News

Money Purchase Annual Allowance

The item below refers to the proposed reduction in the Money Purchase Annual Allowance from £10,000 to £4,000. Following the Government's decision to hold a general election on 8 June this measure has been dropped from the Finance Bill. However, if re-elected the government has said it will reintroduce the reduction at the earliest opportunity in the next Parliament.

It is not yet known whether, if reintroduced, the reduced Money Purchase Annual Allowance would take effect from 6 April 2017 as originally proposed, or be postponed to a later date.

Thu 04 May 2017, 17:05

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Pension changes from 6 April 2017

Money Purchase Annual Allowance

The Annual Allowance is the maximum amount of tax-free pension savings you are allowed to make in one year to all pension schemes. See here for further details about the Annual Allowance.

If you access your pension savings flexibly and take more than your maximum tax-free cash, you become subject to a Money Purchase Annual Allowance for subsequent defined contribution (DC) savings. In a move to limit the extent to which pension savings can be recycled to take advantage of tax reliefs, the government reduced the Money Purchase Annual Allowance from £10,000 to £4,000 from 6 April 2017.

Automatic enrolment thresholds

For the tax year 2017/18, the following automatic enrolment thresholds will apply:

  • the earnings trigger (for establishing eligibility) will remain at £10,000
  • the qualifying earnings band (for calculating contributions) will continue to be aligned with NIC rates – £5,876 for the lower limit and £45,000 for the upper limit.

In order to join the Money Purchase 2003 section, or to be automatically enrolled into the Auto Enrolment section, you need to be:

  • aged 22 or over
  • earn over £10,000 a year
  • under State Pension age

For further details on how to join the Plan see here

Tue 11 Apr 2017, 14:36

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Data survey

Thank you to everyone who filled in and sent back to us the Data Form sent out with this year’s Trustee Report to Members in July. Over 9,000 completed forms were returned, which will assist in our future online communications. The winner of the prize draw for £250 worth of shopping vouchers was Ruth Woolley, a member of the Financial Times section.

Mon 24 Oct 2016, 14:43

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Lifetime Allowance- protection deadline

The Lifetime Allowance is the limit on the total value of your pension savings from all sources that can be drawn without triggering an extra tax charge.The Government reduced the Lifetime Allowance on 6 April 2016 from £1.25 million to £1 million.

There are various HMRC "protections" available to savers who are affected by changes to the Lifetime Allowance. It is now possible to apply for protection online and this leaflet provides further details on the protections and how to apply for them.

If you had pensions savings valued at more than £1.25 million on 5 April 2014 you can apply online for Individual Protection 2014.This will protect the value of your pensions savings on 5 April 2014 up to £1.5 million. Please note that the deadline for applying for Individual Protection 2014 is 5 April 2017.

Wed 19 Oct 2016, 17:13

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Brexit and your pension

The EU referendum result has prompted concerns about its impact on pension schemes. In the Pearson Group Plan we are fortunate that we are very well funded, see Actuarial Report as at 1 January 2016". This high level of funding means that the Trustee has been able to de-risk significantly its investment strategy for the members of the Plan’s "defined benefits” sections – so that exposure to market volatility is greatly reduced. This also reduces the level of concern regarding market uncertainties following the referendum result.

If you are a member of one of the Plan’s “defined contribution” sections, such as the Money Purchase 2003 section or the Auto Enrolment section, it's important to remember that your pension investments are long-term and, if you are a number of years from retirement, you should not be too concerned about market fluctuations. As you get closer to retirement you should consider investing in funds that are of lower investment risk and aim to offer more stable returns. Rather than switching between funds yourself, you could choose to invest in the Lifecycle Option, which is an automatic investment selection process. Under the Lifecycle Option, contributions are invested in different funds at different proportions as you get closer to retirement.

If you have a query on this, or on any aspect of your Plan benefits, you can contact the Pensions Helpline by email at pensions.helpline@pearson.com or phone 0207 010 2424.

Mon 27 Jun 2016, 15:57

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State Pension changes from 6 April 2016

The government made a number of changes to the UK state pension from April 2016.This new factsheet summarises these changes and explains how they may affect Plan members, particularly with the ending of contracting-out of the State Pension.

The factsheet provides links to the Gov.UK websites where you can find more information about the new state pension, and also to sites where you can go to for financial guidance and advice.

Tue 03 May 2016, 10:14

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Member Nominated Trustee Director (MNT) selection process

As explained in an announcement that was sent to all Plan members in November 2015, the terms of office of one of the Plan's current MNTs, Nim Marardas, ended in February 2016. Therefore, the MNT selection process had to be re-run. The Selection Panel interviewed seven candidates in January 2016 and unanimously recommended that Nim Maradas be re-appointed for a five year term.

Peter Hughes has been selected as a reserve candidate, who may be appointed if a vacancy for an MNT arises before the next nomination and selection process is run. Peter is Director Sustainability, Corporate Affairs.

Mon 18 Apr 2016, 15:33

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Annual Allowance modeller

The Annual Allowance (AA) is the maximum amount of tax-free pension savings you are allowed to make in one year to all pension schemes.

We have worked with KPMG to provide an AA modeller which is designed to provide Plan members with an estimate of their position relative to the AA for 2016/17

Active members (i.e. members still in Pearson Group employment) can access the modeller via the Pearson Group Pension PLan (UK) site on Neo.

If you are a deferred or pensioner member of the Plan and would like to use the AA modeller, please contact the Pensions Department at pensions.helpline@pearson.com

This leaflet provides further information about the AA.

