Changes to RBS’s UK Defined Benefit pension schemes · Changes to the UK State Pension Prior to 6 April 2016 After 6 April 2016 2 + Basic State Pension (BSP) Basic State Pension

Changes to RBS’s UK Defined Benefit pension schemes RBS

—

November, 2016

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Document Classification: KPMG Confidential

© 2016 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Contents Introductions to pensions 1 Changes to the UK State Pension 2 RBS's response to the changes 3 What do the bank’s changes mean? 4

Pension Calculator 7

Summary of differences

Options available 8 9

Support available 5 Case studies 6

Questions and answers 10 Further support 11

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Introduction to pensions (1) 1

In the UK you get a State

Pension provided by the

government

Workplace pension schemes are ways for you

and your employer to save money for your

retirement

Defined Contribution

(DC) schemes Defined Benefit

(DB) schemes

State Pension Workplace pensions

You may also have your own

personal pension arrangements

Personal pensions

4



How do Defined Contribution schemes work?


£

£

You put in

Your employer puts in Growth in your

investment returns

££

£

Your Pension Pot

The biggest impact you can have on your income in retirement is how much you regularly save towards your

pension

5



How do Defined Benefit pension schemes work?


For example:

20

(years) £24,000

(pensionable salary)

1

60

(accrual)

£8,000

per year

Years in

scheme

Pensionable

salary

Accrual rate

Pensionable

income per

year

6



New Single State Pension

New Single Tier Pension

Up to £155.65 per week

Changes to the UK State Pension Prior to 6 April 2016 After 6 April 2016

2

+

Basic State Pension

(BSP)

Basic

State Pension

Up to £115.95 PER WEEK

State Second Pension

(S2P)

Current State

Second Pension

Based on earnings

— RBS Defined Benefit pension schemes were ‘contracted

out’ of State Second Pension

— Hence, employer and employee paid a lower rate of

National Insurance

— Bank unable to ‘contract out’ of the New State Pension

— National Insurance contributions (paid by both employer

and employee) did increase

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— Cost of providing DB pension schemes

increasing

— Gap between DB and DC pension provision

widening

— Bank’s response

RBS’s response to the changes 3

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What do the bank’s changes mean? The 2% increase in base

salary will be applied in

0.5% increments in:

— June 2017

— December 2017

— June 2018

— December 2018

4

9



What do the bank’s changes mean? (2) For members of the Group Fund who make Additional

Pension Contributions and get the additional 7%

discretionary top up, this will stop from 1 June 2017

4

10



Support available 5

Pensions

explained

Animated

film

Pension

Calculator

Helplines Phone: 0207 3114040

[email protected]

Pension

statements

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Salary £1,667 (£20,000 per year)

From 5 April 2016

Increase in National Insurance Contributions: £17

After 1 June 2017

Case study 1 — Richard 6

1 June 2017 1 December 2017 1 June 2018 1 December 2018

Increase in cost of membership of Defined Benefit

pension scheme

£8 £17 £25 £33

Reduction in take home pay £6 £13 £20 £26

12



Salary £3,333 (£40,000 per year)

From 5 April 2016

Increase in National Insurance Contributions: £40

After 1 June 2017

Case study 2 — Becky 6

1 June 2017 1 December 2017 1 June 2018 1 December 2018

Increase in cost of membership of Defined Benefit

pension scheme

£17 £33 £50 £67

Reduction in take home pay £13 £27 £40 £53

13



Pension Calculator (1) 7

14




15




16




17




18




19




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Opt out of your Defined Benefit pension scheme

into the Defined Contribution pension scheme

Review amount of Additional Contributions

If you are a member of the Group Fund and paying

the 5% additional RBSelect charge to maintain NPA

60, you can stop paying this and move to NPA 65

Do nothing: Changes will happen automatically

The Bank believes that membership of the UK Defined Benefit

pension schemes remains a valuable benefit

Options available 8

21



RBS Retirement Savings Plan

Benefits depend on how well your investments perform, how much is paid into the pension and how you decide to

access your pension benefits. The risk is with the member, however added flexibility around form of benefit.

Options available (2)

Retirement Savings Plan

Contributions

made

through

RBSelect

Investment Return

Pensions

Benefits

8

22



If you buy an annuity

it can be tailored

to your needs:

Options available (3) How you take your benefits in the Retirement Savings Plan?

