This information is for people who previously contributed to the CARE Section of the AA Pension Scheme (the Scheme).
It is a summary of what CARE has to offer. It outlines the main benefits and explains how it works. Every effort has been made to ensure the accuracy; however, it is not a legal document. Full details of the benefits provided by the Scheme are set out in the Trust Deed and Rules. If there are any differences between the information provided here and the Trust Deed and Rules, the Trust Deed and Rules will apply. A copy of the Trust Deed and Rules can be obtained from the AA Pensions team.
Some information referred to may be subject to change (i.e. taxation limits etc.). To see the most up to date information you should also refer to the ‘Current rates’ page. If there are any terms used that you do not understand, please refer to the Glossary section where a brief definition of the key terms can be found.
The CARE Section provides benefits for you and your dependents both before and after your retirement. The benefits you built up prior to 1 April 2020, whilst you were a contributing member of this Section of the Scheme, were based on your pensionable pay for each year of your membership. These benefits are revalued every year to reflect inflation, until you retire and your pension is paid.
Membership of the Scheme does not affect your entitlement to the Basic State Pension, which is payable from your State Pension Age.
The Trustee is responsible for running this Section of the Scheme in accordance with the Trust Deed and Rules. The names of the Trustee Directors are available in the latest Report and Accounts which can be found in the Document Library.
Aon deals with the day-to-day administration of all Sections of the Scheme.
The CARE Section closed to new entrants with effect from 1 October 2016. No new members were admitted except for contributing members of other Sections of the AA Pension Scheme on 30 June 2017, who moved to the CARE Section on 1 July 2017 unless they opted to leave the Scheme. The CARE Section closed to future accrual on the 31 March 2020. This information is therefore only relevant to those who joined the CARE Section before 1 April 2020. All members of the Scheme are either ‘deferred’ i.e. you haven’t started to receive your pension yet, or ‘pensioner’ i.e. you are already getting your pension.
If you transferred to the CARE Section on 1 July 2017 from one of the other Sections of the Scheme, please also refer to the relevant guide for that Section for details of your pension and any other benefits payable following your death in respect of pensionable service before 1 July 2017.
Since 31 March 2020 members have not been required to make any contributions to this Section of the Scheme. The Company is required to meet the cost of any benefits provided from this Section of the Scheme (in excess of the contributions members and the Company previously paid to the Scheme). Company contributions are determined by the Trustee and the Company after considering advice from the Scheme Actuary and are reviewed regularly.
Some members may have previously transferred benefits into the Scheme and in return were granted an additional period of pensionable employment. However, the Trustee is not currently accepting further transfer payments.
As a deferred member you will have a deferred pension in the Scheme that will become payable from your Normal Retirement Date — age 65.
Your pension will increase over the period until your Normal Retirement Date (age 65) broadly in line with inflation. Precise details of your deferred pension entitlement will have been provided to you when you left this Section of the Scheme.
Your pension is payable for your lifetime in monthly instalments paid in advance and will be paid directly into your bank or building society account.
Once in payment, your pension will be increased each year on 1 April (or such other date as the Trustee and the Company agree) as follows:
Your pension is guaranteed to increase each year in line with inflation (as measured by the Retail Price Index, over the 12 months ending on the previous 30 September or such other date as agreed between the Company and the Trustee) up to a maximum of 5%.
Your pension is guaranteed to increase each year in line with inflation (as measured by the Retail Price Index, over the 12 months ending on the previous 30 September or such other date as agreed between the Company and the Trustee) up to a maximum of 2.5%.
You may, if the Trustee agrees, choose to exchange up to 25% of the ‘value’ of your pension benefits for tax-free cash when you take your pension. This is often referred to as “commutation”.
If you have paid Additional Voluntary Contributions (AVCs), then you may also take up to 25% of the value of your accumulated AVC fund as a cash lump sum. The rest of your AVC fund could be used to purchase an annuity from an insurance company or you may be able to take this as a cash lump sum taxed at your marginal rate of income tax.
Alternatively, you can choose to transfer your AVC fund to another defined contribution pension arrangement. The value of your AVCs and the benefits you can secure with them will depend on several factors including the amount of the contributions paid, any charges payable, the age at which you take the benefits, the performance of investments and any cost of converting the benefit into an annuity, if you chose this option.
The Trustee, after considering advice from the Actuary, will decide the amount of pension you will have to exchange for a cash sum when you commence your pension; this will depend on a number of factors including your age, and the cost of providing your pension benefits. The terms for exchanging pension income for cash may be reviewed and altered by the Trustee from time to time.