Fri 08 Apr 2016, 15:17

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Pension changes from 6 April 2016

The State Pension is changing on 6 April 2016. If you’ll reach State Pension age on or after that date, you’ll get the new single-tier State Pension which replaces the current Basic State Pension and the State Second Pension (S2p). The new system is based on a single amount of no less than £155.65 per week for everyone with at least 35 years of full National Insurance (NI) contributions. However, if you have been “contracted out” of S2P at any time (e.g. as a contracted-out member of the Pearson Group Pension Plan, or any other pension scheme) the amount you receive under the new State Pension may be reduced in certain circumstances.

If you are due to reach State Pension age in the first 5 years of the new system, you can ask for an estimate of your new State Pension. This applies to women born between 6 April 1953 and 5 August 1955 and men born between 6 April 1951 and 5 August 1955.

The service will be extended to younger people in the future. You can call the Future Pension Centre on 0345 3000 168 or request a statement online at: the Gov.UK website

The introduction of the single-tier State Pension means that it will no longer be possible for any pension scheme, including the Pearson Group Pension Plan, to contract-out of the S2P (the Auto Enrolment section is the only Plan section which is currently not contracted-out). This mean that member and Company NI contributions will increase from April 2016 and separate communications have been sent to Plan members who are currently Pearson employees regarding these increases.

Another change being introduced from April 2016 is to the Annual Allowance (AA) for high earners.The AA is the maximum amount of tax-free pension savings you are allowed to make in one year to all pension schemes. From 6 April, your AA may reduce if you have taxable income above £110,000 p.a. This leaflet provides further information about the new AA.

Fri 18 Dec 2015, 14:57

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Changes to the Trustee Board

There are nine trustee directors on the Trustee Board - six "A" directors and three "B" directors. The Company appoints three "A" directors and Plan members nominate the other three. The "B" directors, who cannot be Pearson employees and appoint their own successors, have special voting rights.

From 12 November 2015, Sir David Bell has replaced Christopher Penn, following his retirement as a "B" director. The Trustee expresses its gratitude to Christopher for his long service to the Plan.

The Company has appointed Kate Bishop, Senior Vice President HR Core, to replace Sir David Bell as an "A" director.

The attached leaflet has been sent to all Plan members inviting applications to become a member-nominated trustee director.Nominations must be supported by five other members, with a deadline for applications of 31 December 2015.

Wed 02 Dec 2015, 12:07

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Changes to leaving options from October 2015

Government changes to legislation mean that the leaving options for members who join the Plan on or after 1 October 2015 have changed.

Currently, leavers who have less than two years qualifying service have the option of either a refund of the value of their own contributions, less statutory deductions, or a transfer of the value of their Pension Fund, including the Company’s contributions, to another registered pension arrangement. These options will remain unchanged for anyone who joined the Plan before 1 October 2015.

If you are a new member from 1 October, the refund option will now only be available if you leave with less than 30 days qualifying service and have had contributions deducted.

If you leave with at least 30 days qualifying service , you will have the same two options as are currently available to members who joined the Plan before 1 October 2015 and leave with two or more years qualifying service.

Wed 23 Sep 2015, 12:26

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2015 Actuarial Valuation

The Company and Plan Trustee have recently agreed the latest triennial actuarial valuation (as at 1 January 2015) for Pearson Group Pension Plan.

The latest valuation reports have been uploaded into the library page of the Plan website. The valuation report and Statement of Funding Principles are also linked below:

2015 Actuarial Valuation Report

Statement of Funding Principles

It is important to note that following the announcement of the FT sale last week, Pearson and the Plan Trustee have agreed to accelerate the funding of the Plan so that it becomes fully funded on a “self-sufficiency” basis in the near future. This means that the Trustee expects the Plan to be able to provide benefits (in accordance with the Plan rules) with a very low level of reliance on future funding from Pearson. A commitment has also been made to maintain that level of funding in future years.

Fri 31 Jul 2015, 16:59

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Pearson announcement regarding the sale of the Financial Times

Yesterday, Pearson issued an announcement regarding the sale of the FT.

The transaction is not expected to complete for several months.

As part of this transaction, all pension benefits built up to the sale completion date for FT active* and deferred** members will remain with Pearson Group Pension Plan. In addition, pensions in payment for all pensioners previously employed by the FT will remain with the Plan and will not be affected by the sale.

Future pension arrangements for current FT staff are still to be agreed between Pearson, Nikkei and the FT. Any proposed changes to future arrangements will be subject to an employer-led consultation process.

There has been a recent agreement between Pearson and the Plan Trustee to accelerate the funding of the Plan so that it becomes fully funded on a “self-sufficiency” basis in the near future. This means that the Trustee expects the Plan to be able to provide benefits (in accordance with the Plan rules) with a very low level of reliance on future funding from Pearson. A commitment has also been made to maintain that level of funding in future years.

In addition to a substantial Company contribution already agreed with the Trustee following the Penguin Random House merger (to be paid before July 2017), an upfront contribution will be made to the Plan following the FT sale completion. This is expected to be around £90m and there will be further annual contributions to eliminate any remaining shortfall in the self-sufficiency funding.

If you have any queries on the above or on your Plan benefits please call the Pensions Helpline on 020 7010 2424 or email: pensions.helpline@pearson.com

*An active member is a current FT employee

**A deferred member is an ex-FT employee who has left his or her pension benefits in the Plan

Fri 24 Jul 2015, 09:47

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Budget 2015 pension changes

In the 2015 Budget the Chancellor announced two major changes to pensions.

