New Questions and Answers

We have received a number of questions and consultation feedback. Set out below are the most frequently asked questions to date with answers. All questions and feedback have been passed to the Pensions Consultative Council, and more answers to questions will follow.

We will update these FAQs regularly during the consultation period.

You should have received your Personal Illustration in the last week or so and can ring the pensions helpline for further information.

1I have only a small Final Salary Pension as I joined in July 2009 - can I transfer my Final Salary entitlement into PensionBuilderplus?

The Rules do not currently allow for this however, the matter will be discussed with the Trustee to see if they wish to add this flexibility into the Plan.

2I have heard that I can use my PensionBuilderplus to offset my tax free cash sum from the Final Pay section. Is this correct? How does that work?

See this link for some illustrative examples of taking the Final Pay tax free cash sum entitlement via PensionBuilderplus.

3How will the income protection plan be taxed? Prior to a claim is it taxed as a benefit in kind like Private Medical Insurance? Once the claim is in process is it taxed as earned income, i.e. tax and national insurance contribution deductions?

Unlike Private Medical Insurance the premiums paid by Lafarge on your behalf are not taxed as a benefit in kind and there are no tax consequences on the employee prior to a claim. Once the claim is in payment it is paid as income and may be subject to tax and National Insurance depending on your personal circumstances.

4Can we have some more detail on State Second Pension (S2P)? What benefit does it give? When is state pension age? Are the government proposing any changes to this state pension?

See this link to the State Second Pension Factsheet

5Can I transfer my money purchase pot into the PensionBuilderplus?

Some members may have a money purchase fund which is separate from PensionBuilderplus. The Rules do not currently allow the amalgamation of this fund with PensionBuilderplus. There are no advantages for allowing this (as they are invested in the same range of Legal & General Funds as PensionBuilderplus) but there are some theoretical disadvantages of doing so for example on death in service - if you were to transfer the money purchase pot to the PensionBuilderplus fund it would be used to supplement the cost of any dependants' pensions, whereas if you leave it as a seperate fund it will be paid as an additional sum of money.

6In July 2010 the definition of Pensionable Pay for former Blue Circle members was changed to incorporate the State Pension Deduction. Is it this lower salary that will be used in the calculation of my pension at 31 October 2011?

As a former Blue Circle member your pension will be calculated using

1) for your pre 1 July 2010 Pensionable Service the best definition of Pensionable Pay available, without applying the State Pension Deduction.

2) for Post 30 June 2010 Pensionable Service the best definition of Pensionable Pay available after applying the State Pension Deduction.

7What happens to our benefits when and if Plasterboard is sold?

If Lafarge Plasterboard is sold, the pension arrangements offered in the future will depend on the purchaser who would need to consult with you again if there were to be any changes.  The pension benefits you have built up will remain secured within, and subject to the Rules of, the Lafarge UK Pension Plan.

8How safe is our money in PensionBuilderplus, in the event that Lafarge or Legal & General become insolvent?

The contributions invested through the Lafarge UK Pension Plan in PensionBuilderplus, are held quite separately from Lafarge and would be unaffected in the event that Lafarge were to become insolvent. 

Your PensionBuilderplus investments with Legal and General are also protected if Legal & General become insolvent.  

9Will tax relief on my pension contributions be received/ administered in the same manner under PensionBuilderplus as it is in the Final Salary Plan?

Yes, your pension contributions will continue to be collected via our PenXchange arrangements.  This ensures you receive Tax relief at your highest marginal rate and some savings in your National Insurance contributions.  See the website for a further explanation of how PenXchange works or click on the link PenXchange.

10Is the pension contribution under PensionBuilderplus based on pay and overtime as it is now?

The elements of pay currently used in the calculation of your pensionable pay in the Final Pay section will continue to be used in the calculation of your pensionable pay for PensionBuilderplus.

11Can we join PensionBuilderplus even if we are over State Pension Age?

Yes it is possible to join and contribute to PensionBuilderplus beyond State Pension Age (SPA).  Please note however, that as you will be over SPA you will not pay National Insurance, and so will not be put into PenXchange, and you will not build up a State Second Pension.

12Will the £250 deduction from contributions be removed?

Some members who were former members of the Lafarge Redland Pension Scheme have historically received a £250 pa contribution saving from their contributions to the Final Pay section.  Under the current proposals this will not continue into PensionBuilderplus.

13Will Personal Accident cover remain?

The Personal Accident cover is not a pension benefit, but is an insurance that covers all employees.  It will continue on the same terms as set out in the Employee Handbook.

14What are the reduction factors applicable to me if I take early retirement?

Broadly a deduction is made of 4% per annum, for each year that pension is paid early.  However the early retirement reduction factors are applied to different categories of members in different ways.  (e.g. for former Lafarge Redland members who joined the scheme before August 1990, and for former Lafarge Plasterboard Pension Scheme members).  Your personal illustration shows you the impact of taking your pension at 60 (i.e. five years early) but if you want to know more the Pensions Helpline will be able to provide you with an explanation.

15What level of AVCs do I need to contribute to achieve the same level of pension?

After completion of consultation we expect support will be required to help members to pay contributions and AVCs at the appropriate levels.  We are looking at ways to help you with this.  

16I’ve heard I can use my PensionBuilderplus to offset my Tax Free Cash Sum from my Final Pay Pension?

When you retire, your PensionBuilderplus benefits and Final Pay benefits will become payable at the same time.  You will have several options including the option to use the funds you have built up within PensionBuilderplus to offset some or all of your tax free cash sum entitlement from your Final Pay arrangement. As a result you would need to commute (or give up/convert) less of your Final Pay pension for the same amount of tax free cash.

17Can I delay taking my Final Pay pension until after my Normal Retirement Date?

We anticipate, with the agreement of the Trustee, to amend the Plan’s rules to allow this.

18Can I transfer my Final Pay section benefit out of the Plan?

It is not possible to transfer out of the Plan while you remain a contributing member.  You would need to opt out of the Plan (or leave service) to enable a transfer of your deferred pension.

19Can I transfer my AVCs from the Final Pay section to the PensionBuilderplus section and if I did, would this invoke any penalties?

Yes it is possible to transfer your AVCs from the Final Pay Section to the PensionBuilderplus selecting one or more of the range of Legal & General Funds now available.  You can move the in-house AVCs without any financial penalty – (eg, if you were to transfer your fund of £5,000 then £5,000 will be moved across). If you are invested in the Zurich AVC Scheme the same applies for each of the funds with the exception of the With Profit Fund. If you are invested in the Zurich With Profit Fund there may be applied from time to time, a Market Value Adjustment (MVA) penalty if you were to transfer or move funds.  This has always been the case and will remain so.

You should be aware that there may be advantages in leaving your AVCs within the Final Pay Section.  AVCs paid while a member of the Final Pay Section will remain attached to your Final Pay pension and in some circumstances, certain historical benefits will continue to apply (e.g. AVCs that started before April 2006 will continue to retain the option to purchase additional pension).

If you do not chose to transfer your AVCs and have contributed via the In House or Zurich AVC arrangements, your existing funds will remain invested.

20Why is Tax Free Cash not shown on my Personal Illustration?

The Personal Illustrations were prepared to provide you with an idea of the annual pensions that you could expect at retirement.  To keep the illustrations as simple as possible the option to take a tax free cash sum, was not shown on the illustration, but remains available.

Future annual benefit reports will continue to reflect the cash option at retirement.

21I haven’t received my personal illustration?

Personal Illustrations were sent to all Final Pay members at the end of June.  If your illustration has not yet arrived, please call the Pensions Helpline on 01306 872211 and we will send you a copy.