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Roche Pension Fund DB Section – Scheme booklet

March 2013

2 The Roche Pension Fund DB Section

Contents3 Introduction

4 How the DB Section works – an overview

6 Membership

8 Contributions

14 Retirement benefits

17 Benefits if you leave

18 Death benefits

20 Payment of death benefits

21 State benefits

23 General information

26 Finding out more

27 Glossary of terms

28 Contact details

The Roche Pension Fund DB Section 3

Introduction

So much of our lives entail planning for the future. An important career move, a special holiday, a new car – all of these we plan with excitement. But while we are so forward-looking in many ways, we often tend to neglect some of the most important planning of our lives. How will we manage in retirement? How will our families manage if we die or fall ill?

As an employee of Roche, you are not alone in the task of planning for the future. You have taken the opportunity to belong to the Roche Pension Fund. For many people, it will be an important part of your retirement income, along with benefits from the State and other savings you may have. It also provides protection in the event of ill health as well as benefits for your Dependants following your death.

Though it carries the Roche name, the Fund and its finances are managed by a trustee company in the best interests of the Fund’s members, according to its Trust Deeds and Rules.

The aim of this booklet is to provide a summary of the main features of the DB Section of the Roche Pension Fund. Please remember, however, that the full details about the Fund are contained only in the Trust Deeds and Rules (the legal basis of the Fund) and that these can change from time to time. Should there be any discrepancies between the Trust Deeds and Rules and this guide, then the Trust Deeds and Rules will take priority.

In this booklet, certain terms have defined meanings. You will find these terms printed in bold. On page 27 there is a glossary explaining what these terms mean.


How the DB Section works | an overview

Pension benefits

As a member of the DB Section of the Fund, you will receive a pension when you retire. The amount of pension is linked to your salary near to retirement and the length of your membership. As your service lengthens, the benefits you are building up increase. The benefits you build up will depend on whether your membership is of the Higher Level or the Lower Level. Irrespective of your level of membership, as a member of the DB Section you will pay lower National Insurance contributions as the Fund replaces some retirement benefits that would otherwise be paid by the State.

The Higher Level

This provides a pension based on 1/60th of your Final Pensionable Salary for each year of membership. As a member, you currently pay 5.5% of your Basic Contribution Salary. However, if you are enrolled in Salary Sacrifice (see glossary) your salary is reduced by 5.5% instead of you being required to make contributions to the Fund.

The Lower Level

This provides members with choice and flexibility. As its name implies, it offers lower benefits: the pension it provides is based on 1/90th of your Final Pensionable Salary, for each year of membership. As a member you currently pay 2.5% of your Basic Contribution Salary. However, if you are enrolled in Salary Sacrifice your salary is reduced by 2.5% instead of you being required to make contributions to the Fund.

A secure retirement

When you retire you will receive a pension based on the Higher or Lower Levels, or a combination of the two if you have separate periods of membership at each Level. You can choose to give up a part of your pension in exchange for a cash sum, and this is currently paid free of tax.

Once in payment, your pension will increase annually to help offset the effects of rising prices.

There is also the opportunity to retire earlier than Normal Retirement Age (currently age 65) and to receive an immediate pension (although if you retire early, part or all of your pension is reduced to reflect its earlier payment).

Alternatively you are permitted to retire later than Normal Retirement Age. If you choose to work beyond your Normal Retirement Age then you have the choice of starting to draw your pension or deferring it (in which case it will be increased on account of being paid later).


Protection for your Dependants

Pensions will be payable to your Dependants if you die as an active or deferred member, or in retirement. An allowance for children under 18 is also payable.

In addition, if you die while in Company employment while you are accruing pension benefits in the Fund, a cash sum of four times your Basic Contribution Salary at the date of death will be paid.

Finally, the Fund may also provide benefits if serious ill health or incapacity means you have to give up work.

Benefits if you leave

There are a number of options available to you if you leave, e.g. leaving your pension in the Fund or transferring your benefits to another registered pension arrangement. These are detailed on page 17.

If you die between leaving service and retiring, your pension (if left in the Fund) may be used to provide a pension for your Dependants.


Membership

Eligibility

The DB Section is now closed to new members. Anyone who joined the Fund before 31 March 2003 was offered membership of the DB Section.

If you wish, you can contribute to another pension arrangement (such as a personal pension or stakeholder pension) at the same time as being a member of the Fund. You are able to contribute to as many pension arrangements as you wish and, as long as you stay within the allowances set by HM Revenue & Customs, you will receive tax relief on your contributions.

Procedure on changing levels

If you are currently included in the Lower Level of the DB Section you have the opportunity to build up Higher Level benefits. To change Level, you must give at least one calendar month’s notice to Human Resources of your intention to switch, so that the necessary administrative arrangements may be completed. If you are switching from the Lower Level to the Higher Level, you will be asked to complete a declaration of health.

If you are currently a Higher Level member, it is possible for you to switch to the Lower Level, although this would mean that your future pension under the DB Section would build up at a slower rate. You must give the same one calendar month’s notice to switch to the Lower Level as described above. You can switch again as long as you follow the instructions outlined above, and there must be at least twelve months between switches.

Opting out of retirement benefits

Membership of the Fund for retirement benefits is optional, so you can choose to stop building up retirement benefits at the end of any calendar month. You will need to notify Human Resources of your intention to opt out by the end of the preceding calendar month.

Opting out may substantially reduce your retirement income. Additionally, you will no longer be covered for incapacity and the full range of death benefits. The other consequences of opting out include:

• A reduction in your life cover (from four times to twice your Basic Contribution Salary);

• The loss of the benefit of Company contributions (the Company will not contribute to any personal pension arrangements you may have);

• You will pay full-rate National Insurance contributions (instead of a reduced rate).

If you opt-out then you will only have the option of joining the DC Section of the Fund in the future.

To comply with Government legislation you will automatically be assessed against the automatic enrolment requirements once every three years. If you satisfy those requirements then you will automatically join the DC Section of the Fund. If you still do not wish to be a member of the DC Section of the Fund then you will need to opt-out again.

