EDS Newsletter 2004

Newsletter 2006
E L E C T R O N I C D ATA S Y S T E M S R E T I R E M E N T P L A N
In This Issue
l
Financial Highlights
l
What is a defined benefit scheme?
l
How do I calculate my benefits?
l
Important information
Statement by your
Member Trustee
eighteen months in
In the past year I have learned a great deal
about the world of pensions and would no
longer consider myself a rookie, though my
fellow Trustees may beg to differ. Having
said that, I still seem to be the one who asks
the stupid questions in Trustee meetings
but I prefer to think I was just that bit
quicker thinking than the rest of them and
that if I hadn’t asked the stupid question
then someone else would – eventually.
I don’t wish to be rude but I feel a little
bluntness is called for here. Whilst I may
have taken an interest in pensions and
learnt a great deal it seems that many of
you have yet to get off the starting blocks.
Did you realise that there are some of you
out there who don’t even know which
pension scheme you’re in? Don’t deny it, I
know it’s true!
The good news is that if you are reading
this you are probably in the EDS Retirement
Plan. However, you should find your last
benefit statement to double check and
familiarise yourself with your benefits. Be
happy – you can now write, “Discovered
which pension scheme I belong to” under
Success in your next SOFT report.
If you have made no pension provision you
should be seeking advice. To some of you it
may seem a long way off. It did to me when
I was at university in Bradford in the mid
seventies. All I was interested in was where
the next beer or curry was coming from.
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Actually, that’s still true to some extent but
I have become accustomed to a certain
lifestyle. I can afford beer and curry most of
the time now. However, when I get to
retirement where’s my beer and curry going
to come from? My guess is that the state will
not have introduced a beer and curry
allowance for pensioners by then, though I
live in hope.
My point is that when I was twenty I never
even considered being fifty but that will
happen this year. That means retirement is
fifteen years away or less if I’m lucky. I
know beer and curry today is probably at
the forefront of many peoples’ minds but
think about where it will come from in forty
year’s time.
The following pages provide you with
some important information, summarising
the accounts and providing some contact
details. However, if you read nothing else
I would urge you to read pages four and
five, which give you a basic guide to a
defined benefit arrangement and how to
calculate your benefits.
Malc Newton
Member Nominated Trustee
Financial Highlights
The following is a summary of the
most recent audited accounts for
10.7
51.3
the year ended 5 April 2005. A
copy of the full report and
accounts can be found on the
1.5
4.5
Pensions website or is available on
2.0
request
from
EDS
£70.0M
Pensions
Administration, see the back page
for their contact details. NB. The
audited report and accounts for the
10.2
6.9
year ended 5 April 2006 will be
51.2
available in early November 2006.
2.1
£70.4M
Note: There is a negative figure
£(0.4)M
under net new monies. This can
£656.6M
Total fund value at 06 April 2004
be attributed to the very large
transfer of monies out of the
£(0.4)M
fund (see under expenditure,
£76.1M
transfers out and refunds). This
TOTAL FUND VALUE at 05 April 2005
£732.3M
is due to the Aspire transition,
which meant that there was a
transfer of both the benefits and
800
assets to pay for these, from the
700
Plan to these members’ new
600
pension arrangement.
500
300
Net new monies
Investment growth
Total fund value
200
100
0
-100
-200
2001
2002
2003
year
2004
2005
2005
2004
year
The Last
Five Years
£ million
400
Total
Pensioners
Deferreds
Active
2003
2002
2001
0
2000
4000
6000 8000 10000 12000 14000 16000
membership
3
What Scheme Am I In?
If you are reading this you should be in the EDS Retirement Plan.
This is known as a defined benefit scheme (or final salary). In
addition, you may be paying Additional Voluntary Contributions
(AVCs). If so you also have defined contribution (or money
purchase) benefits.
I Am In A Defined
Benefit Scheme – What
Does That Mean?
Companies and employees pay contributions, which are invested to
ensure the scheme as a whole has enough money to pay the benefits
due to its pensioners and other beneficiaries of the scheme. The risk
lies with the trustees/company and members play no part in the
investment decisions.
It’s called defined benefit because the benefits are defined in the
scheme rules and you can work out what percentage of your
salary you will receive on retirement.
4
I Pay AVCs
Which Are On
A Defined
Contribution
Basis – What
Does This Mean?
Contributions are paid into an
individual pot. The member chooses
how to invest their pot of money
from a range of options, which the
Trustees have selected for them.
These include investing on the stock
market or other forms of investment
such as property or bonds or even
holding in a cash fund (roughly
equivalent to a building society
account). The investment risk lies
with the member. At retirement,
members use their pot to purchase a
pension on the open market (known
as an annuity).
It’s called defined contribution since
the only element that is defined is
how much you have contributed to
the scheme.
