Welkom bij
Philips Pensioenfonds
With the future
in mind
Philips fl ex pensioen
Philips
The pension
changes in
five steps
The pension changes in five steps
This booklet has five tabbed sections. The tabs correspond to the steps set out below. This will enable you to find the information that is important to you. We also tell you what we expect you to do. On page 33 you will find a checklist of the most important points. Finally, after tab 5 you will find practical information and useful tips.
The renewed Philips flex pension
Step 1: With the future in mind
Past
Step 2: What will happen to the pension benefits that you accrued in the past?
Future
Step 3: Changes affecting your future benefit accrual
Funding
Step 4: How is your pension scheme funded?
Changeover to the renewed pension scheme
Step 5: What else you need to know
With the future in mind
The renewed Philips flex pension scheme came into effect on 1 January 2014.
The changes are intended to make the pension scheme ‘future-proof’
and to bring it into line with the measures taken in recent years by the
government to reform the Dutch pension system. This booklet tells you
what you need to know about these changes.
1
2
3
4
5
Tip! For more information about the pension changes go to:
www.philipspensioenfonds.nl/toekomst (in Dutch)
1
The renewed pension scheme Philips fl ex pensioen has been in force since
1 January 2014. Philips and the trade union organizations agreed to make
changes to the pension scheme. Changes that were needed to safeguard
good retirement provision in the future. Philips now has a renewed pension
scheme that conforms to current fi nancial conditions and the legislation and
regulations as of 1 January 2014.
The renewed Philips fl ex pension
Step 1: With the future in mind
1
Renewed
Why has the pension scheme been changed?
On 1 January 2014 the government made changes to the Dutch pension system. Up to and including 2013 the statutory guideline for the retirement age in the Netherlands was 65. With effect from 1 January 2014 this has been raised to 67. Furthermore, pensions have been under great pressure in recent years due to fi nancial and economic trends. You have noticed this yourself, as for a number of years the pensions of Philips Pensioenfonds have not been increased through indexation. What you may not have noticed is that the Company’s pension costs have risen sharply in recent years. As a result of increased life expectancy and low interest rates, the pension premium increased by more than a quarter in fi ve years. Until 1 January 2014 this premium was paid in full by Philips. For Philips it is of great importance to prevent any further increases in the premium in the future. It is also important for Philips that there should be as little fl uctuation as possible in the cost of the pension scheme, thus making it more easily manageable.
What are the most important changes?
The main changes are:- the reference retirement age has been raised from 65 to 67 in the renewed pension scheme
- the benefi t accrual rate of 1.85% is no longer a fi xed percentage, but may also be lower in the future
- the funding of the pension scheme has changed, as Philips will henceforth pay a fi xed percentage of premium. You will also pay an employee contribution.
The pension changes in five steps
Future:
How do the pension
changes affect your
future benefit
accrual?
Past:
What will happen
to the pension
benefits that you
accrued in the past?
Funding:
How is your pension scheme funded?
1 January 2014
Changeover to
the renewed pension scheme
Read more in step 2 Read more in step 3
Read more in step 5
With the
future in
mind:
Why changes?
Read more in step 4 Read more in step 1
65 years
Pension benefi ts accrued up to and including 31 December 2013
2
What is meant by ‘conversion’ of your pension?
You were already a member of Philips Pensioenfonds before 2014. Accordingly, on 31 December 2013 you had accrued pension benefi ts with a reference retirement age of 65.
Past
Step 2: What will happen to the
pension benefi ts that you
accrued in the past?
2
Past
From 1 January 2014 you accrue pension benefi ts in the renewed Philips fl ex
pension scheme. At that time you had already accrued pension benefi ts with
Philips Pensioenfonds. Those pension benefi ts will be converted to their
equivalent in the renewed pension scheme with a reference retirement age
of 67. You do not have to undertake any action in this regard. In this tab we
explain how this conversion works and the advantages that it has. You can also
read here about the option of lodging an objection to the conversion of your
accrued pension benefi ts. In the Guide you can see what information your
‘Overview Pension changes 1 January 2014’ gives on the conversion.
Retirement age from 65 to 67
This accrued pension will automatically be converted to the renewed pension scheme. In doing so we convert your pension with a reference retirement age of 65 to one with the reference retirement age of 67. The portion of your pension between the ages of 65 and 67 will be converted into extra pension from the age of 67. You can see in the illustration that your pension at the age of 67 will thereby be higher.
The same value
The value of your pension will be the same after the conversion as it was before the conversion. As a result of this conversion your entire pension will be administered on the basis of the reference retirement age of 67. The conversion relates only to the past. For your future pension benefit accrual you will in any case accrue pension benefits on the basis of the age of 67.
67 years 01-01-2014
Pension situation: after conversion Pension situation: conversion explained
65 years 67 years 01-01-2014
What are the advantages of the ‘conversion’?
Your entire pension in one pension scheme: clear and comprehensible
After conversion your pension situation will remain transparent: your entire pension is in the Philips fl ex pension scheme with a reference retirement age of 67. This means that your pension overview gives a transparent and comprehensible picture of your pension situation.