Although any cash sum taken will reduce your pension, it will not affect any spouse’s, civil partner’s, or dependant’s pension payable on your death.
You may request to transfer the value of your deferred pension and any AVCs you have paid to another registered pension scheme.
The value of your pension (the cash equivalent transfer value (CETV)) is calculated as the amount which needs to be invested in order to provide your future pension. It takes account of the number of years before your expected retirement and financial conditions at a specified date.
You can request a transfer quote once a year, free of charge. Additional requests can be made within the same 12-month period but will require a fee to be paid.
If you are considering transferring, please seek independent financial advice. The Government-backed MoneyHelper scheme advises that, in most cases, transfers from defined benefit schemes like the CARE Section to other schemes, particularly defined contribution schemes, are likely to leave you worse off. Visit the MoneyHelper website for more information and access to a list of Independent Financial Advisers.
The Normal Retirement Age is 65.
If you have reached your Minimum Pension Age (age 55 – rising to age 57 in 2028) and are still in Service, you can request agreement from the Company, that the Trustee pay part of your CARE pension entitlement to you while you remain in Service.
To apply for flexible retirement, you must notify the Company no later than two months before your chosen flexible retirement date. If approved, the terms of your flexible retirement must then be agreed in writing between the Company, Trustee, and yourself.
If you left pensionable service after 31 March 2007 you may choose to start receiving your pension past your Normal Retirement Date of age 65. If your pension starts after the Normal Retirement Date, it will be increased for late payment on a basis determined by the Trustee after considering advice from the Actuary. The Trustee must be reasonably satisfied that the benefits (including death benefits) for a Member who chooses a late pension are at least equal in value to the benefits that would otherwise have been provided for the Member if they had retired at their Normal Retirement Date.
It is possible to commence payment of your pension before your Normal Retirement Date with consent. Whether it is Trustee or Company consent depends on when you left pensionable service.
The earliest date at which your pension can commence is age 55 (this increases to age 57 from 6 April 2028, in line with current legislation).
Your deferred pension will be reduced to reflect that it is expected to be paid for a longer period. The rate of reduction is decided by the Trustee after considering advice from the Actuary.
With the agreement of the Trustee, and in certain cases the Company, after considering medical evidence, your pension may be paid to you before age 55 if you retire on the grounds of ill-health. See the ill-health retirement section for more information.
When you retire you may choose to exchange some of your accumulated retirement income for a cash lump sum, including if you retire due to ill-health. Some or all of this cash lump sum may be paid tax free.
The amount of accumulated retirement income you will have to exchange for a cash lump sum will be decided by the Trustee and the Company based on figures provided by the Scheme Actuary and may be altered from time to time.
Your retirement income will be paid monthly. Income tax will be deducted using the Pay As You Earn (PAYE) system and payments will be paid direct into your bank or building society account. Payslips will be available to view online in the secure pensioners' area of the Scheme website.
If you die before your pension has come into payment and before Normal Retirement Date, the following benefits will be paid:
Your spouse, civil partner or (if they meet the conditions in the Rules and the Trustee agrees) dependant will receive a pension equal to half the pension you would have received if you had retired on the day before you died, ignoring any reduction for early payment.
If you are not married or in a civil partnership, or you are no longer living with your spouse or civil partner and they are not financially dependent on you, the Trustee may choose to pay a pension to someone else who is deemed financially dependent on you (someone other than a child eligible for a children’s pension). This would be entirely at the discretion of the Trustee. However, to make sure that your wishes are considered, you are encouraged to compete, and regularly update, a Dependant’s Nomination Form and return it to Aon. The easiest way to do this is on the Secure Member Portal. The form can be found in the Document library.
If you die and no spouse, civil partner or dependant’s pension is payable, a cash sum may be paid.
The cash lump sum would be equal to the contributions you paid to the Scheme (with interest determined by the Trustee after consulting the Actuary). The Trustee has discretion as to whom payment is made.
A pension is paid to each of your children. Each pension is equal to one quarter of the spouse’s, civil partner’s or dependant’s pension up to a maximum of four children.
For a member who left pensionable service after 28 February 2015, if you have more than four children, a pension equal to the pension payable to your spouse, civil partner or dependant will be shared between those children in such proportions as the Trustee decides. If, at any time, there is no pension paid to a spouse, civil partner or dependant, the pension payable to any child will be doubled.
Pensions will be paid to children up to the age of 18 or and may be paid at the Trustee’s discretion to children up to the age of 23 if they are still in full time education. The Trustee may continue to pay a child’s pension for life if the child was disabled when the member died.
AVCs
A return of the value of any AVCs you may have paid. The Trustee has discretion as to whom payment is made.
