31 21.1 Time of termination.............................................................................................................. 31 21.2 Effect of termination ............................................................................................................ 31 21.3 Reopening the Scheme....................................................................................................... 31
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22 Winding up the Scheme ................................................................................................... 32 22.1 Time of winding up .............................................................................................................. 32 22.2 Use of assets....................................................................................................................... 32 22.3 Buying annuities.................................................................................................................. 32 22.4 Trivial benefits ..................................................................................................................... 32 22.5 Transfers to other schemes ................................................................................................ 33 22.6 Surplus assets..................................................................................................................... 33
23 Changing the Rules .......................................................................................................... 34
24 Governing law ................................................................................................................... 34
Appendix ........................................................................................................................................ 37
Schedule of previous deeds......................................................................................................... 43
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HEWLETT-PACKARD LIMITED PENSION SCHEME
These Rules of the Hewlett-Packard Limited Pension Scheme (the “Scheme”) are made as a deed on 27 May 2004 between Hewlett-Packard Limited and Susan Shrimpton, Richard Hancock, Richard Holling, Kenneth McQuade, Charles Griffiths and Tracy Cockman.
Introduction
(A) The Scheme started on 1 January 1997 and is currently governed by Rules made on 28 January 2000 (the “Current Rules”) as amended.
(B) Susan Shrimpton, Richard Hancock, Richard Holling, Kenneth McQuade, Charles Griffiths and Tracy Cockman are the current trustees of the Scheme.
(C) Rule 23 of the Current Rules says Hewlett-Packard Limited and the Trustees may together change the Rules at any time.
(D) The Trustees and Hewlett-Packard have agreed to change the Current Rules by replacing them with these Rules with effect from 1 January 2004.
1 Meaning of words used
“Annual Salary” means the amount determined by Hewlett-Packard and notified to the Trustees and the Member concerned as being the yearly rate of the Member’s annual salary excluding shift allowances, overtime and fluctuating emoluments or, in the case of a Member who participates in a sales incentive plan, the Member’s annual earnings objective.
“Contracting-out Laws” means the laws on contracting-out in Part III of the Pensions Schemes Act 1993.
“Dependant” means anyone who is financially dependent on the Member or other person concerned, or was so dependent at the time of that person's death. This may include anyone who shares living expenses with, or receives financial support from, the Member or other person, and whose standard of living would be affected by the loss of that person's contribution or support. The Trustees' decision as to whether someone is another person's Dependant will be final.
“Earnings Cap” means the amount specified from time to time for the purposes of Section 590C of the Income and Corporation Taxes Act 1988.
“Employee” means any employee of an Employer.
“Employer” means an employer participating in the Scheme.
“Employment” means employment with the Employers.
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“Final Earnings” means either:
(i) the annual average of the earnings the Member received from his or her Employer in the last 3 years before the Member leaves Employment or, if shorter, during the Member’s actual period of Employment; or
(ii) for a Member who is not a sales grade Member, the greater of (i) above and the Member’s Annual Salary in the last 12 months of Employment ignoring salary sacrifices plus the annual average over the last three years of Employment or actual period of Employment if shorter, of car and fuel benefits chargeable to tax under Schedule E.
A Member’s earnings for this purpose are earnings which are chargeable to tax under Schedule E other than benefits in kind (except for car and fuel benefits which shall be included), termination payments taxable under Section 148 of the Income and Corporation Taxes Act 1988 and amounts arising from acquiring or disposing of shares or an interest in shares or from a right to acquire shares.
“Flex” means the flexible benefits arrangement operated by Hewlett-Packard.
“Hewlett-Packard” means Hewlett-Packard Limited.
“Incapacity” means physical or mental incapacity which prevents a Member from following his or her normal occupation or seriously impairs the Member’s earning capacity. The Trustees’ decision as to whether a Member is suffering from Incapacity will be final.
“Inland Revenue Limits” means the limits that apply to the benefits provided under the Scheme (see Rule 14.5 and the Appendix).
“Insurance Company” means an “insurance company” as defined in Section 659B of the Income and Corporation Taxes Act 1988.
“Member” means a person who is included in the Scheme for retirement benefits as described in Rule 2.1 (joining for retirement benefits).
“Preservation Laws” means the laws on preservation of benefit in Chapter I of Part IV of the Pension Schemes Act 1993.
“Retirement Account” means a Member’s Retirement Account as described in Rule 4 (Member’s Retirement Account).
“Retirement Date” means a Member’s Retirement Date as described in Rule 5.1 (Retirement Date).
“Revenue Approval” means approval under Chapter I of Part XIV of the Income and Corporation Taxes Act 1988.
“Scheme” means the Hewlett-Packard Limited Pension Scheme.
“Transfer Value Laws” means the laws on transfer values in Chapter IV of Part IV of the Pension Schemes Act 1993.
“Trustees” means the trustees for the time being of the Scheme.
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2 Joining the Scheme
2.1 Joining for retirement benefits Each Employee whose terms of employment say that he or she is eligible to join the Scheme may join the Scheme at any time within 12 months of starting Employment or, if later, as soon as he or she reaches age 18. An Employee may not join the Scheme after reaching age 59.
Applications to join the Scheme must be made on the form required by the Trustees. An Employee will become a Member on the first of the month following receipt by the Trustees of the completed application form.
An Employee who does not join the Scheme within 12 months of starting Employment, or on reaching age 18 if later, may join later only with the specific permission of the Employer.
2.2 Evidence of health The Trustees may require any Employee to provide evidence of good health and other information.
2.3 Employees entitled to death in service benefits only An Employee who does not satisfy the conditions set out in Rule 2.1 or who has chosen not to join the Scheme and, in either case, is not a member of any other occupational pension scheme operated by an Employer, will be included in the Scheme for the lump sum death-in-service benefit described in Rule 6.1.2. These Rules will apply to the Employee, for the purpose of calculating and paying this benefit, as if the Employee were a Member.
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3 Contributions by Employers and Members
3.1 Contributions by Members Members are not required to contribute to the Scheme. Prior to 1 January 2004, Members could choose to pay contributions of 1, 2, 3 or 4 per cent of Annual Salary.
3.2 Contributions by Employers Each Employer will contribute to the Scheme in respect of each Member in its Employment who is aged 65 or less in accordance with the following table or at such other rate as the Employer decides from time to time and notifies to the Member and the Trustees in writing.
Amount chosen by Member under Flex (expressed as a percentage of
Annual Salary)
Contribution payable by Employer (expressed as a percentage of
Annual Salary)
1 6.1
2 8.2
3 10.3
4 12.4
5 13.5
6 14.6
7 15.7
8 16.8
9 17.9
10 19
11 20.1
12 21.2
13 22.3
14 23.4
15 24.5
The contribution payable for the month in which the Member leaves Employment or dies will be a proportionate amount calculated on a daily basis, unless the Trustees decide otherwise.
Each Employer will also contribute to the Scheme at a rate that is sufficient to enable the Trustees to provide the death-in-service benefits payable under Rule 6.1 (benefits on death in Employment before age 65) for its Employees. If the Trustees agree, the Employers may instead pay premiums directly to the Insurance Company with which the benefits are insured.
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3.3 Voluntary contributions A Member in Employment may pay additional voluntary contributions to the Scheme on a basis agreed with the Trustees. If the Trustees so require, Members must give reasonable notice of their intention to start, increase, reduce or stop paying additional voluntary contributions.
Each Member’s voluntary contributions will be allocated to the Member’s Retirement Account. The proceeds will be used to provide additional benefits for, or in respect of, the Member. The additional benefits cannot include a lump sum, however, except on the Member’s death or if the Trustees are satisfied that Revenue Approval of the Scheme would not be prejudiced.
If the whole proceeds of a Member’s voluntary contributions cannot be used to provide benefits within Inland Revenue Limits, the Trustees will pay the surplus funds (less tax) to the Member or, if the Member is dead, the Member’s personal representatives.
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4 Member’s Retirement Account
4.1 Value of Member’s benefits The value of the benefits provided for, and in respect of, each Member under the Scheme will be determined by reference to the realisable value of the Member’s Retirement Account at the date on which the benefits are provided.
4.2 Allocation of assets to Retirement Account The Trustees will allocate to each Member’s Retirement Account:
(a) the Member’s own contributions to the Scheme made under Rule 3.1 (contributions by Members) and Rule 3.3 (voluntary contributions);
(b) the contributions paid by the Employer in respect of the Member under Rule 3.2 (contributions by Employers);
(c) any additional contributions paid by the Employer in respect of the Member under Rule 12.1.2 (Members who were formerly members of the Hewlett-Packard Limited Retirement Benefits Plan - Contributions) or Rule 15 (discretionary benefits);
(d) any assets or surrender values accepted by the Trustees in respect of the Member under Rule 12.1 (Members who were formerly members of the Hewlett-Packard Limited Retirement Benefits Plan) or Rule 16.1 (Transfers in); and
(e) a share of any expenses of the Scheme that are not paid by the Employers, calculated on a basis that the Trustees consider reasonable.
4.3 Protected Rights Account The Trustees will maintain a Protected Rights Account for each Member who is or has been in contracted-out employment by reference to the Scheme or in respect of whom the Trustees have accepted a transfer of “protected rights” (as defined in the Contracting-out laws). The Protected Rights Account forms part of (and is included in) the Member’s Retirement Account.
The Member’s “protected rights” are the Member’s right to the money purchase benefits which derive from the Member’s Protected Rights Account.
Each Member’s Protected Rights Account will compromise:
(a) any “minimum payments” (as defined in the Contracting-out Laws) made by the Employer in respect of the Member and by the Member; and
(b) any payments made by the Secretary of State under Section 42A(3) of the Pension Schemes Act 1993 (“age-related payments”) in respect of the Member; and
(c) any minimum contributions paid to the Trustees in accordance with regulation 12(5) of the Personal Pension Schemes (Appropriate Schemes) Regulations 1997; and
(d) any part of a transfer payment from any other schemes or “buy-out” policies accepted by the trustees in respect of the Member which represent protected rights, guaranteed minimum pensions or “section 9(2B) rights” (as defined in the Contracting-out Laws).