It is important for you to know that the conversion of your pension benefi ts does not mean that you cannot retire until the age of 67. With conversion you retain the option of arranging for your pension to commence at a different age. All the other fl exible options also remain available to you.
More fl exible options
The Philips fl ex pension has several fl exible options. These enable you to tailor your pension situation to your personal wishes. These options are retained in the renewed pension scheme. You can read more about this in step 3 of this booklet. The fl exibility regarding your choice of retirement age is dealt with below.
Advantages of conversion of your accrued pension benefi ts to the renewed pension scheme
Your entire pension in one pension scheme: clear and comprehensible More fl exible options: fewer conditions for earlier and later retirement Possibility of a better future increase in your pension through indexation
Fewer conditions for earlier and later retirement
The conversion means that you have more options for the choice of your retirement age. That is because there are certain rules for having your pension commence earlier or later. After conversion of your pension fewer conditions will apply. This is because after conversion you can arrange for your pension to commence at any time you wish between the ages of 60 and 67, even if you are still working then. Or you can choose to have it commence later, up to the age of 70. However, you do require Philips’ consent if you wish to retire after the age of 67.
Continuing to work
If your accrued pension is not converted, a portion of your pension will have a reference retirement age of 65. You can only defer this pension as long as you continue to work. If you are no longer employed, Philips Pensioenfonds is obliged, for tax reasons, to have this pension commence at the age of 65. After conversion the reference retirement age is 67, but you will always have the flexibility to have your pension commence at any time between the ages of 60 and 67.
Maximization
Normally, your retirement pension together with the state pension (AOW) may not be more than a maximum of 100% of your salary. That is stipulated by law. As a result of the conversion from the age of 65 to 67 your pension will be higher, as it is paid two years later and so for a shorter period of time. If you have been employed by Philips for a long time it is possible that in this way your pension will exceed the maximum of 100% of your salary. If the maximum is exceeded as a consequence of the conversion, the pension is permitted to be more than 100% of the salary.
Unemployment benefi t
After conversion the standard practice is for the pension to commence at the age of 67. If your accrued pension is not converted, a portion of your pension has a reference retirement age of 65. If you are not employed, Philips Pensioenfonds has to pay your pension from the age of 65. If you also receive unemployment benefi t (WW) at that time, this benefi t will be reduced by the amount of the pension payments. Conversion of your accrued pension to the renewed pension scheme means that you avoid this.
Possibility of a better future increase in your pension through indexation
At Philips you accrue a portion of your pension income each year. To retain the purchasing power of this accrued pension, it is important that your pension should increase in line with the cost of living (indexation). If your pension is increased, this takes place at a fi xed time (1 April). Our aim is to increase the pension by the level of the collective salary scale increases at Philips. This is what we call ‘wage infl ation’. In the renewed pension scheme there are different rules governing pension increases through indexation.Increases in pension through indexation under the renewed pension scheme
In spite of our ambition to increase your pension through indexation, it cannot be assumed that this will happen. Whether and to what extent indexation takes place is determined each year by the Pension Fund’s Board of Trustees. For you as a person accruing pension benefi ts a decision on indexation consists of two parts:
- An increase based on price infl ation that is funded from the assets of the Pension Fund. Price infl ation is expressed in the derived consumer price index of the Statistics Netherlands (CBS).
- An increase based on the (positive) difference between wage and price infl ation that is funded from the premium reserve. This premium reserve is new from 1 January 2014. You can read more about it in step 4 ‘Funding’.
After conversion of your accrued pension to the renewed pension scheme, your entire pension qualifi es for both parts of the indexation. If your pension is not converted, that does not apply. In that case the pension that has been accrued up to and including 31 December 2013 becomes a paid-up policy, which qualifi es only for the increase based on price infl ation.
Tip! If you wish to read more about the indexation policy of Philips
Pensioenfonds and the differences between indexation for persons
accruing pension benefi ts and indexation for holders of a paid-up policy,
go to www.philipspensioenfonds.nl/indexatiebeleid (in Dutch)
What is involved in ‘lodging an objection’?
You have the option of objecting to the conversion of the pension benefits that you accrued in the past. In that case you will receive a paid-up policy for the pension that you accrued up to and including 31 December 2013. This is a separate pension policy to which different rules apply. Although you have this option, in almost all situations it does not make good sense, whereas conversion of your accrued pension benefits to the renewed pension scheme has a number of advantages for you. These advantages may become disadvantages if you lodge an objection to conversion:
- You no longer have a complete overview of your pension situation. On your annual pension overview you see only your accrued pension from 1 January 2014. You will be informed separately about your paid-up policy.
- The pension that you accrued up to and including 31 December 2013 does not qualify for a possible increase (indexation) representing the difference between wage and price inflation.
- There may be restrictions on the deferral of your pension.
Example of increase of accrued pension through indexation
Accrued up to and including 31 December 2013Increase if converted
Increase if not converted
65 years price inflation 67 years price inflation wage inflation minus price inflation
Important!