If you wish to re-join the DC Section of the Fund at any other time then this will only be at the Company’s discretion and will be on the Company’s terms. It is likely that any such opportunity would be subject to a declaration of good health.

Remember, opting out or leaving the Fund may substantially reduce your retirement income. The Company will not make contributions to any other pension arrangement so by opting out or leaving either Section of the Fund, you will miss out on valuable employee benefits. Additionally, you will cease to be covered for disability and the full range of death benefits. This includes a reduction in your life cover and the loss of the Dependants’ pension.

Life Assurance cover only

If you opt out of the Fund for retirement benefits at either the Lower or Higher Levels, you will become a Life Assurance Only member and you will cease to build up any retirement benefits.


Forms

It’s important that you complete and keep a number of forms up-to-date, particularly if your personal circumstances change. The information provided in these forms will be treated in the strictest confidence by the Trustee. A special envelope is available from Human Resources for your use.

Expression of wish formThis allows you to let the Trustee know of your wishes for the payment of any cash sum, should you die in employment with the Company. This form allows you to nominate a person or persons for any cash sum following your death. Any payment would be made at the discretion of the Trustee.

Nomination formIf you are married or in a civil partnership, the pension will normally be paid to your spouse/partner. If however, you are unmarried and not in a civil partnership, please complete a Nomination form which allows you to nominate a person or persons for a pension following your death. The payment would be made at the discretion of the Trustee.

Other forms are available to members of the DC Section.

Transfer-in formIf you have previously contributed to another pension plan, you may be able to transfer these benefits into the Fund.

If you wish to do so, you will need to complete a Transfer-in form. This will provide authorisation to obtain a statement of the transfer value from your previous arrangement. You will then be advised whether or not the Trustee can accept the transfer and the benefits that your transfer would provide from the Fund. If you decide to go ahead, these benefits will be added to your other benefits in the Fund.

Whether you should transfer depends on a range of issues including your circumstances and attitude to risk. If you are in any doubt whether to go ahead with a transfer, you are encouraged to seek advice from an IFA. You can obtain a list of IFAs in your area from IFA Promotion Ltd by visiting their website at www.unbiased.co.uk. You may be charged a fee for any advice you receive and the Company does not cover the cost of this advice.

Opt out formThe opt out form should be used to let us know that you no longer wish to be a member of the DB Section.

Note: If you opt-out of the DB Section, you will automatically be enrolled to

the DC Section every 3 years (see page 6).


The Lower Level

Members do not make any contributions to the Fund; instead your pay is reduced currently by 2.5% of Basic Contribution Salary. The Company contributes the whole of the costs of the benefits, which are lower than those provided under the Higher Level.

The real costs to you of membership of the Lower Level is lower than 2.5% of your Basic Contribution Salary because the reduction in your pay under Salary Sacrifice reduces both the amount of your tax and National Insurance contributions.

Company contributions

The Company pays the whole of the costs of providing benefits. Part of this comes from the reduction in your pay because of Salary Sacrifice. The Company’s contributions are determined by agreement with the Trustee after taking the advice of the Fund Actuary, who carries out regular reviews of the financial position of the Fund.

The Lower Level

Members currently contribute 2.5% of Basic Contribution Salary. The Company contributes the majority of the costs of the benefits, which are lower than those provided under the Higher Level.

The real costs to you of membership of the Lower Level is lower than 2.5% of your Basic Contribution Salary because of the tax relief given on pension contributions. Your contributions are deducted from your salary before tax is calculated so you receive immediate tax relief.

Company contributions

The Company pays the costs of providing benefits after taking into account contributions from members. The Company’s contributions are determined by agreement with the Trustee after taking the advice of the Fund Actuary, who carries out regular reviews of the financial position of the Fund.

Contributions | The contributions you are required to pay will depend on whether you are a Higher or Lower Level member and also on whether you participate in Salary Sacrifice. As a member of the Fund (whether on the Higher or Lower Level), you qualify for lower National Insurance contributions due to the DB Section being contracted-out of the State Second Pension. Members who participate in Salary Sacrifice make a further saving in National Insurance contributions.*

If you contribute via Salary Sacrifice

Member contributions

The Higher Level

Members do not make any contributions to the Fund; instead your pay is reduced currently by 5.5% of Basic Contribution Salary. The Company contributes the whole of the costs of the benefits, which are higher than those provided under the Lower Level.

The real costs to you of membership of the Higher Level is lower than 5.5% of your Basic Contribution Salary because the reduction in your pay under Salary Sacrifice reduces both the amount of your tax and National Insurance contributions.

If you do not contribute via Salary Sacrifice

Member contributions

The Higher Level

Members currently contribute 5.5% of Basic Contribution Salary. The Company contributes the majority of the costs of the benefits, which are higher than those provided under the Lower Level.

The real costs to you of membership of the Higher Level is lower than 5.5% of your Basic Contribution Salary because of the tax relief given on pension contributions. Your contributions are deducted from your salary before tax is calculated so you receive immediate tax relief.

*Please refer to the booklet on Salary Sacrifice published by the Company for examples showing the effect on take-home pay of participating in Salary Sacrifice.


Either Or Or

The Higher Level The Lower Level Life Assurance Only member

Gross contributions 5.5% x £17,000 2.5% x £17,000 nil

= £935.00 a year = £425.00 a year

Less tax relief £935 x 20%* £425 x 20%* nil

= £187.00 a year = £85.00 a year

Less savings in 1.4% x (£17,000 – £5,668*) 1.4% x (£17,000 – £5,668*) no savings

NI contributions = £158.65 a year = £158.65 a year

Net effect Membership costs: Membership costs: You pay full rate National

£935.00 – £187.00 – £158.65 £425.00 – £85.00 – £158.65 Insurance contributions

= £589.35 a year or = £181.35 a year or only £49.11 a month only £15.11 a month

Examples

The examples here have been simplified with the aim of illustrating in a straightforward manner how key benefits are calculated. All benefits from the Fund are individually calculated and checked against HM Revenue & Customs allowances.