Irrespective of any other provisions of the Rules, the Trustees must use the Member’s Protected Rights Account to provide benefits in accordance with the Contracting-out Laws.
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4.4 Investment of Retirement Account A Member may choose to link the value of his or her Retirement Account to one or more investment options offered by the Trustees from time to time. If a Member does not choose an investment option, the Trustees will choose for the Member. The Trustees will adjust the value of each Member’s Retirement Account in line with changes in the value of the investment options to which the Retirement Account is linked.
A Member who has not reached his or her Retirement Date may direct the Trustees to vary one or more of the investment options he or she has previously chosen. Unless the Trustees agree otherwise a Member may not make more than four such directions in any Scheme Year. If a Member joins the Scheme part way through a Scheme Year, the Trustees will determine the number of directions which the Member will be permitted to make for that Scheme Year on a basis which they consider to be fair and reasonable. The Trustees may require the Member to pay the costs of varying his or her investment options.
Any direction made by the Member as described above must be given to the Trustees in such manner and form as is required by the Trustees from time to time.
The Trustees may change the investment options available under the Scheme at any time. The Trustees may withdraw any investment option at any time in which case a Member will be able to continue to link any amounts already allocated to his or her Retirement Account to the withdrawn option unless the Trustees decide otherwise. If the Trustees decide that a Member will not be able to continue to link the value of his or her Retirement Account to a withdrawn investment option, the Member may choose an investment option from those offered by the Trustees. If the Member does not choose an alternative investment option, the Trustees will choose for the Member.
The Trustees will not be liable for any loss arising from the Member’s choice of investment option.
The allocation of contributions to a particular Member’s Retirement Account, and the linking of a Member’s Retirement Account to the value of particular investments, is for benefit calculation purposes only. All the assets of the Scheme are held as a common trust fund from which all the benefits are provided. No Member or other person entitled to benefits is entitled to any specific assets of the Scheme.
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5 Member’s retirement benefits
5.1 Retirement Date A Member’s Retirement Date is the Member’s 60th birthday, except that:
(a) if the Member stays in Employment after reaching age 60, the Member’s Retirement Date will be the date on which the Member leaves Employment or, if earlier, the Member’s 75th birthday; and
(b) if the Member leaves Employment before age 60 and has reached age 50 or is suffering from Incapacity, the Member’s Retirement Date will be any date chosen by the Member between the date on which the Member leaves Employment and age 60 but only if the Employer consents.
5.2 Using the Member’s Retirement Account The Trustees will use a Member’s Protected Rights Account to provide:
(a) a pension payable to the Member for life, starting on the Member’s Retirement Date or 60th birthday if later;
(b) a pension payable on the Member’s death as described in Rule 6.3 (benefits on death after retirement).
The pensions provided by the Member’s Protected Rights Account will be calculated in a manner which is consistent with the Contracting-out Laws.
The Trustees will use the balance of the Member’s Retirement Account to provide benefits in one or more of the following forms, as requested by the Member:
(i) a pension payable to the Member for life, starting on his or her Retirement Date;
(ii) a lump sum payable to the Member on his or her Retirement Date;
(iii) benefits payable on the Member’s death as described in Rule 6.3 (benefits on death after retirement).
The Member’s pension may, if the Member so chooses, be guaranteed for any period permitted by the Inland Revenue. If the pension is guaranteed and the Member dies before the end of the guarantee period, either the pension may be continued for the guarantee period or a lump sum may be paid on the Member’s death equal to the pension payments which would have been made during the remainder of the guarantee period. Any payments under the guarantee will be made as described in Rule 6.3 (benefits on death after retirement).
The lump sum payable to the Member cannot exceed the maximum described in Rule 5.3 (maximum lump sum).
None of the benefits provided under this Rule will exceed Inland Revenue Limits.
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5.3 Maximum lump sum A Member will normally be able to choose a lump sum of up to 3/80ths of the Member’s Final Earnings for each complete year of the Member’s Employment, plus an additional 1/320th for each additional complete month. The Trustees may, however, allow a Member to choose a larger lump sum where this is possible within Inland Revenue Limits. No part of the Member’s Protected Rights Account can be used to provide a cash lump sum unless permitted under the Contracting-out Laws.
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6 Benefits on Member’s death
6.1 Benefits on death in Employment before age 65 6.1.1 Benefits payable
If a Member dies in Employment before age 65 the following death-in-service benefits will be paid:
(a) a lump sum calculated in accordance with Rule 6.1.2;
(b) a spouse’s pension calculated in accordance with Rule 6.1.3;
(c) a children’s pension calculated in accordance with Rule 6.1.4.
If, at the date of the Member’s death, the Member’s Retirement Account is greater than the amount needed to provide the benefits referred to above, any excess will be used to increase those benefits in a manner determined by the Trustees.
That part of the Member’s Retirement Account which represents the value of:
(i) any assets or surrender values accepted by the Trustees in respect of the Member under Rule 16.1 (transfers in);
(ii) the Member’s own contributions to the Scheme made under Rule 3.3 (voluntary contributions); and
(iii) unless the Employer determines otherwise, any additional contributions paid by the Employer in respect of the Member under Rule 15 (discretionary benefits).
will not form part of the Member’s Retirement Account for the purposes of this Rule 6.1. Instead it will be used to provide such additional benefits, in the form of a lump sum payable under Rule 6.5 (payment of lump sum death benefits) or a pension payable to the Member’s spouse, children or Dependants payable under Rule 6.4 (payment of survivors’ pensions), as the Trustees consider appropriate.
The Trustees may insure any benefits payable under this Rule with an Insurance Company agreed by Hewlett-Packard. The benefits payable on a Member’s death will be subject to payment having been made to the Trustees by the Insurance Company with which the benefit is insured and will be subject to any conditions imposed by that Insurance Company. An Employee will not qualify for benefits under this Rule 6.1 unless he or she has, if requested to do so, provided the Trustees with satisfactory evidence of good health, and any other information that they require.
The benefits payable under this Rule 6.1 will be subject to Inland Revenue Limits
6.1.2 Lump sum benefit
If a Member dies in Employment before age 65, the Trustees will provide a lump sum equal to 4 times the Member’s Annual Salary as at the date of death or such lower multiple as the Member has selected through Flex.
The lump sum will be paid in accordance with Rule 6.5 (payment of lump sum death benefit). The lump sum paid under his Rule cannot exceed 4 times the Earnings Cap.
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6.1.3 Spouse’s pension
If a Member dies in Employment before age 65, the spouse’s pension payable will be equal to 25 per cent of the Member’s Annual Salary at the date of death or such higher or lower percentage as the Member has selected through Flex.
The spouse’s pension will be payable to the Member’s spouse. However, the Trustees may instead pay part or all of the spouse’s pension to one or more of the Member’s Dependants. If the Trustees pay part of the spouse’s pension to a Dependant, the amount of any pension payable to the Member’s spouse will be reduced by the amount paid to the Dependant. The pension payable to the Member’s spouse cannot, however, be less than the pension which can be provided by the Member’s Protected Rights Account.
If the Member dies and does not leave a spouse, the Trustees will pay the value of the Member’s Protected Rights Account in accordance with the Member’s directions or to the Member’s estate. The Trustees may pay part or all of the spouse’s pension (after making allowance for the value of the Member’s Protected Rights Account) to one or more of the Member’s Dependants provided that the total amount of pension payable shall not be greater than the amount of the spouse’s pension.
If the spouse’s pension is paid to person who is more than 15 years younger than the Member, the pension paid will be reduced by up to 2½% for each year of age difference over 15 unless the Trustees, with the consent of Hewlett-Packard decide otherwise.
A pension paid under this Rule will be payable in accordance with Rule 6.4 (payment of survivors’ pensions).
6.1.4 Children’s pensions
If a Member dies in Employment before age 65, the children’s pension payable will be equal to one-third of the spouse’s pension for each Pensionable Child, up to a maximum of three. The pension will be payable in accordance with Rule 6.4 (payment of survivors’ pensions).
”Pensionable Children” are children of the Member, the Member’s stepchildren, children legally adopted by the Member, and any other children whom the Trustees are satisfied were dependent on the Member at the time of his or her death and whom the Trustees agree to treat as Pensionable Children.
In the event that there are more than three Pensionable Children, the children’s pension will be divided equally between them.
Where a Member initially leaves more than three Pensionable Children and, in accordance with Rule 6.4 (payment of survivors’ pensions), a pension ceases to be payable to one of those children, then that child’s share of the total pension will be divided amongst the remaining Pensionable Children. Once the number of Pensionable Children reduces to three there will be no further redistribution of pension and each child’s pension will finish when it ceases to be payable in accordance with Rule 6.4 (payment of survivors’ pensions).
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6.2 Benefits on death before retirement but after reaching age 65 or leaving Employment If a Member dies before his or her Retirement Date but after reaching age 65 or after leaving Employment, the Trustees will use the Member’s Protected Rights Account to provide a pension for the Member’s spouse in accordance with the Contracting-out Laws. If the Member dies and does not leave a spouse, the Trustees will pay the value of the Member’s Protected Rights Account in accordance with the Member’s directions or to the Member’s estate.
The Trustees will use the balance of the Member’s Retirement Account to provide benefits in one or both of the following forms, as requested by the Member or, if the Member has made no request, as the Trustees consider appropriate:
(a) a lump sum payable as described in Rule 6.5 (payment of lump sum death benefits);
(b) a pension or pensions payable to one or more of the Member’s spouse, children and Dependants as described in Rule 6.4 (payment of survivors’ pensions).
