July 2009
This Factsheet has been updated to include details of the benefits payable on Ill Heath Early
Retirement and clarification relating to drawing your pension early (see 'Leaving before
Retirement' and 'Early Retirement' sections).
31.07.2009
IMPORTANT NOTE: THIS OVERVIEW IS MERELY A GUIDE TO THE C PLAN AND CANNOT INCLUDE
EVERY DETAIL. IF THERE IS ANY INCONSISTENCY BETWEEN THIS OVERVIEW AND THE LEGAL
DOCUMENTS GOVERNING THE C PLAN (THE TRUST DEED AND RULES AS AMENDED FROM TIME TO
TIME) THE TRUST DEED AND RULES WILL PREVAIL.
Plan Type:
C Plan is a Defined Benefit (DB) Section of the IBM Main Plan.
Normal Retirement
Age:
Age 63
Smart*/Employee
Contributions:
*Smart*\* (or Employee) contributions are 6% of your Pensionable Earnings
above the Lower Earnings Limit.
Your Pensionable Earnings are your gross basic remuneration, plus London
Allowance where payable; it excludes a number of elements including
bonuses, commission, overtime and shift allowance.
Pensionable
Earnings:
C Plan Earnings Cap
If you are on an incentive plan, your Pensionable Earnings are the greater of
your gross basic remuneration (excluding a number of elements, some of
which are listed above) and your Reference Salary, plus London Allowance
where payable (and if Pensionable).
If you joined an IBM Pension Plan* on or after 1 June 1989, your Pensionable
Earnings will be restricted to the C Plan Cap. If you joined an IBM Pension
Plan* before 1 June 1989, your Pensionable Earnings are not restricted to the
C Plan Cap.
*or any scheme that was subject to an acquisition or outsource to IBM, where
past service pension rights were transferred on a continuous basis.
Final Pensionable
Earnings:
Your Final Pensionable Earnings (FPE) are the annualised average of your best
36 consecutive months Pensionable Earnings in the last 10 years prior to your
Normal Retirement Age, actual retirement, termination of Pensionable Service
or death, whichever is relevant
C Plan Formula:
For the majority of members: 2.2% x FPE less 2% of the Single Person's Basic
State Pension (known as the Basic State Pension Deduction) x your
Pensionable Service (subject to the C Plan limit) usually reduced by an Early
Retirement Discount Factor if retiring before age 60 (further information on
early retirement is provided below).
C Plan Limit:
Your pension is limited to 2/3 x your best year's Pensionable Earnings in the
last 5 years immediately before your Normal Retirement Age or immediately
before your actual retirement, where you retire between 60 and 63 - If you
retire before age 60 this is adjusted by multiplying this amount by your
Pensionable Service to the date of your retirement and then dividing this by
your potential Pensionable Service to age 60 (maximum of 40 years) and
reduced by an Early Retirement Discount Factor (further information on early
retirement is provided below).
You can opt-out of the C Plan but under HMRC salary sacrifice rules, if you do
so part way through a You* scheme year, your salary will continue to be
Opting out of C Plan: reduced each month in respect of C Plan Smart* contributions (plus any ASCs
you may have elected under the You* scheme), until the end of the You*
scheme year.
On leaving Pensionable service, you become entitled to a deferred pension,
payable from Normal Retirement Age (i.e. age 63). Pension in excess of the
Guaranteed Minimum Pension is subject to Statutory Revaluation. Statutory
Revaluation operates to increase your benefits in line with the rise in RPI for
each complete year from the date you leave IBM until the date you retire. For
pension accrued up to 5 April 2009 RPI is capped at 5% p.a. and for pension
accrued from 6 April 2009, 2.5% p.a.
Leaving before
Retirement:
Alternatively, you have the option to transfer the value of your benefits to
another registered pension scheme e.g. to your new employer's occupational
pension scheme or to a personal pension arrangement.
As a deferred member of the C Plan, it is possible to draw your pension from
age 50#. However, the Early Retirement Discount Factor that would be applied
to your pension would broadly reflect the true cost of paying your pension
before Normal Retirement Age.
# While a change in UK legislation will result in the minimum age increasing to
55 from 6 April 2010 for most employees, the earliest retirement age for
deferred members who have left the employment of IBM will remain at age
50.
Early Retirement:
The earliest you can retire from Service (with Company consent) is age 50.
Due to a change in UK legislation, this is increasing on 6 April 2010 to age 55
for most employees. If you are permitted to retire early, your C Plan Pension
would usually be subject to an Early Retirement Discount Factor (EDRF)of 3%
per annum, for each year that you retire before age 60 (pro-rated for any
completed months of Pensionable Service).
If you are aged 50 or more and wish to retire before Normal Retirement Age
but do not have Company consent to do so, you can become a deferred
member and leave the service of IBM. As a deferred member you can draw an
early retirement pension and the ERDF that would be applied would be on cost
neutral terms, as described in the 'Leaving before Retirement' section above.
State Pension:
C Plan is contracted-out of the State Second Pension (S2P) and as a result,
both you and IBM pay a lower rate of National Insurance (NI) contributions.
The employee rate is 9.4% of your earnings between the Primary Threshold
and the Upper Accrual Point (UAP) - a reduction of 1.6% on the standard NI
rate. For earnings between the UAP and the Upper Earnings Limit (UEL), the
contribution rate is 11% and then 1% on all Earnings above the UEL. In
addition, provided you have paid sufficient NI contributions, you will qualify for
the Basic State Pension.
Spouse's, dependant's and children's pensions are calculated using your FPE at
the date of your death, but based on your Prospective Service. The level of
children's pension payable varies depending on a number of factors, for
example whether you die leaving a spouse and the number of eligible children
Death in Pensionable
at the date of your death. Again this calculation is subject to the C Plan limit.
Service:
Where no spouse's, dependant's or child's pension is payable the Trustee will
pay a discretionary lump sum equal to your contributions and C Plan Smart*
contributions plus, interest.
Subject to Trustee and Company discretion, you may become eligible to retire
on the grounds of serious ill-health.
Your pension would be the sum of:
(a)
the amount calculated using the C Plan formula as described above
and is based on your FPE and Pensionable Service at the date of your
retirement;
and
Ill Health Early
Retirement (IHER):
(b)
an IHER enhancement, if any (the level of which is subject to
discretion). The IHER enhancement is based on the Lower C Plan
accrual rate and your Prospective Pensionable Service to NRA.
Your IHER pension is subject to the C Plan limit.
If you are under the age of 60 at the date of your retirement, an Early
Retirement Discount Factor of 3% per annum will usually apply for each year
that you retire before age 60 (pro-rated for any completed months of
Pensionable Service).
ASCs/AVCs:
IBM and the Trustee agreed to limit the combined amount of ASCs and/or
AVCs to a maximum of 30% of Pensionable Earnings.
On retirement, you can pay your ASC or AVC fund back into the IBM Main
Pension Plan and receive additional pension under the C Plan, on rates
applicable at that time.
At retirement, the maximum lump sum that can now be taken is 25% of the
total value of your overall pension benefits, including ASCs or AVCs. You have
a choice as to whether to surrender all or part of your ASC/AVC fund to obtain
this cash sum, or to obtain it by commuting part of your C Plan pension.
You also have the option of taking an open market option; that is you can
have your ASC/AVC fund transferred to a registered pension scheme of your
choice.
This Factsheet provides an overview of your benefits under the C Plan. Your actual benefits will be
calculated in accordance with the Plan's Trust Deed and Rules, and if there is any discrepancy between
this summary and the Rules, the Rules will prevail