You can only object to conversion, not to participation in the renewed pension scheme. From 1 January 2014 everyone accrues pension benefi ts in the renewed pension scheme. This has been agreed between Philips and the
trade union organizations. Lodging an objection relates only to the conversion to the renewed pension scheme of the pension benefi ts that you accrued up to and including 31 December 2013.
How to lodge an objection
You are not obliged to have your accrued pension converted to the renewed pension scheme. If you do not want to have it converted, you must object by 10 April 2014. More information about this option can be found in step 5 of this booklet.
Guide to your ‘Overview Pension changes 1 January 2014’
What things are, and what things are not, taken into account in the conversion?
This overview takes account of:
- Any supplementary allowance: if you were already employed by Philips before 1 January 2006 and were older than 25 years of age at that time, then you also accrue the ‘supplementary allowance’. The supplementary allowance is included in the conversion of your pension.
This overview does NOT take account of:
- any pension from pre-retirement capital. If you have pre-retirement capital, this capital continues to exist alongside the renewed pension scheme. It is only converted into pension benefi ts when you retire or your service with Philips ends or in the event of your death before that time. With effect from 1 April 2014 some points in the investment of your pre-retirement capital will change. You will be informed about this separately.
- any ANW shortfall insurance. If you have taken out this insurance, your partner will receive an extra amount after your death up to his/her AOW pension age.
- any paid-up policies. Do you still have a paid-up policy? If so, it is not included in the conversion. You have a paid-up policy if, for instance, you objected to the conversion to the Philips fl ex pension scheme as of 1 April 2011. Or if your service with Philips began thereafter and you have not converted any other paid-policies with Philips Pensioenfonds to the Philips fl ex pension.
- a divorce. If you were divorced in the past, a portion of your retirement pension may have been set aside for your ex-partner. That is the case if you opted, at the time of your divorce, for ‘equalization’ of your pension. The amounts that you receive on retirement will then be lower than the amounts in the ‘Overview Pension changes 1 January 2014’.
Accrued pension up to and including 31 December 2013
On the page ‘Your accrued pension up to and including 31 December 2013’ you can see what the conversion means for your personal situation. In the column ‘Before conversion’ you see your pension as accrued under the Philips flex pension scheme up to and including 31 December 2013. In the column ‘After conversion’ you see your accrued pension converted to its equivalent in the renewed pension scheme.
O V ER V IEW P ENSION CHANG E S 1 J A N U A R Y 201 4
2/4 STICHTING PHILIPS PENSIOENFONDS 3/4
Overview Pension changes 1 January 2014
Philips flex pension
Balance as at Pension Scheme Pension Fund Plan Type Salary Number 1 January 2014 Philips flex pension Stichting Philips Pensioenfonds Defined benefit plan «M_9»
The Philips flex pension scheme has been renewed with effect from 1 January 2014. That is why you are now receiving this ‘Overview Pension changes 1 January 2014’ regarding the Philips flex pension. This overview shows you what the renewed pension scheme means for:
- Your accrued pension up to and including 31 December 2013: your accrued pension will be converted to the renewed pension scheme with a retirement age of 67. You can see on page 3 what that means. - Your pension situation from 1 January 2014 after conversion: the renewed pension scheme affects
your pension accrual in the period from 1 January 2014 to the age of 67. On page 4 you can see what your future pension situation will be under the renewed pension scheme.
PLEASE RETAIN THIS ‘OVERVIEW PENSION CHANGES 1JANUARY 2014’ CAREFULLY. ALSO READ THE EXPLANATORY NOTES ‘WITH THE FUTURE IN MIND’.
For whom is this overview intended?
For you «M_10» Born on «M_11» For your partner «M_12»
«M_13» «M_14»
What data is used in your overview? Gegevens van het Philips flex pensioen per:
Start of employment Start of pension accrual Part-time percentage
1 January 2014 «M_15» «M_16» «M_17»% Full-time pensionable salary
Full-time offset Full-time pension base
€ € € «M_18» «M_19» «M_20» Accrual of retirement pension
Accrual of survivor’s pension 1.85% of pension base 70% of accrual of retirement pension
Your accrued pension up to and including 31 December 2013
Accrued pension Before conversion After conversion
On the basis of the pension that you have accrued up to and including 31 December 2013, you will receive:
- from the age of 65 for as long as you live
- from the age of 67 for as long as you live € 13,500 € 15,000
In the event of your death your partner will receive:
- for as long as he/she lives € 9,450 € 10,500
Conversion of your accrued pension
Your accrued pension will automatically be converted to the renewed pension scheme as of 1 January 2014. This means that your pension with a retirement age of 65 will be converted to its equivalent in the pension scheme with a retirement age of 67. No loss of value is involved. In the overview you can see that your pension is higher after the conversion. This is because the portion of your pension between the ages of 65 and 67 has been converted into extra pension from the age of 67. As a result of the conversion your entire pension is administered on the basis of a retirement age of 67. The conversion relates only to the past. For your future pension accrual you will in any case accrue pension benefits on the basis of a retirement age of 67.