The Lifetime Allowance – the total value of tax relievable savings in all pension arrangements has reduced from £1.25m to £1m. The Lifetime Allowance will rise in line with inflation (consumer prices index) from 2018.You can find further information about the Lifetime Allowance on the HMRC website

The Chancellor also confirmed plans to allow people who are already receiving pension income from an annuity to sell their annuities. From April 2016, the government will revise the tax rules to allow this change.This will not affect individuals who are receiving pensions from the Plan.

Thu 02 Apr 2015, 16:02

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Budget 2014 pension changes - update

In advance of the the pension changes from 6 April 2015 introduced by the government, we've revised the Plan literature. See the budget summary leaflet for an overview of what the changes will mean for members of the Pearson Group Pension Plan.

If you are considering retirement, further information is available on the Thinking of retiring page.

Thu 02 Apr 2015, 15:37

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Government launches Pension Wise website

The Pension Wise website has been launched by the government as part of plans to roll out a guidance guarantee service for retiring members of defined contribution pension schemes.People accessing the site will go through a six-step process on how to turn their pension into retirement income.

Thu 12 Feb 2015, 13:46

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State Pension changes

The DWP has launched a major advertising campaign to raise awareness of the changes to the State Pension.

See here for a video about the pension changes, or for more information visit the GOV.UK website

Mon 19 Jan 2015, 16:58

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Budget 2014 pension changes - update

Following the announcement in the 2014 Budget that all individuals with defined contribution (DC) funds would be offered free impartial guidance at retirement from 6 April 2015, HM Treasury has announced that the guidance service will be called “Pension Wise”.

Access to the guidance by members will be available via a website, by telephone from the Pensions Advisory Service or from the Citizens Advice Bureau, which has announced the names of the first 44 bureaux in England and Wales which will be delivery centres for face to face Pension Wise sessions. See press release .

Also see the Pensions Advisory Service website for further details about Pensions Wise.

Fri 16 Jan 2015, 14:31

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Pensionable Salary date change

Following the harmonisation of annual Salary Review dates throughout the Pearson Group to 1 April, the Pearson Group Pension Plan Trustee and the Company have agreed that Plan Pensionable Salary dates should also be changed to 1 April (with the exception of the Financial Times section). This alignment will ensure the continued link between increases to salary and increases to pension contributions and benefits. For historical reasons, the Financial Times section has a Pensionable Salary date of 1 July and this will remain in place.

The change means that pension contributions will next automatically change from the salary review date at 1 April 2015. N.B. in the Auto Enrolment section, contributions are calculated on a month-by-month basis based on Qualifying Earnings. Also, the next annual Plan benefit statements will be sent to members by the end of June 2015, rather than, as in previous years, the end of March.

If you have any questions relating to changes to your Salary Review date, please contact your local HR team.

Thu 08 Jan 2015, 09:38

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Budget 2014 pension changes - update

The Chancellor announced in September 2014 that instead of paying the 55% rate of tax when passing on their pension, people who die under 75 with defined contribution (DC) pensions can, from April 2015, pass on their unused pension as a lump sum to a person of their choice tax free.

For people who die over the age of 75 with unspent DC pensions, they can pass this on to a person of their choice who will be able to take it as a lump sum taxed at 45%, or as income and pay their normal rate of income tax.

Tue 11 Nov 2014, 09:48

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Reduction to Schroder Life fees

We are pleased to report that, with effect from 1 August 2014, Schroder Life has reduced the charges for its Intermediated Diversified Growth Fund by 10bps to take the Fund’s charges from 1.10%p.a. to 1% p.a.

See here for details of the charges for the other funds offered to Plan members via the Friends Life platform.

Tue 26 Aug 2014, 16:19

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Budget 2014 pension changes – update

The Government has now announced its main decisions following the consultation on the proposed changes to pensions announced in the Budget. It has confirmed that the additional flexibility proposals for members of a defined contribution (DC) arrangement will go ahead from 6 April 2015, and that transfers from private sector defined benefit (DB) schemes to DC arrangements will not be banned.

To recap, the Government proposals are:

  • to allow members of a DC arrangement to take all of their benefits as cash. Up to 25% of the benefits will still be paid as tax free cash. From April 2015, if the remaining benefits are also taken as cash, the balance will be taxed at the member’s marginal rate of income tax. This means that it will no longer be necessary to purchase an annuity or enter into a drawdown arrangement (i.e. leave the pension fund invested and access it over time). DC members who want an annuity will still be able to purchase one.
  • retirees with DC arrangements will need to be offered free and impartial guidance on their options at retirement. This will be provided by independent organisations such as the Pensions Advisory Service or the Money Advice Service.
  • transfers from private sector DB schemes (for those not in receipt of a pension) will not be banned. However, there will be new legal safeguards introduced to ensure individuals with over £30,000 in pension savings take advice from a Financial Conduct Authority (FCA) authorised independent adviser before deciding to go ahead with a transfer to a DC arrangement.
  • to prevent the abuse of pension contribution tax relief, once an individual cashes out more than their maximum tax-free cash lump sum from any DC arrangement, they will be subject to a new £10,000 annual allowance in relation to any future pension savings.
  • the age at which an individual can take a trivial lump sum if total pension savings are less than £30,000 (or commute a pension pot of less than £10,000) will be lowered from 60 to 55.

The planned changes mean that it is particularly important you seek independent financial advice before taking any decisions on transfers and retirements. Unbiased.co.uk will help you to find an independent adviser in your area.

Please note that neither the Trustee nor the Company can provide you with any investment advice and this note and any other communication relating to the 2014 Budget is not advice.

