Appendix 6 INLAND REVENUE LIMITS

For the purposes of this Pension Trust and the Rules the following terms have the following meanings:

• “Act” means the Taxes Act 1988 including any statutory amendment, modification or re–enactment;

• “Aggregate Retirement Benefit” means:

  1. (i)

     the annual pension which would be payable to a Member if the following did not apply: the “Elections at Retirement” Rule, increases to GMP, the “State Graduated Retirement Benefits” Rule (if any) and the “Additional Voluntary Contributions by Members” Rule; plus

  2. (ii)

     the Member’s Normal Lump Sum divided by a conversion factor of 1 per annum of pension equivalent to a lump sum of 12; plus

  3. (iii)

     the pension payable under the “Additional Voluntary Contributions by Members” Rule; less

  4. (iv)

     the pension (if any) that the Member has surrendered under the “Joint Annuitant’s Pension” Rule.

• “Associated” in relation to more than one employment means that one of the employers concerned was controlled by the other, or both were controlled by a third party; in this context

• “control” has the meaning set out in section 840 of the Act.

• “Associated Employment” means 2 or more concurrent employments held by the Member where:

  1. (i)

     there is a period during which the Member held all of them;

  2. (ii)

     the period counts under the Scheme in the case of all of them as a period in respect of which benefits are payable;

  3. (iii)

     during the period all the employers in question are Associated.

• “Associated Scheme” means:

  1. (i)

     in respect of a Class A Member or a Class B Member any Relevant Scheme which provides benefits in respect of Relevant Employment; or

  2. (ii)

     in respect of a Class C Member any Relevant Scheme which is a Connected Scheme or which provides benefits in respect of Relevant Employment.

• “Class A Member” means a Member who entered into membership of:

  1. (i)

     the Scheme; or

  2. (ii)

     an Interavailability Scheme

  before 17th March 1987 PROVIDED THAT the Member may elect at any time before the Relevant Date to be deemed to have become a Class C Member on 1st June 1989.

• “Class B Member” means a Member who entered into membership of:

  1. (i)

     the Scheme; or

  2. (ii)

     an Interavailability Scheme

  on or after 17th March 1987 but before 1st June 1989 PROVIDED THAT the Member may elect at any time before the Relevant Date to be deemed to have become a Class C Member on 1st June 1989.

• “Class C Member” means a Member who entered into membership of the Scheme on or after 1st June 1989 and any Class A Member or Class B Member who is deemed to have entered into membership of the Scheme on or after that date.

• “Connected Scheme” means any Relevant Scheme where:

  1. (i)

     there is a period during which the Member has been the employee of two Associated employers;

  2. (ii)

     that period counts under both schemes as a period in respect of which benefits are payable; and

  3. (iii)

     the period counts under one scheme for service with one employer and under the other for service with the other employer.

• “Dependant” and “Eligible Dependant” have the same meanings as in the Rules and for the purposes of these limits include a spouse or former spouse entitled to a benefit.

• “Final Remuneration” means the greater of:

  1. (i)

     the aggregate of:

     1. (a)

        Pensionable Pay for the year preceding the Relevant Date; and

     2. (b)

        the yearly average over 3, 4 or 5 consecutive tax years ending immediately prior to the expiry of (a) above preceding the Relevant Date of any Fluctuating Emoluments provided that Fluctuating Emoluments shall be increased in proportion to any increase in the Index from the last day of that tax year up to the Relevant Date; and

  2. (ii)

     the yearly average of total emoluments for any 3 consecutive tax years ending not more than 10 years before the Relevant Date provided that before calculating the said average the total emoluments for any tax year shall be increased in proportion to any increase in the Index from the last day of the tax year in which the emoluments were paid and the Relevant Date.

  Provided also that:

  1. (a)

     in the case of a Class C Member remuneration and the annual rate of the Member’s remuneration shall not exceed the permitted maximum as defined in section 590C(2) of the Act;

  2. (b)

     in the case of a Class B Member for the purposes of calculation of the maximum lump sum, Final Remuneration shall not exceed £100,000 per annum or such other sum as may be specified in an order amending that amount made by the Treasury; and

  3. (c)

     in the case of a Class B Member whose remuneration in any tax year ended on 6th April 1988 or later has exceeded £100,000 or such other figure as may be specified in an order made by the Treasury, Final Remuneration shall, subject to proviso (b) above, be calculated in accordance with method (ii) above, and method (i) shall not apply; and

  4. (d)

     in the case of the maximum lump sum on death in service, the Pensionable Pay for the year in question in (i)(a) above shall be replaced by the rate of Pensionable Pay in force on the day of death if this leads to the computation of Final Remuneration being increased.

• “Final Average Pay” has the same meaning as in the Rules.

• “Fluctuating Emoluments” in relation to a Member means the aggregate of:

  1. (i)

     any remuneration (excluding anything in respect of which tax is chargeable under section 148 of the Act) received by the Member in excess of his or her Pensionable Pay; and

  2. (ii)

     any benefits in kind in respect of which he or she is assessed for income tax under Schedule E of the Act.