Lodging an objection
You have the option of objecting to the conversion of the pension benefits that you accrued in the past. Although you have this option, in almost all situations it does not make good sense, because conversion of your accrued pension benefits to the renewed pension scheme has a number of advantages for you. These advantages can turn into disadvantages if you object to the conversion. Below we briefly set out the advantages. If you require more information, please read step 5 of the booklet ‘With the future in mind’. You can also find there what you have to do if you wish to lodge an objection to the conversion.
Advantages of conversion to the renewed pension scheme:
9Your entire pension in one pension scheme: clear and comprehensible
Possibility of a better future increase in your pension through indexation
9More flexible options: fewer conditions for earlier and later retirement
9
This overview does not take account of any pre-retirement capital or ANW shortfall insurance. If you want to know what is, and what is not, included in the conversion, consult page 13 of the booklet ‘With the future in mind’.
A B
Accrued pension
Before conversion
These are the amounts of annual pension that you accrued under the Philips fl ex pension scheme up to and including 31 December 2013. The amounts are shown as if you had left the Company’s service on 31 December 2013. The amounts that you see are total amounts.
After conversion
The column ‘After conversion’ shows the total amount converted to the reference retirement age of 67. In the overview you see that your pension is higher after conversion. However, the value of your pension is the same after conversion as it was before conversion.
Survivor’s pension
You have also accrued a survivor’s pension. This is pension income in the event of your death for a partner that you may have. The survivor’s pension is 70% of the retirement pension. As a result of the conversion the retirement pension, and therefore the survivor’s pension too, will be higher. Your partner is entitled to this pension if you are married, if there is a registered partnership or if you cohabit and your partner is registered with Philips Pensioenfonds. On termination of employment and retirement you can, if you so wish, exchange the survivor’s pension for a higher retirement pension.
A
B
3
The Philips fl ex pension provides you with a lifelong income after your
retirement. In addition, as a participant in the renewed Philips fl ex
pension scheme you automatically accrue a survivor’s pension. This is
a lifelong pension income that your partner receives on your death.
These basic elements continue to exist in the renewed pension scheme.
However, a number of important points have changed. You can read more
about this in this tab. In the Guide you can see what information your
‘Overview Pension changes 1 January 2014’ provides about your future
pension situation in the renewed pension scheme.
Future
Step 3: Changes affecting your
future benefi t accrual
3
Future
All the changes at a glance:
- the reference retirement age changes from 65 to 67 in the renewed pension scheme
- the benefi t accrual rate of 1.85% is no longer a fi xed percentage; it may also be lower in the future
- the funding of the pension scheme changes, as Philips will henceforth pay a fi xed percentage of premium. You will also pay an employee contribution.
Later reference retirement age, but fl exibility remains possible
The statutory guideline for the retirement age was formerly 65. Since 1 January 2014 it is 67 years of age. The renewed Philips fl ex pension scheme has been adapted to this. It also has a reference retirement age of 67 for pension accrual. In the renewed pension scheme, therefore, you accrue pension benefi ts over a longer period. This means that your pension will be higher. It still remains possible to retire earlier, namely between the ages of 60 and 67. With the Company’s consent you can also defer your retirement date and retire between the ages of 67 and 70.
Tip! The retirement age for the state pension (AOW) is also going up in
stages. Until 2013 the AOW pension age was 65, but will now change for
everyone. How much later you receive your state pension depends on when
you were born. To find out when you will be entitled to the state pension,
go to www.checkuwaowleeftijd.nl (in Dutch)
Your survivor’s pension and orphan’s pension will be higher
In the renewed pension scheme you still accrue a survivor’s pension for your partner, while there is also provision for an orphan’s pension for your children up to the age of 21. That has not changed. The level of the survivor’s and orphan’s pension is derived from your retirement pension. In the renewed pension scheme you accrue pension benefits for a longer period of time, up to your 67th birthday. This means that your retirement pension, as well as your survivor’s and orphan’s pension, is higher. We also provide some extra security: in the event of your death during your employment, we calculate the level of the survivor’s and orphan’s pension as if you had been in service with Philips until your retirement date (67 years of age).
Benefit accrual rate no longer fixed
As before 1 January 2014, you accrue a retirement pension each year at a rate of 1.85% of your pension base. Your pension base is the portion of your salary on which you accrue pension benefits. The accrual rate of 1.85% is no longer fixed, however. Under certain circumstances the benefit accrual rate may be lowered. In that case you accrue less pension for a certain period. Our expectation, however, is that a good pension accrual can be achieved with the agreed percentage of premium. More information about this can be found in step 4 ‘Funding’ of this booklet.
Different funding of your pension scheme
The renewed pension scheme has a different character. It is, in ambition, a career-average defined benefit scheme. Your pension scheme is funded with a fixed percentage of premium. It is thus a collective defined contribution pension scheme. What, however, do all these terms actually mean for your pension?
Each year you accrue pension benefits on your gross annual salary. When you retire you receive a pension based on the average salary that you earned at Philips. The amount of pension that you accrue is not a definite amount, however. The accrual of your pension is funded from the premium that Philips pays. If this premium is not sufficient, you accrue less pension in a particular period. So the risks are apportioned differently in the renewed pension scheme, lying more with you as a participant. In step 4 ‘Funding’ you can read more about the way in which the renewed pension scheme is funded.