1. Cost of membership

A member has a Basic Contribution Salary of £17,000 a year. The effect on take-home pay depends on whether the member joins the Higher Level or the Lower Level.

These examples do not include the effect of Salary Sacrifice. Please consult the separate booklet on Salary Sacrifice produced by the Company for further details and an example available through My Total Roche or the intranet.

The member has the option of paying Additional Voluntary Contributions (AVCs) (up to HMRC allowances for these to be tax privileged – see page 13) to secure additional retirement benefits.

* Assuming the basic rate of tax of 20p in the £1, and using the Lower Earnings Limit applicable for the tax year 2013/14. If the member were a higher rate taxpayer, the relief would be 40p in the £1.


2. Pension at normal retirement

Four members each have a Final Pensionable Salary of £17,000 a year. Members A, B and C retire at age 65 having completed 20 years’ membership of the Fund. Member A joined at the Higher Level and remained there for his entire membership; Member B contributed at the Lower Level throughout; Member C has completed 10 years on both Scales; and Member D opted out.

Member A, B and C each decide to exchange pension for cash on retirement. The maximum amount they can exchange and the subsequent reduction in pension is calculated as shown below.

Full pension

(i.e. without taking

up cash option)

Reduced pension

and cash option

Maximum Cash Sum

17,000 x 10 plus90

17,000 x 1060

17,000 x 2090

17,000 x 2060

= £1,889 + £2,833

The Higher Level

= £3,778 a year

£17,209*

In order to take this

cash, you would

have to give up:

17,209 ÷ 14.38** =

£1,197 a year

3,778 – 1,197 =

£2,581

= £2,581 a year plus £17,209 in cash

= £4,722 a year

£21,509*


cash, you would

have to give up:

21,509 ÷ 14.38** =

£1,496 a year

4,722 – 1,496 =

£3,226


= £5,667 a year

£25,812*


cash, you would

have to give up:

25,812 ÷ 14.38** =

£1,795 a year

5,667 – 1,795 =

£3,872


* The calculation of maximum tax-free cash available is complicated depending on the Fund’s factors for exchanging pension for cash and whether or not AVCs have been paid, amongst other things. These figures are given only as an indication of how much cash would be available.

** This is the current factor used to convert pension to cash at age 65. This is subject to change at any time.

Member A Member B Member C

Membership status 20 years at 20 years at 10 years at

The Higher Level The Lower Level The Lower Level

10 years at


3. Pension on early retirement

It is 31 March 2012. A member has completed 20 years’ membership of the Fund at the Higher Level and has a Final Pensionable Salary of £17,000 a year. The member decides to take early retirement on their 60th birthday.

The example below shows how the member’s early retirement pension is calculated.

Earliest age for

payment of pension

without reduction

Number of years

actuarial reduction

to apply for early

payment

Actuarial reduction

factor*

Early retirement

pension

The member’s total early retirement pension on their 60th birthday is therefore: £3,636 + £1,318 + £439 = £5,393 a year.

60

None

None

17,000 x 1210⁄12

60

= £3,636 a year

62

62-60 = 2 years

0.900

17,000 x 52⁄12

60x 0.900

= £1,318 a year

65

65-60 = 5 years

0.774

17,000 x 260

x 0.774

= £439 a year

Service before Service between Service from 1 February 2005 1 February 2005 1 April 2010 and 31 March 2010 onwards

Length of membership 1 April 1992 to 1 February 2005 to 1 April 2010 to

1 February 2005 31 March 2010 31 March 2012

= 12 years 10 months = 5 years 2 months = 2 years

* These are the current factors used to calculate early retirement pensions. Different factors apply to retirement at other ages. All factors are subject to change at any time. In this example the member is retiring from active service with Roche. Different factors would apply on early retirement had the member left service with a deferred pension before taking retirement.


4. Death in service

A member dies at age 45 with 10 years’ Pensionable Service, a Basic Contribution Salary of £19,500 at his date of death and a Final Pensionable Salary of £17,000 at his date of death. Potential Pensionable Service is 30 years (10 years already completed and 20 years up to age 65).

He leaves a surviving spouse and two children.

The benefits payable will depend on whether the member had contributed for the Higher Level of benefits or the Lower Level of benefits throughout. The three examples here assume that the member had been at one or the other of the Levels or a Life Assurance Only member for his entire membership. (If the member had switched at any time, the calculation would take into account shorter periods at different levels.)

Either Or Or

The Higher Level The Lower Level Life Assurance Only member

Cash sum 4 x £19,500 4 x £19,500 2 x £19,500

= £78,000 in cash = £78,000 in cash = £39,000 in cash

Spouse’s (dependant’s) pension

= £5,667 a year = £3,778 a year

Children’s

allowance = £708 per child = £472 per child

2 3 30 x £17,000

90

x

Nil

1 8

1 8£5,667x £3,778x

Nil

30 x £17,000

60

x2 3


Depending on your preference, these contributions are then invested in one of two ways, depending on your attitude to investing.

The DB AVC Lifestyling investment strategy follows a pre-determined investment strategy assuming that you wish to use your AVC Account towards a tax-free cash allowance at retirement. It invests your AVC Account in a higher-risk fund when you’re younger and then switches to cash funds as you get older to help protect your AVC Account from any falls in value as you near retirement.

The Self-select investment strategy is designed for members who wish to actively manage investing their AVC Account. You have a range of funds to choose from and you decide what funds you would like to invest in, how much to invest and when to change how your AVC Account is invested.

HM Revenue & Customs allowances

In return for allowing pension contributions to qualify for tax relief, HM Revenue & Customs sets allowances on the level of benefits you can build up and the amount of contributions you may pay.

Bonus choice

Bonus choice gives you the opportunity to sacrifice some or all of your annual bonus for a Company contribution. It also gives you the opportunity to invest this contribution differently from contributions directed to your AVC Account. You can find more details in your Bonus Choice booklet, available on the intranet.