6.3 Benefits on death after retirement If a Member dies after his or her Retirement Date, the Trustees will provide any of the following benefits chosen by the Member at that date:
(a) if the Member’s pension is guaranteed under Rule 5.2 (using the Member’s Retirement Account) and the Member dies before the end of the guarantee period, a pension or lump sum under the terms of the guarantee;
(b) a pension or pensions payable to one or more of the Member’s spouse, children and Dependants as described in Rule 6.4 (payment of survivors’ pensions).
Any pension provided under the terms of a guarantee will be paid to one or more of the Member’s spouse, children and Dependants as described in Rule 6.4 (payment of survivors’ pensions), in addition to any other pension that may be payable. The total amount paid will not, however, exceed Inland Revenue Limits.
Any lump sum provided under the terms of a guarantee will be paid as described in Rule 6.5 (payment of lump sum death benefits).
6.4 Payment of survivors’ pensions A pension payable to a surviving spouse will be payable for life.
A pension payable to a Pensionable Child, will be payable until the child reaches age 18. The Trustees may, however, pay or continue paying a pension to a child who has reached age 18:
(a) for so long as the child is under age 25 and in full-time education or training approved by the Trustees (and the pension payable in these circumstances need not be secured by an annuity contract); or
(b) for the lifetime of the child, but only if the child was dependent on the Member because of disability when the Member died, or was wholly incapacitated at birth.
A pension payable to any other adult Dependant will be payable for life.
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6.5 Payment of lump sum death benefits The Trustees will pay any lump sum death benefit to one or more of the Beneficiaries. If the Trustees decide to pay the benefit to more than one of the Beneficiaries, they will pay it in such shares as they decide.
The “Beneficiaries” are the Member’s widow or widower; the Member’s grandparents and their descendants and the spouses, widows and widowers of those descendants; the Member’s Dependants; any person with an interest in the Member’s estate (but not including the Crown, the Duchy of Lancaster or the Duke of Cornwall); and any person nominated by the Member 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.
So long as only Beneficiaries can become entitled to the benefit, the Trustees may:
(a) direct that all or part of the lump sum be held by themselves or other trustees on such trusts (including discretionary trusts) and with such powers and provisions (including powers of selection and variation) as the Trustees see fit; or
(b) pay all or part of the lump sum to the trustees of any other existing trust.
If the Trustees cannot pay the benefit within two years after the Member’s death, they will transfer it to a separate account outside the Scheme and pay it under this Rule as soon as possible afterwards.
No lump sum death benefit will be paid if there are no living Beneficiaries at the date of the Member’s death.
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7 Early leavers
7.1 Preserved benefits A Member who leaves Employment without becoming entitled to immediate benefits will remain entitled to benefits under the Scheme.
The Trustees will provide retirement benefits for the Member as described in Rule 5 (Member’s retirement benefits) except that the Member’s Retirement Date will be the Member’s 60th birthday, unless the Member chooses:
(a) a later date, but not later than the Member’s 75th birthday; or
(b) an earlier date, but not earlier than the Member’s 50th birthday (unless the Member is suffering from Incapacity).
If the Member dies after leaving Employment but before starting to receive benefits under the Scheme, death benefits will be provided as described in Rule 6.2 (benefits on death before retirement but after reaching age 65 or leaving Employment).
7.2 Discretionary Refund of Contributions A Member who leaves Employment with less than 2 years Qualifying Service may, with the consent of the Trustees and Employer take a refund of the proceeds (after adjustment in line with changes in the value of the investment option to which the Member’s Retirement Account is linked) of his or her own contributions to the Scheme, less tax at 20% or such other rate as applies from time to time.
A Member will not in any circumstances be permitted to take a refund if the Trustees have accepted a transfer payment in respect of the Member’s rights under a personal pension scheme. A Member whose Employment was contracted-out by reference to the Scheme will not normally be permitted to take a refund of his or her contributions to the Scheme.
If a Member receives a refund under this Rule he or she will cease to be entitled to any further benefits under the Scheme. However, if a Member whose Employment was contracted-out by reference to the Scheme is permitted to take a refund:
(a) the Member will remain entitled to the benefits which can be provided with his or her Protected Rights Account; and
(b) the Member’s refund of contributions will be reduced by the realisable value of the Member’s share of the minimum payments credited to the Member’s Protected Rights Account.
“Qualifying Service” means the Member’s continuous Employment after joining the Scheme and employment which qualified the Member for retirement benefit under any occupational scheme from which a transfer payment has been made in respect of the Member either direct to the Scheme, or to an insurance policy or annuity contract and subsequently to the Scheme. When calculating continuous Employment for this purpose, a break between leaving Employment and rejoining the Scheme will be ignored (but will not count as Employment) if it does not exceed one month or is due to a trade dispute.
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8 Right to transfer or buy-out
A Member who leaves Employment before reaching age 59 can require the Trustees to use his or her Retirement Account to buy one or more annuities, or to acquire rights under another occupational pension scheme or a personal pension scheme, in accordance with the Transfer Value Laws.
The Member can exercise this right by writing to the Trustees at any time before reaching age 59 (or, if later, up to 6 months after leaving Employment), but not after his or her Retirement Date.
If the Member’s Retirement Account is used in accordance with this Rule, the Member will cease to be entitled to any further benefits under the Scheme.
9 Members away from work
9.1 General principle If a Member in continuing Employment is away from work for any reason, the Employer will continue to contribute to the Scheme in respect of the Member for only so long as the Member receives pay from the Employer. Hewlett-Packard may agree special terms (consistent with Revenue Approval) to apply to the Member’s and Employer’s contributions and death-in-service benefits payable under Rule 6.1 (benefits on death in Employment before age 65) while the Member is away from work. Any agreed special terms will be notified to the Member.
9.2 Family leave In this Rule 9.2, the terms “ordinary maternity leave”, “additional maternity leave”, “ordinary adoption leave”, “additional adoption leave”, “parental leave” and “paternity leave” mean the same as in the Employment Rights Act 1996.
The Employer will always contribute to the Scheme during:
(a) a Member’s ordinary maternity leave, ordinary adoption leave or paternity leave; and
(b) any period of additional maternity leave, additional adoption leave or parental leave for which the Member receives pay from the Employer.
The Employer’s contributions for ordinary maternity leave, paid additional maternity leave, ordinary adoption leave and paternity leave will be calculated as if the Member was working normally, and receiving the normal pay for doing so.
The Employer’s contributions for paid additional adoption leave and parental leave will be based on the pay the Member actually receives.
If the Employer does not contribute to the Scheme during any period of additional maternity leave, additional adoption leave or parental leave, the Member will be treated as having left Employment unless Hewlett-Packard decides otherwise.
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10 Ceasing to be eligible
If a Member’s terms of Employment are varied so that he or she is no longer eligible for membership of the Scheme, the Member will be treated as having left Employment. However, the Member cannot take any benefits unless he or she actually leaves all employment with the Employers.
11 Opting out
A Member may opt out of the Scheme at any time by giving one month’s notice (or such shorter period as the Trustees may agree) to the Employer and the Trustees. The Member will be treated as having left Employment on the last day of the month in which the notice expires, except that:
(a) the Member will still be included in the Scheme for the lump sum death in service benefit described in Rule 6.1.2 (Benefits on death in Employment before age 65 - Lump sum benefit); and
(b) no retirement benefits will be paid to the Member until the Member actually leaves Employment or, if earlier, reaches age 75.
A Member who opts out of the Scheme may rejoin only with the specific permission of Hewlett-Packard.
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12 Special provisions for certain Members
12.1 Members who were formerly members of the Hewlett-Packard Limited Retirement Benefits Plan This Rule sets out the special benefits which apply to Members who were formerly members of the Hewlett-Packard Limited Retirement Benefits Plan (the “Plan”) and who elected to become Members of the Scheme on 7 April 1997:
12.1.1 Death Benefits
For the purposes of calculating the lump sum death-in-service benefit payable in respect of the Member under Rule 6.1.2, the Member’s Annual Salary will be equal to 11⁄24 times the Member’s actual Annual Salary.
The spouse’s pension payable under Rule 6.1.3 will be equal to 36% of 11⁄24 times the Member’s Annual Salary.
The children’s pension payable under Rule 6.1.4 will be equal to 9% of 11⁄24 times the Member’s Annual Salary.
12.1.2 Contributions
In addition to the contributions set out in Rule 3.2 (contributions by Employers), the Employer will pay additional contributions at a rate previously notified by Hewlett-Packard to the Member. These contributions will be paid on a monthly basis until the Member leaves Employment, reaches age 60 or dies, whichever occurs first and will be allocated to the Member’s Retirement Account.
12.1.3 Earnings Cap
In the case of Members who, by virtue of their membership of the Plan are deemed to have joined the Scheme before 1 June 1989 the references to the Earnings Cap do not apply. However, for the purposes of calculating the maximum lump sum that a Member who is deemed to have joined the Scheme on or after 17 March 1987 and before 1 June 1989 may choose under Rule 5.3 (maximum lump sum) Final Earnings cannot exceed £100,000.
12.2 Members who are receiving benefits under an Employer’s long term disability benefits scheme This Rule sets out the special provisions which apply to Members who are in receipt of benefits under an Employer’s long term disability benefits scheme (“LTDB Members”).
For the purposes of Rule 3.2 (contributions by Employers), Rule 6.1 (benefits on death in Employment before age 65) and Rule 12.1.1, if applicable, an LTDB Member’s Annual Salary is the Member’s notional salary as determined by Hewlett-Packard and notified to the Trustees. Unless the Trustees agree otherwise, the contributions payable under Rule 3.2 will be based on the choices made by the Member under Flex as at the 1st January immediately preceding the date on which payments under the long term disability benefits scheme commence.
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12.3 Members with special terms If a Member was previously a member of a pension arrangement operated or sponsored by an employer which is connected with Hewlett-Packard, special terms may apply. In particular, the contributions payable by the Member’s Employer may be different to those set out in Rule 3.2 (contributions by Employers). Any special terms will be agreed with the Trustees. Members will be notified if this Rule applies to them.