Your pension is based on a formula and
once you understand how this works,
calculating what your benefit will be
when you retire is relatively easy.
How Do I
Calculate
My EDS Retirement Plan Benefits?
For each year you are in the Plan you will receive a certain percentage of your salary (known as the Pension Accrual Rate)
when your retire. Your Pension Accrual Rate up to 6 April 2005 was 1.7%. Your Pension Accrual Rate from 6 April 2005
depends upon which category of membership you have opted for. The rates are outlined in the table below:
Pension Accrual Rate
Category A
1.2%
Category B
1.45%
Category C
1.7%
Your Pension Accrual Rate is multiplied by your Pensionable Service and your Final Pensionable Salary.
Your Pension
per annum
=
Pension
Accrual Rate
x
Pensionable
Service
x
Final Pensionable
Salary
Your Final Pensionable Salary is defined in your Plan booklet. It includes a deduction of an amount which is broadly
equivalent to your Basic State Pension.
Pension Example:
Mr. Jones joined the Plan in April 1995. Initially the Pension Accrual Rate for all members was 1.7% (Period 1). He opted for
category B membership in April 2005, with a Pension Accrual Rate of 1.45% (Period 2) and he opted for category A
membership in April 2006 (period 3). He retired in April 2010 on a Final Pensionable Salary of £35,000. His pension would
be calculated as follows upon retirement:
Your Pension
per annum
=
Pension
Accrual Rate
x
Pensionable
Service
x
Final Pensionable
Salary
Period 1
=
1.7%
x
10 years
x
£35,000
=
£5,950.00 pa
Period 2
=
1.45%
x
1 years
x
£35,000
=
£507.50 pa
Period 3
=
1.2%
x
4 years
x
£35,000
=
£1,680.00 pa
=
£8,137.50 pa
If you transferred your benefits from a previous scheme any calculation will also take this into account.
You can elect to exchange part of your pension on retirement for a tax free cash lump sum. EDS Pensions Administration
will provide you with details prior to your retirement.
For further details of your entitlements please refer to your Plan booklet. A copy is available on the EDS InfoCentre or
from EDS Pensions Administration. In addition, your annual benefit statement provides you with an indication of your
entitlements. There are further details about this on page seven.
5
Important
Information
Changes in your circumstances
Please remember to advise us if any of your personal details change. If you
are an EDS employee it is your responsibility to ensure that such details,
including changes in marital status and / or home address, are correctly
recorded on SAP. If you are a pensioner or deferred member, please advise
EDS Pensions Administration of such changes.
It is also very important that you express your wishes for the allocation of
benefits in the event of your death in service by completing, and keeping
updated as and when your circumstances change, a Nomination Form.
While the application of such benefits to beneficiaries is at the sole discretion
of the Trustee, the task is made much harder if you have not completed this
form or if, upon your death, it is found to be out of date.
If you are unsure whether you have completed a nomination, or whether your
form is up to date, please complete a new one. The form is available from EDS
Pensions Administration or the Pensions Website (see below).
EDS Pensions Administration
contact details
Write to:
EDS Pensions Administration
Paymaster (1936) Limited
Sutherland House
Russell Way
Crawley
West Sussex RH10 1UH
T 0870 1971400
F 01293 604015
E [email protected]
6
Accessing the
Pensions
website
Access to the website is via the EDS
intranet and therefore not currently
available to all members. This can
be accessed via the EDS InfoCentre,
UK and Ireland home page. Select
People Support, then Compensation
& Benefits, then UK Pensions;
alternatively you can use the
InfoCentre keyword ‘UK Pensions’.
Ode To A Benefit Statement
These are forms we have to send you
Once a year for you to see
What your pension fund is worth
And at retirement what could be.
Lots of items to be shown:
Salary, service, accrual rate,
Transferred benefits or fund value,
Forecasts to normal retirement date.
It is important that you read and understand your annual
benefit statement. Please raise any queries you have
with EDS Pensions Administration, as this will help to
ensure that your benefits are correct when they are put
into payment.
This poem was written by Joy Roberts, who is retiring in
August after 21 years with Paymaster, 9 of which have
been spent with the EDS Pensions Administration team.
We wish her a long and happy retirement.
We feel quite happy when we’ve sent them
And notified you of your pension
But we know that when you see them
The reaction can be incomprehension.
“I can’t understand the figures;
That salary is far too low;
Where did this future figure come from?
There’s such a lot for me to know”.
If you turn the statement over
And read the notes explaining all
The figures should make sense to you
If not, then please give us a call.
7
Published by EDS Trustee Limited
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If you have any comments on this newsletter or suggestions on what you
would like to see in future issues, please write to:
Tom Roy at Wavendon Tower, Milton Keynes MK17 8LX
or email him on [email protected]