The implications of these changes for the Pearson Group Pension Plan are being considered by the Company and the Trustee. This website will be kept updated.

Thu 31 Jul 2014, 17:29

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Change to Friends Life’s administration platform

Friends Life who administer the Plan’s money purchase investment arrangements, have recently changed to a new administration platform, New Generation Pension (NGP). If you are a member of either the Money Purchase 2003 section or the Auto Enrolment section, or you have AVCs invested with Friends Life, you will already have been notified of this change and you will shortly receive confirmation of your new scheme and member numbers, allowing you to register to use Friends Life’s online service, Membersite, on www.friendslife.co.uk/membersite.

The new online access can help you:

  • Manage your Pension Fund details.
  • Manage your investments.
  • Use Friends Life’s online tools to manage your retirement.

This Registration and Activation Guide will help you to register for access to view and service your pension on Membersite.

The value of your investments has not been affected by this change. However, you may see the following differences:

  • The fund names may have changed. The underlying funds themselves have not changed – you are still invested in the same funds. Friends Life have simply standardised fund names during this process.
  • The number of units and prices may be different. The value of your funds will not reduce as a result of this. There may be several reasons for the difference:
    • The way Friends Life takes its annual management charge has changed. This does not affect the amount of charges you currently pay. Previously, it amended the daily unit price of your fund to take this charge. Now, it deducts units to take this.
    • As part of the move, Friends Life reset the unit prices of the funds you are invested in. This does not affect your fund value. This may mean you have a higher or lower number of units, depending on what the unit price was before Friends Life moved your policy.

If you have any queries on the above, or would like to make any changes to your Pension Fund, you can contact Friends Life direct:

Friends Life helpline: 0845 072 7204

Address: Friends Life, PO Box 1550, Salisbury, SP1 2TW

Thu 24 Jul 2014, 17:01

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Alert regarding free pensions advice

With so many changes taking place to pensions, it is more important than ever to be aware of the risk of misleading advice - including from pension release schemes. The Financial Conduct Authority has issued the following alert to consumers about what to do if they are contacted unexpectedly by someone offering free pensions advice.

Fri 30 May 2014, 09:34

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Budget pension changes

In his 2014 Budget speech the Chancellor announced some significant changes to the rules which apply to pension saving including:

  • allowing members of a Defined Contribution (DC) pension arrangement to take their whole pension as a cash lump sum, subject to the marginal rate of income tax, with the facility for a 25% tax free cash lump sum as at present. Those DC members who want an annuity will still be able to purchase one. Please note that this change is not due to come into effect until April 2015.
  • A member over age 60 could previously take a trivial commutation lump sum on retirement where the total value of their pension rights from all schemes was less than £18,000. From 27 March 2014, this limit has been increased to £30,000.
  • From 27 March 2014, the size of a small pension pot that can be taken as a lump sum, regardless of the total value of pension rights, has also been increased, from £2,000 to £10,000.

The Government is also proposing that:

  • A new guarantee will be introduced from April 2015, requiring DC members to be offered free and impartial financial guidance on their choices at the point of retirement; and
  • There may be restrictions imposed on transfers out to DC pension arrangements from Defined Benefit (DB) pension arrangements.

More information about these pension changes will be published by the Government in coming months and the implications for the Pearson Group Pension Plan will be considered by the Company and the Trustee as the details become clearer. This website will be kept updated. The planned changes mean that it is particularly important you seek independent financial advice before taking any decisions on transfers and retirements. Unbiased.co.uk will help you to find an independent adviser in your area.

Fri 21 Mar 2014, 13:48

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Additional Voluntary Contributions (AVCs)

If you are an “active” Plan member (a current Pearson Group employee), you can save more money for retirement in a tax-efficient way by making AVCs over and above your normal Plan contributions. AVCS qualify for immediate full tax relief at your highest rate, so the cost may be less than you think.

If you are a member of the Money Purchase 2003 section, before starting AVCS, you should make sure you are contributing at your maximum rate which attracts double matched Company contributions, as AVCs are not double matched by the Company.

When you retire, you may currently take your AVCs as part of your tax-free cash. The other option is to use your AVCs to buy extra pension income from an insurance company.

AVCs are flexible- you can stop and start them at any time, and you can also make one-off payments. You choose how your AVCs account is invested from the range of investment options with Friend Life.

Please see this short AVCs presentation (6 minutes) for details about making AVCs via the Pearson Group Pension Plan. The AVCs page has further information including booklets, factsheet and AVCs Application Form.

Tue 04 Mar 2014, 11:34

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Transfer to Penguin Pension Plan for Money Purchase 2003 section members

Following the merger of Penguin with Random House, a new pension scheme, the Penguin Pension Plan (PPP) was created with effect from 1 July 2013 for eligible Penguin employees who had been members of the Pearson Group Pension Plan (PGPP). The PPP was set up to provide equivalent benefits to those currently provided in the PGPP and discussions have taken place between the trustees of both schemes and the employing companies regarding the proposed transfer to the PPP of benefits built up in the PGPP by Penguin members.

A transfer of pension benefits from the PGPP to the PPP in respect of Penguin employees who were members of the Money Purchase 2003 section of the PGPP has now been agreed. This will not alter the transferring members’ benefits, which will remain as they were in the PGPP. An announcement has been sent to the home addresses of the relevant members providing further information.

The proposed transfer in respect of Penguin members of the final pay sections of PGPP is still being discussed and further details will be provided in due course. In the meantime, any final pay section leavers are being provided with separate benefits from the PGPP and the PPP.