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13 General Rules about pensions
13.1 Purchase of pensions A pension payable under the Scheme may be secured by an annuity contract purchased by the Trustees. The Trustees will decide whether the annuity contract will be chosen by either the person entitled to the pension or by the Trustees. If the Trustees allow the person entitled to the pension to choose the annuity contract any additional costs incurred will be deducted from the Members Retirement Account prior to the purchase of the annuity.
Alternatively, subject to Inland Revenue limits, the Trustees may pay pensions out of Scheme assets.
13.2 Pension increases Pensions will increase in payment at a rate chosen by the Member or, if the Member dies before starting to receive benefits under the Scheme, at a rate chosen by the Trustees. However, the increases cannot be less than is required under Section 51 of the Pensions Act 1995 or more than is consistent with Revenue Approval of the Scheme.
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14 General Rules about benefits
14.1 Deduction of tax The Trustees will deduct from any payment under the Scheme any tax for which they may be liable in respect of it.
14.2 Benefits not assignable Benefits under the Scheme cannot be assigned or charged; they will not be paid to anyone other than the person entitled under these Rules.
A benefit will cease to be payable if:
(a) the person entitled to the benefit under these Rules tries to assign or charge it or becomes bankrupt; or
(b) any other event occurs by which all or part of the benefit would if it belonged to that person absolutely, become payable to some other person.
If a benefit ceases to be payable under this Rule, the Trustees may pay an equivalent or smaller discretionary benefit to, or for the benefit of, one or more of:
(i) the person who was entitled to the original benefit, and
(ii) that person’s spouse and Dependants.
If the Trustees decide to pay a discretionary benefit to more than one person, they will pay it in such shares as they decide. The Trustees may deduct from a discretionary benefit any expenses incurred in paying it.
This Rule does not apply to any lump sum or instalment of pension that falls due for payment before the benefit ceased to be payable. Nor does this Rule apply to a Member’s Protected Rights Account or any benefits derived from it.
This Rule does not apply on the making of a pension sharing order or other provision under Section 28(1) of the Welfare Reform and Pensions Act 1999 (activation of pension sharing), or on earmarking order of the kind mentioned in Section 24 of that Act (charges by pension arrangements in relation to earmarking orders) or equivalent Northern Ireland Laws.
14.3 Beneficiary who is incapable If the Trustees consider that any person cannot look after his or her affairs (because of illness, mental disorder, age or otherwise), they may use any amounts due to that person under the Scheme for his or her benefit, or may pay them to some other person to do so. The Trustees may also make, for the person concerned, any choice which that person has under the Scheme.
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14.4 Off-set for crime, fraud or negligence If a Member owes money to his or her Employer arising out of a criminal, fraudulent or negligent act or omission, the Employer may require the Member’s benefits (including benefits payable on the Member’s death), to be reduced by an amount that the Trustees decide is equal to the debt. If the debt is more than the value of the benefits that can be reduced, the benefits will cease to be payable.
Benefits granted in respect of a transfer payment to the Scheme can be reduced only if they are attributable to employment with the same employer or an associated employer and could have been reduced under the transferring scheme. A Member’s Protected Rights Account and the benefits derived from it, cannot be reduced.
The Member will be given a certificate that shows the amount of the debt to the Employer and the effect of the reduction in benefits. If the Member disputes the amount of the debt, the benefits will not be reduced until the debt has become enforceable under an order of a court or in consequence of the award of an arbitrator.
If a Member’s benefits are reduced under this Rule, the Trustees will pay the Employer an amount equal to the Member’s debt or, if less, the value of the Member’s benefits.
14.5 Revenue Approval The Scheme is designed for Revenue Approval.
The Trustees will comply with all requirements for Revenue Approval of the Scheme, including those of Regulations 5 and (so far as applicable) 6 of the Retirement Benefits Schemes (Restriction on Discretion to Approve) (Additional Voluntary Contributions) Regulations 1993 (which deal with the calculation and repayment of surplus additional voluntary contributions).
The Appendix to these Rules forms part of these Rules. It limits the benefits that can be provided under the Scheme and the contributions that Members can pay to the Scheme. The Inland Revenue require benefits and contributions to be limited to the amounts described in the Appendix as a condition of approving the Scheme. Greater amounts may be paid only if Revenue Approval of the Scheme would not be prejudiced.
14.6 Contracting-out Prior to 6 April 2003, Member’s employment could be contracted-out by reference to the Scheme under Part III of the Pension Schemes Act 1993. The Trustees will operate the Scheme in accordance with the contracting-out requirements of the Pension Schemes Act 1993 to the extent that they remain applicable.
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14.7 Pension sharing on divorce 14.7.1 Compliance with pension sharing orders
It may be that an order provision under Section 28(1) of the Welfare Reform and Pensions Act 1999 or equivalent Northern Ireland laws (activation of pension sharing) requires all or part of a Member’s benefits to be transferred to the Member’s former spouse. If this happens, the Trustees will discharge their liability to the former spouse in accordance with the requirements of that Act and the Inland Revenue.
14.7.2 Benefits under the Scheme
If the Trustees provide benefits for the former spouse under the Scheme, the benefits will comply with Inland Revenue Limits and the laws on safeguarded rights in Part IIIA of the Pension Schemes Act 1993. The benefits will be provided separately from any other benefits to which the former spouse may be entitled under the Scheme. The Trustees will provide the former spouse with written details of the benefits that will be provided.
14.7.3 Death of former spouse before a transfer payment is made
It may be that the Trustees intend to discharge their liability to the former spouse by making a transfer payment to another pension arrangement, but the former spouse dies before the payment is made. If this happens, the Trustees may (but need not) provide benefits in respect of the former spouse in one or both of the following forms, as they consider appropriate:
(a) a lump sum death benefit payable as described in Rule 6.5 (payment of lump sum death benefits) as if the former spouse were a Member;
(b) a pension or pensions for one or more of the former spouse’s children, new spouse or other Dependants as described in Rule 6.4 (payment of survivor’s pensions).
Any lump sum death benefit cannot exceed 25% of the transfer payment that would have been made to the other pension arrangement if the former spouse had not died.
The amount of any single pension cannot exceed two-thirds of the annuity that the transfer payment could have bought for the former spouse, at an available market rate, immediately before his or her death. Where more than one pension is paid, the total of all the pensions cannot exceed the amount of the annuity that could have been bought for the former spouse.
If the Trustees decide not to provide benefits as described above, they may (but need not) discharge their liability in respect of the former spouse in one of the other ways allowed by the Welfare Reform and Pensions Act 1999 or equivalent Northern Ireland laws and the Inland Revenue.
Any part of the transfer payment that is not used as described in this Rule will be retained by the Trustees as part of the general assets of the Scheme.
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15 Discretionary benefits
If Hewlett-Packard so requests and the Employers pay any additional contributions that the Trustees consider appropriate, the Trustees will provide:
(a) increased or additional benefits in respect of any Member or Members;
(b) benefits for any Member or Members different, or on different terms, from those that would otherwise be provided under the Scheme; or
(c) benefits in respect of any Employee or former Employee or any spouse or Dependant of a former Employee (or for any other person for whom the Inland Revenue permit the Scheme to provide benefits).
Any benefits provided under this Rule will be consistent with the Preservation and Transfer Value Laws and with Revenue Approval of the Scheme.
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16 Transfers and buy-outs
16.1 Transfers-in If Hewlett-Packard agrees, the Trustees may accept a transfer of assets in respect of any person 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 the person’s name.
In the case of a Member who has not started to receive benefits under the Scheme, the Trustees will add the assets or surrender value to the Member’s Retirement Account. In any other case, the Trustees will use the assets or surrender value to provide benefits (or additional benefits) for the person concerned, as agreed with Hewlett-Packard and notified to that person. The benefits must comply with the Contracting-out Laws, Preservation Laws and Transfer Value Laws, and be consistent with Revenue Approval of the Scheme.
16.2 Transfers-out Instead of providing benefits under the Scheme in respect of any person, the Trustees may transfer assets to another occupational pension scheme or to a personal pension scheme, so that benefits will be provided under the other scheme in respect of the person concerned.
The transfer must comply with the Preservation Laws and the requirements of the Inland Revenue. In particular, the receiving scheme must be:
(a) an occupational pension scheme with Revenue Approval or which otherwise satisfies the Inland Revenue’s requirements; or
(b) a personal pension scheme approved under Chapter IV of Part XIV of the Income and Corporation Taxes Act 1988; or
(c) a “statutory scheme” as defined in Section 612(1) of the Income and Corporation Taxes Act 1988; or
(d) an overseas scheme or arrangement that satisfies the Inland Revenue’s requirements.
In the case of a Member who has not started to receive benefits under the Scheme, the transfer payment will be equal to the realisable value of the Member’s Retirement Account. In any other case, the transfer payment will be equal to the value of the benefits that would otherwise have been provided under the Scheme for, and in respect of, the person concerned.
If a transfer is made in respect of a Member in accordance with this Rule, the Member will cease to be entitled to any further benefits under the Scheme.
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16.3 Securing benefits with an Insurance Company Instead of providing benefits under the Scheme in respect of any person, the Trustees may buy an insurance policy or annuity contract from an Insurance Company in the name of the person concerned, or transfer a policy or contract into that person’s name. The policy or contract must comply with the Contracting-out Laws, the Preservation Laws and the requirements of the Inland Revenue.
In the case of a Member who has not started to receive benefits under the Scheme, the amount used to buy a policy or contract will be equal to the realisable value of the Member’s Retirement Account. In any other case, the amount used will be equal to the value of the benefits that would otherwise have been provided under the Scheme for, and in respect of, the person concerned.
Where the Preservation Laws so require, the Trustees must obtain the consent of the person concerned before buying or transferring a contract or policy under this Rule.
