1. Illustrative Examples of the impact of the Individual Salary Cap
Willis
October 2013

2. Illustrative Examples of the Impact of the Individual Salary Cap
The following slides are designed to help illustrate the impact of the Individual Salary Cap on Members Pensionable Salaries and to aid overall understanding
They do not reflect the exact detail that will apply in practice
In particular the Individual Salary Caps will increase only once a year whereas these graphs show continuous increases – in order to simplify the position.
In the event of any discrepancy, the rules of the Willis Pension Scheme will take precedence

3. Example 1 – Pay Rises below inflation
Pension £pa
In this example a members pensionable salary is rising gradually over time at a rate below inflation .. (next slide)
Uncapped Salary Individual Cap Capped Salary
2010
2013
2016
2019

4. Example 1 – Pay Rises below inflation
Pension £pa
.. In 2013 the Individual Cap is introduced, but this increases at inflation, faster than this members salary .. (next slide)
Uncapped Salary Individual Cap Capped Salary
2010
2013
2016
2019

5. Example 1 – Pay Rises below inflation
Pension £pa
.. The Capped salary is the lower of the two lines – in this case it is the same as the Uncapped salary, so the member is unaffected by the change (next slide)
Uncapped Salary Individual Cap Capped Salary
2010
2013
2016
2019

6. Example 2 – Pay Rises higher than inflation
Pension £pa
In this example a members pensionable salary is rising quickly, by more than price inflation .. (next slide)
Uncapped Salary Individual Cap Capped Salary
2010
2013
2016
2019

7. Example 2 – Pay Rises higher than inflation
Pension £pa
… In 2013 the Individual Salary Cap is introduced and this rises in future in line with inflation, slower than pensionable salary.. (next slide)
Uncapped Salary Individual Cap Capped Salary
2010
2013
2016
2019

8. Example 2 – Pay Rises higher than inflation
Pension £pa
… Capped Salary, which is used to calculate benefits from time to time, is the lower of the two. It doesn’t fall in 2013, but it increases at a slower rate going forward which means the members benefits will be lower than they would have been previously
Uncapped Salary Individual Cap Capped Salary
2010
2013
2016
2019

9. Example 3 – Variable Pay Rises
In this example Pay rises are sometimes higher and sometimes lower than inflation … (next slide)
Pension £pa
Uncapped Salary Individual Cap Capped Salary
2010
2013
2016
2019

10. Example 3 – Variable Pay Rises
Pension £pa
… In 2012 the Individual Cap is introduced – this is sometimes more and sometimes less than the Salary … (next slide)
Uncapped Salary Individual Cap Capped Salary
2010
2013
2016
2019

11. Example 3 – Variable Pay Rises
Pension £pa
Again the Capped Salary that is used for benefits is the lower of the two from time to time. This means that if an Associate has no pay rises for a year or so, he can “catch up” to the Cap at a later date
Uncapped Salary Individual Cap Capped Salary
2010
2013
2016
2019