Earnings Cap

There is a cap on the amount of earnings that are taken into account when:

• calculating the contributions that you are required to pay as a member of the DB Section; and

• the benefits that you will eventually receive (including death benefits).

The cap for 2013/14 is £141,000. You may pay AVCs on your earnings above the cap. You should be aware that the cap does not apply if you joined the DB Section before 1 June 1989.

Additional Voluntary Contributions (AVCs)

Generally speaking, paying additional contributions is a tax-efficient means to save for a retirement income as AVCs receive the same favourable tax treatment as your regular contributions to the DB Section.

Any regular AVCs you make through payroll to investment funds administered by Friends Life will be made via Salary Sacrifice. This means that your pay will be reduced by the amount of the AVC you wish to make and this amount will be paid into your AVC Account by the Company instead. In that way both you and the Company will pay lower National Insurance contributions. You will only be able to change the amount of your AVC contribution once a year. Any non-regular AVCs you pay that are not via payroll (lump sum contributions by cheque for example) cannot be made via Salary Sacrifice and therefore will not lead to a saving in Contributions.

If you are on the Lower Level of benefits, you may wish to consider switching to the Higher Level rather than paying AVCs.

If you are already on the Higher Level of benefits or you have switched to the Higher Level, you may wish to increase your benefits further still.

Reasons for paying AVCs

AVCs are particularly useful if you:

• have had periods of non-pensionable employment;

• have earnings or benefits that are not covered by the Fund (such as overtime or annual bonus);

• have built up benefits at the Lower Level in the past;

• have changed employer; or

• intend retiring early.

How does DB AVC investing work?

AVCs work in a similar way to a Defined Contribution (DC) scheme, whereby your contributions are paid in to an account – your AVC Account – set up in your name.


Retirement benefits

You should be aware that the way in which your Final Pensionable Salary is calculated was changed in February 2005. Prior to this date, your Final Pensionable Salary was taken to be your Basic Contribution Salary. It is now calculated as your Basic Contribution Salary averaged over the 36 months prior to your retirement. However, your pension built up before 1 February 2005 will be protected so that it will be no less than it would have been if you left on that date (the ‘underpin’). Your benefits after 1 February 2005 will be in addition to this underpin. For more information please refer to the announcements supplied at the time of this change, or if you require further information please contact Human Resources.

Cash option

When you retire, you may have the opportunity to exchange part of your pension for tax-free cash. You are able to take up to 25% of the value of your pension from the DB Section as tax-free cash. This amount includes any AVCs you may have invested or any contributions made via Bonus Choice.

The actual calculation of your maximum tax-free cash is complex. You will be provided with an illustration of this amount when you approach retirement.

Payment of your pension

Your pension will be paid monthly in arrears by credit transfer into your bank or building society account. Your pension will be taxed under the PAYE system and is payable for life. If you retire part way through the month, the first payment will be a proportionate amount to cover the period from retirement to the end of the month. Similarly, if you die in retirement part way through a month, a proportionate payment will be made up to the date of your death.

Pension increases

Most pensions (whether paid to retired members or their Dependants) are guaranteed to increase in line with the increase in price inflation up to 5% a year.

Normal retirement age

Your Normal Retirement Age is 65 although there are opportunities to retire earlier or later. If you wish to change your Normal Retirement Age, please contact Friends Life. Their details are on the back page.

Pension

The amount of your pension depends on whether you have had membership at either the Higher or Lower Level of benefits. If you have periods of membership at each Level, your pension is calculated separately for each period and then added together.

The Basic State Pension is currently payable in addition to your pension from the Fund once you reach State Pension Age provided you have the appropriate National Insurance contribution record.

The Higher Level

Your pension will be equal to 1/60th of your Final Pensionable Salary at retirement for each year of Pensionable Service.

This is calculated as:

Final Pensionable Salary x Pensionable Service

60

The Lower Level

Your pension will be equal to 1/90th of your Final Pensionable Salary at retirement for each year of Pensionable Service.

This is calculated as:

Final Pensionable Salary x Pensionable Service

90

Please refer to pages 10 and 11 which gives examples showing how a retirement pension is calculated.


Pension for service after 1 April 2010 is guaranteed to increase in line with price inflation up to 2.5 % a year. The increases are awarded on 1 April each year. For the purposes of working out pension increases, the measure of price inflation currently used is the Consumer Prices Index (CPI). This may be changed in the future if the Company agree.

If you were a member before 6 April 1997, part of your pension will increase at a lower rate (see page 21).

Early retirement

Voluntary early retirementYou may be able to start to draw your pension earlier than age 65, but no earlier than age 50.

Any pension in relation to service you have accrued before 1 February 2005 is paid unreduced at age 60. Benefits built up between 1 February 2005 and 31 March 2010 are payable unreduced from age 62. Pension built up after 1 April 2010 will be reduced if it starts to be paid any time before your 65th birthday. The benefits you would receive if you retire after your 65th birthday are detailed on page 16.

Drawing your pension early whilst working for Roche.With Company agreement you can draw your DB Section pension early and continue to work for Roche. You will not be able to build up further benefits under the DB Section, although you will have the option of joining the DC Section of the Fund.

Your pension on early retirement will tend to be lower than that payable on normal retirement for three reasons:

• It is based on your Final Pensionable Salary at your early retirement date (which is likely to be lower than it would be at normal retirement);

• It is based on your completed Pensionable Service only (not the Pensionable Service you could have completed up to normal retirement); and

• It will usually be reduced to take account of the longer period over which it will be paid (this is known as the ‘early retirement reduction’).

The amount of reduction will be determined by the Trustee on the advice of the Fund Actuary and will depend on your age at retirement. Human Resources will be able to advise you on the extent of the reduction to your pension. An example of the early retirement pension calculation is shown on page 11.

As with all benefits from the Fund, the Lifetime Allowance set by HM Revenue & Customs will apply (see page 16). You may also have the option of exchanging part of your pension for cash on retirement (as described on page 14). Early retirement pensions are increased in the same way as normal retirement pensions (as described on pages 14 and 15).