When you retire you have lots of choices on how to take your Retirement Savings Plan pension benefits

Or

Buy an annuity

(an annual pension)

Take as cash

(up to 25% is tax-free)

And

/or

Transfer to an external

provider to access

further flexible options

Allow for

your health

Inflation

increases

Dependant

benefits

8

23



Options available (4) The impact on your Defined Benefit pension scheme if you opt out and join the Defined Contribution Scheme pension

Past Defined

Benefit pension

Currently increases in line

with Pensionable Salary

Future Defined

Benefit pension


with how long you decide

to stay in the Defined

Benefit scheme and your

Pensionable Earnings

If you stay in the Defined Benefit pension scheme

Past Defined

Benefit pension


with inflation up to a cap

Future pension in

the Retirement

Savings Plan

Will depend on how well

your investments perform,

how much is paid into the

pension and how you

decide to access your

pension benefits

If you opt out of the Defined Benefit pension scheme

8

24



You have the option to take undiscounted pension for age 55 and over in case of redundancy, for those eligible

Death in service and ill health benefits are included as part of the scheme

The Defined Benefit pension scheme also includes a number of benefits which you wouldn’t receive if you opt-out

Other considerations

Options available (5) 8

25



Summary of differences for RBS and Ulster Bank Schemes

Summary of differences

Scheme Will the 2% increase in the cost of membership apply?

Will the removal of the 7% APeCs uplift apply?

The Royal Bank of Scotland Group Pension Fund Yes Yes

The Ulster Bank Pension Scheme Yes No (the 7% uplift has never applied)

The RBS International Pensions Trust No (as a non UK scheme) Yes

The Isle of Man Bank Pension Fund No (as a non UK scheme) Yes

Definition in presentation Equivalent definition for Williams & Glyn employees

Base salary

The monthly charge is calculated on the “RBS Salary Element” which has been emailed to each

W&G colleague

Value Account Fixed Pay

Retirement Savings Plan (RSP) Williams & Glyn My Retirement Savings Plan (by Legal & General)

RBSelect My HR

Default DC contributions of

10% for opt outs

If a W&G colleague opts out of DB they have the option to enrol in the Williams & Glyn My

Retirement Savings Plan, The default contribution is 4% of salary, but can be flexed up or down

Definitions that differ for the Williams & Glyn Employees

9

26



Questions and answers 10

This is your opportunity to ask any

questions you might have.

You can ask a question by pressing *1

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Further support 11 What? Where?

Pensions explained film Visit the RBSelect pages at rbs.tbs.aon.com >Learn More> Great Britain

OR Northern Ireland> Defined Benefit Pension Plan OR Retirement Savings

Plan>Useful Information

W&G intranet > Colleague Resources > My HR Intranet > HR Support –

Williams & Glyn employees

Pensions explained guide

Online Pension calculator

KPMG – Pension change helpline Phone: 0207 311 4040

[email protected]

HR People Services Contact HR help (at the top right of any HR intranet page)

Phone: 0808 100 4242

(0345 307 3464 – Williams & Glyn employees)

mailto:[email protected]

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© 2016 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 28



— This presentation provides outline information and indicative positions for discussion purposes and is not to be construed as advice or a

basis for the evaluation of an individual’s circumstances.

— KPMG act as advisers to the employer and not to individual employees - as such no individual advice can be given.

— The future basis and rates of National Insurance contributions may vary, and the value of any tax relief available or tax payable will

depend upon the individual circumstances of the investor.

— All references to National Insurance Contributions are to UK taxation and are based on KPMG’s understanding of current UK law and

HM Revenue & Customs practice which may change at any time.

— You should obtain independent financial advice about your own circumstances. You can contact an independent financial adviser in

your area by looking at the Money Advice Service www.moneyadviceservice.org.uk

— The complete details of scheme benefits are set down in the formal Trust Deed and Rules for each scheme, which are summarised in

the booklets available on RBSelect. In case of any discrepancies the Trust Deed & Rules will prevail.

— The information contained in this webinar is of a general nature and is not intended to address the circumstances of any particular

individual. Although endeavours have been made to provide accurate and timely information, there can be no guarantee that such

information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such

information without appropriate professional advice after a thorough examination of the particular situation.

— The webinar is designed to provide a few key facts and help you to better understand your options. You are responsible for carrying out

your own investigations before making any changes to your scheme; and we recommend that you take independent financial advice

about your own personal circumstances. You should not regard any of the information provided by the webinar as financial advice and

no responsibility is taken for any decisions you make based on the webinar.

Disclaimer


The KPMG name and logo are registered trademarks or trademarks of KPMG International. CRT064403J

The information contained herein is of a general nature and is not intended to address the circumstances of any particular

individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such

information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on

such information without appropriate professional advice after a thorough examination of the particular situation.

© 2016 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms

affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

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Documents

Changes to RBS’s UK Defined Benefit pension schemes · Changes to the UK State Pension Prior to 6 April 2016 After 6 April 2016 2 + Basic State Pension (BSP) Basic State Pension