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Defined Benefit (DB)

POST BENEFIT CHANGES AND BENEFIT STATEMENTS. Defined Benefit (DB). Agenda. DB overview of the benefits introduced as at April 2010 Benefit Statements Communications Timetable of forthcoming events Questions . DB Scheme overview Accrual Rates.

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Defined Benefit (DB)

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  1. POST BENEFIT CHANGES AND BENEFIT STATEMENTS Defined Benefit (DB)

  2. Agenda • DB overview of the benefits introduced as at April 2010 • Benefit Statements • Communications • Timetable of forthcoming events • Questions

  3. DB Scheme overview Accrual Rates • For service up to 31 March 2010, the old accrual rate will apply • From 1 April 2010 the accrual rate is 1/80 of salary for each year’s service plus a lump sum of 3/80 of salary for each year’s service

  4. DB Scheme overview Contribution Rates • Employee contribution rate will increase to a single contribution rate of 7.5% of pensionable salary each year • Actual increases will be restricted to a maximum of 1.5% per year each August, which started in August 2010 • The impact of this change will be reduced by tax relief and may be further reduced for those in the PensionSaver arrangement.

  5. DB Scheme overview Normal Retirement Age (NRA) • NRA is linked to the State Pension Age (SPA) subject to a minimum age of 65 for service earned after 1 April 2010 • Benefits earned before 1 April 2010 will not be affected and the old NRA will continue to be applied • Any future increase to SPA will increase NRA for service from the following 1 April

  6. DB Scheme overview Pensionable Salary • Salary for service to 31 March 2010 will be Final Pensionable Salary as at 31 March 2010 • Salary definition from 1 April 2010 will be basic salary, plus a number of allowances • Salary increases for service from 1 April 2010 will be limited to RPI subject to a floor of zero • Letters will be issued confirming pensionable salary each March

  7. DB Scheme overview Pensionable Salary – pre April 2010 • Pensionable salary calculated as at 31 March 2010 • Pension earned up to 31 March 2010 calculated as at 31 March 2010 based on the pensionable salary above • Each year the pension will increase by the rise in the RPI

  8. DB Scheme overview Pensionable Salary – from April 2010 Pensionable Salary as at 31 March 2011 (£25,000 + £625) £2,500 £625 Salary Increase 10% Rise in RPI 2.5% Pensionable Salary as at 31 March 2010 (£25,000)

  9. DB Scheme overviewRule of 85 – Water Pension and Local Government Pension Sections only • Your Rule of 85 date has not changed • The same reduction for service after 1 December 2006 applies, up to April 2010 • For service after April 2010, your pension will be reduced based on the number of years you are retiring before your NRA

  10. DB Scheme overview Rule of 85 Pension earned after 1 April 2010 – reduced for number of years to NRA Pension earned between 7 December 2006 and 31 March 2010 – reduced for number of years to age 60 Pension earned up to 6 December 2006 - UNREDUCED

  11. DB Scheme overview Redundancy • WPS, LGPS and MIS section members over 50 when made redundant able to receive an immediate pension. The pension relating to service before 1 April 2010 will be paid without any reduction for early payment • Pension relating to service after 1 April 2010 will be reduced for early payment based on the number of years they retire before NRA • Not affected by the Government change to the minimum retirement age from 50 to 55.

  12. DB Scheme overview Death in service • Death lump sum is 4 times pensionable salary (pensionable salary will be the greater of gross earnings in the last tax year (excluding bonus) and pensionable salary at date of death)

  13. DB Scheme overview Ill health provision • Definition for all sections is the same as the one used in the Main Section • Provides two levels of Incapacity pension – Partial Incapacity and Total Incapacity • Partial Incapacity provides a pension based on actual service to the date of retirement and will be unreduced for early payment • Total Incapacity provides a pension based on actual service to the date of retirement plus prospective future service to NRA. The benefits will be unreduced for early payment

  14. Benefit Statements

  15. Benefit Statements

  16. Benefit Statements

  17. Benefit Statements

  18. Benefit Statements

  19. Benefit Statements

  20. Benefit Statements

  21. Benefit Statements

  22. Benefit Statements

  23. Mediums of communications www.unitedutilities.com/pensions

  24. Communication Pension modeller

  25. Communication Pension modeller

  26. Timetable of forthcoming events * If applicable

  27. One to One meetings

  28. Questions ?

  29. Thank you

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