You should note that the benefits payable to your Dependants after your death are based on the pension you would have received had no early retirement reduction been applied and before any part of your pension was exchanged for cash.

Ill health retirement

It may be possible for you to draw an early pension from the Fund on the grounds of ill health. You may retire at any age if, in the opinion of the Company, you become unable to carry out your duties due to physical or mental incapacity and that this incapacity is likely to be permanent. Your pension will be calculated in the same way as for voluntary early retirement. However, at the discretion of the Trustee, if your ill-health early retirement occurs before age 65 your pension may be enhanced to include the future Pensionable Service you could have completed to age 65 and calculated without any reduction for its earlier payment.

Ill-health pensions are increased in the same way as normal retirement pensions as described on pages 14 and 15. You may also have the option of exchanging part of your pension for cash on retirement (this is also explained in more detail on page 14). If you return to some form of work after drawing an ill-health pension, any enhancement which has been awarded by the Trustee may be reduced or stopped.


Late retirement

If you remain in service past your Normal Retirement Age, you have several options as to how your pension is treated.

You will have the option to either start drawing your pension whilst you continue to work or to defer drawing your pension until your final retirement date.

If you start drawing your pension whilst you continue to work, you can either not accrue any further pension within the Roche Pension Fund or, alternatively, you may join the DC Section of the Fund for future accrual of pension benefits for the remainder of your employment with Roche.

If you choose not to start drawing your DB pension, you will have the option to not accrue any further pension benefits, in which case your Normal Retirement Pension will be increased by the Trustee, on the advice of the Fund Actuary, to take account of the period between Normal Retirement Age and the date on which you actually retire. Alternatively, you may continue to accrue pension within the DB Section of the Fund or become a member of the DC Section for future accrual.

Minimum Income Requirement

In 2011, the government introduced more flexibility over annuity options. The requirement to buy an annuity was removed. This applies to all members, but additional flexibility is available to members who are in receipt of pensions income at a certain level. This is known as the Minimum Income Requirement (MIR), and is £20,000 per year. If total pension income exceeds MIR, you will be able to take the rest of your pension assets as a taxable lump sum or a series of taxable payments through an appropriate policy. State benefits and any Final Salary benefits you have can count towards the £20,000 per year, together with any annuity you have purchased. The Government will review the MIR level at least every five years.

Annual Allowance

There is a maximum allowance on the total pension contributions that can be paid by you, or on your behalf, each year tax-efficiently. This is called the Annual Allowance and is set at £50,000 for the 2013/2014 tax year. From 2014/15, the Annual Allowance will reduce to £40,000.

The Annual Allowance is measured over the Fund’s Pension Input Period which is 1 April to 31 March. To check whether your pension savings are within the Annual Allowance you need to multiply the increase in your DB Section pension during the year by a factor of 16 and add to this any monies paid into your AVC Account, through Bonus Choice or any contributions to any other pension arrangements. Any increase in your DB Section pension due to inflation (as measured by the CPI) can be ignored. It is your responsibility to monitor the build up of your pension benefits and pay tax on any amounts you build up over the Annual Allowance. You will be notified after the end of the tax year if you have exceeded the Annual Allowance in the Fund.

Lifetime Allowance

The total value of pension benefits that you can build up tax efficiently during your lifetime from all sources cannot exceed the maximum allowance set by HM Revenue & Customs. This is called the Lifetime Allowance and is set at £1.5 million for the 2013/14 tax year. From 2014/15, the Lifetime Allowance will reduce to £1.25 million. It is possible to build up pension benefits in excess of the Lifetime Allowance but these would be taxed, currently at 55% if taken as a lump sum or 25% if it is taken as additional pension (the remaining pension will itself be subject to income tax when paid).

When checking the value of your benefits under the DB Section against the Lifetime Allowance, your pension will be multiplied by a factor of 20 and the value of your AVC Account and the accumulated value of any Bonus Choice will be added to this.


Benefits if you leave

As soon as practicable after you have left service, you will be informed of your options with regard to benefits that have built up in the Fund.

Your options are:

• keep your pension in the Fund as a deferred pension; or

• a transfer of the value of your pension to another registered pension scheme.

Transfer of benefits

Your transfer value will be equivalent in value to the benefits to which you would otherwise be entitled under the DB Section.

It must be calculated in accordance with certain statutory principles.

You can request a transfer value at any time after you have ceased to be an active member of the Fund (until age 64). The amount of the transfer payment can vary from time to time, but it will be guaranteed for a period of three months from the effective date on which it is calculated.

Deferred pension

You can choose to defer your benefits in the Fund until you reach Normal Retirement Age.

Your pension will be calculated in the same way as described on page 14, using your Final Pensionable Salary and completed Pensionable Service at the date of leaving.

The underpin in respect of service before 1 February 2005 service will still apply (see page 14 for details). Your deferred pension will increase in line with statutory increases between your date of leaving and date of drawing your pension. Once in payment it is increased as outlined on pages 14 and 15.

You will have the same range of options as a member retiring from service: that is, you may be able to exchange up to 25% of the value of your pension for cash and you can opt to receive your pension earlier, or later, than age 65 (see pages 14-16).

Personal circumstances

It is important that you keep Friends Life informed of any changes in your name or address or marital status, particularly if you have left service.

Information about the Fund (including the address at which the Trustee may be contacted) has been given to the Department for Work and Pensions (DWP’s) Pension Tracing Service. It acts as a central tracing agency to help individuals keep track of the benefits they have in previous employers’ schemes. The contact details for the Pension Tracing Service are on page 25.


Death benefits

Death in service before Normal Retirement Age

If you die while in Company service before Normal Retirement Age, the following benefits are payable:

Cash sumA cash sum of four times your Basic Contribution Salary at the date of death will be paid.

If you opted out of the DB Section for retirement benefits, you will continue to be covered for a life assurance benefit. However, the benefit payable, in the event of your death in Company service is a cash sum of twice your Basic Contribution Salary at the date of death.

The next section explains that the Trustee has discretion about to whom the cash sum is paid. How the Trustee exercises that discretion is set out on page 20.

