Retirement may seem a long way off. Although, you are no longer a contributing member of the Management 2 section of the AA Pension Scheme (‘the Scheme’), planning how to provide for the future, for you and your family still involves important decisions for you to make.
These pages describe the benefits offered to members who previously contributed to the Management 2 section of the Scheme employed in the UK.
It has been designed to give members a broad outline of the benefits provided by the Scheme, as such, this is only a guide and not a legal document. The Scheme is governed by the Trust Deed and Rules, a copy of which is available from the AA Pensions team. If there is any conflict between this and the Trust Deed and Rules, then the Trust Deed and Rules will take precedence.
With effect from 30 June 2017, all contributing members of this section of the Scheme ceased to accrue any further benefits from this section of the Scheme. Consequently, members as at this date become deferred members of this section.
All contributing members of this section as at 30 June 2017 joined the CARE section of the Scheme for future accrual, unless you elected to opt out at the time. The CARE section Booklet provides more information regarding your service with effect from 1 July 2017.
If there are any terms used that you do not understand, the Glossary section of the Pension Scheme website provides a brief definition of the key terms regularly used.
This section provides benefits for you and your dependents both before and after your retirement. The benefits you built up prior to 1 July 2017 whilst you were a contributing member of this section of the Scheme are covered in more detail.
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.
The Trustees have currently appointed Aon as our Pension Administrators. Aon deal with the day to day administration of the all sections of the Scheme.
This section of the Scheme is closed to accrual and to new joiners so it is not possible for you to rejoin this section as a contributing member if you were to rejoin the Company, or elect to rejoin the Scheme (if you previously decided to opt out). If, however, you were a contributing member of this section as at 30 June 2017, you automatically became a contributing member of the CARE section of the Scheme with effect from 1 July 2017, unless you elected to opt out at the time. The CARE section Booklet provides more information.
Information contained here is in relation to the Management 2 section of this Scheme and is only relevant to those who have already built up a benefit in this section before 30 June 2017.
Since 1 July 2017 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).
You may have the option to retire early or late. You may also take a transfer payment out of the Scheme. If you do and you transfer your benefits to a money purchase scheme, you may be required to take independent financial advice.
Your deferred pension is payable from your Normal Retirement Date. You will receive increases to your deferred pension to help protect it against inflation.
The Guaranteed Minimum Pension (GMP) included in your deferred pension will also be subject to increases. The exact basis differs depending upon when you became a deferred member of the section, when your pension commenced and your age.
Your pension (above your GMP) will increase over the period from the date you left service until your Normal Retirement Date broadly in line with inflation (as measured by the Consumer Price Index) up to a maximum of 5% per year for your pension built up prior to 6 April 2009 and up to a maximum of 2.5% per year for your pension built up after this date. If you were in service on 30 June 2010, you will have been treated as leaving service and immediately re-joining on that date. Therefore, you will be treated as having earned two separate pensions. The pension you earned before 1 July 2010 will have increased as outlined above since 30 June 2010.
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 by monthly instalments in advance and will be paid directly into your bank or building society account.
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” - in line with current legislation.
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 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 give up in exchange for a cash sum when you commence your pension; this will depend on your age. The terms for exchanging pension income for cash may be reviewed and altered by the Trustee from time to time on the advice of the actuary.
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, save for any children’s pension which is calculated by reference to your reduced pension.
As a member with an entitlement to a deferred pension, it is possible to commence payment of your pension before your Normal Retirement Date with Trustee consent.
The earliest date at which your pension can commence is age 55 (this increases to age 57 from 6th April 2028, in line with current legislation).
Your deferred pension will however be reduced due to the fact that it will be paid for a longer period. The rate of reduction is decided by the Trustee after considering advice from the Actuary.
As a member with an entitlement to a deferred pension, it is possible to commence payment of your pension after your Normal Retirement Date with Trustee consent. Your pension will be increased to reflect the fact that it will be paid for longer by such amount as the Trustee decides having taken the advice of the actuary.
With the agreement of the Trustee after considering medical evidence, your pension (as described above) may be paid to you before age 55 if you retire on the grounds of ill-health, which may include an enhancement in cases of serious incapacity with the agreement of the Company. Once an enhanced ill-health pension has been granted it is subject to periodic review and may be reduced or suspended at any time before Normal Retirement Date. If you have less than 12 months to live, you may be able to commute all of your pension to a lump sum, subject to evidence of your life expectancy from a registered medical practitioner. If you take a transfer of your deferred pension to a money purchase scheme, you may be required to take independent financial advice.
You may request to transfer the value of your deferred pension and any AVCs to another registered pension scheme.