If you die before your pension has come into payment and after Normal Retirement Date, the following benefits will be paid:
Your spouse, civil partner or (if they meet the conditions in the Rules and the Trustee agrees) dependant will receive a pension equal to half the pension that would have been payable to you had you retired the day before you died.
If you are not married or in a civil partnership, or you are no longer living with your spouse or civil partner and they are not financially dependent on you, the Trustee may choose to pay a pension to someone else who is deemed financially dependent on you (someone other than a child eligible for a children’s pension). This would be entirely at the discretion of the Trustee. However, to make sure that your wishes are considered, you are encouraged to compete, and regularly update, a Dependant’s Nomination Form and return it to Aon. The easiest way to do this is on the Secure Member Portal. The form can be found in the Document library.
A cash sum equal to the maximum lump sum you could have taken if you had retired the day before you died plus an amount equal to five years of pension payments (disregarding any future pension increases) as well as a return of the value of any AVCs you may have paid. The Trustee has discretion as to whom payment is made.
A pension is paid to each of your children. Each pension is equal to one quarter of the spouse’s, civil partner’s or dependant’s pension up to a maximum of four children. For a member who left pensionable service after 28 February 2015, if you have more than four children, a pension equal to the pension payable to your spouse, civil partner or dependant will be shared between those children in such proportions as the Trustee decides. If at any time there is no pension paid to a spouse, civil partner or dependant, the pension payable to any child will be doubled.
Pensions will be paid to children up to the age of 18 and may be paid at the Trustee’s discretion to children up to the age of 23 if they are still in full time education. The Trustee may continue to pay a child’s pension for life if the child was disabled when the member died.
If you die after taking your pension, the following benefits will be paid:
Your pension is guaranteed for five years, so if you die within five years of commencement of your pension, the remainder of the five years’ pension payments is paid (disregarding any future pension increases). The Trustee has discretion as to whom the payment is made.
Your spouse, civil partner or (if they meet the conditions in the Rules and the Trustee agrees) dependant will receive a pension equal to half the pension payable to you but as if you did not exchange any of your pension for a cash lump sum.
If you are not married or in a civil partnership, or you are no longer living with your spouse or civil partner and they are not financially dependent on you, the Trustee may choose to pay a pension to someone else who is deemed financially dependent on you (someone other than a child eligible for a children’s pension). This would be entirely at the discretion of the Trustee. However, to make sure that your wishes are considered, you are encouraged to compete, and regularly update, a Dependant’s Nomination Form and return it to Aon. The easiest way to do this is on the Secure Member Portal. The form can be found in the Document library.
A pension is paid to each of your children (up to a maximum of four). Each pension is equal to one quarter of the spouse’s, civil partner’s or dependant’s pension up to a maximum of four children.
For a member who left pensionable service after 28 February 2015, if you have more than four children, a pension equal to the pension payable to your spouse, civil partner or dependant will be shared between those children in such proportions as the Trustee decides. If at any time there is no pension paid to a spouse, civil partner or dependant, the pension payable to any child will be doubled.
Pensions will be paid to children up to the age of 18 and may be paid at the Trustee’s discretion to children up to the age of 23 if they are still in full time education. The Trustee may continue to pay a child’s pension for life if the child was disabled when the member died.
Payment of cash sum death benefits
Where a cash sum is paid in the case of death, the recipients will be at the discretion of the Trustee, taking into account any nominations on your Expression of Wish Form.
You can complete an Expression of Wish form online by logging into the Secure Member Portal.
It is important to keep your Expression of Wish form up-to-date, particularly if you have a significant life event, such as getting married or divorced, the birth of a child, or a family bereavement. You can log in any time to check your details.
If you previously completed an Expression of Wish paper form, the administrators will still have that, however, the Trustee strongly recommends you go online and update your details as the online updates will be much quicker and easier to access in the event that the details are needed.
If you prefer to complete a paper Expression of Wish form you can download one from the Document Library.
Pension rights are often taken into account as part of your assets when the court is arranging a divorce settlement or a dissolution order of a civil partnership.
The Trustee must comply with any order made by the court in divorce or dissolution proceedings. The order may affect your benefits under this Section of the Scheme, including any benefits payable on your death.
If you need more details on pensions and divorce, you can request an information pack from the AA Pensions team. Also, please do not forget to complete a new Expression of Wish form which can be done online by logging in to the Secure Member Portal.
For members of the Scheme who reached their State Pension Age prior to April 2016, the State Pension scheme was made up of two main parts:
Provided you have paid the required National Insurance Contributions (NICs) during your working life, you will receive a Basic State Pension. The pension is a fixed amount set by the Government and is increased each year in line with price increases. It is paid from State Pension age.