Dependant’s pensionA pension will be payable to your surviving spouse (i.e. widow or widower) or civil partner. If you do not leave a surviving spouse/civil partner the Trustee may pay this pension to other Dependants. The Dependant’s pension (in total) will be equal to two-thirds of the pension that you would have received had you continued in Pensionable Service until age 65 on your Final Pensionable Salary applicable at the time of death.

Part of the Dependant’s pension can be exchanged for cash, subject to the Trustee’s discretion. Any lump sum up to the Lifetime Allowance would be paid tax-free, with any benefits over this allowance being taxed at 55%.

Please refer to the information under ‘Payment of death benefits’ on page 20.

Children’s allowanceA children’s allowance of 1/8th of the Dependant’s pension will be payable for each of up to four children. If you leave four or more children, the maximum amount of the children’s allowance (that is, one half of the Dependant’s pension) will be split equally between them all.

The allowance will be payable until the child reaches age 18. It may be extended up to age 23 at the discretion of the Trustee if the child is in full-time education or vocational training, or for longer if the child is disabled.

If no Dependant’s pension is payable, the children’s allowance is trebled.

Please refer to page 12 which gives examples showing how death benefits are calculated.


Death in service after Normal Retirement Age

If you die while in Company Service after Normal Retirement Age, a Dependant’s pension equal to two-thirds of the pension you would have received, had you retired on the date of your death, will be payable (ignoring any reduction that would have been made for taking tax-free cash). In addition, a children’s allowance will be payable as described under ‘Death in service before Normal Retirement Age’.

Death after leaving

If you die after you have left the Company but before you have retired a Dependant’s pension equal to two-thirds of the pension that would have been paid to you at Normal Retirement Age (including statutory increases until your death) will be payable. In addition a children’s allowance will be payable as described under ‘Death in service before Normal Retirement Age’.

If you die after you have left the Company and having postponed receiving your pension beyond Normal Retirement Age, a Dependant’s pension equal to two-thirds of the pension that would have been paid to you had you retired on the date of your death will be payable. In addition a children’s allowance will be payable as described under ‘Death in service before Normal Retirement Age’.

Death after retirement

If you die after you have retired, a Dependant’s pension equal to two-thirds of your pension (ignoring any reduction made for taking cash at retirement or retiring early) will be payable. In addition a children’s allowance will be payable as described under ‘Death in service before Normal Retirement Age’.

You should note that if you leave a surviving spouse (i.e. widow or widower) or civil partner, the Dependant’s pension will always be paid to that surviving spouse or civil partner rather than to another Dependant.


Cash sums

The Trustee has discretion to decide who will receive any cash sums payable from the Fund because, under current tax law, this means payments can be made free of inheritance tax. The Trustee wants to take account of members’ wishes for the payment of such sums, but can only do so if it has received a completed Expression of wish form.

You are encouraged to complete and return an Expression of wish and Nomination form, and to review it from time to time, to ensure that it is always up-to-date. The form lets you state the people you would like to receive the benefit and in what proportion. The Trustee will always take your wishes into consideration but cannot be legally bound by them.

Expression of wish and Nomination forms are available from Human Resources. If your circumstances change in the future (for example, if you get married or divorced), you should review your decision and, if necessary, complete a new form. These are available from Human Resources. Their contact details are on the back page.

Pension benefits

The Dependant’s pension will be payable for the rest of his or her life (unless a child). If your Dependant (except in the case of children) is more than ten years younger than you, their pension will be reduced by an amount determined by the Trustee.

If you are unmarried or not in a civil partnership, you can nominate another Dependant to receive a pension (not exceeding the spouse’s pension) by completing the Nomination form. A pension can only be paid to an individual who is financially dependent upon you, either wholly or partially, and is at the discretion of the Trustee.

The way in which a Dependant’s pension is increased is described on pages 14 and 15.

If no pension or allowance is payable, a cash sum equal to your contributions to the Fund (if any) with interest (currently at 3.5% a year) will be paid to your estate.

If you participated in Salary Sacrifice then, for the purpose of this benefit, the amount of your contributions will be increased so that the benefit payable from the Fund is the same as it would have been had you continued to contribute to the Fund outside of Salary Sacrifice.

Payment of death benefits


State benefits

Overview

The State Scheme currently provides a two-part retirement pension:

• the Basic State Pension;

• the State Second Pension (S2P) (prior to April 2002, this was the State Earnings Related Pension Scheme).

The Basic State Pension is a flat-rate pension set by the Government and increases annually in line with the greater of the rise in average earnings, the CPI or 2.5%. It is payable from State Pension Age to anyone who has paid sufficient National Insurance contributions. Certain married women may not be eligible if they have been paying the special reduced rate of National Insurance contributions. Further details are available from The Pension Service, the contact details for which are provided on page 22.

The State Earnings Related Pension (SERPS) provides income for service after April 1978 and is paid in addition to the Basic State Pension. When in payment, it is intended to be increased annually in line with the rise in the CPI. It is payable from State Pension Age. The pension it provides is related to earnings in a band between two levels, known as the Lower Earnings Limit and the Upper Accrual Point. The Lower Earnings Limit is announced each year by the Government. The Upper Accrual Point has now been fixed at £770 per week. An individual will receive a proportion of average revalued band earnings for each year that he or she has participated in the SERPS.

S2P provides earnings-related benefits between certain earnings limits that build up at different rates. The rates are geared so that pension for lower earners builds up at a higher rate. S2P is likely to change to a flat-rate pension at some point in the future.

Entitlement to State benefits

Your Basic State Pension amount will depend on your National Insurance contribution record and is unaffected by your membership of the Fund.

However, you will not be entitled to S2P (or SERPS in relation to service before April 2002) in respect of your service as an active member of the Fund because you are contracted-out of S2P. In order for you to contract out via the Fund, it must pass the Reference Scheme Test, which refers to the minimum level of benefits to be provided. The Fund passes this test.