If an insurance policy or annuity contract is purchased for a person in accordance with this Rule, the person will cease to be entitled to any further benefits under the Scheme.
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17 Trustees
17.1 Appointment and removal Hewlett-Packard may appoint new or additional trustees or a body corporate as sole trustee. Hewlett-Packard may also remove Trustees and in particular may remove any Trustee who ceases to be in Employment or who reaches age 75. A trustee may resign from office by giving notice to Hewlett-Packard and the other trustees.
These powers will be exercised by deed. They may be exercised without giving any reason and without any limit on the number of Trustees. However, they may not be exercised in any way that conflicts with any arrangements made under Sections 16 to 21 of the Pensions Act 1995.
17.2 Decision making 17.2.1 General
The Trustees may act by majority vote. Two Trustees will constitute a quorum and a chairman shall not have a casting vote. All decisions made by the Trustees at a meeting shall be minuted and signed.
17.2.2 Written and electronic mail (“email”) resolutions
A written resolution signed by a majority of the Trustees shall be as effective as a decision made by those Trustees at a meeting. The resolution may be passed using several copies of a document (which may be fax copies), if each copy of the document is signed by one or more of those Trustees.
A resolution passed by email shall be as effective as a decision made by the Trustees at a meeting. A resolution will be passed by email if a majority of the Trustees have indicated their approval to the proposed resolution in a manner which sufficiently identifies the resolution which is being approved and the identity of the person giving approval.
17.2.3 Notice of meetings and written resolutions
Prior notice of any meeting will be given to all Trustees to whom it is reasonably practical to give such notice at least 10 business days prior to the meeting. The notice shall specify the date, time and place of the meeting.
A copy of a proposed written or email resolution will be sent or emailed to all Trustees to whom it is reasonably practical to do so at least 10 business days before the date on which a decision is to be made on the resolution. The copy shall be accompanied by notice of the time and date by which the Trustees may indicate their approval of or sign the proposed resolution.
However, notice need not be given or a copy of a proposed written or email resolution sent or emailed under this Rule 17.2.3 if: (i) the Trustees agree otherwise; or (ii) it is an occasion on which it is necessary, as a matter of urgency, to make a
decision.
17.2.4 Receipt of notices
Any notice given under this Rule 17.2 by email shall be deemed to have been received one day after it is sent.
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17.3 Delegation The Trustees may delegate any of their powers, duties or discretions to any person and on any terms.
17.4 Trustee charges A Trustee who acts in a professional capacity (as defined for the purposes of section 28 of the Trustee Act 2000) (a ”Professional Trustee”) may charge for services provided to the Scheme on a basis agreed with Hewlett-Packard, as also may a company or firm in which a Trustee is interested. These charges will also be treated as expenses of the Scheme and paid as described in Rule 18.3 (Scheme expenses).
17.5 Limit of liability None of the Trustees (except a Professional Trustee) will be liable for any breach of trust other than:
(a) wilful wrongdoing; or
(b) breach of a duty of care in relation to investment functions, liability for which cannot be excluded by reason of section 33 of the Pensions Act 1995.
The Trustees will not be liable for any acts or defaults of a fund manager to whom they have delegated any discretion, except where the Pensions Act 1995 does not permit such liability to be excluded.
17.6 Indemnity Hewlett-Packard will indemnify each of the Trustees (except a Professional Trustee) against any expenses and liabilities which are incurred through acting as a trustee of the Scheme but which cannot, for any reason, be met out of the Scheme’s assets. However, this does not apply to expenses and liabilities which are incurred through wilful wrongdoing or covered by insurance under Rule 17.7 (trustee insurance).
17.7 Trustee insurance The Trustees may insure the Scheme against any loss caused by them or any of their delegates. The Trustees may also insure themselves against liability for breach of trust. The premiums may be paid from the assets of the Scheme except to the extent that:
(a) the insurance relates to a paid trustee; or
(b) the insurance covers fines or penalties of a kind mentioned in Section 31 of the Pensions Act 1995.
To the extent to which the Trustees obtain insurance, they will waive the protection of Rule 17.5 (limit of liability).
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18 Assets of the Scheme
18.1 Assets held on trust The Trustees will hold all the contributions and other assets which they receive and the property representing them and all the income on trust for the purposes of the Scheme.
18.2 Use of assets For the purposes of the Scheme, the Trustees may, in any part of the world, alone or together with others:
(a) acquire and dispose of any property (tangible or intangible, movable or immovable), whether or not it produces income;
(b) enter into any contract or incur any obligation;
(c) lend or borrow money or other property for any purpose (including acquiring assets);
(d) grant any mortgage or charge over or give any right of recourse against any or all of the assets of the Scheme;
(e) form and finance any company;
(f) carry on and finance any business;
(g) insure assets of the Scheme for any amount against any risk; and
(h) keep assets in nominee names.
(i) exercise their powers under Section 34(1) of the Pensions Act 1995 to make an investment of any kind as if they were absolutely entitled to the assets of the Scheme.
The Trustees will exercise these powers in accordance with Sections 36 and 40 of the Pensions Act 1995.
18.3 Scheme expenses The Trustees will pay the expenses of the Scheme out of the assets of the Scheme unless Hewlett-Packard decides otherwise.
If Hewlett-Packard so decides, the Employers will pay the expenses of the Scheme or reimburse the Scheme for expenses already paid out of the Scheme assets, in such proportions as Hewlett-Packard decides.
If any expenses are not recovered from the Employers, the Trustees will allocate to each Member’s Retirement Account a fair share (determined by the Trustees) of the expenses paid from the Scheme’s assets.
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18.4 Accounts and actuarial valuations The Trustees will prepare annual accounts of the Scheme and have them audited.
The Trustees will obtain actuarial valuations of the Scheme in accordance with the requirements of the Inland Revenue from time to time.
18.5 Surplus assets It may be that an actuarial valuation of the Scheme shows that the value of the Scheme’s assets exceeds the value of its liabilities by a percentage which is more than the maximum laid down in the laws on surplus funds in Schedule 22 to the Income and Corporation Taxes Act 1988 (reduction of pension fund surpluses). If this happens, the Trustees may, with the consent of the Hewlett-Packard, the prior written agreement of the Inland Revenue and after satisfying the requirements of Section 37 of the Pensions Act 1995 (payment of surplus to employer), pay all or part of the surplus (less tax) to one or more of the Employers.
Hewlett-Packard may direct the Trustees to use any assets of the Scheme which are not attributable to a Members’ Retirement Accounts to meet any liability of the Employers to contribute to the Scheme.
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19 Participating Employers
19.1 Inclusion in the Scheme Hewlett-Packard may allow any employer to participate in the Scheme, so long as Revenue Approval of the Scheme is not prejudiced. An employer wishing to participate in the Scheme must enter into a deed with Hewlett-Packard and the Trustees, agreeing to comply with the Rules.
19.2 Ceasing to participate An Employer may cease to participate in the Scheme at any time by giving 13 weeks’ written notice to the Trustees, and will cease to participate if required to do so by Hewlett-Packard, or if its continued participation would prejudice Revenue Approval of the Scheme.
When an Employer ceases to participate in the Scheme, any Members who are then in Employment with that Employer will become entitled to benefits as if they had then left Employment.
20 New Principal Employer
The Trustees may allow another employer or holding company to take over the role of Hewlett-Packard in relation to the Scheme, subject to the Inland Revenue’s consent. This requires the agreement of Hewlett-Packard, however, unless Hewlett-Packard has been dissolved.
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21 Termination of the Scheme
21.1 Time of termination Hewlett-Packard may terminate the Scheme at any time by giving 13 weeks’ written notice to the Trustees.
The Trustees will terminate the Scheme if Hewlett-Packard goes into liquidation, unless another employer or a holding company agrees to take over the role of Hewlett-Packard in relation to the Scheme.
21.2 Effect of termination After the Scheme terminates, the Trustees will continue to provide benefits in accordance with the Rules, but all the Members will be treated as having left Employment and no further contributions or death-in-service benefits will become payable, unless the Scheme is reopened.
21.3 Reopening the Scheme At any time before the Trustees decide to wind up the Scheme, the Trustees and Hewlett-Packard may agree to reopen the Scheme, so that Employees can again start qualifying for benefits.
If the Scheme is reopened, all the Rules will again apply but, unless the Trustees and Hewlett-Packard agree otherwise:
(a) no contributions will be payable in respect of the period between the termination of the Scheme and its reopening; and
(b) no death-in-service benefits will be payable under Rule 6.1 (benefits on death in Employment before age 65) in respect of any Member or other Employee who died during that period.
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22 Winding up the Scheme
22.1 Time of winding up The Trustees will wind up the Scheme at any time after the Scheme is terminated if so directed by Hewlett-Packard. The Trustees may, however, defer winding-up the Scheme until such time as they resolve to wind-up the Scheme. While the winding-up of the Scheme is deferred, the power of alteration in Rule 23 may be exercised by the Trustees alone.
If Hewlett-Packard is dissolved before the winding up is completed, the Trustees may exercise any powers given to Hewlett-Packard, unless another employer or a holding company has taken over the role of Hewlett-Packard in relation to the Scheme.
The Trustees will continue to pay benefits in accordance with the Rules until the Scheme has been wound up and all the benefits secured.
22.2 Use of assets After the Trustees have decided to wind up the Scheme, they will pay all sums that became due for payment before the winding up started, including lump sums in respect of Members who died before the winding up started. The Trustees will then set aside sufficient assets to pay the expenses of the winding up. The Trustees will then use the rest of the Scheme assets as described in Rules 22.3 to 22.6 below.
22.3 Buying annuities The Trustees will buy an insurance policy or annuity contract from an Insurance Company in the name of each person entitled to benefits under the Scheme, except those for whom they provide benefits as described in Rules 22.4 (trivial benefits) or 22.5 (transfers to other schemes).
