A-Day changes

From the 6 April 2006 (or A-Day as it has been christened) the previously complex sets of tax Rules that governed pensions have been swept into a single simplified set of rules. The government has also taken the opportunity to add greater flexibility and security for pension members.

We are pleased to announce that O2 has embraced these changes and, as a result, the O2 Pension Plan is easier to understand, more flexible, quicker to join and offers greater security than ever before.

Learn more about the changes that took place to the Plan from 6 April 2006.

A-Day Changes affecting Section 1 members

A clearer approach

Rules imposed by HM Revenue and Customs (‘the Revenue’) have always shaped pensions. For many years these rules have been criticised as being far too complicated and as a result have been blamed for putting people off saving for their retirement. From A-Day the way the Revenue views pensions will change and become simpler. There will be those with large amounts of pension’s savings that will have some difficult decisions to make as a result of this but, for the majority of pension savers, pensions will be much clearer.

Does the Inland Revenue’s new approach affect you? More details.

Freedom to save

You will continue to enjoy the tax favourable basis that pension savings provide but will now have the freedom to make pension savings at times when saving most suits you. Up until A-Day, government rules meant that members of the O2 Pension Plan have been only able to put up to 15% of their salary in to their pension and most people could only save with one pension arrangement at a time.

From A-Day you can contribute up to 100% of your salary to the O2 Pension Plan and recover tax relief on those contributions. Furthermore, you can save with more than one pension arrangement at once.

Click here to find out more about the contributions you can make to the Plan.

More tax-free cash at retirement

From A-Day you will be able to take up to 25% of the value of your retirement benefits as tax-free cash and for most this will mean an opportunity to take more tax-free cash than before. Tax free cash will be subject to an overall maximum but this will not affect the majority of members. You should note that by taking more tax free cash your pension will be reduced in compensation.

Click here to find out more about tax free cash on retirement.

Flexibility to retire the way you want

Changes in the law have allowed us to make significant improvements in the way you may choose to take pension benefits from A-Day, for example you may:

Continue to work for O2 whilst drawing your retirement pension.
Draw your pension early but continue to make more pension savings if you continue to work for O2.
Take part of your pension before the rest.

In certain circumstances O2 and/or the Trustees of the Plan may need to give their consent to you taking your benefits and continuing to work.

Click here to find out more about Flexible Retirement.

Improvement for leavers

Up until A-Day, those employees leaving with less than two years membership of the Plan were provided with a refund of their contributions less tax. From A-Day, those with just a short period of service with O2 of 3 months or more will be entitled to transfer their fund to another pension arrangement therefore maintaining the pension saving made at O2.

Click here to find out more about improvements for early leavers.

Rights to work later than age 60

Currently, O2 employees retire at age 60 but from 1 October 2006 members will have the right to continue to work until age 65 if you like. You will also have the right to ask to work past 65 which O2 will be required to consider carefully.

As a result, your contractual and Plan retirement age will change to age 65. But, because O2’s aim is provide more flexibility rather than to force you to work longer, all rights to draw your pension or leave the Company at age 60 will be protected; you will even be written to at age 60 with a reminder you that you can draw your pension without penalty.

Click here to find out more about your retirement age.

Investment choices for all

Unconnected to the A-Day changes, but representing another improvement, the Trustees of the Plan have put in place an investment fund that is compliant with Islamic law – the HSBC Amanah Fund. Under Islamic law there are certain activities which are not permitted to be invested in such as alcohol, tobacco, arms and conventional financial companies. The fund has a specialist supervisory committee made up of Islamic Scholars to make sure that such investments do not take place. It is a fund designed for Muslims but is open to all.

Click here to find out more about the Amanah Fund.

Protection of your current rights

From the outset, O2’s approach to adopting the pension’s legislation has been centred on protecting existing rights under the Plan but adding flexibility for members. As a result of the A-Day changes, there is no detrimental impact to the benefits provided through the O2 Pension Plan for you.

Click here to find out more about protection of your benefits.