A change forthe better!Pension news from the Trustee of the Michelin Pension and Life Assurance Plan

YOUR pensionYOUR future

YOUR way

YOUR pensionYOUR future

YOUR way

YOUR pensionYOUR future

YOUR way

Chris Wood

10 second summaryFind out what’s new inside:

• Adviser and investmentsAre you making the most of the help and information available?

• Contributions Will you be affected by the Government changes to the minimum level of pension contributions?

• State PensionAre you entitled to a full State Pension?

• TrusteesMeet the new Trustees.

• New ways of thinkingMake sure you’re up to speed with how you can take your pension savings.

• Contact usWho to contact if you wish to get in touch.

September 2017

Even though building up our pension savings is something we do over the long term, there is always something new to think about.

In this issue of the Trustee’s newsletter we’ve concentrated on what’s new. In some cases, it’s a reminder of changes that have happened over the last few months, in others it’s notice of something new to come.

There have been plenty of new developments for the Plan, so we’ll introduce you to our new Trustee Directors and remind you of the new Plan administrators who are there to help you and answer your questions. You have new “Pathway” investment funds introduced earlier in the year which aim to make investing your money simpler and at the same time easier to fit with your personal plans.

In the wider world, the Government has announced plans that may affect when your State pension is paid. And following the Government’s changes to how and when we can take money from a pension plan, we look at some of the implications of this new way of looking at our pension savings: it’s no longer just about a pension and it’s not even necessarily about retirement.

How can we help you?

If you have any questions or would like to make any suggestions to improve future communications, please contact us at michelin@pensionsoffice.com.

Chris WoodChairman to the Trustee

2

New advisors and new investmentsWell this isn’t really “new”! It’s more of a reminder of what’s gone on over the last few months.

There’s more onlineFirstly, you’ll remember that the Capita team based in an office at our Riverside offices in Stoke (where Michelin Group Services and Commerce operate) now look after the administration of all our pension arrangements. You can contact them using the details on the back page.

Having just one administrator looking after all of the day-to-day running of the Plan makes it easier for those of you that have benefits in both the Defined Benefit and the Defined Contribution Sections to see the whole picture of your pension. And if you go to the Trustee’s website at www.michelin-pensions.co.uk you can use the link to Member Online on the home page to see your own personal details and most members can even get quotations online.

Because it contains private and personal information, you need to log in to Member Online using your member number and a password. If you haven’t used the site before, you can ask for an activation code by going to www.michelin-pensions.co.uk then use the link to Member Online on the home page to send an email to Capita by clicking on the word “administrator” in the sentence:

“If you have not yet received your personal activation code please send your member number and your full name to the administrator who will arrange for this to be issued to you by post.”

Alternatively you can call Capita on the number shown on the back page.

Making the most of investmentsThe second big change you’ll remember from earlier this year was around the investment of your Defined Contribution funds.

Where your money is invested is always important: but particularly as you get nearer to the time you plan to start taking your benefits. You’ll probably have a bigger pot of money at that stage, so the growth on this could be worth more than the contributions you are paying in each year. Plus, as you approach the time you want to start taking your savings, you’ll want to make sure they’re invested in a way that matches your plans. For example, if you plan to take your Defined Contribution savings all in one go as a lump sum, you might want to ensure they’re invested in funds whose value is quite stable – so there’s little risk of their value falling at the last minute.

If you’ve chosen your own options from the Self Select range of funds it’s up to you to ensure they fit with your plans. If you’re invested using the new Pathway fund options, these are based on two things:

1. when you think you might retire, and

2. what you are considering doing with your pension savings at retirement (for example, take it all in one go, or draw money out in stages).

If you haven’t already done so, you should contact Capita and let them know your target retirement date. It doesn’t mean you must retire at that date. It just means any benefit projections we provide to you will be more accurate. If you don’t contact Capita, this will be set at age 65.

Then go to Member Online (see above) to check which type of fund you’re invested in and see if it fits with how you plan to use your Defined Contribution pension savings. This is particularly important if you are within 10 years of the time you’re planning to start drawing on your savings.

3

R ememb er,

You can go to www.michelin-pensions.co.uk and then Member Online to

see where your money is currently invested. You’ll also

find the form you need if you want to change your investments.

There are t wo different Pat hway f unds:

• Pat hway 3 For those who have a long-term view of investment risk in retirement with a view to getting a higher level of return by leaving their savings invested and withdrawing the money as and when they need it.