Further information on the State Pension can be found at www.gov.uk/state-pension.
The Additional State Pension (previously known as the State Second Pension (S2P)) is an extra amount of money you could get on top of your Basic State Pension if you reached State Pension age before 6 April 2016.
From April 2016, the Government introduced a new flat rate pension. The new State Pension is a regular flat rate payment that you get if you reach State Pension age on or after 6 April 2016.
The actual amount you get depends on your National Insurance record.
Further information on the new State Pension can be found at www.gov.uk/new-state-pension
For queries relating to your State benefits, you can contact the Department for Work and Pensions (DWP).
Freepost DWP Pensions Service 3
Telephone: 0800 731 0175
Website: www.gov.uk/check-state-pension
You do not pay tax on your pension savings, up to certain limits which are set by Government.
Full details can be found on the HMRC website. It should be remembered that the tax treatment of pension schemes is outside of the AA’s control and is subject to change in the future by the Government.
If you think that you may breach these limits and incur a tax charge on your pension saving you should seek independent financial advice. Visit the MoneyHelper website for more information and access to a list of Independent Financial Advisers.
Previously a member’s benefits across all the registered pension schemes they are a member of – like the Scheme – were subject to the Lifetime Allowance (LTA). Benefits in excess of the LTA were subject to an extra tax. This tax charge was removed on 5 April 2023 and any benefits taken after this date are no longer be subject to this extra tax. However, the LTA was replaced with two new allowances: the Lump Sum Allowance and the Lump and Sum Death Benefit Allowance.
The maximum lump sum you can take tax free at retirement is now capped at the lower of 25% of the total value of your pension saving or the Lump Sum Allowance (LSA). The LSA is £268,275. The LSA may be different for individuals who have a form of LTA protection, for example enhanced or fixed protection. Only members who applied for such protection will benefit from it. The LSA applies to a number of types of lump sum and applies across all registered pension schemes you are a member of. You will be asked for details of any lump sums you have taken when you retire so the Trustee can determine how much of your LSA you have left. Any lump sum in excess of your LSA will be taxed at your marginal rate.
This is the total tax-free lump sum amount that can be paid to your beneficiaries if you die before age 75. The LSDBA limit is £1,073,100. Any amount in excess of this limit is taxed at your marginal rate.
Any lump sums payable on your death benefits will be tested against the Lump Sum and Death Benefit Allowance when you die.
If you have any of the LTA protections noted above or your tax position is more complicated for other reasons, it is a good idea to speak to an independent financial advisor. If you do not have your own adviser, you can find one local to you at www.unbiased.co.uk
The above is a summary of the tax regime. You can obtain further information about the Lump Sum Allowance and the Lump Sum and Death Benefit Allowance, including available LTA protections from the HMRC website www.gov.uk/tax-on-your-private-pension
It should be remembered that the tax treatment of pension schemes is outside of the Company’s or Trustee’s control and is subject to change in the future by the Government.
Your entitlement to CARE benefits may be withdrawn or reduced if you are party to a fraudulent, negligent, or criminal act which results in financial loss to the Company.
Your benefits are strictly personal and cannot be assigned to any other person or used as security for a loan including a mortgage.
In line with legal requirements, the Trust Deed and Rules contain provisions to amend or wind-up the CARE Section in specific circumstances.
The Trustee will hold personal data provided by you (and, where appropriate, by third parties such as the Company) for the purpose of calculating and providing your benefits and your dependants’ benefits under the Scheme.
The Trustee needs to use your personal data:
The Trustee may share your personal data with others (within the United Kingdom or in any other country) where it thinks it is necessary or desirable to do so in connection with the administration of the Scheme. In particular the Trustee may make the information available to its professional advisers, to the Company, to the Scheme Administrator and to any other persons who may become responsible for providing benefits. The Trustee has measures in place to protect the security of your personal data and keep it confidential.
You can find out more about how the Trustee will use your data by reading the Trustee’s privacy notice. If you would like a copy of the privacy notice, please request one from the AA Pensions team.
If you have a complaint relating to CARE you should contact AON the Scheme administrator in the first instance. Aon can also provide a copy of the Internal Dispute Resolution Procedure (IDRP) and any forms you need.
MoneyHelper
MoneyHelper offers unbiased information and advice on a range of topics and has a number of tools for you to use in your retirement planning. It can help you with pensions questions and any issues that you have been unable to resolve with the Trustee.
