UK Pensions Consultation Forum:
Pensions & Benefits
‘working for everyone’sUK
benefit’
Defined Benefit employees
September 2014
FOR BP INTERNAL USE ONLY
1
Contents
• Your benefits package
• Main features of the BP Pension Scheme
• Core benefits
• Flexible benefits
• Voluntary benefits
2
Your benefits, your way
BP’s flexible benefits plan is called your benefits, your way
Your benefits package has three elements:
• Core benefits
− Benefits you get automatically, paid for by BP
− ‘Backbone’ of overall benefits package
− Life assurance, income protection & health benefits
• Flexible benefits
− Buy additional benefits with earnings
• Voluntary benefits
− Wide range of discounted goods and services
− Available to choose all year round
− Charitable giving opportunities and more
Overview of BP Pension Scheme
• Pension benefits
• Contributory options
− Taxable allowances
• Normal retirement
− Age 60 for joiners on or before 30 November 2006
− Age 65 for joiners from 1 December 2006
• Early retirement
• Options on retirement
• State Pension Scheme
• Death benefits
• Use PensionLine
BP Pension Scheme - benefits
• Non-contributory 60ths final salary pension:
Pensionable service (in years and days) x final salary
60
− Member (pre December 2006 joiner) retires age 60 after 20 years’ pensionable service with a final
salary of £30,000.
− 20 x £30,000 = £10,000 annual pension
60
‘Final salary’ is basic annual salary, including any permanent shift allowance, but excluding overtime and other
variable payments.
• Life cover of four times salary
• Full details are in the new explanatory booklet at pensionline.bp.com plus 24/7 benefit statement and
modelling facilities
Your contributory options
•
Higher pension build-up rates
You contribute
(as % of pensionable salary)
Your pension builds up at the rate of
2
3
5
10
15
1/54
1/51
1/45
1/40
1/35
Pensionable service (in years and days) x final salary
Accrual rate
− Example: Member retiring at age 60 after 30 years’ pensionable service and final salary of £30,000; 20 years under 60 th option; 10 years under
40th option
20 x £30,000 = £10,000
60
10 x £30,000 = £7,500
40
Total pension = £17,500 a year
• Tax efficient contributions paid via salary sacrifice monthly
• Start, stop or switch options anytime during the year via the “your benefits your way” portal as an “Anytime
Event”.
• Alternative: pay AVCs or contribute to another pension
6
Your contributory options
Example: Member with 20 years’ service and a final salary of £30,000
Option
Final Salary
£ a year
You contribute**
£ a year
Pension secured***
£ a year
0:60*
30,000
0
10,000 (20/60) 33%
2:54
30,000
600 (2%)
11,111 (20/54) 37%
3:51
30,000
900 (3%)
11,765 (20/51) 39%
5:45
30,000
1,500 (5%)
13,333 (20/45) 44%
10:40
30,000
3,000 (10%)
15,000 (20/40) 50%
15:35
30,000
4,500 (15%)
17,143 (20/35) 57%
*
Non-contributory option
**
Your contributions are made via salary sacrifice, so you save tax at your highest marginal rate
*** Assumes you maintain constant contribution level over 20 years
Annual Allowance (AA)
• Maximum pension savings each tax year without any tax liability
• BP’s Scheme year runs 1 January to 31 December known as PIP Year
(PIP = Pension Input Period)
For example:
1 January 2013 to 31 December 2013 = PIP Year 2013 = Tax Year 2013/14
• Allowance currently £40,000 per annum
• Pension savings = growth in your pension during PIP year
− Final Salary Scheme = increase in accrued pension
− Money Purchase Scheme = actual contributions paid in
• CPI growth allowable before counting for AA.
• Savings above allowance subject to a tax charge
• Can use any unused allowance from previous 3 years if needed (Carry Forward)
• AA Statements available on Pensionline (currently whilst employed only)
• Taxable Pension Savings need to be entered on Self Assessment Form
• Tax charge can be paid via “Scheme Pays” providing over £2,000
8
Scheme Pays
• Tax charge must be over £2,000 in the Scheme
• Cannot add any non-BP Scheme’s tax charge to BP’s
• The deadline for notifying the HMRC you are using Scheme Pays for 2013/14 (PIP Year 2013) is 31 January 2015
via self assessment.
• There is a deadline for notifying the Scheme you are using Scheme Pays (for 2013/14 it is 31 July 2015, but if leaving
must be before you leave)
• The Scheme Pays tax charge within 3 month of notification
• Tax charge offset from your pension using a pension debit
• BP Pension Scheme factors on PensionLine for 2012, (2013 to be added shortly)
• Scheme Pays form available on PensionLine
• Irreversible decision
• For more information on AA and Scheme Pays see HMRC website and PensionLine – AA Q&As
9
When you can take your pension
From age
Circumstances
Benefit
65
(normal retirement age)
Standard retirement
Full pension
60***
If you were an employee on or before 30
November 2006)
Full pension
Reduced pension
55- 60*
Early retirement
50 - 55*
Early retirement
*
**
***
(3% a year discount if with Company
consent)**
Reduced pension
(4% a year)
By law the minimum retirement age is now 55 (However, pre-6 April 2006 joiners retain right to retire at 50 on unconsented retirement
terms.)
