Pensions Act 1995

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s that of an SPT directors committee, the decisioof an SPT directors committee, the decision will be reviewed by three voting directors (who are not members of the committee which took the original decision), together with one member of the original committee, who may advise but may not vote. The reply will explain whether, and to what extent, it confirms or replaces the previous decision. - and available in pdf format from the pensions site on 'Momentum'.

Additionally accumulated SBS credits can be transferred to one or both of the new providers. We will write to you separately regarding these additional options before mid-April 2002.

Why has more choice been introduced?

To recap on last year's announcements, the two main reasons for the new choices were:

Credited interest rates under the SBS are likely to be lower than in the past; and
A wide range of AVCs, on competitive terms, have become available in recent years, enabling members to choose products suited to their own anticipated needs.

Like many other UK pension plans whose pensioners are becoming an increasing proportion of the membership, the Plan has to adopt an investment policy aimed at providing a greater level of financial stability. For this reason, and because of the outlook for investment markets and low predicted rates of inflation, future investment returns in the Plan are expected to be lower than in the past. The Plan has been progressively increasing fixed-interest holdings and reducing those in equities, so that over 50% of the Plan's assets (and therefore SBS) are now in fixed-interest.

Changes in regulations, and the continuing requirement for prudent investment management, mean that the Trustee does not have the same investment freedom, but must focus much more on the security of returns for current and future pensioners.

After an extensive search, the Trustee, with the help of its professional advisers, have appointed two leading AVC Investment Management firms - Standard Life and Merrill Lynch Investment Managers.

How do these options compare with past choices?

Previously, if you wanted to make contributions to SBS you had only one investment choice. The alternative was to set up your own individual Free Standing Additional Voluntary Contribution (FSAVC) policy, as some members have chosen to do, paying fees and other costs as required.

The Trustee has negotiated favourable fees with the new AVC providers

From 6 April 2002, the SBS facility is being withdrawn to new contributors. For those with a SBS balance, contributions can continue to be made into SBS as well as the new choices.

What happens to my existing SBS credits?

You can retain part, or all, of your accumulated capital in SBS whilst contributing to the new AVC arrangements. You can also make future contributions partly to SBS and partly to the new choices.

You will also be able to transfer part, or all, of your existing SBS balance to one or more of the new AVC choices. However, once SBS balances have been transferred they cannot be transferred back into SBS in the future.

Before considering transferring SBS balances you need to compare the choices available. For example, SBS retirement credits do not go down, and there is a 2.5% guaranteed minimum credited interest level. Apart from the Cash Fund with Merrill Lynch and the Standard Life With-Profits Fund, if taken at age 65, the new AVC investment choices can go down as well as up.

Further information in respect of transferring existing SBS balances will be forwarded before mid-April 2002.

Where can I obtain more information about SBS?

More information about SBS is contained in the Appendix to this leaflet. More information is available in the Plan booklet (April 1997 edition)(1.8MB).

Do I need to seek advice regarding my SBS credits and the new choices?

Each member should consider carefully the information th