Tip! If you wish to know more about the employee contribution and about
terms like pensionable salary, pension base and offset, or if you want to see
other examples, go to www.philipspensioenfonds.nl/toekomst where you
can download the article ‘Een eigen bijdrage betalen: wat betekent dat?’
(in Dutch).
Employee contribution
Until now Philips paid the entire pension premium. That has changed in the renewed pension scheme. From 1 April 2014 you will pay a monthly contribution to your pension via your salary. This contribution will be introduced gradually: 1% from 1 April 2014 and 2% from 1 January 2015. The gross employee contribution is calculated in relation to your pension base. The pension base is the portion of your salary on which you accrue pension benefi ts. From April 2014 you will see the employee contribution on your salary statement.
How much does Frank contribute to his pension?
Frank is 38 years old and is employed by Philips. His pensionable salary is € 60,000. The offset as of 1 April 2014 is € 13,164. Frank’s pension base is therefore (€ 60,000 - € 13,164) € 46,836.
From 1 April 2014 Frank will pay each year a pension premium of 1% of his pension base. So he contributes (1% x € 46,836) € 468.36 per year. Assuming the tax rates that are currently in force, this means that Frank pays a net amount of approximately € 195 for his pension. Per month that is a net amount of approximately € 16. From 1 January 2015 the pension premium will be 2% of the pension base. So from then he will pay per year (2% x € 46,836) € 936.72. That means a net amount of approximately €390 per year and approximately € 32 per month.
Flexible pension with options
The Philips fl ex pension offers several options. These enable you to tailor your pension situation to your personal wishes. These options are retained in the renewed pension scheme:
- You can still arrange for your pension to commence earlier than the reference retirement age of 67. Or later: up to the age of 70. If you wish to retire after your 67th birthday, you require Philips’ consent.
- You can exchange your survivor’s pension, either in full or in part, for extra retirement pension. You automatically accrue a survivor’s pension. This is a pension income for your partner, where applicable, in the event of your death. Everyone accrues a survivor’s pension, irrespective of whether you have a partner. At the time of your retirement you can choose what to do with the accrued survivor’s pension. You can retain it for your partner or, if you do not have a partner or you have a partner with suffi cient income of his/her own, you can opt to exchange all or part of your survivor’s pension for extra retirement pension.
- You can vary the level of the bridging pension. If you retire before the AOW pension age, you will not yet receive a state pension. In that case you can purchase a bridging pension for the period until you reach the AOW pension age. You can vary the level of this bridging pension.
- You can make use of the high-low scheme. You can opt to receive more pension in the fi rst years following retirement and less thereafter. That makes sense if you think that you will need more money in the fi rst years after retirement. You can choose to receive more pension up to the AOW pension age or up to the age of 72.
Tip! The Pension Planner is fully geared to the renewed pension scheme.
It enables you to calculate for your own personal situation all the individual
options that you have when you retire. In the Pension Planner we assume
that you do not lodge an objection to conversion to the renewed pension
scheme. If you do object, you will see in the Pension Planner, after the
processing of your objection, only the pension that you accrue from
1 January 2014 in the renewed pension scheme:
Guide to your ‘Overview Pension changes 1 January 2014’
Your pension situation from 1 January 2014 after conversion
Your future pension situation is shown on the page ‘Your pension situation from 1 January 2014 after conversion’. This takes into account the conversion of your accrued pension benefits to the renewed pension scheme.
Philips Pensioenfonds
Philips Pensioenfonds Beukenlaan 14 O V ER V IEW P ENSION CHANG E S 1 J A N U A R Y 201 4 3, Eindhoven P.O. Box 80040, 5600 JP Eindhoven Telefoon 0800 – 023 15 01 Fax 040 – 265 38 77 [email protected] www.philipspensioenfonds.nl4/4 STICHTING PHILIPS PENSIOENFONDS
Your pension situation from 1 January 2014 after conversion In the event of retirement
Accrued pension on 1 January 2014
On the basis of the pension that you have accrued on 1 January 2014, you will receive:
- from the age of 67 for as long as you live Pension to be accrued from 1 January 2014
If you accrue pension from 1 January 2014 up to the age of 67, you will receive:
- from the age of 67 for as long as you live Projected pension at the age of 67
Assuming continued employment until the age of 67, you will receive:
- from the age of 67 for as long as you live
€ € € 15,000 9,000 24,000 +
In the event of your death Your partner will receive
- from your death for as long as he/she lives € 16,800
If you do not have a partner
Do you not have a partner when you reach the age of 67? In that case the survivor’s pension is exchanged for extra retirement pension. In the present situation that means that the survivor’s pension of € 16,800 is exchanged for extra retirement pension. This means that your projected pension at the age of 67 will be increased to € 28,000. After the exchange the survivor’s pension amounts to € 0.