The annuity contracts bought for pensioners must provide benefits that are as nearly as practicable the same as the benefits that would otherwise have been provided for, and in respect of, the pensioners under the Scheme.
Any insurance policy or annuity contract that was bought in the name of the Trustees, before the winding up started, to provide benefits in respect of a particular person, will be assigned to the person concerned.
22.4 Trivial benefits When winding up the Scheme, the Trustees may pay a person an immediate lump sum if the total benefits to which that person would otherwise be entitled under the Scheme and all other occupational pension schemes and free-standing AVC schemes relating to the same employment are less in value than a pension of £260 a year or any greater amount acceptable to the Inland Revenue and consistent with the Contracting-out Laws and the Preservation Laws. For this purpose, the Trustees will calculate how much pension a Member’s Retirement Account would provide on a basis certified as reasonable by an actuary.
The Trustees will pay the lump sum to the person in whose name they would otherwise have bought an insurance policy or annuity contract.
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22.5 Transfers to other schemes When winding-up the Scheme, the Trustees may make transfer payments in accordance with Rule 16.2 (transfers-out) in respect of all or any of the people entitled to benefits under the Scheme, instead of buying insurance policies or annuity contracts.
22.6 Surplus assets If any assets of the Scheme remain after all benefits have been provided in full, the Trustees will pay them to Hewlett-Packard or, if Hewlett-Packard has been dissolved, to the other Employers in such shares as the Trustees decide. The requirements of Section 76 of the Pensions Act 1995 (excess assets on winding-up) must be satisfied before any payment is made to the Employers.
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23 Changing the Rules
Hewlett-Packard and the Trustees may together, by deed, change these Rules at any time (and may do so retrospectively).
24 Governing law
English law governs the Scheme and its administration.
The common seal of
Hewlett-Packard Limited was put on this deed in the presence of:
SIGNED as a DEED by the said Susan Shrimpton in the presence of:
Witness’s signature
Name Address
Occupation SIGNED as a DEED by the said Richard Hancock in the presence of:
Witness’s signature
Name Address
Occupation
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SIGNED as a DEED by the said Richard Holling in the presence of:
Witness’s signature
Name Address
Occupation SIGNED as a DEED by the said Kenneth McQuade in the presence of:
Witness’s signature
Name Address
Occupation SIGNED as a DEED by the said Charles Griffiths in the presence of:
Witness’s signature
Name Address
Occupation
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SIGNED as a DEED by the said Tracy Cockman in the presence of:
Witness’s signature
Name Address
Occupation
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(Rule 14.5) Appendix Inland Revenue Limits
Extra definitions used in this Appendix
For the purposes of this Appendix, the following terms have the following meanings:
“Aggregate Retirement Benefit” means the aggregate of:
(a) the Member’s pension under the Scheme and any Associated Scheme; and
(b) the pension equivalent of the Member’s Lump Sum Retirement Benefit.
“Associated Employer”. An employer is associated with another employer if one is controlled by the other, or both are controlled by a third party. Control has the meaning in Section 840 of ICTA (meaning of “control” in certain contexts), or in the case of a close company, Section 416 of ICTA (meaning of “associated company” and “control”).
“Associated Scheme” means any Relevant Scheme providing benefits in respect of Relevant Service.
“Class A Member” means any Member who is not a Class B or Class C Member.
“Class B Member” means any Member:
(a) who joined the Scheme on or after 17 March 1987 and before 1 June 1989 (but only if the Scheme commenced before 14 March 1989); or
(b) who may be treated as a Class B Member by virtue of previous membership of a Relevant Scheme,
and, in either case, has not opted to become a Class A Member.
“Class C Member” means any Member who joined the Scheme before 17 March 1987, or who joined subsequently and may be treated as a Class C Member by virtue of previous membership of a Relevant Scheme, and, in either case, has not opted to become a Class A Member.
“Connected Scheme” means any Relevant Scheme which is connected with the Scheme in relation to the Member in that:
(a) there is a period during which the Member has been the employee of 2 Associated Employers;
(b) that period counts under both schemes as a period in respect of which benefits are payable; and
(c) the period counts under one scheme for service with one employer and under the other for service with the other employer.
“Controlling Director” means a Member who, at any time on or after 17 March 1987 and in the last 10 years before the Relevant Date has, in relation to the Employer, been both within the definition of a director in Section 612(1) of ICTA (interpretative provisions) and within paragraph (b) of Section 417(5) of ICTA (meaning of “director”).
“Final Remuneration” means the greater of:
(a) the highest Remuneration upon which tax liability has been determined for any one of the five years preceding the Relevant Date being the aggregate of:
(i) the basic pay for the year in question; and
(ii) the yearly average over three or more consecutive years ending with the expiry of the corresponding basic pay year, of any Fluctuating Emoluments. For the purpose of this calculation, (A) Fluctuating Emoluments of a year other than the basic pay year may be increased in proportion to the increase in the Index from the last day of that year up to the last day of the basic pay year and (B) Remuneration that is received after the Relevant Date and upon which tax liability has been determined will be treated as a Fluctuating Emolument if (I) it was earned or qualified for prior to the Relevant Date and (II) the yearly average of three or more consecutive years begins no later than the commencement of the basic pay year; or
(b) the yearly average of the total emoluments from the Employer which are assessable to income tax under Case I or II of Schedule E and upon which tax liability has been determined for any three or more consecutive years ending not earlier than 10 years before the Relevant Date. Where such emoluments are received after the Relevant Date but are earned or qualified for prior to that date, they may be included, but only if the yearly average of three or more consecutive years begins no later than the commencement of the year ending with the Relevant Date.
For the purpose of these calculations:
(1) Remuneration and total emoluments do not include any amounts which arise from the acquisition or disposal of shares or any interest in shares or from a right to acquire shares (except where the shares or rights, etc. which give rise to such an amount liable to tax under Schedule E were acquired before 17 March 1987) or anything in respect of which tax is chargeable by virtue of Section 148 of ICTA (payments on retirement or removal from office or employment);
(2) in relation to a Controlling Director, Final Remuneration shall be the amount ascertained in accordance with (b) above and (a) above shall not apply;
(3) in relation to any other employee whose Remuneration in any year subsequent to 5 April 1987 used for the purpose of calculating benefits has exceeded £100,000, (or such other figure as may be prescribed by the Treasury), Final Remuneration shall not exceed the amount ascertained in accordance with (b) above and (a) above shall not apply, unless the individual chooses to adopt £100,000 (or such other figure as may be prescribed by the Treasury);
(4) where Final Remuneration is computed by reference to any year other than the last complete year ending on the Relevant Date, the Member’s Remuneration or total emoluments of any year may be increased in proportion to any increase in the Index from the last day of that year up to the Relevant Date. For a Class C Member this paragraph (4) shall not apply to the calculation of the maximum Lump Sum Retirement Benefit unless the Member’s aggregate total benefits are similarly increased beyond the maximum amount which could be paid but for this paragraph and/or the increase mentioned in (a)(ii)(A) above and then only to the same proportionate extent;
(5) for Class A Members Final Remuneration shall not exceed the Earnings Cap;
(6) for the purpose of calculating the maximum Lump Sum Retirement Benefit of a Class B Member, Final Remuneration shall not in any event exceed £100,000 (or such other figure as may be prescribed by the Treasury);
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(7) for an employee who remains, or is treated as remaining, in Service but by reason of incapacity is in receipt of a much reduced Remuneration (i.e. under a sick pay or permanent health insurance scheme) for more than 10 years up to the Relevant Date, Final Remuneration may be calculated under (a) or (b) above as at the cessation of normal pay and increased in accordance with the Index;
(8) the total amount of any profit related pay (whether relieved from income tax or not) may be classed as pensionable remuneration and treated as a Fluctuating Emolument;
(9) an early retirement pension in payment from the Employer may not be included in Final Remuneration.
Notes: Except as in paragraph (1) above, benefits in kind may be taken into account when they are assessed to income tax as emoluments under Schedule E, and will normally be regarded as Fluctuating Emoluments. If benefits are not so assessable, they may not be included as part of Final Remuneration except with the agreement of the Pension Schemes Office.
For the purpose of providing immediate benefits at the Relevant Date, Final Remuneration may be calculated on the appropriate basis above using Remuneration assessable to tax under Case I or II of Schedule E and upon which tax liability has not been determined. On determination of this liability, Final Remuneration must be recalculated. Should this result in a lower Final Remuneration, then benefits in payment should be reduced if this is necessary to ensure that they do not exceed the maximum approvable based on the lower Final Remuneration. Where Final Remuneration is greater, it will be possible to augment benefits in payment but such augmentation must take the form of a non-commutable pension.
Where immediate benefits are not being provided or where a transfer payment is to be made in respect of accrued pension benefits, then Final Remuneration may only be calculated using Remuneration assessable to income tax under Case I or II of Schedule E and upon which tax liability has been determined.
Where Fluctuating Emoluments have not been paid for the full three years, they should be averaged over the period from the commencement of their entitlement to payment (or the beginning of the 3 year period, if later) to the end of the relevant basic pay year. Where it is proposed to include in Final Remuneration a Fluctuating Emolument which was payable in a single year only, however, the agreement of the Pension Schemes Office of the Inland Revenue must be sought.
“Fluctuating Emoluments” are any part of any employee’s earnings which are not paid on a fixed basis and are additional to the basic wage or salary. They include overtime, commission, bonuses or benefits in kind as long as they are assessable to tax under Case I or II of Schedule E and profit related pay (see paragraph (8) of the definition of Final Remuneration). Directors’ fees may rank as Fluctuating Emoluments according to the basis on which they are voted.
“ICTA” means the Income and Corporation Taxes Act 1988 and any statutory amendment, modification or re-enactment thereof.
“Index” means the Government’s Index of Retail Prices.
“Lump Sum Retirement Benefit” means the total value of all retirement benefits payable in any form other than non-commutable pension under this and any Associated Scheme.