Thu 30 Jan 2014, 11:08

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Automatic enrolment FAQs

Why is automatic enrolment happening?

The government’s view is that many people are not saving enough for when they retire. Due to many workers neglecting to take up their employer’s pension scheme the government has changed the way pensions work. Under the new rules, each employer has to offer their employees a pension scheme that meets the standards the Government has set. They have to make some employees members of the pension scheme automatically, depending on how old they are and how much they earn. This is to make it as easy as possible for anyone who wants to have a pension to start saving. Anyone that doesn’t want to stay in the scheme can opt out.

Will I be automatically enrolled?

You will be automatically enrolled into the Pearson Group Pension Plan (“the Plan”) if:

  • You are not already a member of the Plan
  • You are at least 22 years old
  • You are below your State Pension age
  • You earn more than £9,440 a year (£787 a month)
  • You work in the UK normally

What pension arrangements will I be automatically enrolled into?

The Plan is a 'qualifying scheme' and meets the standards needed to satisfy the Government's requirements in relation to automatic enrolment. There are two sections of the Plan which are open to new entrants the Money Purchase 2003 section and the Auto Enrolment section. This Pensions Information Summary gives further details about these Plan sections.

When will I be automatically enrolled?

If you are a current Pearson employee at the 1 September 2013 (our first staging date') and you have not yet joined the Plan, you will be assessed for automatic enrolment with effect from 1 December 2013. If you meet the earnings and age criteria listed above on that date, you will be automatically enrolled into the Auto Enrolment section from 1 December 2013. If you are a new employee after 1 September 2013, you will be assessed for automatic enrolment up to three months after your date of joining.

If you do not meet the earnings and age criteria listed above on the date you are assessed, you will not be automatically enrolled. If this happens, you may still choose to join the Auto Enrolment section of the Plan. We will write to you to give you all of the information you will need. If you do meet the earnings and age criteria above, you may choose to join the Money Purchase 2003 section now. Go toThinking of Joining for details of how to join the Plan.

I am not from the UK. Could I still be automatically enrolled?

Yes, you could still be automatically enrolled, even if you’re not from the UK. You just need to work in the UK normally.

What does ‘opting out’ mean?

Opting out means telling us you don’t want to be a member of the Plan. If you opt out, no more money will go from your pay into your pension, Pearson will stop paying in, and you will not get any tax relief from the Government.

If you are automatically enrolled you can opt-out of the Auto Enrolment section. You will need to contact your HR department for an opt-out form. NB you cannot request an opt-out form before your date of automatic enrolment. If the completed opt-out form is returned before the end of the one month “opt-out period”, which commences the day you receive notice that you have been auto enrolled, you will be removed from the Plan. Any payments you have already made will be refunded, and you will not have become an active member of the Plan on this occasion. If you want to stop making payments after the end of the one month opt-out period you can do so. The payments you have made already will provide you with benefits in accordance with the Plan Rules.

If you decide not to join or opt out of the Plan you may be able to join or rejoin the Auto Enrolment section at a later date. Please contact the Pensions Department if you wish to do so.

Tue 03 Sep 2013, 14:57

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Automatic enrolment has arrived.

To help people save more for their retirement, employers now have to automatically enrol certain employees into a pension scheme which has to meet Government standards, called a 'qualifying scheme'.

The Pearson Group Pension Plan (“the Plan”) is a 'qualifying scheme' and meets the standards needed to satisfy the Government's requirements in relation to auto-enrolment. There are two sections of the Plan which are open to new entrants the Money Purchase 2003 section and the Auto Enrolment section. This Pensions Information Summary gives further details about these Plan sections. Automatic enrolment applies to UK employees who aren’t in the Plan and who:
• earn over £9,440 a year (£786 a month);
• are aged 22 or over; and
• are under State Pension age.

Letters are being sent to UK employees from the week commencing 1 September 2013 (our first 'staging date'), explaining how automatic enrolment will work. Even if you are already a Plan member you will receive a letter providing confirmation of your membership and other statutory information.

The regulations give us the flexibility to postpone automatically enrolling our employees for up to three months. We have opted to do this and we will therefore assess employees (who are not already members of the Plan) for auto-enrolment with effect from 1 December 2013. If you meet the earnings and age criteria listed above on that date, you will be automatically enrolled into the Auto Enrolment section from 1 December 2013.

If you do not meet the earnings and age criteria listed above on 1 December 2013, you will not be automatically enrolled. If this happens, you may still choose to join the Auto Enrolment section of the Plan. We will write to you again to give you all of the information you will need. If you do meet the earnings and age criteria above, you may choose to join the Money Purchase 2003 section now. Go to Thinking of Joining for details of how to join the Plan.

If you are automatically enrolled you can opt-out of the Auto Enrolment section. You will need to contact your HR department for an opt-out form. NB you cannot request an opt-out form before you’ve been notified that you’ve been automatically enrolled, so that won’t be until 1 December 2013 at the earliest. If the completed opt-out form is returned before the end of the one month “opt-out period”, which commences the day you receive notice that you have been auto enrolled, you will be removed from the Plan. Any payments you have already made will be refunded, and you will not have become an active member of the Plan on this occasion. If you want to stop making payments after the end of the one month opt-out period you can do so. The payments you have made already will provide you with benefits in accordance with the Plan Rules.

