Previous Questions and Answers

We know you are likely to have questions about the proposed changes and how they might affect your pension. We have tried to answer some of these below.

Throughout the consultation process, you are encouraged to ask further questions  by completing the feedback form or by emailing questions to info@lafargeukpensions.com. We will collate the most frequently asked questions and add them to this website. However, we will not be able to answer questions about your individual personal circumstances as part of this process.

1Why make the changes now?

The increased shortfalls in the Final Pay Section over the last few years, and the current challenging economic conditions mean that it has become more important that we reduce our exposure to these pension risks and help protect the benefits that members have already built up. We want to make sure we remain a competitive business and provide equitable, competitive and sustainable pension arrangements for all. This means that it is important that we take action to manage the risks connected with the Final Pay Section.

2Can Lafarge legally change my pension arrangements?

Yes. Under pension law, Lafarge can propose changes and alter the way in which future pension benefits are built up. The law requires that we actively engage in consultation with affected members, which is what we’re doing now.

3What is Lafarge doing to address the shortfall?

Lafarge has made changes in the past (such as closing the Final Pay Section to new members in 2007) and has made additional deficit contributions to the Plan which, to date, total £182m. Lafarge has also worked with the Trustee of the Plan to finalise a long-term funding plan to reduce the shortfall as explained in the December 2010 ValuationTalk sent to all members.

4What is the role of the Trustee in these changes?

One of the main responsibilities of the Trustee is to protect members’ benefits already built up in the Plan. We have discussed the proposed changes with the Trustee and will continue to do so once the consultation process is finished and the final changes are agreed.

5What is the role of the Pensions Consultative Council?

The Pensions Consultative Council (PCC) is the official forum for the purposes of consultation and will be meeting with Lafarge to discuss the proposal. We will let you know the outcome of these meetings should there be a need to share information with members. Your PCC representative is shown on the website and the feedback form.

6Are you consulting with the Union representatives?

In accordance with our normal practice, we have informed the Unions of the proposed changes.

7Will the proposed changes affect the pension I have built up?

No. The proposed changes would only apply to benefits that you build up from 1 November 2011. These proposed changes will not affect your Final Pay Section pension up to that date. Your pension will be based on your final pensionable pay at 31 October 2011.

8Will financial advice be available?

During the consultation process, we will provide you with information to help you understand how the proposed changes affect you. If you’d like personal financial advice, you should speak to an independent financial adviser (IFA) as Lafarge and the Trustee are unable to provide this. You can find an IFA in your area by visiting the IFA Promotion Ltd website at www.unbiased.co.uk.

9I have a mix of full-time service and part-time service, how will this affect my final pay benefits?

You would be affected in the same way as full-time members except that your benefits will be calculated on a pro-rata basis.

10Can I stay contracted out of the State Second Pension (S2P)?

No. From 6 April 2012, the Government will require all members of DC pension schemes to contract in to the S2P. This means that from this date both you and Lafarge will have to pay a higher rate of National Insurance contributions. Lafarge is proposing to make this change from 1 November 2011, ahead of the legally required deadline, so that members who decide to join PensionBuilderplus will automatically start to build up S2P as soon as they join.

11What charges would I pay in the future?

If the proposals were implemented, you would only pay the employee contributions to PensionBuilderplus. Lafarge would pay both the investment charges for your personal investment account and the general administration charges for the Plan.

12What will the changes mean for me personally?

We recognise that the impact on individuals is likely to vary. Therefore, as part of the consultation and communication process, we will be preparing personal illustrations which will be sent to you in late June.

13Will I be given an opportunity to attend the road shows?

Yes, we will ensure that you are able to take time off work to attend a pension road show.

14Will the consultation really make any difference?

The proposed changes have been considered very carefully. However, Lafarge wants to hear your views and questions before any final decisions are made, to make sure that your points of view are considered.

15How is the deficit being met and who stands behind it?

A deficit Recovery Plan has been agreed between the Company and Trustee.  The Company will pay between £20m - £30m per year for the next 15 to 20 years – more details can be found in ValuationTalk 2009 sent to all Final Pay Section members in December 2010...here. 

Lafarge SA has undertaken to stand behind and fully support the Lafarge UK Pension Plan.

16What is the deficit today?

The deficit at the last formal valuation as at 30 June 2009 was £613m.  An interim update as at 30 June 2010 showed a deficit of £568m.  The next interim update will not be available until December 2011; however we estimate the deficit to be around £500m today.

17What will happen to pensions in the joint Venture Company (JVCo)?

This is a Lafarge consultation across all of its UK businesses and employees, many of whom are outside the scope of JVCo.  The future pension provision within JVCo will be a matter for JVCo at the time.  JVCo would need to consult with you again if it wanted to make any changes.

18You wouldn't be doing this if it wasn't for the JVCo would you?

The increased shortfalls in the Final Pay Section over recent years and the current challenging economic conditions mean that it has become more important that we reduce our exposure to these pension risks and help to protect the benefits that members already built up. Lafarge is committed to fund the liabilities built up to date and to meet the deficit, but no longer wants to add to these obligations by continuing with future accrual. It is correct that the announcement of the proposed changes with Tarmac in the UK has accelerated our decision to make these proposals, but it must be stressed that they would have happened soon regardless.