This overview does not take account of any pre-retirement capital or ANW shortfall insurance. If you wish to know what is and what is not factored into the conversion, consult the booklet ‘With the future in mind’ on page 13. Please note: Your pension accrual is based on a benefit accrual rate of 1.85%. This is not a fixed percentage. In certain circumstances it may also be lower. In that case you will accrue less pension in a particular period. Please note: All benefits stated are gross amounts per year. This means that tax and social security contributions still have to be paid on them. Your pension is paid in monthly instalments.
«M_1» «M_2» «M_3» «M_4» «M_5» «M_6» Date : Reference : Re : 27 February 2014 «M_7»
Philips flex pension per 1 January 2014
Dear «M_8»,
Op 1 januari 2014 is uw pensioenregeling vernieuwd. Vanaf dat moment bouwt u pensioen op in de vernieuwde pensioenregeling Philips flex pensioen. Bij deze brief vindt u persoonlijke informatie over de wijzigingen. Hieronder vermelden wij kort waar u meer informatie kunt vinden.
Overview Pension changes 1 January 2014
Dit ‘Overzicht pensioenwijzigingen 1 januari 2014’ geeft weer wat de overgang naar de vernieuwde pensioenregeling voor u persoonlijk betekent. U vindt de volgende informatie:
- Your accrued pension up to and including 31 December 2013: your accrued pension will be converted to the renewed pension scheme with a retirement age of 67. You can see on page 3 what that means.
- Your pension situation from 1 January 2014 after conversion: the renewed pension scheme affects your pension accrual in the period from 1 January 2014 to the age of 67. On page 4 you can see what your future pension situation will be under the renewed pension scheme.
Meer informatie
In het meegestuurde boekje ‘Met het oog op de toekomst’ vindt u informatie over de wijzigingen, een toelichting op uw persoonlijk overzicht en over de mogelijkheid om bezwaar te maken tegen de omrekening van uw opgebouwde pensioen. De belangrijkste aandachtspunten hebben wij voor u samengevat in een checklist. Op
www.philipspensioenfonds.nl/toekomst vindt u meer informatie over de vernieuwde pensioenregeling. In de
Pensioenplanner (www.philipspensioenfonds.nl/pensioenplanner) kunt u zelf berekeningen maken om inzicht te krijgen in uw actuele pensioensituatie op basis van uw individuele wensen.
Do you have questions?
If you have any questions about this letter, please call the Service Desk of Philips Pensioenfonds on telephone number 0800 - 023 15 01. We are available on working days from 9 a.m. to 5 p.m. If you call from abroad, the number is +3140 - 265 38 70. You can also, of course, contact us by letter, email or fax.
With kind regards,
Stichting Philips Pensioenfonds
Ton de Visser
Head of Pension Administration
A
B
C
D
Accrued pension on 1 January 2014
This is your accrued pension up to and including 31 December 2013, converted to the reference retirement age of 67. If you object to the conversion, your starting situation on 1 January 2014 is shown in the column ‘Before conversion’ on the page ‘Your accrued pension up to and including 31 December 2013’ of your overview.
Pension to be accrued from 1 January 2014
This is the amount of pension that you accrue from 1 January 2014 up to the reference retirement age of 67. This pension accrual is based on a benefi t accrual rate of 1.85%. This accrual rate is not a fi xed percentage. Under certain circumstances it may be lower. In that case you will accrue less pension in a particular period.
Projected pension at the age of 67
This is the pension income that you receive from the age of 67 if you continue to accrue pension benefi ts with Philips until that age on the basis of your current data. This presupposes the conversion of your pension. Your projected pension does not take account of future developments. Such developments may have a (positive or negative) impact on your projected pension, for instance an increase in your pension through indexation and changes in your personal data, or measures such as a reduction of the benefi t accrual rate in the future.
Your partner will receive
This is the amount that your partner receives in the event of your death, taking account of the conversion of your pension. Your partner is entitled to this pension if you are married, if you are in a registered partnership or if you cohabit and your partner is registered with Philips Pensioenfonds.
If you do not have a partner
On your overview you can also see the amounts of pension you receive if you opt to exchange your survivor’s pension for a higher retirement pension. These amounts are applicable to you if you do not have a partner when you retire or if you have a partner who can provide for his/her own income. As a result, your retirement pension will be higher, but after your death no income will be provided for your partner.
Tip! On page 13 of this booklet you can read exactly what, and what is not,
taken into account in the ‘Overview Pension changes 1 January 2014’.
A
B
C
D
4
Funding
Fixed percentage of premium
Until now Philips paid each year the total pension premium needed for pension accrual in that year. In addition there was an extra supplement to the premium if the Pension Fund’s fi nancial position was not strong. This has changed. In the renewed pension scheme Philips funds the scheme by paying a premium that is a fi xed percentage (24%) of the salaries. This includes your employee contribution.
What happens to this 24%?
Philips Pensioenfonds uses the total pension premium of 24% of all salaries, minus costs, to fi nance your annual pension accrual of 1.85%. If any money is left over after the payment of costs and pension accrual, the Pension Fund pays the surplus into a separate account. This account is known as the ‘premium reserve’. This is set down in the CAO agreements on the renewed pension scheme. If in a given year the payment of 24% of all salaries is not suffi cient to fund the pension accrual of 1.85%, the defi cit is covered by the premium reserve, provided it contains suffi cient funds. If that is not the case, the accrual rate for that year is reduced and you accrue less pension in that year.