Tue 03 Sep 2013, 14:38

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Automatic enrolment is coming

Automatic enrolment is the Government’s new way of encouraging people to save for retirement. It means that employers must automatically enroll employees into a workplace pension scheme if they:

- are aged between 22 and State Pension age
- earn more than £9,440 a year
- work in the UK

Pearson will start automatically enrolling later in the year. If you are already a member of the Plan you will not be affected. If you are not a Plan member go to our “Thinking of joining?” page and find out about the great range of benefits available from the Plan and how to join.

Click here for a short video explaining why it’s good to plan ahead and save for retirement "What's good about automatic enrolment?"

Further updates on the automatic enrolment process will be provided here over the coming months.

Thu 25 Apr 2013, 15:51

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Plan valuation results

For Plan valuations, the Plan Actuary estimates the eventual cost of benefits payable in the future, using assumptions agreed between the Trustee and the Company about the main variables that affect it. These include how long members might live, the likely level of future salary increases and the long term rates of inflation and investment return.

The most recent full valuation was carried out as at 1 January 2012 and the results are now available. These indicate that the Plan’s assets constituted 91% of the Plan’s liabilities at that date (this compares to a funding level of 81% at the date of the previous valuation at 1 January 2009). The corresponding change in deficit has been from £365m to £210m. To remove the deficit the Trustee and Company have agreed that the Company will pay £40.8m a year into the Plan, as well as ongoing employer contributions for future service. These additional payments are expected to remove the shortfall by June 2017.

In addition, a mechanism has been agreed for the Company to make supplementary payments up to a maximum of £15m per annum. If such payments are made they are expected to accelerate the end date for extinguishing the deficit.

Click here for copies of the Valuation Report, Schedule of Contributions and Recovery Plan.

Thu 28 Mar 2013, 08:51

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Changes to Lifecycle Option

The Trustee has reviewed the lifecycle options available to Plan members in the Money Purchase 2003 section and will be making some changes with effect from 26 March 2013. At this date funds in the current lifecycle option will be transferred to the Plan’s new default investment option (subject to market conditions). Letters to all affected members have been sent to home addresses explaining the reasons for the change and providing full details.

There will be three lifecycle options, each with different risk characteristics:
1. Lifecycle Option A – designed for members who prefer a mix of investments which are less volatile and do not aim to produce such strong long-term returns as the other lifecycle options.
2. Lifecycle Option B – designed for members who are prepared to take a higher level of risk for the potential for higher returns in earlier years but want to start moving into a lower risk mix of investments from 15 years before retirement. This lifecycle option will become the Plan’s default investment option.
3. Lifecycle Option C– designed for members who can accept more investment risk and for a longer period, to give them the potential to receive stronger long-term returns, and are comfortable with higher volatility in the performance of their retirement savings in the Plan. This option moves to less volatile funds over the final five years to retirement to provide the opportunity to gain the maximum level of growth, but you should be aware that you would also be exposed to a longer period of higher risk.

There will also be a new Additional Voluntary Contributions (AVCs) lifecycle option. Members with AVCs investments have received a letter providing full details of the new option.

The three new funds available are:
1. MFS Meridian Global Equity Fund – an actively managed fund invested in a portfolio of equity securities of global issuers. The Fund aims to outperform the MSCI World Index by 2.0% p.a. (before the deduction of charges)
2. Standard Life Global Absolute Return Strategies Fund – an actively managed fund aiming to outperform 6 month LIBOR by 5% p.a. over rolling 3 year periods. The aim is to deliver a positive absolute return in the form of capital growth over the medium to longer term in all market conditions. Standard Life states the investment policy of the fund is to invest in permitted derivative contracts (including futures, options, swaps, forward currency contracts and other derivatives), transferable and fixed interest securities, cash and other collective investment schemes. Use may also be made of borrowing, efficient portfolio management (including hedging) and stock lending.
3. BlackRock Market Advantage Strategy Fund – a combination of active asset allocation and passive stock selection decisions with the aim of providing a return in line with global equities but with approximately two thirds the risk. The Fund achieves this by investing in a broad range of asset classes

In order to implement the changes to the fund range, switches between the Friends Life funds will not be allowed until the new lifecycle options and self- select funds become available.

Tue 05 Mar 2013, 10:08

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Member-nominated Trustee Director (MNT) selection process

As explained in an announcement that was sent to all Plan members in November 2012, the terms of office of two of the Plan's current MNTs ended in February 2013. Therefore, the MNT selection process had to be re-run.

The Selection Panel interviewed nine candidates for the MNT positions on 14 and 15 January and has appointed David Hall and Nigel Rendell for five year terms. David is an existing MNT and Nigel is a director at Medley Global Advisors, part of the Financial Times Group. He is an active member of the Money Purchase 2003 section.

Padraig Floyd, has been selected as a reserve candidate, who may be appointed if a vacancy for an MNT arises before the next nomination and selection process is run. Padraig is a deferred pensioner, who was previously Editor in Chief, UK Pensions and Investment Group, at the Financial Times.

Thu 21 Feb 2013, 11:53

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Pension liberation fraud

The Pensions Regulator has launched an information campaign to crackdown on incidences of false and misleading messages from companies that claim to be able to release pension cash as a loan or lump sum before age 55.

The Regulator warns that perpetrators are sending spam text messages, making cold calls or publishing website promotions to encourage savers to transfer their existing pension in return for a portion of the savings in cash. Any such unauthorised payment could result in tax charges of over half the value of member’s savings; and resulting fees – as high as over 20 per cent – may not be recoverable.

This information leaflet provides details and is intended to assist members in understanding what may well happen should they take up an offer.

Mon 18 Feb 2013, 15:12

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New microsite for money purchase members

With the help of Friends Life we have developed a new microsite for members and prospective members of the Money Purchase 2003 section.