If you were a member of the Fund before 6 April 1997, different terms applied to contracting-out. For your service that built up between April 1978 and 1997, your pension from the Fund includes a Guaranteed Minimum Pension (GMP), which is broadly equivalent to the benefits you have given up in SERPS. It might be necessary to restrict some of the retirement options (such as the earliest age that a pension can begin or amount that may be exchanged for cash) to ensure that the pension payable to you does not fall below the GMP. When your pension is in payment, your GMP in relation to service between 6 April 1988 and 5 April 1997 is guaranteed to increase in line with the rise in the CPI up to 3% a year from GMP Payment Age and no increases apply after GMP Payment Age to GMP in relation to service before 6 April 1988. However, additional increases may be added by the Government.

Please note the GMP Payment Age remains at age 60 for women and 65 for men regardless of any changes to the State Pension Age.


State benefits

As a member of the DB Section, you are contracted-out of the State Second Pension (S2P). This means that the DB Section replaces part of your State benefits and, as a result, both you and the Company are eligible for lower National Insurance contributions.

Your entitlement to the Basic State Pension is not affected by your membership of the Fund and will be payable to you from State Pension Age, subject to your National Insurance contribution record.

If you want an estimate of your State pension you can request a forecast from the Department for Work and Pensions. It will show you, in today’s money, the State pension you have already earned and what you can expect to have earned by State Pension Age. To get a forecast you can contact the Pension Service by:

Phoning: 0845 3000 168 Visiting: www.gov.uk/state-pension-statement Writing to: Department for Work and Pensions Tyneview Park Whitley Road Newcastle-upon-Tyne NE98 1BA


Management of the Fund

The Fund has been established under Trust so that the assets and liabilities are kept entirely separate from the Company. It is managed by Roche Products Pension Trust Limited (the Trustee), which has been set up specifically to run the Fund.

The Trustee appoints several professional advisers to assist in the smooth running of the Fund. The Trustee is required to produce an annual report about the Fund, including details of the Fund’s accounts.

The names of the current Directors of the Trustee and the Trustee’s advisers are available from Human Resources. They also appear in the regular Trustee’s Report to members.

Tax Status

The DB Section of the Fund is a registered scheme under the Finance Act 2004. This registration currently brings the following tax advantages:

• most members receive full income tax relief on any contributions they make to the Fund within the maximum permitted;

• the cash lump sum paid on retirement is tax-free up to the maximum allowed by HM Revenue & Customs and on death is tax-free up to the Lifetime Allowance;

• the Fund benefits from tax advantages in respect of its investment income.

In return for these valuable concessions, HM Revenue & Customs sets allowances for the benefits you can receive and the contributions that can be paid. Any benefits and contributions above these allowances will not receive the same favourable tax treatment.

Investment of funds

The contributions paid by members and the Company are paid promptly to the Trustee for long-term investment. Responsibility for the proper investment of funds rests with the Trustee, although it delegates the day-to-day investment decisions to independent investment managers. The managers work within the guidelines set out in a document prepared by the Trustee called the Statement of Investment Principles. The Trust Deed prohibits assets of the Fund from being invested in the Company.

Data Protection

Both the Trustee of the Fund and the Company will hold personal data provided by you for the purpose of calculating and providing your benefits and your survivor’s benefits under the Fund. Both the Fund and the Company may also make that information available:

• To others (within the United Kingdom or in any other country) to allow the administration of the Fund (for example, the Department for Work and Pensions).

• To their respective professional advisers.

• To any other trustees or other persons who become responsible for providing benefits.

• To other Roche companies where required in connection with the business of the Roche group of companies.

Where information is made available outside the European Economic Area (‘EEA’), laws and practices relating to the protection of personal data may differ from those within the EEA and may offer a different level of protection or no protection for personal data. However, all information will be handled in accordance with the Roche Group’s Directive on the protection of personal data.

General information


Amendment to the Fund

The Fund may be amended or discontinued at any time. If your benefits or rights are affected, you will be given written notice. If the Fund is discontinued, the Trustee will use the assets of the Fund to provide members’ benefit entitlements in accordance with the Trust Deeds and Rules. Should there be insufficient assets in the Fund to meet all pension liabilities on wind-up, current legislation would require the Company, providing it is solvent, to make extra contributions so that all pensions could be bought out in full with an insurance company.

If on wind-up, the Company is insolvent and unable to make up any deficit to buy out all pensions in full, additional protection may be available to members from the Pension Protection Fund.

Assignment of benefits

Your benefits from the Fund are strictly personal and cannot be assigned to anyone else or, for example, used as security for a loan. If you divorce and where a Court so orders, the Trustee will use part of your benefit to create benefit rights for your former spouse.

Temporary absence

If you are temporarily absent from work due to ill-health or for other reasons, your membership of the Fund may be continued at the discretion of the Company and you may be allowed to continue building up pension benefits. There may be instances, however, of unpaid temporary absence where pension accrual will cease. Members who are likely to be affected should contact Human Resources for further information.

Part-time working

If your Pensionable Service includes any period where you worked part-time, the benefits payable to you will be adjusted by the Company and Trustee after taking advice from the Fund Actuary.

Maternity and Paternity or other Statutory leave

Maternity and Paternity leave will be dealt within accordance with the relevant company policies. For additional information please contact Human Resources.

Disputes

If you have a query about the Fund, Human Resources will normally be able to resolve it. However, in the unlikely event of you being dissatisfied with the response you receive, there is a formal procedure in place for resolving disputes. You may request a copy of the full formal internal disputes procedure from Human Resources.

If you are dissatisfied with the outcome of the internal disputes resolution procedure, the following external organisations are available to investigate complaints.