• Pat hway 4 For those who maybe haven’t been in the Plan for very long or who have other pension income and wish to take their Plan savings as cash. This option is unlikely to be suitable for anyone aiming to retire after 2030.

You can invest in more than one Pathway fund if you wish. For example if you think you might take most of your Defined Contribution Section savings as cash, but might have some savings left over which you want to keep invested in a drawdown arrangement. You might therefore want to consider investing mainly in Pathway 4 (for the cash element), but have some investment in Pathway 3 (for the drawdown element).

New contribution rates coming in 2018To encourage us all to save for retirement, in 2008 the Government made it compulsory for all eligible employees to be opted into a workplace pension scheme and have a minimum level of contributions paid in. You may remember the “I’m in” adverts on television when this came into force in 2012.

As a member of the Plan, the money paid in has been more than enough to cover these requirements. However, from April 2018 the minimum level of total contributions from both yourself and the company will go up to 5% of your earnings and this may affect some members of the Plan.

If the total contributions paid into the Plan by you and the company on your behalf are less than 5%, your contributions will need to be increased from April 2018. This will include ATS Euromast er employ ees who current ly pay t he minimum 1 % memb er cont rib ut ion ( mat ched b y t he company ) which will increase t o 2 .5 % and t he Michelin Ty re employ ees who are b elow t he ag e of 2 3 whose ag e relat ed memb er cont rib ut ion will increase t o 2 .0 5 % . If your level of contributions will need to increase because of this new Government minimum, we will issue communications at the beginning of next year with details. We will automatically change the level of contributions you pay to ensure it is within the new Government rules.

Ste ease se ect fro the funds isted be o here you ant to invest your savin s and hat ercenta e

of your fund you ant to invest there Just make sure that the total adds up to 100%.

Pathway funds 5 year target retirement date bands Charges (% of fund each year) % you want to invest?

Pathway 3 (Drawdown from retirement)

mid 2015- mid 20200.30%

%

mid 2020- mid 20250.30%

%

mid 2025 –mid 20300.30%

%

mid 2030 – mid 20350.30%

%

mid 2035 – mid 20400.30%

%

mid 2040 - mid 20450.30%

%

mid 2045 – mid 20500.30%

%

mid 2050 – mid 20550.30%

%

mid 2055 – mid 20600.30%

%

mid 2060 – mid 20650.30%

%

Pathway 4 (Cash from retirement)

mid 2015 – mid 20200.30%

%

mid 2020- mid 20250.30%

%

mid 2025 –mid 20300.30%

%

Self Select funds

Equity funds

LGIM UK Equity0.15%

%

Artemis UK Special Situations0.90%

%

LGIM 30/70 Global Equity0.225%

%

Newton Global Equity0.80%

%

Schroder Emerging Markets1.15%

%

Ethical funds LGIM Ethical Global Equity0.30%

%

HSBC Life Amanah Global Equity Index0.45%

%i e sified funds

ch ode i e sified o th 0.80%

%

Balanced Fund (45% global equities, 15% property and 40% corporate bonds) 0.361%%

Properety fundsThreadneedle Property

0.80%%Bond funds

LGIM Over 5 Year Index Linked Gilt0.15%

%

LGIM Over 15 Year Gilt0.15%

%

LGIM Active Corporate Bond0.35%

%

M&G Corporate Bond0.45%

%

Cash fundsLGIM Money Market

0.18%%

Signed

Date

/ /

Ste ease tic one of the bo es be o to te us ho you ant to chan e your invest ents:

I want to switch all my e istin ension account into the investment funds detailed below

I want to redirect all my future contributions into the investment funds detailed below

I want to switch my e istin account and redirect all my future contributions into the investments detailed below

oror

switch andredirect investments

ease se ect fro the funds isted be o here you ant to invest your savin s and hat ercenta e Pathway funds

Pathway 3(Drawdown from retirement)

Pathway 4(Cash from retirement)Self Select funds

Equity funds

Ethical funds

i e sified funds

Properety funds

Bond funds

Cash funds

Signed

I want to switch all my e istin ension account into the investment funds detailed below

YOUR pension

YOUR future

YOUR way

YOUR pension

YOUR future

YOUR way

YOUR pension

YOUR future

YOUR wayswitch and

redirect investments

Michelin Pension and Life Assurance Plan

Defined Contribution Section

Please complete and return this form to: The Pensions Administrator, PO Box 2281, Stoke-on-Trent, ST4 4ZT

You can choose to invest your account in any combination of:

• Pathway funds which will manage your investments for you.

