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Are you taking advantage of everything your membership of the Fund has to offer? As a member
of the Defined Benefit Section of the Fund, although you do not need to make decisions about how
much you contribute or where your money is invested, there are still some actions you can take to
make sure you maximise the benefits you receive at retirement or to make sure you don’t face an
unnecessary tax charge.
On the next two pages you can see some of the things you can monitor and take responsibility for as a
member of the Fund.
Making the most of your pension
Boost the value of
your pension
Increased flexibility with your AVCs
There is now more flexibility about the way
you can choose to take your benefits. You will
usually have the option to take up to 25% of
the value of your DB pension and AVCs as tax-
free cash. Under the new policy, if the value of
the AVCs you have built up is less than 25% of
the total value of the benefits you have built
up across your AVCs and your DB pension in
the Fund, you will have the option to take up
to 100% of your AVCs as tax-free cash, up to
HMRC limits.
Usually, when you take a tax free lump sum at
retirement your DB pension will be reduced as a
result. However, if you choose to use your AVCs
to provide a cash lump sum, you will not need
to reduce the value of your DB pension as much
in order to do this.
If you are not already paying AVCs, now might
be a good time to review your finances and
see if this option would be right for you.
In light of this increased flexibility, if you are
already paying AVCs you might wish to review
your contributions as part of your overall
retirement planning. Don’t forget to monitor
your payments to make sure your pension
contributions do not exceed the Annual
Allowance. See opposite for more details.
Use our range of
interactive online tools
Plan-it
/
This calculator helps you to estimate the
pension you might need in retirement, by
working out what your expenses could be.
Although designed for members of the Defined
Contribution Section, this tool is useful for
DB members to work out if their pension will be
enough to cover their needs in retirement.
Invest-it
If you pay AVCs, this tool is a must! It helps
you to decide where to invest the value of your
account by determining your attitude to risk and
explaining the funds that are available.
*Coming soon* Take-it
Again, if you pay AVCs or have DC benefits
in another scheme, this is an essential in the
run-up to retirement. When this tool launches
in early 2014 you will be able to find out
more about the different products on offer at
retirement. Covering different annuity options
and income drawdown, a series of questions will
help you to identify which options might suit
your circumstances.
Keep an eye on the
Annual Allowance
The Annual Allowance is the total amount
you are able to save tax-efficiently across all
UK pension schemes over a 12 month period.
For the 2013/14 tax year the Allowance is
£50,000, but it will soon be reducing to
£40,000, on 6 April 2014.
You are responsible for monitoring your
pension(s) against the Annual Allowance and
if you exceed it you could be liable to a tax
charge.
The 12 month period for the purposes of
calculating your benefits in the Fund (known
as the Pension Input Period or PIP) against
the Annual Allowance is 1 October to
30 September each year, so active members
should bear in mind that if you receive a
salary increase (and your pension increases as
a result), this will happen mid-way through
this period and you will need to make sure
you don’t go over the Allowance. There is a
modeller available on the Hartlink online site
),
which you can use to calculate your benefits
against the Annual Allowance.
Rothmans deferred
members
If you are a deferred member of the Rothmans
Section of the Fund, you might be able to
retire earlier than your Normal Retirement
Date with an unreduced pension.
• If you left the Company on or after 8 April
1999, you can retire with an unreduced
pension from age 55.
• If you left the Company before 8 April
1999, you can retire with an unreduced
pension from age 60.
Your pension will be calculated at the date you
left the Fund, based on your years of service
and your pensionable salary when you reach
retirement.
Members from other sections of the Fund
should be aware that if you retire before your
Normal Retirement Date, reductions to your
pension might be applied (to take account that
it is likely to be paid for longer).
If you think you are eligible, please contact the
BAT Pensions Administration Team for further
information.
Did you know?
AVC assets
as at 31 March
2013 amounted to
£7,650,000
.
The Lifetime
Allowance
The Lifetime Allowance
will also reduce on 6 April
2014, from £1.5 million to
£1.25 million. If you have
any retained benefits (any
benefits in other pension
schemes) and you think
that the total of all your
pension savings exceeds
the Lifetime Allowance,
you should contact the BAT
Pensions Administration
Team (see the front page
for contact details).