As well as lots of useful information about the Plan, the microsite contains a short video explaining why you should save for retirement and you can also use a Retirement Planner to get an idea of how much you may receive when you retire.

Tue 11 Sep 2012, 12:12

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Investment Governance Group Principles

The Investment Governance Group (IGG) is a joint pension industry and government forum, which has been tasked with improving the way pension schemes are governed. Chaired by The Pensions Regulator, the group is made up of representatives of trustees, employers, providers, members and pensions professionals. The IGG has set out a practical framework of principles and best practice guidance to help those running work-based defined contribution (DC) pension schemes improve their investment decision-making and scheme governance.

The Trustee’s Money Purchase Committee has reviewed the principles and confirmed that they are in accordance with the Plan’s current practices. Click here here for a summary of the Committee’s findings.

Wed 25 Jul 2012, 09:28

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Winterthur Life changes name to Friends Life

Winterthur Life, the investment provider for the Plan’s money purchase arrangements, was included in the sale of the majority of AXA’s life assurance business to Resolution, the owners of Friends Provident, which was completed in September 2010. The Winterthur Life name has now been replaced by Friends Life as part of a rebranding exercise. Please note that the website address for the Plan's money purchase arrangements has now been changed to www.friendslife.co.uk/corporatebenefits

The Trustee has been monitoring the change of ownership to ensure that the administration and security provided to Plan members have not been adversely affected.

Mon 28 May 2012, 16:57

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Reduced charges for Money Purchase funds

The Trustee has negotiated lower Annual Management Charges (AMCs) for a number of the Winterthur Life funds available to members of the Money Purchase 2003 section, or to those making Additional Voluntary Contributions. AMCs are deducted from the value of units in each fund through the unit pricing mechanism and meet Winterthur Life's administration costs and charges levied by the fund manager. The reduced AMCs are good news because the lower the AMCs, the greater the effect on eventual pension, increasing members' retirement income. Except for the AMCs, the Company meets all costs associated with running the Pearson Group Pension Plan.

The funds for which a reduced AMC has been agreed from April 2012 are as follows:

Fund name New AMC Previous AMC
Aquila 30:70 Currency Hedged Global Equity Index 0.28% 0.32%
Aquila Over 5 years UK Index-Linked Gilts 0.28% 0.30%
Aquila Over 15 years Corporate Bond 0.28% 0.30%
Aquila Over 15 years UK Gilt Index 0.28% 0.30%
Money Market 0.28% 0.35%

The full listing of fund charges is available here.

Thu 22 Mar 2012, 14:13

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Increased flexibility for pension contributions

Members of the Money Purchase 2003 section now have the opportunity to change their pension contributions rates on a quarterly basis (1 April, 1 July, 1 October and 1 January). Previously, contribution rates could only be changed at 1 January each year, so this change allows greater flexibility. The other good news is that the increase in the maximum rate now takes effect from the quarter following 30th or 45th birthdays. So, for example, if you reached age 45 in March 2012, you could increase your maximum contribution from 6% to 8% from 1 April and the maximum contribution from the Company would also increase from 12% to 16%.

If you would like to change your current pension contributions, please complete a Contributions Change Form, and return it to your HR Department by the end of the month before the effective date of the change (31 March, 30 June, 30 September and 31 December).

You may also find these Contribution Cost Charts helpful. They show the additional pension you might get if you increase your contributions and how much extra contributions will cost in real terms.

Wed 18 Jan 2012, 12:13

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Tax allowances for pensions

The amount pension scheme members can contribute tax-free every year is determined by two HMRC allowances. These are the Lifetime Allowance (LA) and Annual Allowance (AA).

The LA is £1.8 million for the tax year 2011/12 but is reducing to £1.5 million in the tax year 2012/13. If when you take benefits the value of the benefits exceeds your remaining LA then the excess will be subject to a tax charge known as the LA charge.

You may apply to HMRC for a new form of protection called ‘fixed protection’ before 6 April 2012. This will protect pension savings up to £1.8 million. There are a number of conditions that need to be met to retain ‘fixed protection’ after it has been granted. For example, no new contributions can be paid and you will not be able to set up a new pension arrangement under a registered pension scheme unless it is to receive a transfer of existing pension rights.

The AA has been reduced from £255,000 is £50,000 for the tax year 2011/12. In a money purchase (also known as a defined contribution) pension arrangement, contributions are anything a member or an employer pays into the scheme in a Pensions Input Period (PIP). The Plan's nominated PIP is the tax year ending on 5 April. In a final pay (also known as a defined benefit) pension arrangement, the value of contributions is calculated by taking the amount the pension entitlement has increased by in a PIP and multiplying it by 16. There will be an option to carry forward unused tax relief which will protect people who have a spike in pension build up in a particular year. Where an individual exceeds the AA, any unused AA in the previous three tax years (assumed to be £50,000 for 2008/09, 2009/10 and 2010/11) may be used to offset the additional pension saving.

Death benefits and total commutation in cases of serious ill health will be exempt from the AA.

If the value of the increase in your total pension savings in a tax year exceeds the AA then you may be subject to a tax charge of the excess known as the AA charge which is charged at your highest marginal rate of income tax. The Trustee has agreed that a “Scheme Pays” facility will be available to members whose AA charge exceeds £2,000 in any tax year. Scheme Pays is a process by which a member can request their pension scheme to pay the AA charge on their behalf, and the scheme will then reduce the benefits the member is entitled to from the scheme. The Trustee has agreed that the AA charge will be met immediately i) using any money purchase funds held by the member and ii) for members with no, or insufficient, money purchase benefits, to record a negative deferred pension equal in value to the tax charge paid.