19Are these changes happening elsewhere in Lafarge?

This is a UK consultation affecting all employees employed by Lafarge UK. Other than in North America, Lafarge does not have any significant Defined Benefit retirement plans.

20Can I still pay Additional Voluntary Contributions (AVCs)?

Yes, to the Pensionbuilderplus AVC options with Legal & General. 

You will not be able to continue paying AVCs to the in-house or Zurich options. The funds you have built up in these options will continue to be invested.

21Can I take my Final Pay Section pension early and carry on working for Lafarge?

This may be an option if you are age 55 or over. The pension would be reduced for early payment. However there may be disadvantages to doing this so you should be careful to understand the implications.

We will issue more information on this after the consultation process is complete.

22Do the pension changes affect redundancy rights?

The changes do not directly affect redundancy rights, see this link to the Redundancy Question and Answer section for more details.

23At what inflation rate does my deferred Final Pay Section pension increase?

Broadly speaking the deferred pension will be increased from 1 November 2011 to the date you take pension benefits by inflation up to a maximum of 5% p.a.

Generally the inflation index used is the Consumer Price Index (CPI), unless you are a member of the Lafarge Redland Section of the Plan (mainly former Lafarge Redland employees who joined the Plan before October 2003) when the Retail Prices Index (RPI) is used.

Irrespective of which Final Pay Section your are in, once your Final Pay pension is in payment it will increase broadly with RPI up to a maximum of 5% p.a.

24Can I transfer other benefits into the Plan?

No. The Plan has not accepted transfers since 2007.

25How does the Group Income Protection Plan affect the current sickness benefits?

The pension changes do not affect your current sick pay arrangements. 

Some former Redland and Lafarge Plasterboard employees have an existing entitlement to income protection – the overall level of this entitlement will not change as a result of the pension changes.

26Will I be entitled to a supplementary allowance in the future?

No, as a deferred member of the Final Pay Section you would not normally be entitled to the supplementary allowance if you retire before State Pension Age. 

27I have two seperate periods of service with Lafarge, will this be shown in my Personal Illustration?

The Personal Illustration will show the pension you have built up in respect of your current period of service.

If you have a previous period of service the pension earned is payable in addition to that shown in the Personal Illustration.  If you contact the Pensions Department they will be able to provide you with more details.

28Where can I find out more about PensionBuilderplus and the investment choices?

We will send you more details once the consultation process is complete. However if you are interested now you can find out more on the Pensions Website by clicking...here, for PensionBuilderplus details.

29I only have a year or two until I retire, should I bother joining PensionBuilderplus?

We can’t advise you on whether or not to join. However if you do not join you will not be eligible for the death in service and ill health benefits (which Lafarge pay for) and will miss out on Lafarge’s pension contributions.

30Will Lafarge be providing any advice?

As we said in the Consultation Guide sent to you on 3 June, we will not be providing financial advice. We will be providing you with more guidance about your choices under Pensionbuilderplus after Consultation is complete; and if there is sufficient interest we will consider arranging “Group  Sessions” at various locations.

31Will I automatically join PensionBuilderplus; and can I opt out if I want to?

We plan to automatically put you into Pensionbuilderplus at the highest contribution rate available to you and in PenXchange. You will then have a chance to lower your contribution level.

You may also opt out but you will lose the valuable benefits described in Answer 14 above.

32How does PenXchange work?

The attached link takes you to an explanation of PenXchange.

33Will I be able to transfer out my PensionBuilderplus account and leave my Final Pay Section Pension in the Plan?

We are discussing with the Trustee whether the Plan’s rules can be amended to allow this. We will let you know the outcome when the consultation is complete.

34What pay is used to calculate my Final Pay Section pension.

This will be the “best” Final Pensionable Pay allowed under the Plan’s rules. This calculation varies depending on which part of the Final Pay plan your are a member of.

Your Personal Illustration shows your Final Pensionable Pay for the year ended 5 April 2011, your Final Pensionable Pay at 31 October 2011 might be a little more than this but should not be less.

35Where can I see some example annuity rates?

We suggest you try this link to example annuity rates.

36I have some old "Money Purchase Section" benefits, what happens to these?

The value of your Money Purchase account will be shown on your Personal Illustration. We will also write to you after the consultation is complete to explain what options you have with this account.

37Will I have to change my nomination of beneficiary form when I join PensionBuilderplus?

The current Plan Trustee will continue to exercise its discretion in relation to death in service benefits so we do not anticipate any need for you to complete a new nomination of beneficiary form.

38Will the Consultation make any difference?

We have considered our proposals carefully before we made them. However the feedback we receive might change our final proposals. Some examples received so far are whether we could lift the 10% limit on AVCs, or whether we could waive the requirement for 10 years’ service to contribute at the 6% level with 12% from Lafarge.

These and other suggestions will be passed to the Pensions Consultative Council and we will inform you of any changes to our proposals in due course.