“Negative Deferred Pension” means the amount by which the Member’s pension is reduced by virtue of section 31 of the Welfare Reform and Pensions Act 1999.
“Normal Retirement Date” means the Member’s 65th birthday.
“Pension Debit Member” means a Member whose benefits have been permanently reduced by a Pension Debit. Such a Member will either be:
(i) a Member who is a controlling director of a company which is his/her employer if he/she is a director of the company to whom paragraph (b) or section 417(5) of the Income and Corporation Taxes Act 1988 applies either at the date on which the marriage was dissolved or annulled, or at any time within the period of 10 years before that date or,
(ii) a Member whose earnings at the date at which his/her marriage was dissolved or annulled exceeded ¼ of the Earnings Cap for the year of assessment in which the dissolution or annulment occurred. Earnings for these purposes shall be taken to be the total emoluments:
(a) which were paid to the member in consequence of pensionable service to which the Scheme relates during the year of assessment before the year of assessment in which the marriage was dissolved or annulled, and
(b) from which tax was deducted in accordance with the Income Tax (Employments) Regulations 1993.
“Pensionable Service” means Service that qualifies the Member for retirement benefits under the Scheme.
“Pensions Sharing Order” means any order or provisions referred to in Section 28 of the Welfare Reform and Pensions Act 1999.
“Relevant Date” means the date of retirement, leaving Pensionable Service or death as the case may be.
“Relevant Scheme” means any other scheme with or seeking Revenue Approval and also, in respect of a Class A Member who is a Controlling Director, any retirement annuity contract or scheme approved under Chapter III of Part XIV or any personal pension scheme approved under Chapter IV of Part XIV of ICTA insofar as it provides benefits secured by contributions in respect of Relevant Service.
“Remuneration” in relation to any year means the aggregate of the total emoluments for the year in question from the Employer and which are assessable to income tax under Schedule E but excluding any amounts which arise from the acquisition or disposal of shares or any interest in shares or a right to acquire shares or anything in respect of which tax is chargeable by virtue of Section 148 of ICTA and, in respect of a Class A Member, excluding any emoluments in excess of the Earnings Cap.
“Retained Death Benefits” means any lump sum benefits payable on the Member’s death in respect of previous employments or periods of self-employment (whether alone or in partnership) from:
(a) retirement benefits schemes with or seeking Revenue Approval or relevant statutory schemes as defined in Section 611A of ICTA (definition of relevant statutory scheme
(b) funds to which Section 608 of ICTA applies (superannuation funds approved before 6 April 1980);
(c) retirement benefits schemes which have been accepted by the Inland Revenue as “corresponding” in respect of a claim made on behalf of the Member for the purposes of Section 596(2)(b) of ICTA (schemes with corresponding approval);
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(d) retirement annuity contracts approved under Chapter III of Part XIV of ICTA (retirement annuities);
(e) term life provisions under personal pension schemes approved under Chapter IV of Part XIV of ICTA (personal pension schemes); or
(f) transfer payments from overseas schemes held in a type of arrangement defined in (a), (d) or (e) above.
If the Retained Death Benefits do not exceed £2,500 in total, they may be ignored.
If the Member is not a Controlling Director and his/her earnings in the 12 months after entry to the Scheme (in this context including any other Relevant Scheme providing benefits in respect of service with the current Employer) do not exceed one quarter of the Earnings Cap, benefits from these sources, other than those transferred into the Scheme, will not be treated as Retained Death Benefits.
“Relevant Service” means service with the Employer or an Associated Employer or, except in relation to a Class A Member who is a Controlling Director of either employer, an employer who is associated with the Employer only by virtue of a permanent community of interest.
Benefit limits for Class A Members
Notwithstanding anything to the contrary in the Scheme provisions, the benefits payable to a Class A Member or his/her Dependants or other beneficiaries in respect of him shall not, when aggregated with all benefits of a like nature provided under all Associated Schemes exceed the limits set out below:
1. The Member’s Aggregate Retirement Benefit shall not exceed:
1.1 on retirement at any time between attaining age 50 and attaining age 75, except before Normal Retirement Date on grounds of incapacity, a pension of 1/60th of Final Remuneration for each year of Relevant Service (not exceeding 40 years) or such greater amount as will not prejudice Revenue Approval of the Scheme;
1.2 on retirement at any time before Normal Retirement Date on grounds of incapacity, a pension of the amount which could have been provided at Normal Retirement Date in accordance with paragraph 1.1 above, Final Remuneration being computed as at the actual date of retirement;
1.3 on leaving Pensionable Service before attaining age 75, a pension of 1/60th of Final Remuneration for each year of Relevant Service prior to leaving Pensionable Service (not exceeding 40 years) or such greater amount as will not prejudice Revenue Approval of the Scheme. The amount computed may be increased by 5% for each complete year or, if greater, in proportion to any increase in the Index which has occurred between the date of termination of Pensionable Service and the date on which the pension begins to be payable. Any further increase necessary to comply with Social Security legislation is also allowable.
1.4 Benefits for a Class A Member are further restricted to ensure that his/her total retirement benefit from the Scheme and from any Associated Scheme or Connected Scheme does not exceed a pension of 1/30th of the Earnings Cap for each year of service, subject to a maximum of 20/30ths. For the purpose of this limit, service is the aggregate of Relevant Service and any period of service which gives rise to benefits under a
Connected Scheme provided that no period is to be counted more than once.
1.5 For the purpose of calculating the Aggregate Retirement Benefit or the total retirement benefit in 1.1 to 1.4 above, the pension equivalent of any Lump Sum Retirement Benefit is one-twelfth of its total cash value.
2. The Member’s Lump Sum Retirement Benefit shall not exceed:
2.1 on retirement at any time between attaining age 50 and attaining age 75, except before Normal Retirement Date on grounds of incapacity, 3/80ths of Final Remuneration for each year of Relevant Service (not exceeding 40 years) or such greater amount as will not prejudice Revenue Approval of the Scheme;
2.2 on retirement at any time before Normal Retirement Date on grounds of incapacity, the amount which could have been provided at Normal Retirement Date in accordance with paragraph 2.1 above, Final Remuneration being computed as at the actual date of retirement;
2.3 on leaving Pensionable Service before attaining age 75, a lump sum of 3/80ths of Final Remuneration for each year of Relevant Service prior to leaving Pensionable Service (not exceeding 40 years) or such greater amount as will not prejudice Revenue Approval of the Scheme. The amount computed may be increased in proportion to any increase in the Index which has occurred between the date of termination of Pensionable Service and the date on which the benefit is first paid.
Contribution limits for Class A Members
Notwithstanding anything to the contrary in the Scheme provisions, the contributions paid to the Scheme by a Class A Member in a year of assessment shall not exceed either:
(a) when aggregated with the Member’s contributions to any other exempt approved schemes, 15 per cent of the Member’s Remuneration; or
(b) when aggregated with the Member’s contributions to any schemes which are Associated or Connected Schemes, 15% of the Earnings Cap.
Benefit limits for Class B Members and Class C Members
Notwithstanding anything to the contrary in the Scheme provisions, the benefits payable to a Class B or a Class C Member or to his/her Dependants or other beneficiaries in respect of him shall not, when aggregated with all benefits of a like nature provided under all Associated Schemes, exceed the limits set out below:
1. The Member’s Aggregate Retirement Benefit shall not exceed:
1.1 on retirement at or before Normal Retirement Date, a pension of 1/60th of Final Remuneration for each year of Relevant Service (not exceeding 40 years) or such greater amount as will not prejudice Revenue Approval of the Scheme;
1.2 on retirement at any time before Normal Retirement Date on grounds of incapacity, a pension of the amount calculated in accordance with paragraph 1.1 above as if the Member had remained in Relevant Service until Normal Retirement Date, Final Remuneration being computed as at the actual date of retirement;
1.3 on retirement after Normal Retirement Date, a pension of the greater of:
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1.3.1 the amount calculated in accordance with paragraph 1.1 above on the basis that the actual date of retirement was the Member’s Normal Retirement Date;
1.3.2 the amount which could have been provided at Normal Retirement Date in accordance with paragraph 1.1 above increased either actuarially in respect of the period of deferment or in proportion to any increase in the Index during that period; and
1.3.3 where the Member’s total Relevant Service has exceeded 40 years, the aggregate of 1/60th of Final Remuneration for each year of Relevant Service before Normal Retirement Date (not exceeding 40 such years) and of a further 1/60th of Final Remuneration for each year of Relevant Service after Normal Retirement Date, with an overall maximum of 45 reckonable years,
Final Remuneration being computed in respect of 1.3.1 and 1.3.3 above as at the actual date of retirement, but subject always to paragraph 3 below;
1.4 on leaving Pensionable Service before Normal Retirement Date, a pension of 1/60th of Final Remuneration for each year of Relevant Service prior to leaving Pensionable Service (not exceeding 40 years) or such greater amount as will not prejudice Revenue Approval of the Scheme. The amount computed may be increased by 5% for each complete year or, if greater, in proportion to any increase in the Index which has occurred between the date of termination of Pensionable Service and the date on which the pension begins to be payable. Any further increase necessary to comply with Social Security legislation is also allowable.
