your guide to the m&g group pension scheme

Your guide to the

M&G Group Pension Scheme

3

Contents

Some terms explained � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 5

Membership of the Scheme, Contributions and Building up Benefits and Charges � � � � � � � � � � � � � � � � � � � � 7

Benefits on retirement � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 8

Exchanging pension for a tax-free cash sum � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 11

Payment of Pensions and Pension Increases � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 13

Ill-Health Benefits � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 14

Leaving Pensionable Service � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 15

Transfers� � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 16

Death Benefits � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 17

Additional voluntary contributions � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 18

Pensions Taxation � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 19

The State Pension Scheme � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 20

Complaints Procedure � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 21

Personal information and External Bodies � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 22

Trustee and its Advisers � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 23

Amendment or Discontinuance� � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 24

4

M&G Group Pension Scheme

This booklet is a simple guide to the M&G Group Pension Scheme (the Scheme) for active Members of the Scheme as at 1 January 2021� If you are a deferred Member or pensioner of the Scheme, your benefits may be different� You can contact the Scheme Administrator if you have any questions�

The Scheme provides retirement, death and sickness benefits for you and your family� The Scheme is governed by a Trust Deed and Rules and administered by The First British Fixed Trust Company Limited (the Trustee)� This booklet is purely explanatory and the actual benefits payable to you may differ from those set out in this booklet� If there is any inconsistency between the Trust Deed and Rules and this booklet, the Trust Deed and Rules will take precedence�

If you have a question regarding the Scheme or if you would like to view a copy of the formal documentation that provides more information about the Scheme including the following most recent documents, please contact: the Pensions Manager, M&G Group Pension Scheme, M&G plc, 10 Fenchurch Avenue, London EC3M 5AG�

• Statement of Funding Principles

• Recovery Plan

• Statement of Investment Principles

• Schedule of Contributions

• Annual Report and Accounts of the Scheme

• Full report on the Actuarial Valuation

• Scheme Actuary’s report on the funding position

• Trust Deed and Rules

The Scheme Administrator is: XPS Administration, Priory Place,

New London Road, Chelmsford, Essex, CM2 0PP

[email protected]

01245 968171

Example MembersThroughout this booklet we provide a number of illustrations to help explain the possible benefits available to you from the Scheme� These illustrations use three example members whose details are as follows:

Alex – joined the Scheme at age 47, with Final Salary of £30,000 and Normal Retirement Date of age 65�

Sam – joined the Scheme at age 25, with Final Salary of £30,000 and Normal Retirement Date of age 65�

Ashley – joined the Scheme at age 47, with Normal Retirement date of age 65 and started working 50% of hours after 5 years’ service� Ashley’s current annual salary is £15,000�

Please note: The content of this booklet reflects the understanding at the time of publication�

5

Some terms explained

Civil partnerIn relation to a deceased member, his or her civil partner as defined by law�

CompanyM&G Limited, and any other M&G Group company that is participating in the Scheme�

DependantA Member’s spouse or civil partner and any other person that the Trustee considers to be financially dependent on the Member�

Exit DateEarlier of the date a Member retires from or leaves Pensionable Service or the date of his or her death�

Family LeaveAbsence from work due to statutory adoption, maternity, parental or paternity leave� Family Leave, paid or unpaid, is counted as Pensionable Service�

Final SalaryThe greater of Salary in the last 12 months of service and the yearly average of Salary over the last 36 months of service� For active members of the Scheme, Salary is capped at its level on 30 September 2019: please refer to the separate communications you received in relation to this�

Guaranteed Minimum Pension (GMP)The minimum amount of pension that must be provided from the Scheme for a Member who was contracted-out of the State Earnings-Related Pension Scheme (SERPS) or State Second Pension (S2P)� No GMP accrues in respect of service after 5 April 1997�

Lifetime AllowanceHer Majesty’s Revenue and Customs (HMRC) imposes a limit, called the Lifetime Allowance (LTA), on the overall amount of pension benefits you can take from all sources without triggering an additional tax liability� The LTA for the tax year 2020/21 is £1,073,100� The LTA increases each year in line with the increase in the Consumer Prices Index (CPI)� HMRC publish the increases in the LTA on their website each year�

Benefits over the LTA will be subject to additional taxation at the rate of either 25% for benefits taken as income or 55% for benefits taken as a cash sum� Further information is given on page 20�

Lifetime Allowance Member (LTA Member)A Member of the Scheme whom the Company (with the Member’s permission) notifies the Trustee is to be an LTA Member, and immediately before this is in Pensionable Service� LTA Members are not required to pay contributions and any period of continued service (called LTA Service) will not count towards Pensionable Service, except in the calculation of Ill-health and Death-in-Service benefits� Details are explained in the relevant sections�

Normal Minimum Pension AgeAge 55� The Government has indicated that it intends to increase this to 57 in 2028 (when the State Pension Age increases to 67) and that it will remain at 10 years below State Pension Age thereafter� The Normal Minimum Pension Age was age 50 until 5 April 2010�

6

Normal Retirement DateThe first day of the month following attainment of age 60 for Selected Members and age 65 for all other Members�

Pensionable ServiceContinuous period of service as a contributing Member of the Scheme up to Normal Retirement Date or date of leaving or death, if earlier�

Permitted MaximumFor Members joining the Scheme on or after 1 June 1989, benefits may be restricted to less than the amount described in this booklet where the Member’s Final Salary exceeds the permitted maximum� The permitted maximum is 170,400 in 2020/21 and is subject to annual review by HMRC�

Qualifying ServicePensionable Service plus the period of membership of any previous scheme that makes a transfer payment to the Scheme in respect of the Member�

Retained BenefitsAny other benefits you may be entitled to from other registered pension schemes that built up before 6 April 2006 ie benefits in respect of your previous employment(s)�

SalaryBasic annual salary, including Statutory Family Pay (SFP, meaning any statutory adoption, maternity or paternity pay) and Statutory Sick Pay (SSP) and excluding overtime, bonuses, commission, director’s fees or other forms of remuneration� For active members of the Scheme, Salary is capped at its level on 30 September 2019: please refer to the separate communications you received in relation to this�

Selected MemberA Selected Member is an employee of the Company whom the Board of M&G Limited decides should be permitted to become a Selected Member and who has agreed to be a Selected Member�

SpouseThe person to whom a Member is married including both opposite sex and same sex spouses�

Unpaid leaveIf you are absent from work for a reason other than Family Leave, this period can be counted as Pensionable Service, provided the Company agrees and you make contributions at the end of your unpaid leave, based on the Salary you were receiving immediately before going on unpaid leave�

7

Membership of the Scheme, Contributions, Building up benefits and Charges

Your Scheme membershipThe Scheme is closed to new Members� In exceptional circumstances, the Company and Trustee may agree that an employee of the Company can become a Member� This would be subject to terms and conditions agreed by the Company and Trustee�

You can opt out of the Scheme, in which case contributions will cease and your benefits will be calculated as though you had left service (see page 15)� If you do opt out, you will not be able to re-join the Scheme again, unless the Trustee agrees and then only on the terms decided by the Trustee�

Member contributionsYou currently contribute 4% of Salary to the Scheme unless you opt out of the Scheme or, in limited circumstances, are not required to� Your Scheme contributions qualify for tax relief at the highest rate you pay� They are deducted from your gross pay and you are not required to claim for tax relief as this is granted automatically� During times when you are receiving only Statutory Family Pay, you will not be required to pay normal contributions�

Company contributionsThe Company contributes the balance of the cost to provide the benefits, after taking into account the Members’ contributions� The Company usually pays considerably more than the Members’ contributions�

Making extra savingsIf you wish to increase your retirement savings, you can pay Additional Voluntary Contributions (AVCs)� More details are shown on page 18�

Retiring at Normal Retirement DateIf you remain in the Scheme until Normal Retirement Date and complete at least 30 years of Pensionable Service, the annual amount of your pension will be equal to 2/3rds of your Final Salary� If it is not possible for you to complete 30 years’ Pensionable Service by Normal Retirement Date, the annual amount of your pension will be equal to 1/45th of your Final Salary for each year of Pensionable Service� As a result, the rate

at which you build up benefits depends on the number of years’ potential Pensionable Service you can complete from the date you join the Scheme until your Normal Retirement Date:

*Subject to a maximum of 40 years�

This sliding scale of accrual rate is a consequence of the Scheme’s benefit design being based on a targeted benefit at retirement (2/3rds), but with a minimum of 30 years’ Pensionable Service being required to qualify for this� If the rate at which you build up benefits (the effective accrual rate) is greater than 60ths, your benefits may be reduced depending on the level of any Retained Benefits you may have�

Part-time employeesIf you work part-time, your contributions and benefits are adjusted to reflect your part-time employment� The adjustment is calculated on a pro-rata basis and compares standard full-time hours with the number of part-time hours that you work� Your part-time service does not impact your effective accrual rate, which remains unchanged from the date you joined the Scheme�

ChargesCurrently there are no administration fees charged for exercising any of your rights to your benefits from the Scheme or investing in the Scheme’s AVCs�

Further information about your benefits is available from the Scheme Administrator�

Potential Years of Pensionable Service to Normal

Retirement DateEffective

accrual rate

20 45ths

25 45ths

30 45ths

35 52�5ths

40+ 60ths*

8

Normal Retirement Example – AlexAlex joined the Scheme at age 47, and therefore has less than 30 years’ potential Pensionable Service� If Alex works until Normal Retirement Date (age 65), Alex will complete 18 years’ Pensionable Service� With a Final Salary of £30,000, Alex’s pension at Normal Retirement Date will be calculated as:

Normal Retirement Example – SamSam joined the Scheme at age 25, and therefore has 40 years’ potential Pensionable Service� If Sam works until Normal Retirement Date (age 65), Sam will complete 40 years’ Pensionable Service� With a Final Salary of £30,000, Sam’s pension at Normal Retirement Date will be calculated as:

Normal Retirement Example – AshleyAshley joined the Scheme at age 47, and therefore has 18 years’ potential Pensionable Service� Ashley worked full-time for the first 5 years’ Pensionable Service, and then worked part-time at 50% of hours until Normal Retirement Date (13 years)� Ashley’s Pensionable Service at Normal Retirement Date would be calculated as: 5 + (50% x 13) = 11�5 years�

With a part-time Salary of £15,000, Ashley’s pension at Normal Retirement Date will be calculated as:

*The Final Salary of £30,000 is the full-time equivalent of Ashley’s part-time Salary at retirement�

Members have the option to exchange some of their pension for a tax-free cash sum� For more information see the Exchanging pension for a tax-free cash sum section on page 10�

Members also have the option, with the Trustee’s consent, to exchange some pension for additional dependants’ benefits� This needs to be agreed before benefits are in payment� Please contact the Scheme Administrator for more information about this option�

Retiring after Normal Retirement DateIf the Company agrees, you may remain in service after Normal Retirement Date and start receiving an immediate pension� You may also be able to defer drawing your pension until your actual retirement�

For more information on the options, please contact the Scheme Administrator�

Benefits on retirement

Final Salaryx

Pensionable Servicex

Accrual rate=

Annual pension

£30,000 18 1/45 £12,000

Final Salaryx


Accrual rate=

Annual pension

£30,000 18 1/45 £12,000

Final Salaryx


Accrual rate=

Annual pension

£30,000* 11�5 1/45 £7,667

9

Retiring before Normal Retirement Date (not due to ill-health)Provided you are at least the Normal Minimum Pension Age and the Company agrees, you may retire before Normal Retirement Date and receive an immediate pension� The amount of your pension will be calculated based on your actual Pensionable Service and your Final Salary at the date of leaving Service� You will have the same options to exchange pension for a tax-free cash sum or dependants’ benefits�

If you elect to take your benefits early, your pension is expected to be paid for longer than if you had retired at Normal Retirement Date and your pension will be reduced to reflect this� The amount of the reduction reflects how early you take your benefits and whether you are in Service or a deferred member when you draw your benefits� The table shows some example rates of reduction to help illustrate the likely reductions� These factors are correct at February 2019, but are subject to regular review by the Trustee and may change at any time� NB – if you are in Service and your Final Salary is below £35,000 or above the Permitted Maximum, your factors may be different�

Early retirement pensions are calculated in two stages, as shown below:

Early Retirement Example – AlexIf Alex retires immediately on leaving service at age 60, Alex will have completed 13 years’ Pensionable Service and will be retiring 5 years early� With a Final Salary of £30,000, Alex’s early retirement pension would be calculated as follows:

Stage 1 – The accrued pension is calculated as:

Stage 2 – The early retirement factor is applied:

Number of years before Normal Retirement Date Reduction Factor

0 1�000

5 0�794

10 0�631


Accrual ratex

Final Salary=

Annual pension at NRD

13 1/45 £30,000 £8,666�67

Early retirement factorx

Annual pension at NRD=

Early retirement pension

0�794 £8,666�67 £6,881�34

10

Early Retirement Example – SamIf Sam chooses to retire immediately on leaving service at age 55, Sam will have completed 30 years’ Pensionable Service and be retiring 10 years early� With a Final Salary of £30,000, Sam’s early retirement pension would be calculated as follows:



Early Retirement Example – AshleyIf Ashley chooses to retire immediately on leaving service at age 55, Ashley will have completed 5 + (50% x 3) = 6�5 years’ Pensionable Service and be retiring 10 years early� With a part-time Salary of £15,000, Ashley’s early retirement pension would be calculated as follows:


*The Final Salary of £30,000 is the full-time equivalent of Ashley’s part-time Salary at retirement�


You can obtain a formal quotation from the Scheme Administrator� You will need the agreement of the Company if you are retiring from active service�

If you are intending to retire early, you may wish to boost your benefits by making additional savings� One way you can do this is by paying AVCs (see page 18)�


Accrual ratex

Final Salary=


30 1/60 £30,000 £15,000�00


Accrual ratex

Final Salary=


6�5 1/45 £30,000* £4,333�33




0�631 £15,000�00 £9,465�00




0�631 £4,333�33 £2,734�33

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Exchanging pension for a cash sumWhen your pension payments start, you can exchange part of your annual pension for a tax-free cash sum� The amount of tax-free cash you can take is limited by HMRC; currently the limit is broadly 25% of your total benefits from the Scheme (subject to a maximum of 25% of the unused Lifetime Allowance – see page 19 for further information)� In addition, the amount of your pension remaining after commutation must not be less than any GMP�

Your annual benefit statement shows an illustration of the pension you would receive at Normal Retirement Date if you stayed in Service until that date with an unchanged Final Salary, and also the alternative option of maximum tax-free cash sum and reduced annual pension�

Your own pension will be reduced if you take this option, however any spouse’s pension will not be affected� The factors used to calculate the reduction depend on your age at retirement and vary from time to time�

Cash Sum Option Example – AlexOn normal retirement, Alex has an annual pension of £12,000 (see page 7)� If Alex instead wished to take the maximum tax-free cash, Alex’s pension would be calculated as follows:

Stage 1 – The maximum tax-free cash is calculated as:

*HMRC factor is 20/(3 + 20/(CCF)) where CCF is the Scheme’s Cash Commutation Factor� We have used a cash commutation factor of 21�57 in our calculations above and below for illustrative purposes� These factors are generally reviewed every three years following an actuarial valuation and hence are subject to change�

Stage 2 – The reduced pension is calculated as:

Exchanging pension for a tax-free cash sum

Annual pension at NRDx

HMRC factor=

Maximum tax-free cash

£12,000 *5�09 £61,112�03

Annual pension at NRD-

Pension given up by taking cash=

Reduced annual pension

£12,000 £61,112�03/21�57 £9,116�80

12

Cash Sum Option Example for Member with AVCs – AlexNow assume that Alex also has an AVC fund at retirement of £40,000� As this is less than the maximum tax-free cash allowed by HMRC, Alex can take the full AVC fund as cash (see page 18)� If Alex chose this option, Alex’s pension would be calculated as follows:

Stage 1 – The maximum tax-free cash is calculated as:

*HMRC AVC factor is 1 – (3/(3 + 20/(CCF))) where CCF is the Scheme’s Cash Commutation Factor�

Of this maximum tax-free cash, £40,000 comes from the AVC fund and the remaining £30,556.02 is taken from Alex’s pension.Stage 2 – The reduced pension is calculated as:

Trivial commutationIf you have reached the Normal Minimum Pension Age and have total pension funds (across all registered pension schemes of which you are a member) of £30,000 or less, you may be able to take all your benefits (excluding any defined contribution funds) at once as a single cash sum� 25% of the amount will be paid tax-free and the rest taxed at your marginal rate of income tax for the relevant tax year�

If the value of your benefits in the Scheme (and any other registered pension scheme relating to the same employment) is £10,000 or less, you will be able to take that amount as a cash sum (taxed as above), even if the value of your total pension savings across all registered pension schemes is more than £30,000�

Annual pension at NRDx

Pension given up by taking cash=

Reduced annual pension

£12,000 £30,556�02/21�57 £10,583�40

Annual pension at NRD x HMRC factor + AVC fund x HMRC AVC factor =

Maximum tax-free cash

£12,000 5�09 £40,000 *0�24 £70,556�02

13

Payment of Pensions and Pension Increases

Payment of pensionsScheme pensions are payable monthly in advance on the 25th of each month and will be taxed as earned income through the PAYE system� You may not assign your pension or use it as security for a loan; any attempt to do so can lead to forfeiture of your pension�

Pension increasesIf your pension includes any GMP, this part will be increased as required by legislation as follows:

• GMP earned on or before 6 April 1988 will not receive any increases from the Scheme (although if you reached State Pension Age before 6 April 2016, the Government may pay increases which will be added to your basic State Pension each year)�

• GMP earned after 5 April 1988 will be increased annually on 1 October by the lower of 3% and the increase in the Consumer Price Index over the 12 months to the preceding September (if the Consumer Price Index in any year is more than 3% and you reached State Pension Age before 6 April 2016, the rest of the increase may again be paid by the Government and be added to your basic State Pension each year)�

The balance of your pension (ie the excess over GMP) will be increased as follows:

• Pension earned on or before 6 April 2006 will be increased annually on 1 October by the lower of 5% and the increase in the Retail Prices Index over the 12 months to the preceding July�

• Pension earned after 6 April 2006 will be increased annually on 1 October by the lower of 2�5% and the increase in the Retail Prices Index over the 12 months to the preceding July�

14

If you become seriously ill while you are in service with the Company and retire before reaching your Normal Retirement Date, you may be eligible for an ill-health pension�

Ill-health pensions are allowed only if, in the opinion of the Company and the Trustee, you are prevented by ill-health from following your occupation or another occupation for which you are suitably trained, subject to considering the advice of a qualified medical practitioner� If, in their opinion, you are fit to follow another occupation for which you are suitably trained, no ill-health pension will be paid�

If you are requested to provide medical evidence of your continued ill-health and you do not comply, the Trustee may suspend or reduce your ill-health pension at any time before Normal Retirement Date�

If you are a LTA Member, your pension will be calculated as if you had never become a LTA Member (ie all of your LTA Service will count as Pensionable Service)� Ill-health benefits are tested against the Lifetime Allowance in the usual way (see page 19 for further information)�

The ill-health pension is calculated in 2 stages as follows:

From actual retirement date to Normal Retirement DateA pension of the minimum of 2/3rds of your Salary at your Exit Date or, if less, the pension you could have received if you had remained in Pensionable Service to Normal Retirement Date� This amount will be payable until Normal Retirement Date�

The enhancement to what would have been your accrued pension is normally tested against the Annual Allowance when it starts to be paid�

On reaching Normal Retirement DateThe pension is recalculated as if you had remained in Pensionable Service to Normal Retirement Date, but based on your Salary at your actual retirement date increased each year by the lower of 5% or the increase in the Retail Prices Index from retirement to Normal Retirement Date�

Pensions in payment will be increased as described on page 12�

Ill-Health Retirement Example – AlexIf Alex retires at age 50 due to ill-health, with a Final Salary of £30,000 at Exit Date, then before Alex reaches Normal Retirement Age, Alex will receive:

2/3rds x £30,000 = £20,000 per annum�

With pension increases each year as described on page 12�

Once Alex reaches Normal Retirement Date, Alex’s pension will be calculated as:18/45ths x £46,739�02* = £18,695�61 per annum�*The Final Salary of £46,739�02 is Alex’s Salary at retirement of £30,000 increased by 3% per annum, assuming this represents the increase in the Retail Prices Index over the period from the date of retirement up to Alex’s Normal Retirement Date�

Ill-Health Benefits

15

If you leave Pensionable Service before Normal Retirement Date, you will become a deferred member of the SchemeYou will be entitled to a deferred pension payable at Normal Retirement Date calculated as:

• Final Salary at leaving x Pensionable Service/accrual rate�

Options for deferred members• A transfer payment to another suitable

pension arrangement�

You may transfer your benefits to another suitable pension arrangement�

• After you reach Normal Minimum Pension Age, and before your Normal Retirement Date, you can choose to take your deferred pension early� If you choose to do this, your pension will be reduced to take account of early payment� If, when you make this choice, you are still in service with the Company, the Company will need to agree to you taking your deferred pension early�

For more information on the options, please log on to the Scheme’s website or contact the Scheme Administrator�

Leaving Service Example – AlexIf Alex leaves the Scheme at age 53, Alex will have completed 6 years’ Pensionable Service� With a Final Salary of £30,000, Alex’s deferred pension will be calculated as:

6/45ths x £30,000 = £4,000 per annum�

Leaving Service Example – SamIf Sam leaves the Scheme at age 41, Sam will have completed 16 years’ Pensionable Service� With a Final Salary of £30,000, Sam’s deferred pension will be calculated as:

16/60ths x £30,000 = £8,000 per annum�

Leaving Service Example – AshleyIf Ashley leaves the Scheme at age 54, Ashley will have completed 5 + (50% x 2) = 6 years’ Pensionable Service� With a part-time Salary of £15,000, Ashley’s deferred pension will be calculated as:

6/45ths x £30,000* = £4,000 per annum�*The Final Salary of £30,000 is the full-time equivalent of Ashley’s part-time Salary at leaving service date�

Increases to pension in defermentBetween your Exit Date and the date your draw your benefits, your deferred pension (in excess of any GMP) will be increased as follows:

• For Service between 1 January 1986 and 5 April 2009 (inclusive), in line with inflation between leaving and Normal Retirement Date, subject to a maximum of 5% per year over the whole period of deferment�

• For Service on and from 6 April 2009, in line with inflation between leaving and Normal Retirement Date, subject to a maximum of 2�5% per year over the whole period of deferment�

Inflation for these purposes used to be measured by the change in the Retail Prices Index but due to a change by the Government, the measure of inflation for these purposes became the Consumer Prices Index with effect from 1 January 2011�

Separately, any GMP part of your pension will be increased at GMP payment age (65 for men and 60 for women) for each complete tax year between your Exit Date and your GMP payment age at a fixed rate as required by legislation� The applicable fixed rate will be determined at your Exit Date by reference to legislation at that time�

Leaving Pensionable Service

16

Transfers

You may ask the Trustee to transfer your benefits out of the Scheme whether you have left Pensionable Service or not�

Transfers out when you have left Pensionable ServiceIf you have left Pensionable Service and ask to transfer your benefits out of the Scheme, the transfer amount will be calculated by assessing the present cash value of your benefits, including the value of increases for each year until retirement� Within three months of your request, you will be provided with a statement showing your entitlement� The figure shown in the statement will be guaranteed for three months from the quotation date and, if accepted, will be paid within six months of the quotation date� If you do not take up the option, the Trustee is not obliged to provide you with a further statement until twelve months after the last date you asked, but may do so for a fee�

Transfers out when you have not left Pensionable ServiceIf you are a contributing Member of the Scheme and request a transfer quotation, the amount will be calculated based on your benefits had you left the Scheme and stopped building up Pensionable Service at the quotation date� This quotation will not be guaranteed�

Transfers out generallyTransfer values include any discretionary benefits that have been awarded in the past but do not reflect any discretionary benefits that may be granted in the future� Transfers may be reduced if the Scheme does not have sufficient funds available�

The benefits you build up as described in this booklet are known in law as “safeguarded benefits”� If you want to transfer your benefits to another scheme which will use the transferred benefits to give you cash or defined contribution benefits, and the value of your safeguarded benefits is £30,000 or more, the law says that before you transfer, you need to take financial advice� You must take this financial advice from a regulated independent financial adviser (IFA)�

If you have them, you may transfer out your AVCs together with, or separately from, your safeguarded benefits� For more information on AVCs see the Additional voluntary contributions section on page 18�

Transfers into the SchemeThe Trustee may accept transfers into the Scheme� However, the Trustee’s policy is that the Scheme does not currently accept transfers in�

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Death benefits

In service before Normal Retirement DateIf you die before Normal Retirement Date while still a contributing Member of the Scheme or a Member on Family Leave, the following benefits will be payable:

• a cash sum equal to the total amount of your own contributions; and

• a cash sum equal to four times your Salary; and

• a pension for your spouse/civil partner, equal to half of the pension which you would have received had you remained in service until Normal Retirement Date, but based on your Final Salary at your date of death�

If you are an LTA Member, and die during LTA Service, your benefits will be calculated as if you had died in service as a non-LTA Member and all your LTA Service will count as Pensionable Service�

Death Before Normal Retirement Date Example – AlexAlex had 18 years potential service at date of joining and so has an accrual rate of 45ths� If Alex died before Normal Retirement Date and with a Final Salary of £30,000, Alex’s spouse’s pension would be calculated as:

50% x 18/45 x £30,000 = £6,000 per annum�

Death Before Normal Retirement Date Example – SamSam had 40 years potential service at date of joining and so has an accrual rate of 60ths� If Sam died before Normal Retirement Date and with a Final Salary of £30,000, Sam’s spouse’s pension would be calculated as:

50% x 40/60 x £30,000 = £10,000 per annum�

Death Before Normal Retirement Date Example – AshleyAshley had 18 years potential service at date of joining and so has an accrual rate of 45ths� If Ashley stayed in service up to Normal Retirement Date at the same part-time hours, she would have completed 5 years of full-time service plus 13 years of service at 50% hours which gives a total of 11�5 years of service� Therefore, if Ashley died before Normal Retirement Date and with a part-time Salary of £15,000, Ashley’s spouse’s pension would be calculated as:

50% x 11�5/45 x £30,000* = £3,833 per annum�*The Final Salary of £30,000 is the full-time equivalent of Ashley’s part-time Salary at date of death�

In service on or after Normal Retirement DateIf you die in service on or after Normal Retirement Date, the following benefits will be payable:

• a cash sum equal to the total amount of your own contributions; and

• a cash sum equal to four times your Salary; and

• a pension for your spouse/civil partner equal to half of the pension you would have received had you retired on the day of your death�

In receipt of a pensionIf you die as a pensioner, the benefits below will be payable:

• if you are under 75 and die within five years of starting to take your pension, the Scheme will pay a cash sum� This cash sum will be equal to the remaining payments you would have received in your first five years of being a pensioner, increased by 5% pa to allow for future increases that would have been applied each year; and your spouse/civil partner will receive a pension equal to half of the pension you were receiving at your date of death (or would have been receiving had you not taken a tax-free cash sum or surrendered any of your pension for additional dependant’s pension)�

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While entitled to a deferred pensionIf you die whilst entitled to a deferred pension (see page 14) that has not yet come into payment, the following benefits will be payable:

• a cash sum equal to your own contributions; and

• your spouse/civil partner will receive a pension equal to half of the deferred pension you would have received if you had retired on your date of death, ignoring any exchanges you might have made (eg cash sum or dependant’s pension)� This pension will take account of any revaluation (ie increases) up to your date of death�

In receipt of an ill-health pensionBefore Normal Retirement DateBenefits will be paid as described in the “In service before Normal Retirement Date” section above, calculated as if you had continued in service until the date of death and received your Salary at the date of your retirement, increased each year by the lower of 5% or the annual increase in the Retail Prices Index to the previous July�

Death Before Normal Retirement Date (Ill-health) Example – SamSuppose Sam retired due to ill-health at age 45, having completed 20 years’ Pensionable Service, with Salary at retirement of £30,000 and a Normal Retirement Age of 65� If Sam died at age 55 (10 years later), the benefits would be:

• a cash sum equal to the total amount of Sam’s own contributions; and

• a cash sum equal to four times Sam’s Salary: 4 x £40,317�49 = £161,269�96; and

• a spouse’s/civil partner’s pension, equal to ½ x £40,317�49 x 40/60ths = £13,439�16 per annum�

The Final Salary of £40,317�49 is the Salary at retirement of £30,000 increased by 3% per annum for 10 years, assuming this is the increase in the Retail Prices Index over this period�

After Normal Retirement DateYour spouse/civil partner will receive a pension as described in the “In receipt of a pension” section shown above, except that the five year guarantee benefit, also described above, does not apply to ill-health pensions�

Reduced spouse’s pensionIf your spouse/civil partner is more than 10 years younger than you the pension payable to them may be reduced� If you marry your spouse/enter into a civil partnership after retiring and within six months of your death, the spouse’s/civil partner’s pension may be reduced�

Dependants’ PensionsIf you leave no surviving spouse/civil partner (or if you married your spouse after retiring or your spouse is living with another person as husband or wife at the time of your death), pensions may be paid to one or more persons (survivors) who, in the opinion of the Trustee, were financially dependent on you or living in the same household as you at the time of your death� The total amount of these pensions will not exceed the total pension that would have been payable to your spouse/civil partner (on the basis that no reduction due to age applies)� Your spouse/civil partner is not considered a ‘survivor’ for these purposes�

The Trustee may, at its discretion, decide that a survivor’s pension will cease if he or she marries or re-marries or, in the case of a minor, when he or she is capable of earning their own living or reaches a certain age, generally age 23�

Payment of cash sum benefits if you dieSo that the cash sum death benefit can be paid free of Inheritance Tax and with minimum delay, the Trustee has discretion to decide to whom the benefit will be paid within the following categories of beneficiaries and, if appropriate, how it will be shared between one or more of the beneficiaries:

• Your spouse/civil partner, children, descendants, parents, grandparents, brothers and sisters;

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• Any person(s) the Trustee may consider to have been financially dependent on you within the 12 months immediately preceding your death;

• Any individual or individuals designated by you, on a Nomination Form (see below), to receive the whole or any part of the benefit�

Although the Trustee is not legally bound to comply with your wishes, you can guide it by completing a Nomination Form� Please remember to complete a new Nomination Form if your circumstances change�

For a Nomination Form please contact the Scheme Administrator (see page 2)�

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Additional voluntary contributions

Making contributionsThe Trustee provides a facility for you to top up your pension benefits by making additional voluntary contributions (AVCs)� AVCs are invested in a fund or funds of your choice within the fund range made available to members by the Trustee�

AVCs are paid monthly in the same way as your normal contributions� You can choose how much to pay in a tax efficient way, provided your total pension contributions to all arrangements are under 100% of your Relevant UK Earnings (as defined by HMRC) and are within your Annual Allowance limit – note that the value of benefits accruing in the Scheme counts towards your Annual Allowance� Please read the information on Annual Allowance on page 19�

Should you wish to start paying AVCs, change how much you wish to pay, change where your AVCs are invested or, wish to stop paying AVCs please contact the Scheme Administrator (see page 2)�

Should you leave the Scheme, your AVCs will remain invested until such time as you decide to draw on or transfer them� During the period between leaving the Scheme and retiring you can still switch the funds your AVCs are invested in and this can also be done by contacting the Scheme Administrator�

Taking AVC benefits at retirementIf you have paid Additional Voluntary Contributions (AVCs), you have several ways to take the fund at retirement, including:

• Taking the entire AVC fund as part of your tax-free cash sum*;

• Taking 25% as a tax-free cash sum with the remainder used to purchase an annuity or transfer to an alternative pension arrangement;

• Taking an Uncrystallised Funds Pension Lump Sum (UFPLS) with 25% tax-free and the remainder taxable;

• Transferring the full fund to an alternative arrangement (this option is available at any time, not just at retirement);

• Leaving the fund invested until a later date� You will still be able to switch between the funds offered by the Scheme during this period)�

*As long as your AVC fund is not more than the maximum tax-free cash sum allowed by HMRC�

The value of your AVCs will depend on several factors including how much you have paid, any cost of transferring your AVC fund, any charges payable, the age at which you access the benefit, the performance of your investment funds and (if applicable) any cost of converting the AVCs into an annuity�

Please note that anyone over the Normal Minimum Pension Age has access to a free and impartial government-supported guidance service (Pension Wise) to help make informed choices regarding defined contribution funds (including AVCs)�

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Pensions Taxation

The Scheme is a registered pension scheme under the Finance Act 2004�

Lifetime Allowance (LTA)The LTA is the maximum amount of benefits you can take from all your pension schemes (excluding State pensions) without triggering an additional tax liability� There is no limit on the amount of benefits a pension scheme can pay you� However, if your pension scheme benefits exceed the LTA you will pay an extra tax charge on the amount in excess of the LTA� The LTA is £1,073,100 for the 2020/21 tax year� The LTA increases each year in line with the increase in the Consumer Prices Index (CPI)�

The LTA value of your Scheme benefit is shown on your annual benefit statement�

If you become an LTA Member, you will be treated as having left Pensionable Service from that date and your normal Scheme contributions will cease� However, if you retire early due to ill-health, or die during service as an LTA Member, you will be treated as though you had been in normal Pensionable Service throughout the period you have been an LTA Member�

You have a choice in relation to how any benefits in excess of the LTA may be paid� Benefits over the LTA may be taken as a lump sum or as pension� If taken as lump sum then the value of the benefit over the LTA is taxed at 55%� If you take it as pension the value over the LTA is taxed at 25%� The tax is deducted from your benefits prior to benefits being paid and is paid direct by the Scheme to HMRC� The pension will be subject to PAYE tax in the same way as pension from benefits below the LTA� If you have any questions, please contact the Scheme Administrator for further details�

If you meet certain criteria, it may be possible to agree a higher LTA with HMRC based on your personal circumstances� Further information can be found online at:

www.gov.uk/guidance/pension-schemes-protect-your-lifetime-allowance

Annual AllowanceThe amount of tax-relieved pension savings you can make during a tax year will be tested against the Annual Allowance� Pension savings in excess of the Annual Allowance are subject to a tax charge�

With effect from 6 April 2016, the Annual Allowance is £40,000 for individuals with taxable earnings less than £110,000 per year� However, an individual’s Annual Allowance may be reduced from £40,000 down to a minimum of £4,000 depending broadly on actual taxable income� Individuals can carry forward unused allowance from the previous three tax years�

For testing against the Annual Allowance, benefits are valued over the ‘pension input period’, which is the 6th of April to the 5th of April each year� This value is referred to as the ‘pension input amount’ (PIA) and for the Scheme this is:

• The value of benefits accrued in the Scheme, plus

• The amount of AVCs paid�

Your pension input amount is shown on your annual benefit statement� You will generally be subject to tax at your marginal rate on any PIA in excess of the Annual Allowance (taking account of any unused allowance carried forward from previous tax years)� You can either pay the charge directly, through the self-assessment process, or it may be possible to ask the Scheme to pay the charge in return for a reduction in your benefits� The latter is known as ‘scheme pays’�

Details of your Annual Allowance in relation to your Scheme benefits is shown on your annual benefit statement� If you need further information, please contact the Scheme Administrator�

Please note that you are responsible for any tax liabilities that arise from benefits you build up in the Scheme�

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The State Pestion Scheme

Pre April 2016Up to 5 April 2016, the State provided a basic flat-rate pension and an additional pension based on earnings�

Accordingly, before 6 April 2016 occupational pension schemes could opt to contract out of the earnings-related part of the State pension (the State Second Pension or S2P) provided the scheme’s benefits met specified requirements� The M&G Group Pension Scheme was contracted out of the State Second Pension and therefore contributing Members paid lower National Insurance contributions�

In respect of Pensionable Service between 6 April 1978 and 5 April 1997, there is a minimum amount of pension that must be provided as a condition of contracting out, known as Guaranteed Minimum Pension (GMP)� Once in payment, legislation requires GMPs attributable to service on or after 6 April 1988 to be increased each year� Part of this increase is paid by the Scheme and the balance is paid by the State�

Single Tier State PensionThe Government made changes to the State Pension system with effect on and from 6 April 2016, with a single tier flat-rate State Pension replacing the basic flat-rate pension and additional pension based on earnings�

As part of the reforms, the Government has also ended contracting out of the State Second Pension for defined benefit pension schemes� Up until 6 April 2016, the Scheme was contracted out of the State system� This means that the Company and Members paid a reduced rate of National Insurance contributions� On and from 6 April 2016, the Scheme ceased to be contracted out, so Members and the Company needed to pay the full rate of National Insurance contributions from this date onwards�

State Pension AgeThe State Pension Age in respect of the basic State Pension is currently age 66� It will reach age 67 between 2026 and 2028, and it is expected to reach age 68 between 2044 and 2046�

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Complaints Procedure

Most queries can be dealt with and resolved as they arise� However, in order to comply with the law, the Trustee has a formal procedure� Should prospective or current Members of the Scheme, their spouses, civil partners or dependants, or those currently receiving a pension, or deferred pensioners, encounter problems concerning their pension rights and have a dispute that they have been unable to resolve informally with the Scheme Administrator, they should follow the procedure shown below�

You can request that the complaint is considered under the Scheme’s formal internal dispute resolution procedure (IDRP)� This is a two stage process:

Stage 1Please put your query in writing to the Pensions Manager at the following address:

Pensions Manager, M&G Group Pension Scheme, M&G plc, 10 Fenchurch Avenue, London EC3M 5AG

Please include your full name, address and date of birth and, if you are a current Scheme Member, your National Insurance Number� If you are a spouse, civil partner or dependant of a deceased Member, please also include the Member’s full name, last address, date of birth, National Insurance Number and details of your relationship with the Member� In all cases, the subject of the complaint and the details of the query should be included�

You can expect a written reply within two months of receipt of your complaint� If this is not possible, you will be notified of the reason for the delay and when you can expect a reply� If you wish, you can nominate someone to represent you� The representative must include their full name, address and profession as well as your personal details, the subject of the complaint and the details of the query�

If you are not satisfied with the response, you can proceed to the second stage�

Stage 2If you are not satisfied with the answer from the Pensions Manager, you can write to the Directors of the Trustee Company and ask for your complaint to be reconsidered by the Trustee� You must do this within six months of receiving the answer at Stage 1� Please address your letter to: The First British Fixed Trust Company Limited at the address shown under Stage 1� You must include the personal details outlined in Stage 1, a copy of the response received from the Pensions Manager and the reason you are dissatisfied with the response� You should receive a written reply within two months of receipt of your letter� If this is not possible, you will be notified of the reason for the delay and when you can expect a reply�

The IDRP does not cover:

• disputes that solely involve the Company;

• disputes that are being investigated by the Pensions Ombudsman or where proceedings have started in Court or a Tribunal; and

• complaints from former employees who have transferred their benefits out of the Scheme or taken a refund of contributions, unless the complaint is made within six months of the date of transfer or refund�

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Personal Information and External Bodies

General Data Protection Regulations (GDPR)In order to administer the Scheme, it is necessary for information about you and your beneficiaries to be held and processed by the Trustee or other parties who act on behalf of the Trustee� The Trustee and the Scheme Actuary are the data controllers under the UK Data Protection Act 2018 and the EU General Data Protection Regulation (EU Regulation 2016/679) (GDPR) which came into effect on 25 May 2018)�

This information is kept secure and only disclosed in limited circumstances, for example, information may be disclosed to companies within the Company’s Group, Trustee advisers and other organisations in connection with the operation of the Scheme� Information may also be disclosed to any future potential employers and their advisers and, only if the Trustee is legally obliged to do so, to Government or regulatory organisations�

A copy of the Scheme’s current Data Privacy Statement is available at any time by writing to the Pensions Team, M&G Group Pension Scheme, M&G plc, 10 Fenchurch Avenue, London EC3M 5AG

External bodiesThe Pension Tracing ServiceThe Pension Tracing Service, run by the Department for Work and Pensions, holds details of all occupational pension schemes� If you need help to trace pension benefits from a previous employer, you can contact:

The Pension Tracing Service, The Pension Service 9, Mail Handling Site A, Wolverhampton, WV98 1LU

Telephone: 0800 731 0176

https://www.gov.uk/find-pension-contact-details

The Pensions Advisory ServiceThe Pensions Advisory Service (TPAS) is available at any time to assist you with pensions-related questions, and problems you have been unable to resolve with the Trustee� You can contact TPAS at:

11 Belgrave Road, London, SW1V 1RB

Telephone: 0800 011 3797

www.pensionsadvisoryservice.org.uk

It is not necessary to have made application to use the Scheme’s IDRP in order to approach TPAS for help�

The Pensions OmbudsmanSince 1 April 2018, The Pensions Ombudsman has taken over TPAS’s advisory function in relation to disputes, but please note that if you wish to make a complaint to the Ombudsman, you must normally have gone through the Scheme’s IDRP�

If, after going through the Scheme’s IDRP, your problem remains unresolved, you can make a complaint to The Pensions Ombudsman, who investigates and deals with complaints against, and disputes with, occupational and personal pensions free of charge� The Ombudsman is completely independent and acts as an impartial adjudicator� You can write to the Ombudsman at:

10 South Colonnade, Canary Wharf , E14 4PU

Telephone: 0800 917 4487

www.pensions-ombudsman.org.uk

The Pensions RegulatorThe Pensions Regulator (TPR) can intervene in the running of occupational pension schemes where trustees, employers or professional advisers are considered to have failed in their duties� TPR can be contacted at:

Napier House, Trafalgar Place, Brighton, East Sussex, BN1 4DW

www.thepensionsregulator.gov.uk

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Trustee and its Advisers

Trustee The First British Fixed Trust Company Limited (FBFT)

The Directors of FBFT are listed in the Trustee Report & Accounts

Secretary M&G Management Services Limited 10 Fenchurch Avenue London EC3M 5AG

Actuary David Lindsay FIA Aon Limited

Auditor KPMG LLP

Scheme Administrator XPS Group Limited

Banker Barclays Bank UK plc

Investment Adviser Hymans Robertson LLP

Investment Managers M&G Investment Management Legal & General Investment Management Limited M&G Alternatives Investment Management Limited (MAGAIM)

AVC Provider Prudential Assurance Company Limited

Lawyer Mayer Brown International LLP

Head of Staff Pensions Management Marion Steel

Principal Employer M&G Limited

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Amendment or Discontinuance

The Company reserves the right to discontinue and, with the Trustee’s consent, amend the Scheme in accordance with the relevant provisions in the Trust Deed� No amendment can be made that would diminish the benefits already built up for a Member without the Member’s previous written consent�

If the Scheme is discontinued, the assets of the Scheme would be used by the Trustee to secure, as far as possible, the benefits that Members are entitled to under the Rules� Any Member in service at the date of termination would be provided with benefits calculated as if they had left service on that date� If a surplus remained after providing all the benefits in full, the Trustee would have discretion (after taking advice from the Scheme Actuary) to use that surplus to improve benefits or pay the surplus to the Company�

The Company does not guarantee the solvency of the Scheme however, if there was a deficit, the Company could be legally required to make good all or part of that deficit� Ultimately, if the Company were to become insolvent and there were insufficient funds available to secure benefits in full, the Scheme would be assessed for entry to the Pension Protection Fund, which provides a specified level of compensation�

FEB 21 / 542404

your guide to the m&g group pension scheme

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