From 1 March 2008, the reduction 4% a year if retiring without Company consent.
If you joined the Scheme after 30/11/2006, the minimum age to receive an unreduced pension is 65.
Examples of early retirement
Age: 58
Pensionable service: 16 years
Accrual option: non-contributory 0:60
Final salary at retirement: £25,000
Annual pension at retirement:
If retiring WITH employer’s consent
Total pensionable service
1/60 x 16 x £25,000 =
£6,667
Less 6%
£6,667 x 6% =
£400
David’s total annual pension is
£6,267
If retiring WITHOUT employer’s consent
Total pensionable service
1/60 x 16 x £25,000 =
£6,667
Less 8%
£6,667 x 8% =
£533
Total annual pension
£6,134
Options on retirement
• Annual pension, or
• Exchange part of pension for a tax-free cash lump sum
− One-off option only
− Up to 25% of value of pension
− Normally taken from any AVCs in first instance
State pension scheme
• Two parts to State pension
− basic State pension
− additional State pension
• Both payable from State pension age
• Basic pension is flat rate and based on NI contributions record
• Additional pension is earnings related (SERPS and S2P)
• Replaced by single-tier pension from 6 April 2016
• BP Pension Scheme employees contracted-out of S2P
− Pay reduced rate NI contributions
− For BP service the Scheme provides benefits instead of the State
• Getting State pension forecast/profile/statement
− PensionLine; or
− Directgov (process depends on your date of birth)
Pension for spouse/civil partner/dependants
• Pension for your spouse, civil partner or another dependant
− Equal to two-thirds of your pension
• Children’s pensions
• Active members
− 4x basic salary lump sum death-in-service benefits
• Deferred members and pensioners
− five-year pension guarantee
• Death grant to next-of-kin (for pensioners)
• Fill in expression of wishes form and keep it up to date
- Guides Trustee about who to consider for lump sum death benefit (and survivor’s pension in certain
circumstances)
- Get Form from PensionLine or from BP Pensions & Benefits Team
Use PensionLine
• Use PensionLine to:
− Check BP Scheme benefits and State pension
− Model changes to contributory options
− Model projected retirement benefits
• Modeller in March to
− Check effect of accrual rate changes and predicted salary increases on Annual Allowance
− Check/download your latest Annual Allowance Statement
• https://pensionline.bp.com
Core benefits in addition to pension
• Private Medical Insurance (PMI)
− Quicker medical diagnosis and treatment than NHS
− Currently provided by Bupa
• Core benefit limits
− Covers only employee
− Excess of £100/claim in a plan year
− £1,000 per life per plan year in respect of eligible outpatient treatment and therapy costs
− An additional per employee life per plan year benefit of £4,000 applies in respect of employee
psychiatric and musculoskeletal treatments
•
Can ‘flex up’ PMI at favourable rates
− Add immediate family members
− Remove outpatient limits
16
Core benefits in addition to pension
• Face-to-face health screening every three years
− Paid for by BP
– Gold (Bands C & D plus level E and below aged over 40)
– Silver (Level E and below, aged below 40)
– Or buy Gold cover through flexible benefits plan
• Wellness Checkpoint
– Online tools to monitor and manage health all year round
• Employee Assistance Programme (EAP)
– Confidential telephone helpline
– Plus face-to-face counselling if needed
– Financial information, debt counselling and specialist information
17
Flexible benefits
•
You can give up part of your earnings to buy additional:
− Spouse/partner life assurance
− Critical illness insurance
− Dental insurance
− Personal accident insurance
− Childcare vouchers (change anytime via “Anytime Event”)
− Cycle to work- (Only available at Annual enrolment)
− Travel insurance
• Deductions for benefits via salary sacrifice
− valuable tax and NI savings
• Select benefits during annual enrolment window
− Fixed for calendar year, except for ‘qualifying life event’
Voluntary benefits
• Buy them yourself at significant discounts secured by BP
• BP Staff Fuel Card
• Employee car plan
• Insurance cover (e.g. house, car)
• Charitable Giving
• All new employees’ need to register for access to the Voluntary benefits website and access is given
within 7-10 days.
Further Information
Benefit
Flexible Benefits
(your benefits, your way)
Website
www.bp.com/yourbenefits
Voluntary Benefits
www.bp.com/voluntarybenefits
Employee Car Plan
www.zenith.co.uk/bpemployees
Employee Assistance Programme (EAP)
www.livewell.optum.com
(Username / access code is : BP)
Wellness Checkpoint
https://bpglobal.wellnesscheckpoint.com
Charitable Giving
https://www.easymatch.com/bpmatch
20
Who to contact?
• Your benefits, your way
− Helpline: 0800 916 8013 (+44 1737 227513 from overseas)
− Email: bpyourbenefits@towerswatson.com
− Escalations: yourbenefitsyourway@uk.bp.com
• For BP Pension Scheme
− Phone: 0845 602 1063 (+44 1932 767 730 from overseas)
− Email: pensions@uk.bp.com
https://pensionline.bp.com
Thank you for attending
Any questions?
22