2. The Member’s Lump Sum Retirement Benefit shall not exceed:
2.1 on retirement at or before Normal Retirement Date, 3/80ths of Final Remuneration for each year of Relevant Service (not exceeding 40 years) or such greater amount as will not prejudice Revenue Approval of the Scheme;
2.2 on retirement at any time before Normal Retirement Date on grounds of incapacity, the amount calculated in accordance with paragraph 2.1 above as if the Member had remained in Relevant Service until Normal Retirement Date, Final Remuneration being computed as at the actual date of retirement;
2.3 on retirement after Normal Retirement Date, the greater of:
2.3.1 the amount calculated in accordance with paragraph 2.1 above on the basis that the actual date of retirement was the Member’s Normal Retirement Date;
2.3.2 the amount which could have been provided at Normal Retirement Date in accordance with paragraph 2.1 above, together with an amount representing interest thereon; and
2.3.3 where the Member’s total Relevant Service has exceeded 40 years, the aggregate of 3/80ths of Final Remuneration for each year of Relevant Service before Normal Retirement Date (not exceeding 40 such years) and of a further 3/80ths of Final Remuneration for each year of Relevant Service after Normal Retirement Date, with an overall maximum of 45 reckonable years,
Final Remuneration being computed in respect of 2.3.1 and 2.3.3 above as at the actual date of retirement, but subject always to paragraph 3 below;
2.4 on leaving Pensionable Service before Normal Retirement Date, a lump sum of 3/80ths of Final Remuneration for each year of Relevant Service prior to leaving Pensionable Service (not exceeding 40 years) or such greater amount as will not prejudice Revenue Approval of the Scheme. The amount computed as aforesaid may be increased in proportion to any increase in the Index which has occurred between the date of termination of Pensionable Service and the date on which the benefit is first paid.
3. If a Member elects to take any part of his/her benefits under the Scheme in advance of actual retirement, the limits set out in paragraphs 1 and 2 above shall apply as if the Member had retired at the date of the election as aforesaid, no account being taken of subsequent Relevant Service, save that the maximum amount of any uncommuted pension not commencing immediately may be increased either actuarially in respect of the period of deferment or in proportion to any increase in the Index during that period.
4. The preceding provisions of this Appendix shall be modified in their application to a Member who is a Controlling Director as follows:
4.1 the amount of the maximum Aggregate Retirement Benefit in paragraph 1 and of the maximum Lump Sum Retirement Benefit in paragraph 2 shall be reduced, where necessary for Revenue Approval of the Scheme, to take account of any corresponding benefits under retirement annuity contracts, schemes approved under Chapter III of Part XIV of ICTA or under personal pension schemes approved under Chapter IV of Part XIV of ICTA;
4.2 where retirement takes place after Normal Retirement Date but not later than the Member’s 70th birthday, paragraph 1.3.2 and 1.3.3 and paragraph 2.3.2 and 2.3.3 shall not apply, and if retirement is later than the attainment of that age, those paragraphs shall apply as if the Member’s 70th birthday had been specified in the Rules as his/her Normal Retirement Date, so as not to treat as Relevant Service after Normal Retirement Date any Relevant Service before the Member reaches the age of 70;
4.3 where paragraph 3 applies to the Member, the rate of the actuarial increase referred to therein in relation to any period of deferment prior to his/her attaining the age of 70, shall not exceed the percentage increase in the Index during that period.
Contribution limits for Class B Members and Class C Members
The total contributions paid by a Class B Member or a Class C Member in a year of assessment to this and any Associated Scheme shall not exceed 15% of the Member’s Remuneration for that year.
Other limits on benefits relating to all Members
1. Lump sum death benefit
The lump sum benefit (exclusive of any refund of the Member’s own contributions not applied specifically to secure the payment of benefits on the Member’s death and any interest thereon) payable on the death of a Member while in Relevant Service or (having left Pensionable Service with a deferred pension) before the commencement of his/her pension, shall not, when aggregated with all benefits of a like nature under all Associated Schemes, exceed the greater of:
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1.1 £5,000; and
1.2 4 times the greater of:
1.2.1 the annual rate (subject, for a Class A Member, to the Earnings Cap) of the Member’s basic salary or wages at the date of death or leaving Pensionable Service together with the yearly average of Fluctuating Emoluments received in the three years (or the whole period of Relevant Service if less) up to the date of death or leaving Pensionable Service; and
1.2.2 the Member’s total emoluments (subject, for a Class A Member, to the Earnings Cap) of any selected period of 12 months ending not earlier than 36 months before the date of death;
1.2.3 Final Remuneration disregarding paragraphs (1), (2) and (3) of that definition;
less Retained Death Benefits.
2. Dependants’ pensions
Any pension for a Dependant, when aggregated with the pensions, other than those provided by surrender or allocation of the Member’s own pension, payable to that Dependant under all Associated Schemes, shall not exceed an amount equal to 2/3rds of the maximum Aggregate Retirement Benefit payable to the Member immediately before death as described above. Where the death of the Member occurs whilst in Relevant Service before Normal Retirement Date the maximum is that which would have been appropriate if the Member had retired on grounds of incapacity on the date of death with no retained benefits from previous employments.
If pensions are payable to more than one Dependant of a Member, the aggregate of all Dependants’ pensions payable in respect of the Member under this and all Associated Schemes will not exceed the full amount of the maximum Aggregate Retirement Benefit described in the previous paragraph of this Appendix.
3. Increases of pensions in payment
The maximum amount of a pension ascertained in accordance with the previous provisions of this Appendix, less any pension which has been commuted for a lump sum or the pension equivalent of any benefits in lump sum form and any pension surrendered to provide a Dependant’s pension, may be increased by 3% for each complete year or, if greater, in proportion to any increase in the Index since the pension commenced.
4. Additional voluntary contributions
If any Member makes voluntary contributions to the Scheme to secure additional benefits for himself and/or his/her Dependants and such contributions commence on or after 8 April 1987, any retirement benefits so secured must be in the form of non-commutable pension except to the extent to which the provisions of the Scheme allow commutation of trivial pensions or on the grounds of serious ill-health.
Where the application of the limits in this Appendix requires the amount of the Aggregate Retirement Benefit to be restricted and the Member has paid additional voluntary contributions to supplement scheme benefits, that restriction shall first be effected on those supplementary benefits so as to permit the repayment of the surplus additional voluntary contributions, subject to
Section 599A of ICTA (charge to tax: payments out of surplus funds).
5 Benefits payable to members following divorce
Notwithstanding any other provisions of the rules, the benefits for a Pension Debit Member are additionally subject to the following limits, subject to compliance with Social Security legislation:
(i) The pension shall not exceed the Member’s Aggregate Retirement Benefit less the Negative Deferred Pension in the Scheme and the Negative Deferred Pension in any Associated Scheme and, furthermore in the case of a Class A Member the Negative Deferred Pension in any Connected Scheme.
(ii) The lump sum for the Scheme and any Associated Scheme shall not exceed:
(a) for Pension Debit Members who are Class A Members or Class B Member, an amount equal to 2.25 x the initial annual pension payable to the Member;
(b) for Pension Debit Members who are Class C Members, an amount equal to the greater of:
(i) 1.25 x the initial annual pension payable to the Member; and
(ii) an amount determined in accordance with Rule 5.3 as if there had been no Pension Debit, less 2.25 x the Negative Deferred Pension.
For the purposes of this paragraph, the initial annual pension should be calculated on the following basis:
(i) if the pension payable for the year changes, the initial pension payable should be taken;
(ii) it should be assumed that the Pension Debit Member will survive for a year;
(iii) the effect of commutation should be ignored.
On the death of the Pension Debit Member, any pension for a Dependant shall not exceed 2/3 x an amount determined in accordance with the Rules as if there had been no Pension Debit, less the Negative Deferred Pension and the Negative Deferred Pension in any Associated Scheme and, in the case of a Class A Member, the Negative Deferred Pension in any Connected Scheme. Where more than one pension is to be paid the total of all the pensions cannot exceed 100% of an amount determined in accordance with the Rules as if there had been no Pension Debit, less the Negative Deferred Pension and the Negative Deferred Pension in any Associated Scheme and, in the case of a Class A Member, the Negative Deferred Pension in any Connected Scheme.
6 Benefits payable on death of Former Spouse
If a Former Spouse dies after a Pension Sharing Order is made but before it is acted upon by the Trustees, the following benefits may be paid:
A lump sum death benefit may be paid to any person at the discretion of the Trustees.
The lump sum is limited to 25% of what would have been the cash equivalent of the fund which would have provided the Pension Credit Rights for the Former
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Spouse. The balance of the fund may be used to provide a non-commutable pension to a Dependant of the Former Spouse.
The amount of pension payable to a Dependant is limited to a maximum of 2/3rds of the amount of the pension that could have been paid to the Former Spouse at the date of death if the whole of what would have been the cash equivalent of the fund which would have provided the Pension Credit Rights had been used to purchase an annuity at an available market rate. Where more than one pension is to be paid the total of all the pensions cannot exceed the amount of the pension that could have been paid to the Former Spouse. Such pensions must be payable for life, except that pensions paid to children must cease on the attainment of age 18, or if later, on the cessation of full time education. Such pensions may be fully commuted, however, for a lump sum of the grounds of triviality at the time such a pension becomes payable.
Note to this Appendix
In any case when the Inland Revenue either generally or in any particular case permit payment of a higher sum by way of benefit or contributions than that described above, the Trustees or the Member (as appropriate) may pay the higher sum.
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Schedule of previous deeds
(a) Rules dated 25 February 1997.
(b) Deed of amendment dated September 1997.
(c) Deed to admit a new employer (Co-Create Limited) dated 7 April 1997.
(d) Deed to appoint additional trustees dated 24 December 1998.
(e) Deed to appoint and remove trustees dated 21 January 1999.
(f) Deed to admit a new employer (VeriFone UK Limited) and appoint a new trustee dated 10 June 1999.
(g) Deed to admit a new employer (Agilent Technologies UK Limited) dated 14 December 1999.
(h) Deed to remove a trustee dated 19 September 2000.
(i) Deed to admit new employers (Bluestone Software Europe Ltd and Arjuna Solutions Ltd) dated 12 March 2001.
(j) Deed to appoint a new trustee dated 11 September 2001.
(k) Deed to confirm the temporary participation of an employer (VeriFone (UK) Limited) dated 10 October 2001.
(l) Deed to change the Rules dated 3 September 2002.
(m) Deed to appoint and remove trustees dated 11 December 2002.