• Self select funds where you choose the investment funds you want to invest in.

For more information on your options and how the different investment approaches work, read the investment guide available

on www.michelin-pensions.co.uk

About you

Title Surname

Forename(s)

National Insurance Number

Any questions?

If you have any questions you can:

Ask your HR or Personnel Department

Telephone Capita on 0344 3912 422

Email questions and comments to Michelin@pensionsoffice.com

Write to The Pension Administrator, PO Box 2281, Stoke-on-Trent, ST4 4ZT

Turn over!

to tell us how you

want to change

your investments

4

Don’t assume, ask!

• Check how much your State Pension might be

• Check when it will be paid

New state pensionAlso in the news these last few months has been the State pension. This pension is paid on top of anything you receive from the Michelin Pension Plan.

A new system was introduced last year, and as long as you have paid in for enough years, it provides an income for the rest of your life once you have reached state pension age.

Will you get the full amount?The full new State Pension is currently £159.55 per week. And this is the figure you’ll see mentioned in any headlines. However, the actual amount you get will depend on your National Insurance record. In general, you need to have paid in for at least 10 years to qualify for something and 30 to get the maximum. Remember, you may have received credits for some years if you were unemployed, sick or when a parent/carer.

An important point to note, though, is that if you were a member of the Michelin Plan Defined Benefit Section, you may not be entitled to the full amount, particularly if you are due to reach State pension age in the next few years. That’s because there was a time when you didn’t have to make payments towards the full State pension if you were making payments to a pension plan (like the Defined Benefit Section). This was known as ‘contracting out’. Those years don’t count in full. The same will apply in respect of other contracted out schemes you may have been a member of if you worked at other companies.

The best thing to do is to check where you stand. It’s now easy to find out how much you might receive from the State Pension by visiting www.gov.uk/check-state-pension and following the instructions there. If you’re not online you can telephone the Future Pension Centre helpline on 0345 3000 168 and ask for a statement (if you’re more than 30 days from State pension age).

When will you get your State pension?Although you can start taking your Michelin Pension Plan pension at any time after you reach 55, you cannot start to receive your State pension until you reach State pension age. When this is will depend on your current age and you can find out by using the calculator on www.gov.uk/state-pension-age.

The Government is making the State pension age for men and women the same and also gradually increasing it as people live for longer. Under the current law, the State Pension age is due to increase to 68 between 2044 and 2046. So, anyone born after 2 April 1978 will have a State pension age of 68. But following a recent review, the Government has announced plans to bring this timetable forward so the State Pension age will increase to age 68 between 2037 and 2039. This change will affect you if you are currently between the ages of 39 and 47 (born between 6 April 1970 and 5 April 1978).

It’s not yet law and still needs to be approved by Parliament.

5

New TrusteesSince our last newsletter, there have been changes to the board of the Plan’s trustee company, Michelin Pensions Trust Limited. We have had three new Trustee Directors elected by members. All three took up their appointments on 1 November 2016, with a term of office running to 31 October 2020. Plus there has been one new Trustee Director appointed by the Company

Your current Trustees are:

Company Nominated Trustee Directors

Chris Wood

Gill Addy

Colin Porteous

Lynne Varder

Vincent Dormieux

Member Elected Trustee Directors

David Bull

Iain Hall

Marc Jackson

Rob Taylor

We would like to thank the Trustee Directors who retired for their contribution and commitment to the work of the Trustee Board - Ian Murray, Jeff Deakin and Dave Brady – who between them had a total of almost 30 years service on the Board.

Lynne Varder

Lynne is Compensation Manager, based at Stoke. She was appointed by the Company and joined the Board in May 2017.

Iain Hall

Iain works as an Insurance Manager and is based at Stoke. He was elected by Michelin Salary employees.

Rob Taylor

Rob is a Works Convenor at the Stoke Factory and was elected by Michelin Wage employees. He had previously been a Trustee Director from November 2008 until December 2015.

Marc Jackson

Marc is a Senior Shop Steward at the Dundee factory. He was elected by Michelin Wage employees.

