Your future, your pension
Pennon Group Defined Benefit Pension Scheme – Final Design
Employee Guide
Please read this in conjunction with your original Employee Consultation Guide. Information
in this document supersedes the previous Guide.
The final design of the future Pennon Group Defined Benefit Pension Scheme has now been
agreed. The details are set out below. There are some additional choices and features to
provide flexibility for Scheme members. It is important to remember that the following
changes apply to future benefits from 1 July 2014.
Benefit Feature
New Section
Standard contribution rate for
members
The contribution rate for members will be 8% of pensionable pay
A standard rate of accrual
The rate at which all members build up their pension will be at the
rate of 1/80th of pensionable pay each year
Retirement age
The normal Scheme retirement age will be 67 for all members. Any
benefits already earned will still be payable from your current
retirement age without reduction for early retirement
Pensionable pay
Pensionable pay will continue to comprise basic salary plus existing
pensionable contractual payments
Increases to pensionable pay
(future service and accrued
service)
Any future increases in pensionable pay – the pay that counts
towards your pension will be limited to the rate of inflation (Retail
Price Index or RPI) subject to a maximum of 2.5% each year
Increases to pensions after
you retire
Final pensionable pay
Redundancy benefits
AVCs
Ill-health and death benefits
For service after 1 July 2014 increases will be in line with inflation
(RPI) but subject to a maximum of 2.5% each year. Any pension
already earned will be increased in line with RPI, subject to a
maximum of 5% each year
Final pensionable pay will be the best in the last five Scheme years
A non-actuarially reduced pension will not be available for future.
For service prior to 1 July 2014 a non-actuarially reduced pension
will be paid
For AVC funds built up in the future, up to 25% will be available as a
tax free cash lump sum with the remainder used to purchase an
annuity subject to confirmation of the government’s proposals
Remain unchanged
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Your future, your pension
Additional member choices
Low cost choice allows members to reduce their contributions to 4% with corresponding reduction in
accrual and benefits.
Retirement age choice allows members who want to retire earlier than 67 the opportunity to do so
without a corresponding early retirement reduction factor being applied to new benefits.
Name
Description
When is choice available
Low cost choice
Retirement age choice
Employee contributions rate: 4%
Pension grows at rate of 1/120th
Also accrue State Second
Pension with extra 1% NI
contribution
Employee contributions:
extra 1% p.a. for each year the
chosen retirement age is below
age 67 (minimum retirement
age for WPS members: 62.
Minimum retirement age for
2006 members: 65)
Once at go-live date and up to two additional times in your career
Defined Benefit ‘top up’ arrangement
Defined Benefit members will have the opportunity to join the Pennon Group Defined Contribution
Scheme and contribute 3%, 4% or 5% of any pay increase they receive above the cap on
pensionable pay. The employer will make a corresponding 6%, 8% or 10% matching contribution
(less 1.0% for Scheme administration). At retirement the member can take their total Defined
Contribution Pension fund either all as a lump sum (subject to confirmation of the government’s
proposals expected later this year) or to buy a pension or annuity with a 25% lump sum option.
Example 1
Employee contribution 3.0%
Employee contribution 5%
Starting salary £23,000
Member contributes 3% of their
pensionable pay above the cap
into the DC Scheme until they
either retire or leave the Scheme.
The employer contributes 6%.
Member contributes 5% of their
pensionable pay above the cap
into the DC Scheme until they
either retire or leave the Scheme.
The employer contributes 10%.
Salary after 20 years
£41,521
DC Pension fund £4,090 *
DC Pension fund £7,165 *
Example 2
Employee contribution 3.0%
Employee contribution 5%
Starting salary £23,000
Member contributes 3% of their
pensionable pay above the cap
into the DC Scheme until they
either retire or leave the Scheme.
The employer contributes 6%.
Member contributes 5% of their
pensionable pay above the cap
into the DC Scheme until they
either retire or leave the Scheme.
The employer contributes 10%.
DC Pension fund £13,203 *
DC Pension fund £23,106 *
Annual pay increase 3.0%
Pensionable pay
2.5%
DC ‘top up’
0.5%
Annual pay increase 3.0%
3 additional promotion
increases of 10% each
Pensionable pay
2.5%
DC ‘top up’
0.5%
Salary after 20 years
£54,852
* Estimated projected pension fund is the total employee and employer contributions with no account for fund growth.
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Your future, your pension
What do I need to do now?
You now need to decide whether you wish to be transferred into the standard option, or opt
out of this and take either the low cost choice or retirement age choice from 1 July 2014. To
make your choice please complete the enclosed Pension Option Form, and return it to the
Pennon Group Pensions Team at Peninsula House, by 1st July 2014. Soon after this date
we will write to you to confirm which option you have selected.
Please make a definite choice between the options: standard or low cost and retirement age.
However, if you choose to do nothing or do not return your completed Form by 1st July 2014,
you will automatically be transferred into the standard option with a Pension Scheme
retirement age of 67 and an employee contribution rate of 8%. Should you then wish to
change you will be able to do so in April 2015 as one of your two further choices.
If you think you may want to take advantage of the Defined Contribution ‘top up’
arrangement in the future you do not need to do anything right now. If you do receive a
future salary increase above the pensionable pay cap and wish to join the Defined
Contribution Scheme you will need to contact the Pensions team.
What help and support is available to me?
The Pensions Helpline on 01392 442802 is available if you are not clear what you have to
do or have questions about your updated personal illustration.
No one in the Pennon Group of Companies can legally give you individual financial
advice. If you want to talk to a financial advisor for impartial advice you can find one
by visiting www.unbiased.co.uk.
Don’t forget that South West Water’s confidential employee assistance programme can offer
you help and where necessary specialist counselling and support. Help is available 24
hours a day, seven days a week, online or on the phone. Calls are free from a UK landline.
To phone call 0800 282193. To access the website please visit: www.ppconline.info
(Username: SWW, Password: employee).
 Help line: 01392 442802
 Visit: www.yourfutureyourpension.co.uk
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