The value of your deferred 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 retirement and financial conditions at the date of payment of the CETV. You are entitled to request a transfer quotation once a year free of charge which outlines the transfer value, at a specified date. If you do wish to consider transferring, please seek independent financial advice to make sure it is in your best interest to do so. Additional requests for a CETV quotation within the same 12 month period will be chargeable. If you take a transfer of your deferred pension to a money purchase scheme, you may be required to take independent financial advice.
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:
Where your pension has been in payment for less than a year, it will be increased by one-twelfth of the above amount for each month it has been in payment.
The GMP element of your pension will be subject to increases, the exact basis differs depending upon when you became a deferred member of the section, when your pension commenced and your age.
Pensions in payment are reviewed each year by the Company, which may award additional discretionary increases to help keep pace with inflation.
If you die before your pension has come into payment, the following benefits will be paid:
If you die after taking your pension, the following benefits will be paid:
Where a cash sum is paid in the case of death, the recipients will be at the discretion of the Trustee but they will take into account any nominations on your Expression of Wish Form.
If you have not yet logged in to the Scheme website to complete an online Expression of Wish form, please could we ask you to do this as soon as possible.
If you have previously completed an Expression of Wish form, please take a moment to check that the information on it is up to date. If you need to make changes, you can do this online.
If you have previously completed an Expression of Wish in paper form, the Trustee would still ask that you enter your wishes online.
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
You cannot opt-out of the Basic 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.
How much you get depends on:
From April 2016, the Government introduced a new flat rate pension. The new State Pension is a regular flat rate payment from the government that you can 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).
Future Pension Centre
The Pension Service 9
Mail Handling Site A
Wolverhampton
WV98 1LU
Telephone: 0800 731 0175
Website: www.gov.uk/check-state-pension
With effect from 30 June 2017 contributing members at that time were no longer able to continue paying contributions into this section of the Scheme and joined the CARE section for future accrual. The CARE section closed to future accrual on 1 April 2020. Therefore, the taxation of contributions and the earning of benefits is no longer relevant to the Scheme.
From 6 April 2024, the Lifetime Allowance (LTA) which sets the total value of all the pension savings you can build up before having to pay extra tax, is being abolished. The limit of cash, members can take will remain the same. From 6 April 2023, the LTA charge has been removed, so there will be no additional tax charge from this date. However, the maximum lump sum you can take at retirement will remain capped at the lower of 25% of the total value of your pension saving or £268,275 (25% of the LTA before the tax charge was abolished). This 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.
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
You can obtain further information about the LTA, including available 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. In particular, it is anticipated that the LTA will be replaced with a new tax regime but we do not yet know the details.
Your entitlement to Scheme 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. If you attempt to do so, the Trustee may decide that you are no longer entitled to benefits from the Scheme.
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 you should in the first instance contact the Scheme’s Pension Department about any concerns — it may be that a concern can be resolved informally. If the matter cannot be resolved informally, the Scheme has a formal Internal Disputes Resolution Procedure (IDRP).
The IDRP will be used to resolve any dispute if you have a serious problem that the Pension Department cannot resolve, or you are unhappy with the decision reached. To begin the IDRP your complaint must be sent in writing and addressed to the Chairman of the Administration Committee.
Please refer to the Document library of the Scheme website where you can download a copy of the Scheme’s Formal Internal Disputes Resolution Procedure which also includes the STAGE 1 Dispute Form (Initial Complaint).
You will then receive a written decision and an explanation, where possible within four months of your written complaint being received.
If you are still dissatisfied, you have the right to appeal to the Trustee.
Money Helper offers unbiased information and advice on a range of topics and has available a range of tools for you to use in your retirement planning. It can help you with pensions questions and any issues they 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
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
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 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 9
Mail Handling Site A
Wolverhampton
WV98 1LU
Telephone: 0345 6002 537
Website: www.gov.uk/find-pension-contact-details
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 the 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.
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. Copies are available from the AA Pensions team.
The Company is committed to the Scheme and has every intention of continuing it, but future conditions cannot be foreseen. The Rules give the Company the right to terminate the Scheme (without replacing it) at any time, and the right to amend the Scheme (subject to certain restrictions) by agreement between the Company and the Trustee.
In the event of the Scheme being terminated, benefits for pensioners, members and other beneficiaries would be transferred to an alternative arrangement, for example an insurance company. The funding of the Scheme aims to ensure that the assets are, in normal circumstances, sufficient so that benefits can be paid as and when they become due. If the assets prove insufficient, the Company (unless it had become insolvent) would be responsible for making up the shortfall.
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. In particular, 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:
…plus one of the following additional questions:
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
Fanum House
Basing View
Basingstoke
Hampshire
RG21 4EA
Telephone: 01256 491 003
Email: pensions@theaa.com