6

New ways of thinking - transferring your moneyIf you’ve been a member of the Michelin Pension Plan for a while (and even if you’re a new member) you may be so used to seeing a pension plan in a particular way that it’s hard to get into a new way of thinking about it. But that doesn’t change the facts: the money you build up in the Michelin Pension Plan no longer needs to be used to buy a pension. Recent changes to pensions legislation have provided members with much more freedom and choice regarding their retirement income. Full details can be found on page 14 of your Member Guide. and you don’t even need to wait until you’ve retired to access your money.

Taking defi ned contribution pension savings after 55If you are 55 or over, you could start withdrawing some of your savings directly from the Plan as cash, even if you are not retiring. Your Defined Contribution Pension Guide has full details on page 14. You can find a copy on the Trustee website at www.michelin-pensions.co.uk.

The key points to remember are:

• You can only do this once every 5 years and the minimum withdrawal is £3,000

• One quarter of the amount withdrawn is tax free, but the rest will be added to your pay to work out your tax bill, and taxed – so a large withdrawal could mean you’re taxed at a higher rate than you are used to. And this tax is taken before you get the money – you’ll have to reclaim any overpayment if the tax rate applied turns out to have been too high.

• It will limit how much you can save into a pension plan in the future and still get favourable tax treatment. An Annual Allowance of £10,000 will apply and the Government may reduce this further to £4,000 a year.

• There’s a £75 charge to cover administration costs.

14

Withdrawing cash from

the Plan before you retire

If you’re 55 or over, you could start withdrawing some of your savings

directly from the the Plan as cash, even if you are not retiring. But you must

make sure that this won’t leave you short of money in retirement!

We know this arrangement could be really helpful to pay for big one off

expenses, like paying off a mortgage or other debts, but there are a few

things you need to keep in mind.

How can you take cash?

There are two key ways you can take cash from your retirement savings

after you reach age 55. One is directly from the Plan, and the other is by

transferring money out of the Plan. If you’d like to withdraw money directly

from this Plan, you need to take what’s known as an Uncrystallised Funds

Pension Lump Sum (UFPLS) – yes, it’s a bit of a mouthful!

If you take cash this way from this Plan:

• There are limits on your withdrawals. The minimum amount you can

withdraw is £3,000. You can also only make one withdrawal every five

years from age 55.

• Most of your cash is treated as income by the tax man. Normally, the

first 25% of your UFPLS is tax free. The other 75% will be added to your

taxable income for that year and taxed accordingly. If the amount you’re

withdrawing is quite large you could end up paying 40% or even 45%

tax on some of it.

• The tax the Plan has to deduct from your payment may be substantial.

When the Plan makes an UFPLS payment, it will have to apply an

emergency tax code. This could mean that tax is overpaid and you will

be responsible for reclaiming any overpayment from HMRC. Make sure

you understand how much tax will be deducted before you make an

application. For example, if you want £10,000 immediate cash, you will

need to withdraw about £13,500.

• Your Annual Allowance will reduce. The Government limits how much

pension you can build up and receive tax relief on for each year. This is

known as the Annual Allowance. Taking a UFPLS will trigger an Annual

Allowance of £10,000* for any Defined Contribution Section payments

(it’s usually £40,000 unless you’re a higher earner when it could be less).

So, if you plan to keep saving into your retirement account, you need

to be careful.

• Fees apply. You will be charged £75 to cover the administration costs.

Above all, make sure you leave enough in your pension pot for

your retirement. If you wish to transfer money out of the Plan, contact the

the Pensions Department (Capita).

How do you make it happen?

The process will be administered on the Plan’s behalf by Capita, our Plan

administrators. You will need to ask them for the appropriate form, complete

it and send it back to them. Capita will then arrange the withdrawal of

funds, calculate the tax and pay you the net amount direct to your bank

account (after tax has been deducted).

Please note: An UFPLS is only available for savings you have in our Defined

Contribution Section. There is no facility for an UFPLS from the Defined

Benefit section. If you want to take cash from these benefits before you

retire, you will have to transfer your Defined Benefit Section benefits out

of this Plan into a separate arrangement.

* The Government has announced its intention to reduce this to £4,000 from April 2017, but as of

May 2017 the necessary legislation has yet to be passed.

There’s more inside your pension guide

7

Remember,

You now have more choices, but it’s important

you consider how these affect the money you’ll have for

your retirement.