If you are issued with a self assessment tax return it is your responsibility to report the details of your total pension savings, known as your Total Pension Input Amount, for all the pension arrangements to which you belong, to HMRC.

If you are not issued with a self assessment tax return, but you have a liability to an annual allowance charge, then it is your responsibility to notify your tax office of this.

Please speak to your financial adviser if you think either the LA charge or AA charge may apply to you. If you think you may be affected by these changes, we recommend you speak to an independent financial adviser. IFA Promotion Ltd. provides details of Independent Financial Advisers see :www.unbiased.co.uk

Fri 13 Jan 2012, 14:43

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Contacting the Trustee directors

The Contact us page of the website allows you to:
i. raise general enquiries about the Pearson Group Pension Plan
ii. ask Payroll questions about pension payments, or
iii. provide feedback on the website.

There is now a new facility to allow you to raise any issue directly with the directors of the Trustee Board. Just click “Trustee enquiries” under the “Enquiry type” dropdown box and submit your enquiry.

Fri 30 Sep 2011, 16:40

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Choosing a Selected Retirement Age (SRA)

If you are a member of the Money Purchase 2003 section, or are making Additional Voluntary Contributions (AVCs) via the Winterthur Life fund range, you can use this Selected Retirement Age (SRA) Form to choose an alternative retirement age to the Plan's normal retirement age of 62. Money purchase pensions illustrations, such as that provided in your annual benefits statement, will be based on your chosen SRA and this may assist your financial planning. If you are investing in the Lifestyle Option, the SRA will also be used for the automatic fund switching process.See here for further details about the Lifestyle Option.

Choosing an SRA will not affect your contractual employment rights in any way.

If your circumstances change in future and you wish to choose a different SRA, you can submit an updated Selected Retirement Age Form.

Tue 01 Feb 2011, 16:05

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Valuation of the Plan as at 1 January 2009

The most recent full valuation was carried out as at 1 January 2009 and the Trustee is pleased to confirm that the results have been agreed with the Company and that all of the necessary documentation has been completed.

The questions below aim to share the main features of the valuation results with you and to answer some of the queries you may have. We hope that after reading it you will be reassured that the Trustee and Pearson are working together constructively to seek to ensure that the Plan is able to pay the benefits as they fall due.

What is an actuarial valuation?

It is part of the Trustee’s responsibility to make sure that a full valuation of the Plan is carried out at least every 3 years. The Plan Actuary estimates the eventual cost of future Plan benefits using assumptions agreed between the Trustee and Pearson about the main variables that affect it. These include how long members might live, the likely level of future salary increases and the long-term rates of inflation and investment return.

What were the results of the actuarial valuation at 1 January 2009?

The valuation shows that the market value of the Plan’s assets is some 81% of the amount needed to cover the value of the benefits earned at the valuation date. This represents a shortfall of £365 million and compares to the funding position of 85% calculated at the previous valuation of the Plan as at 1 January 2006.

Why has the funding position of the Plan deteriorated since the previous valuation?

In common with many other pension plans, the Plan’s funding position has been affected by lower than expected investment returns since 2006 and changes to the mortality assumptions. This was partially offset by additional contributions from Pearson and changes to the investment return assumptions, reflecting altered market conditions.

What is going to be done to make up this shortfall?

To remove the shortfall of £365m shown by the 2009 valuation, Pearson has agreed to pay the following amounts into the Plan, in addition to its normal contributions:

Paid during 2009 £41.9m
To be paid each year from 2010 to 2020 £40.8m

These additional payments are expected to remove the shortfall by the end of 2020.

The Trustee has also agreed with the Company that supplementary payments will be made when the Pearson’s cashflow position allows such payments to be made without prejudicing its credit rating. Pearson has also provided the Trustee with a formal guarantee that it will meet the obligations to the Plan of any of the subsidiary employers should it be required to do so.

Will I receive an update on the position?

Yes, the Trustee reviews the funding position annually on an informal basis and an interim update was carried out as at 1 January 2010. This showed an improved estimated funding level of 86% compared with 81% at 1 January 2009 The results of this update are available here and will also be included in the formal Summary Funding Statement which will form part of the Trustee Report to Members. The Report will be forwarded to the home addresses of all Plan members in June 2010.

Can I get a copy of the full valuation report?

Yes, you can download a copy of the formal valuation report.

Mon 26 Apr 2010, 09:03

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Pension Quality Mark PLUS

PQM

The Pearson Group Pension Plan has been awarded the National Association of Pension Funds' (NAPF) Pension Quality Mark PLUS for its money purchase pension arrangements. The Pensions Quality Mark is designed to create a benchmark and applaud employers for high calibre money purchase pension schemes which encourage members to save for retirement.
In order to achieve this prestigious new award the NAPF has to be satisfied that a scheme is well-managed with good member communication and high levels of contributions. The three core tests which we needed to meet to gain the Pension Quality Mark were:

  1. Contributions: contributions of 10% must be available, with at least 6% paid by the employer. Because of the Plan's high contribution rates (from age 45, 8% member and 16% employer contributions) we have received the highest award, a Pension Quality Mark PLUS.
  2. Governance: governance arrangements must be in place to ensure that the scheme is operating in the best interests of members.
  3. Communications: the scheme must provide clear and simple information to members when they join the scheme and thereafter.

The NAPF will monitor schemes which have gained the award to ensure that they continue to meet the required standards.

Tue 02 Mar 2010, 10:14

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