4
In order to be able to pay for pensions, money is needed. An important
difference between the current and the renewed pension scheme is the way in
which the pension scheme is funded. On the one hand your pension is funded
from the Pension Fund’s investment income, and on the other hand from the
premiums that are received for the accrual of your pension benefi ts. And this
premium is going to change. A fi xed percentage of premium has been agreed for
the renewed pension scheme. This has important consequences, which are
explained in this step.
Funding
Step 4: How is your pension
scheme funded?
The premium reserve
The Board of Trustees may resolve to use the premium reserve for the realization of the accrual rate of 1.85%, for a higher indexation for those accruing pension benefits or to add a surplus to the Fund’s assets.
- Pension accrual for persons accruing pension benefits
The premium reserve is primarily intended to realize a pension accrual of 1.85% of the pension base. So in a year in which the premium of 24% of all salaries is insufficient, the funds in the premium reserve are used to realize 1.85%.
- Indexation for persons accruing pension benefits
If the premium reserve contains sufficient funds which are not needed for realizing the accrual rate, these funds are used to realize a higher indexation for persons accruing pension benefits. This indexation will then consist of the (positive) difference between wage and price inflation. You can read more about indexation in the renewed pension scheme in step 2.
- Pension assets for everyone
If the premium reserve reaches a certain level, no new payments are transferred to the reserve, and the surpluses are added to the assets of the Pension Fund. In this way the financial situation of the Pension Fund as a whole will be strengthened, thus increasing somewhat the possibility of indexation for those accruing pension benefits, those receiving benefits and former Philips employees who have a pension entitlement with the Fund.
Once-only payment
As the risks are apportioned differently in the renewed pension scheme, Philips will make a once-only payment to the value of € 600 million to Philips Pensioenfonds. This will strengthen the Fund’s position and increase the likelihood of future indexation for all members. Of this € 600 million, a sum of € 100 million will be added to the premium reserve. The expectation is that this addition will enable the premium reserve to do its work effectively, i.e. to realize an accrual rate of 1.85% and to realize higher indexation.
Addition of € 600 million
It was agreed in the CAO negotiations that part of the entire sum of € 600 million will be added to the premium reserve. The extra contribution is divided into two parts:
- € 500 million will be added to Philips Pensioenfonds’ pension assets.
- € 100 million will be added to the premium reserve.
Once-only extra contribution
e
6oo
MILLION
pension assets premium reserve
e 500
million
e 100
January 2014
From 1 January 2014 you accrue pension benefi ts in the renewed Philips fl ex pension.
May/June 2014
You receive your Uniform Pension Overview 2014. The Uniform Pension Overview confi rms the introduction of the renewed pension scheme with effect from 1 January 2014. Your choice regarding the conversion of your pension benefi ts is also processed in the pension overview.
February 2014
In this month you have received the ‘Overview Pension changes 1 January 2014’ together with this booklet. The overview shows what the changeover to the renewed pension scheme means for you personally.
You can make use of the Pension Planner via www.philipspensioenfonds.nl/pensioenplanner The Pension Planner is geared to the renewed pension scheme. It will enable you to calculate the consequences for your personal situation of individual options that you will have when you retire.
April 2014
You pay an employee contribution for your pension. You can see your employee contribution on your salary statement.
If you wish to object to the conversion of your accrued pension benefi ts to the renewed pension scheme, you must make this known by 10 April 2014. Exactly what you have to do is described on page 30.
5
In this tab you will fi nd a timeline showing when the most important information
is provided. You can also read how to proceed if you wish to object to the
conversion of your accrued pension benefi ts. All the main points are summarized
in the checklist on page 33.
Changeover to the renewed pension scheme
Stap 5: What else you need to know
5
Changeover
Lodging an objection to conversion: how to proceed
You are not obliged to have your accrued pension converted to the renewed pension scheme. You have the option of objecting to this. If you are considering such an objection, you are advised to take note of the information given from page 12 of this booklet, particularly since conversion of your accrued pension to the renewed pension scheme has a number of advantages for you. These advantages may become
disadvantages if you lodge an objection to conversion. However, if you nevertheless wish to choose not to have your pension benefits converted, you should proceed as follows:
You go to www.philipspensioenfonds.nl/toekomst and download the form ‘Objection to conversion of accrued pension’.
You fill in the form.
You and, where applicable, your partner both sign the form.
You send the form no later than 10 April 2014, quoting ‘Objection Form’, to Philips Pensioenfonds, Antwoordnummer 35, 5600 VB Eindhoven, the Netherlands. Philips Pensioenfonds will send you an acknowledgement of receipt of the form
within ten working days.
You receive a letter in which you are given the choice of exchanging your accrued survivor’s pension for extra retirement pension.
You receive a paid-up policy for the pension benefits that you accrued up to 1 January 2014.
Are you aged 60 or older?
In that case you will receive with this information package extra information about choosing your retirement date.