Members with Defi ned Benefi t section pension savingsDid you know that you can now transfer your Defined Benefit Section benefits out of the Plan even if you continue working for the company and remain a member of the Defined Contribution Section? Some members have already taken advantage of this flexibility to transfer their benefits to a personal pension plan or a drawdown arrangement. If you want to do this you will have to transfer your Defined Benefit Section benefits out of the Plan into a separate, personal arrangement that is not related to the company. Also remember that you can only draw money from any pension arrangement after age 55 – even if you transfer to a personal pension plan before this. And be aware that drawing cash from such an arrangement could reduce the amount which you can contribute to a pension plan tax efficiently. Please think carefully about drawing cash from such arrangements whilst you are still working.

To do this you will need to first opt out of the Defined Benefit Section. This will mean these benefits no longer increase with future pay rises you receive while working for the Company. If you receive a pay rise, it won’t improve your pension as it does now.

The transfer value of your Defined Benefit Section benefits depends on a whole range of assumptions around matters such as investment returns and how long you can be expected to live. So the calculation is complex and takes time. The whole process will always take several weeks to complete.

Always remember you are giving up the security of your future pension income from the Plan for something that can’t be predicted with any certainty. It’s a legal requirement that you seek advice from an adviser who is registered with the Financial Conduct Authority if your transfer value is more than £30,000. The Trustee will need proof that you have done this.

It’s also important to remember that the statistics show current generations will live longer than any in the past, so we all need to plan for living a long time after we stop working. And that means we’ll need our money to last for longer: pension savings like the Michelin Pension Plan, private savings and income from the State such as your State pension.

If you do decide to transfer your Defined Benefit Section benefits out of the Plan, you must make sure this won’t leave you short of money in retirement.

Remember, always be sure your money is going to a legitimate pension plan. Over the last year significantly more scams have been reported than ever before, particularly those claiming that they can help savers cash in their pension early or provide much better investment returns. If it sounds too good to be true, it probably is!

You can read more about pension scams on the Plan’s website www.michelin-pensions.co.uk or on the Pensions Regulator’s website at www.tpr.gov.uk/pension-scams.

If you need to speak to a financial adviser, you can use www.unbiased.co.uk to find one near you. The Trustee can’t give you advice.

Members With Defi ned Contribution section pension savingsYou can also transfer your Defined Contribution savings into a personal pension plan or drawdown arrangement, either after you have left the company, or even if you continue working for the company and remain a contributing member of the Plan. But you can only draw cash from a personal pension plan or drawdown arrangement if you are over age 55. See page 14 of your Member Guide for details.

If you are over age 55 you can even draw cash from your Plan Defined Contribution savings, but this may have adverse tax consequences for you, so you should think about this option very carefully before taking up this option.

8

Designed and produced by Like Minds

Contact us

Your Plan has received an independent Pension Quality Mark The Michelin Pension and Life Assurance Plan has been awarded a Pension Quality Mark by the National Association of Pension Funds. This means it is a high quality defined contribution pension plan and has met strict criteria relating to contribution rates, governance and communications.

Choose the right way for youWe hope that you have found this newsletter useful. It is now time for you to choose the right way to save for your retirement and here is what you can do.

Step 1: ThinkConsider how much you need in retirement and whether you are saving enough. Think about how much you earn each year now and whether you think you will need more or less in retirement.

Step 2: Find out moreVisit our website www.michelin-pensions.co.uk where you’ll find other valuable resources including your investment and member guide. You can also login to Member Online to manage your pension online.

Step 3: Get helpGuidance from the Government’s Pension Wise service can be accessed online at www.pensionwise.gov.uk, or by calling the Citizens Advice Bureau on 0300 330 1001 between 8am and 10pm any day.

Step 4: Take actionIt’s a good idea to review your pension at least once each year. Someof the most common actions to keep your pension on track are to:

• Update your selected retirement age with Capita.

• Save more into the Plan.

• Review your investments.

• Complete, or review, your Nomination form.

You can find most forms on our website or simply contact the Plan’s administrators.

Step 5: ReviewKeep track of your pension online by logging into Member Online at www.michelin-pensions.co.uk.

If you’re nearing retirement visit www.retirementservice.co.uk/michelinpension to review your options with our retirement service from Hargreaves Lansdown.

Capita, the Plan administrator, can be contacted at:

Post: Michelin Pensions Administration

PO Box 2281 Stoke on Trent ST4 4ZT

Email: michelin@pensionsoffice.com

Call: 0344 391 2460

Find your way online

Visit our website at www.michelin-pensions.co.uk and you will find some great resources:

• A copy of your member guide and other useful publications.

• Access to Member Online where you can log in to check your account and use the ‘What if?’ calculator.