• “Incapacity” has the same meaning as in the Rules.

• “Index” means the Government’s Index of Retail Prices, or such other index as may be agreed between the Trustee and the Board of Inland Revenue.

• “Interavailability Scheme” means any scheme where:

  1. (i)

     there was a period during which the Member was an employee of the Participating Employer;

  2. (ii)

     that period counted under the scheme as a period in respect of which benefits were payable; and

  3. (iii)

     a transfer value has been paid to the Scheme either under Clause 8B (Transfers–In) or under a Statutory Instrument made under section 7 of the Transport Act 1962^f1.

• “IR Limit Employment” means:

  1. (i)

     in respect of a Class A Member or a Class B Member that Member’s employment by the Participating Employer; and

  2. (ii)

     in respect of a Class C Member the aggregate of the Member’s employment by the Participating Employer; and any period which counts in respect of any Associated Employment or any Connected Scheme.

• “Normal Lump Sum” means (1) in the case of the Shared Cost Arrangement, the Member’s lump sum under Rule 5B (Lump Sum on Retirement between Minimum Pension Age and Age 65) and (2) in the case of the 1994 Pensioners “A” and “B” Sections, the aggregate of the Member’s lump sum benefit under BR Rule 13 and BR Rule 13A.

• “Relevant Date” means whichever is the earlier of the Member’s leaving Service, the Member’s death and the Member’s 65th birthday.

• “Relevant Employment” means in relation to a Class A or Class B Member, service with a Participating Employer, and in relation to a Class C Member, the aggregate of service with a Participating Employer and any period which counts in respect of any Associated Employment or any Connected Scheme.

• “Relevant Scheme” means a scheme for the provision of relevant benefits as defined in Chapter I of Part XIV of the Act and which is approved or is seeking approval under Chapter I of Part XIV of the Act.

• “Remuneration” in relation to any year means:

  1. (i)

     as regards a Class A Member or a Class B Member the aggregate of the total emoluments for the year in question from his or her employer which are assessable to Income Tax under Schedule E;

  2. (ii)

     as regards a Class C Member the aggregate of the total emoluments for the year in question from his or her employer and from any Associated Employment or any Connected Scheme which are assessable to Income Tax under Schedule E provided that in arriving at such emoluments there shall be disregarded any emoluments in excess of the permitted maximum as defined in section 590C(2) of the Taxes Act excluding in the case of a Member who left Service after 5th April 1987 anything in respect of which tax is chargeable under section 148 of the Taxes Act.

• “Tax Year” means the year ending immediately prior to 5th April which is used by the Participating Employer for PAYE tax purposes.

• “Transferred Membership” means any period of additional membership granted under rule 6(2) of the New Section of the British Railways Superannuation Fund or any predecessor to that rule, rule 6(2) of the British Railways (Wages Grades) Pension Fund or any predecessor to that rule or as a result of a transfer–in to the Scheme.

In any case when the Inland Revenue either generally or in any particular case permits payment of a higher sum by way of benefit or contributions than that described above, the Trustee or the Member (as appropriate) may pay the higher sum.

Clause 9 (Contracting–out) overrides any provisions which are inconsistent with it.

Where in addition to being a member of this Scheme the Member is also a member of a scheme approved by the Revenue (the voluntary Scheme) which provides additional benefits to supplement those provided by this Scheme and to which no contributions are made by any employer of his, the provisions of the paragraph that follows shall apply in relation to any augmentation of the benefits provided for him by this Scheme after he has ceased to participate in it.

Any provisions in this Scheme imposing a limit on the amount of a benefit provided for the Member shall have effect (notwithstanding anything in them to the contrary) as if they provided for the limit to be reduced by the amount of any like benefit provided for the Member by the voluntary Scheme.

In the case of a Class A Member or a Class B Member the Member’s Aggregate Retirement Benefit shall not exceed the following:

In the case of a Class C Member the Member’s Aggregate Retirement Benefit shall not exceed the following:

increased by the proportion (if any) by which the Index has increased between the day the Member

In the case of a Class A Member or a Class B Member the total value of all benefits payable in any form other than non–commutable pension under the Scheme and any Associated Scheme shall not exceed an amount equal to the following:

increased by the proportion (if any) by which the Index has increased between the day the Member left Service and the day his or her pension commences.

In the case of a Class C Member the total value of all benefits payable in any form other than non– commutable pension under the Scheme and any Associated Scheme shall not exceed an amount equal to the following:

increased by the proportion (if any) by which the Index has increased between the day the Member left Service and the day his or her pension commences.

The aggregate lump sum payable on the death of a Member in Service shall not exceed the aggregate of:

if the aggregate of such lump sums exceeds £1,000.

Surplus contributions shall be calculated in accordance with the Retirement Benefit Schemes (Restriction on Discretion to Approve) (Additional Voluntary Contributions) Regulations 1993^f2 and the Trustee shall at all times comply with the requirements of those Regulations.