Website: www.moneyhelper.org.uk/en
Pensions Helpline: 0800 011 3797
From overseas: +44 20 7932 5780
The Pensions Ombudsman
If you have a complaint or dispute in relation to the Scheme, you should contact the Pensions Ombudsman, who may be able to investigate this matter on your behalf free of charge. The Pensions Ombudsman will expect you to have tried to resolve your complaint or dispute through the Scheme’s IDRP first.
You can contact the Pensions Ombudsman by writing to:
The Pensions Ombudsman
10 South Colonnade
Canary Wharf
E14 4PU
Telephone: 0800 917 4487
Website: www.pensions-ombudsman.org.uk
Email: enquiries@pensions-ombudsman.org.uk
The Pensions Regulator (TPR)
TPR is responsible for regulating UK pension arrangements. It has the power to intervene in the running of a pension scheme where trustees, employers or professional advisers have failed in their duties. TPR can be contacted at:
The Pensions Regulator
Napier House
Trafalgar Place
Brighton
East Sussex
BN1 4DW
Telephone: 0345 600 0707
Website: www.thepensionsregulator.gov.uk
The Pension Tracing Service
The Pension Tracing Service holds details of over 200,000 occupational and personal pension schemes. If you need help to trace pension benefits from previous employment, for example if you leave and lose touch with your employer, you can ask for free help by contacting:
Pension Tracing Service
The Pension Service
Mail Handling Site A
Wolverhampton
WV98 1AF
Telephone: 0800 731 0175
Website: www.gov.uk/find-pension-contact-details
CARE is a Section of the AA Pension Scheme. The Scheme is registered and approved by HM Revenue & Customs under the Finance Act 2004. It is run in accordance with its Rules. Nothing contained in this can override the Rules.
CARE’s assets are entirely separate from
those of the AA. It is managed by the Trustee in accordance with its Rules and
legislative and tax requirements.
The Scheme is set up as a trust. The assets of the Scheme are held entirely separately from the Company and may only be used to pay benefits to and in respect of members and the expenses of running the Scheme until the Scheme is wound up. All the benefits from the Scheme are provided out of the funds of the trust.
The trust is administered by a trustee company called AA Pensions Trustees Limited (‘the Trustee’). The Trustee’s role is to ensure that the Scheme is managed according to the Rules, and that its assets are invested prudently in line with the Statement of Investment Principles. Its board is made up of employer appointed and member nominated directors, whose names appear in the Scheme’s annual report, which the Trustee publishes each year, and which reports on progress over the preceding twelve months. Copies are available from the AA Pensions team.
The Rules are the governing documentation of the Scheme and in the event of any ambiguity or inconsistency between the Rules and this guide or any announcement; it is the Rules that will apply. This is a guide and does not confer any entitlement to benefits.
The Trustee must prepare a statement concerning decisions about investment of the Scheme’s funds, as required by law, and review it from time to time. The Trustee must seek independent advice from a suitably qualified investment adviser and consult with the Company in arriving at this statement. You can see the latest Statement of Investment Principles in the Document Library. Copies are also available on request from the AA Pensions team.
The Pension Protection Fund (PPF) compensates members of eligible pension schemes when their employer becomes insolvent, and their scheme does not have sufficient assets to pay benefits to members. The PPF provides compensation to members which is generally at a lower level than the benefits provided by the scheme. Future pension increases are only provided on a limited basis. The benefit payable to a scheme member from the PPF is restricted to a maximum. For more information on the PPF, visit its website at: www.pensionprotectionfund.org.uk
The websites listed below provide information on pensions, financial planning, and State benefits.
www.gov.uk/government/organisations/department-for-work-pensions — The Department of Work and Pensions provides information and advice on pensions, savings, and State benefits. You can also request a State Pension Forecast here.
www.hmrc.gov.uk — This site contains information about issues including tax, National Insurance, and tax credits.
www.unbiased.co.uk — The official site for personal independent financial advice. You can find general advice and contact details for an adviser in your area.
This information has been produced by the Trustee. If you have any queries relating to any section or to your benefits you should first contact the AA Pensions team. Their contact details are:
The AA Pensions team
Aon
PO Box 196
Huddersfield
HD8 1EG
Telephone: 0345 850 6406
Email: AA.pensions@aon.com
When you call the Helpline the following questions will always be asked:
You can also contact this team with any queries relating to your pension payslip.
We are here to help you so please do what you can to be prepared before calling. If you cannot pass the data security questions then we will not be able to divulge any information.
You can also contact the AA Pensions Department:
AA Pensions Department
Level 3, Plant, Basing View
Basingstoke
Hampshire
RG21 4HG
Email: pensions@theaa.com