Organisations which may be helpful

Pensions Ombudsman If TPAS cannot solve your pension problem, the Pensions Ombudsman is available to settle complaints and disputes of fact or law connected with pension schemes. If you have exhausted the internal dispute procedure, you can contact the Ombudsman by:

Phoning: 020 7630 2200 Visiting: www.pensions-ombudsman.org.uk Emailing: [email protected] Writing to: 11 Belgrave Road, London SW1V 1RB

The Pensions Regulator The Pensions Regulator provides support and advice to Trustees, administrators and employers, and ensures that employers meet their pension obligations and that schemes are run to a high standard. You can contact the Pensions Regulator by:

Phoning: 0870 600 0707 Visiting: www.thepensionsregulator.gov.uk Emailing: [email protected] Writing to: Napier House, Trafalgar Place, Brighton, BN1 4DW

Independent Financial Advisers (IFAs) IFAs are able to provide impartial and personal advice about your pension options, such as whether to join a particular arrangement, whether to transfer benefits and whether to contract-out. The Company, the Trustee, and Human Resources are all prevented by law from giving you financial advice, therefore you may find it helpful to talk to an IFA. You may be charged a fee for any service you receive which the Company will not pay for. Neither the Company nor the Trustee can take responsibility for the advice you receive or any action you may take as a result. You can obtain a list of IFAs in your area by:

Visiting: www.unbiased.co.uk

The Pension Tracing Service All approved pension schemes have to register with the Department for Work and Pensions (DWP) Pension Tracing Service. The relevant details of the Fund have been passed on. If you have lost track of your deferred benefits with a previous employer, you can contact the Pension Tracing Service who will provide you with an up-to-date address of the Trustees of that scheme. You can contact the Pension Tracing Service by:

Phoning: 0845 6002 537 Visiting: www.gov.uk/find-lost-pension Writing to: The Pension Tracing Service The Pension Service Tyneview Park Whitley Road Newcastle-upon-Tyne NE98 1BA


Finding out more

Additional information

The Company and the Trustee are committed to ensuring that members have all the information they need about the DB Section of the Fund. In addition to this booklet, the following items are issued to members:

• a DB AVC New investment options leaflet;

• an annual benefit statement, which gives details of your benefit record;

• information about AVCs;

• popular Trustee Report, which extracts the key items of news from the formal Trustee Annual Report and Accounts; and

• Summary Funding Statement, which summarises the latest valuation and provides an update on funding since that date.

Fund documentation

As a member of the DB Section you can ask to see the following items (and in certain cases, you can request your own copy):

• Trust Deeds and Rules relating to the DB Section;

• latest Actuarial Valuation;

• formal Trustee Annual Report and Accounts (which includes the audited accounts of the DB Section of the Fund, a statement from the Fund Actuary and a report from the Fund’s investment managers);

• the Trustee’s Statement of Investment Principles;

• Schedule of Contributions; and

• Statement of Funding Principles and Recovery Plan.

The Trust Deeds and Rules

The information given in this booklet summarises many aspects of the benefits under the DB Section of the Fund. The Trust Deeds and Rules are the legal documents governing the payment of benefits. In the event that the benefits and conditions described in this booklet differ from those in the Trust Deeds and Rules, the Trust Deeds and Rules will prevail.


Annual Allowance is the limit on the amount of tax-relievable contributions that may be paid and benefits that may be built up in any single tax year.

AVC Account is the account held by the Trustee in your name to which you and the Company contribute. At retirement, the accumulated value of your AVC Account is available to secure retirement benefits for you and your Dependants.

Basic Contribution Salary is the annual rate of your basic salary (excluding overtime and commissions but including shift pay) at any given time. If you contribute via Salary Sacrifice, Basic Contribution Salary will be calculated ignoring any change to your salary which has occurred as a result.

Bonus Choice allows you to exchange part, or all, of any bonus you may earn for a lump-sum Company AVC contribution, within tax limits.

Company includes Roche Products Limited, Roche Diagnostics Limited and all other companies participating in the Fund.

DB Section is the Defined Benefit Section of the Fund.

DC Section is the Defined Contribution Section of the Fund.

Dependants can include your surviving widow, widower, civil partner, any children under 18 and anyone who the Trustee believes was, wholly or partially, financially dependent on you.

Final Pensionable Salary is your Basic Contribution Salary averaged over the 36 months before your retirement, date of leaving or date of death as appropriate.

Fund refers to the Roche Pension Fund.

GMP Payment Age is the age at which you receive your Guaranteed Minimum Pension, if eligible. It is currently age 60 for women and age 65 for men.

Lifetime Allowance is the allowance against which the value of your pension benefits from all registered pension schemes must be tested at retirement (or in the event of death).

Normal Retirement Age is 65.

Pension Protection Fund is a statutory fund run by the Board of the Pension Protection Fund. It was established to pay compensation to members of eligible defined benefit pension schemes where there is a qualifying insolvency event in relation to the employer and where there are insufficient assets in the pension scheme to cover Pension Protection Fund levels of compensation.

Pensionable Service is the last continuous period of service during which you have been a member of the Fund.

Salary Sacrifice refers to the way that pension contributions can be paid, leading to a reduction in the National Insurance contributions paid by both the member and the Company.

State Pension Age is the date from which you can normally claim a State pension. It is currently 65 for men and rising from 60 to 65 for women. By 2020, State Pension Age will be 66 for everyone and this is expected to increase to 68 by 2046.

Trustee is Roche Products Pension Trust Limited, a trustee company. The Trustee is run by its directors, whose appointment and removal rests formally with Roche Products Limited. However, one-third of the directors are appointed in accordance with the law relating to the nomination and selection of member nominated trustee directors.

Glossary of terms

Human Resources

Writing to: HR Compensation & Benefits Roche Products Limited Hexagon Place 6 Falcon Way Shire Park Welwyn Garden City Hertfordshire AL7 1TW

Alternatively, if you have any questions after reading this guide, please contact your Pensions Co-ordinator:

Welwyn Garden City (Pharmaceuticals): Susie O’Leary

Burgess Hill (Diagnostics): Sharon Waddell

Friends Life

You can contact Friends Life by:

Phoning: 0845 6717 868

Visiting: https://corporatebenefits.friendslife.co.uk

Emailing: [email protected]

Writing to: Friends Life Corporate Client Services

PO Box 6272

Basingstoke

Hampshire

RG21 6SH

Contact details

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