A conversion of pension benefi ts from a previous employer
If you are in the process of having the pension benefi ts accrued with a previous employer transferred to Philips Pensioenfonds and this process has not yet been completed, you will not see these pension benefi ts on the ‘Overview Pension changes 1 January 2014’. You will receive further information from Philips Pensioenfonds as soon as the conversion has been completed.
www.philipspensioenfonds.nl/toekomst
The website of Philips Pensioenfonds has been brought fully into line with the renewed pension scheme. But a special information board has also been created where all the information about the renewed pension scheme can be found: not only a specifi c explanation of the changes, but also FAQs, previous articles published in ‘Generaties’ and current news. For this, go to www.philipspensioenfonds.nl/toekomst (in Dutch). And of course you can download here all the available booklets and forms regarding the renewed pension scheme. These documents can also be requested from the Service Desk of Philips Pensioenfonds (see page 34).
This booklet contains the most important information about the pension
changes that take effect from 1 January 2014. Together with the personal
‘Overview Pension changes 1 January 2014’ this package provides a lot of
information about your renewed pension scheme and its consequences for
your pension. Do you wish to know more about this or are there special
circumstances in your case? Below you will fi nd a few more practical points
and useful tips.
Practical points and useful tips
Tip! Any questions you might have about the changes to the pension scheme
can be addressed to the Service Desk of Philips Pensioenfonds. The contact
details can be found on page 34.
Insight into your pension situation via the Pension Planner
You have a pension scheme with various flexible options. However, you only really get a clear picture of your pension situation if you calculate the effects of your personal choices. You can do this with the Pension Planner. The ‘Overview Pension changes 1 January 2014’ does not take account of individual choices. The Pension Planner enables you to make your own calculations based on the renewed pension scheme, so that you see what the financial consequences of your choices are. The Pension Planner has been adapted to the renewed pension scheme from 1 January 2014, taking account of the conversion of your accrued pension benefits to the renewed pension scheme.
Annual pension overview
Once per year your personal Uniform Pension Overview is sent by us to your home address. On this overview you will find all the financial information about your personal pension situation with Philips Pensioenfonds. In the next Uniform Pension Overview that you receive from us you will see your pension situation in the renewed pension scheme.
Pension scheme rules
Your pension scheme is described in the pension scheme rules, which can be downloaded from www.philipspensioenfonds.nl/downloads. You can also request a copy of the pension scheme rules from the Service Desk of Philips Pensioenfonds.
Tip! You can log onto the Pension Planner with your payroll number and your
password.
Go to: www.philipspensioenfonds.nl/pensioenplanner (in Dutch)
If you have forgotten your password, you can request a new one.
!
Action point
If you wish to register your partner with Philips Pensioenfonds or if your partner’s details are incorrect, fi ll in the form ‘Partner Registration’, which can be downloaded from www.philipspensioenfonds.nl/downloads or requested from the Service Desk of Philips Pensioenfonds.
Checklist
Are you aware of the main changes to your pension?
In this booklet you can read what the most important changes are. Do you have any questions or is there anything which is not clear on your ‘Overview Pension changes 1 January 2014’?
In that case look at the FAQs at www.philipspensioenfonds.nl/toekomst (in Dutch). Or call the Service Desk of Philips Pensioenfonds on telephone number 0800 – 023 15 01 (from abroad +3140 – 265 38 70). The Service Desk can be contacted on working days from 9.00 a.m. to 5.00 p.m. More contact details can be found on page 34 of this booklet.
Are your partner’s details registered correctly on the overview?
Do you wish to register your partner with Philips Pensioenfonds? Or are your partner’s details incorrect? If so, fi ll in the form ‘Partner Registration’. You can download the form from www.philipspensioenfonds.nl/downloads or request it from the Service Desk of Philips Pensioenfonds (see page 34). Your accrued pension was automatically converted to the renewed pension scheme on 1 January 2014.
By the summer you will receive your Uniform Pension Overview showing your new pension situation. You do not have to undertake any further action, unless you do not agree to the conversion of your accrued pension. If you wish to lodge an objection, you can do so by fi lling in the form ‘Objection to conversion of accrued pension’, which can be downloaded from www.philipspensioenfonds.nl/toekomst. Your objection must be received by us by 10 April 2014. You will then receive an acknowledgement from us.
Contact
If you have any questions, don’t hesitate to contact our Service Desk. The contact details are:
Philips Pensioenfonds P.O. Box 80040 5600 JP EINDHOVEN The Netherlands
Visiting address : Beukenlaan 143 5616 VD Eindhoven
Telephone : 0800 – 023 15 01 (Netherlands) : +3140 – 265 38 70 (Abroad)
(during working days from 9.00 a.m. until 5.00 p.m. (CET))
Fax : 040 – 265 38 77
E-mail (pension questions) : [email protected] E-mail (brochures) : [email protected] Internet : www.philipspensioenfonds.nl
This booklet has been prepared with the utmost care and is based on the information currently known to us as well as the pension scheme rules applicable to you. Ultimately, the pension scheme rules are decisive. The pension scheme rules can be requested from us or downloaded from www.philipspensioenfonds.nl/downloads
