AlSTOM 24p MB DBS .di 2

ALSTOM Pension Scheme

2006 Defined Benefit Section

Member Booklet

Contents

Introduction 3

How does the Scheme work? 4

Joining 5

How much will it cost? 6

What do I get when I retire? 8

What will my family get if I die? 11

What happens if I stop contributing to the Scheme? 13

Keeping you informed 15

Appendices

State pensions 16

General details 17

Some information about tax 20

The legal background 21

Words with a special meaning 22

Introduction

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Being in a healthy financial position is important to us all, both now and in the future. The 2006

Section of the ALSTOM Pension Scheme (“the Scheme”) has been designed to help you save for

your retirement. The Scheme will provide you with an income when you retire and benefits for

your family in the event of your death.

This guide explores the Scheme and explains how it works. A number of words in this guide

have a special meaning and these are capitalized. You can find an explanation of what they

mean on pages 22 and 23.

The Scheme is contracted-in to the State Second Pension. This means that, as a member of the

Scheme, you will build up an additional State pension as well as your Basic State Pension.

The Trust Deed and Rules of the ALSTOM Pension Scheme set out your rights to benefits. If there

is any conflict between this guide and the Trust Deed and Rules, we will follow the Trust Deed

and Rules.

If you have any questions about your benefits or about the Scheme in general, please contact

ALSTOM UK Pensions at:

[email protected]

or on:

01788 557402 or 01788 557403

or at:

ALSTOM UK Pensions

PO Box 2229, Rugby, CV21 2YP.

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How does the Scheme work?

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The Scheme is set up

and run as a trust.

This means that

the Scheme’s assets

are held entirely

separately from

the Company.

Each month, you contribute a percentage of your Pensionable

Earnings to the Scheme. The Trustees invest these contributions

together with the contributions from your employer, which go

towards the cost of your Scheme benefits. You can choose

to build up extra benefits by paying Additional Voluntary

Contributions (AVCs).

● You can give up some of

your pension in exchange for

a tax-free cash sum at

retirement.

● Your pension increases each

year after retirement if price

inflation has gone up over

the previous year.

● Your Dependants will receive

benefits if you die.

● You may receive a pension

if you become ill.

● Your benefits are paid in

addition to the Basic State

Pension and State Second

Pension.

You have a choice of benefit

levels and member contribution

rates under the Scheme. When

you retire, you will receive a

pension. This will be based on

your length of Pensionable

Service and your pay close

to when you retire. It will also

depend on the tier of

the Scheme that you decide

to join each year.

The other main features of

the Scheme are:

● Your employer makes up

the difference between

the money you pay in and

the cost of providing your

benefits.

● You get automatic tax relief

on your contributions through

payroll.

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Joining

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Your Scheme benefits

are valuable. Please bear

this in mind if you are

considering opting-out of

the Scheme.

Who can join?

This section of the Scheme is for members who joined the Scheme

on or before 30 September 2002 and are still contributing to

the Scheme at 6 April 2006.

Your choice

You may stop contributing to the Scheme at any time while still

working for ALSTOM. This is called opting-out. Before making your

decision to opt out, please think about the valuable benefits you

and your Dependants will be giving up.

It allows you to build up

benefits for service on or after

6April 2006. Before this date,

you have been building up

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benefits in another section

of the Scheme. These are

explained in a previous booklet.

If you opt-out of the

Scheme, you will no

longer be able to make

contributions to,

or build up further benefits

under, the Scheme. If you

opt-out, you will not be able

to rejoin the Scheme.

If you wish to opt-out of

the Scheme, please fill in

....

and return an ’opting-out’

form. You can get one from

ALSTOM UK Pensions or print

it from the pensions website.

You will need to give a full

month’s notice, and you will

stop making contributions

at the end of the month

following completion of

this notice period.

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How much will it cost?

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You and the Company

both contribute

to the cost of

your benefits

from the Scheme.

If you do not complete the

enclosed application form

before joining this section,

then the Trustees will

assume that you wish to

join tier 1 and will deduct

a contribution rate of 4%.

You will not be able to change

your tier under any

circumstances until April 2007.

The real cost to you is less than

this. Under current legislation,

you receive full tax relief at

your highest rate on these

contributions.

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For example, if you pay basic

rate tax (currently 22%) every

£100 you contribute only costs

you £78. If you pay higher rate

tax (currently 40%), every

£100 you contribute only costs

you £60.

You do not have to do anything

in order to benefit from this tax

relief, it happens automatically

through payroll.

You stop paying contributions

when you retire, leave the

Company, leave the Scheme or

if you opt out (see page 5).

Contribution rate

(% of Pensionable Earnings)

Rate at which your

pension builds up

Tier 1

Tier 2

5.5%

1/85

1/75

Tier 3 7% 1/65

Your contributions

From April 2006, each time you are paid you contribute

a set percentage of your Pensionable Earnings into the Scheme.

You can choose between three tiers:

Company contributions

The Company, and other employers, who have employees in the

Scheme, meet the balance of the cost of the Scheme, after taking

your contributions into account.

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Switching between the tiers

You have the option of switching between the tiers on 6 April each

year. If you switch, you must remain in your chosen tier until the

following 5 April.

● Think you need a greater

pension to enjoy the life you

want when you retire;

● Joined the Scheme late on in

your career so don’t have

long to build up your

ALSTOM Pension.

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To switch tiers you need

to complete a final salary

switch form before the end of

February in the year you wish

to switch.

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(You can get a final salary

switch form from ALSTOM UK

Pensions or print it from the

pensions website.)

Extra contributions

You can choose to build up extra benefits by making Additional

Voluntary Contributions (AVCs) on top of your normal Scheme

contributions. Paying AVCs can be a straightforward, tax-efficient

and cost-effective way to increase your Scheme benefits.

You may find them useful if you:

There is a guide that explains

how you can increase your

retirement savings through

AVCs. This guide is

available on the pensions

website. You can also get

copies from ALSTOM UK

Pensions.

What do I get when I retire?

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Plus

Any pension you built up in the Scheme before

6 April 2006

Tier 1

1/85

of Final Pensionable Earnings for each

year of Pensionable Service completed in tier 1

Tier 2

1/75

of Final Pensionable Earnings for each

year of Pensionable Service completed in tier 2

Tier 3

1/65

of Final Pensionable Earnings for each

year of Pensionable Service completed in tier 3

Here’s an example…

Example

If your Final Pensionable Earnings are £20,000 and you

were in tier 1 for three years, tier 2 for eight years and tier 3

for six years, your normal retirement pension would be:

1/85 x £20,000 x 3 = £706 a year

1/75 x £20,000 x 8 = £2,133 a year

1/65 x £20,000 x 6 = £1,846 a year

Plus any pension built up in the Scheme for Pensionable Service

before 6 April 2006

Total = £4,685 a year

The benefits you receive

will depend on which tiers

you have contributed to.

At Normal Retirement Age

When you retire, you will receive your Scheme pension for the rest

of your life.

Your Normal Retirement Age is 65. At this age, your pension will

be worked out as follows:

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If you retire early

The Scheme allows early

retirement between age

55 and age 65.

You will need the agreement of

the Company and the Trustees

to retire early.

Your pension is worked out in

the same way as if you had

retired at Normal Retirement

Age, except that:

● Your Pensionable Service and

Final Pensionable Earnings at

the day you retire are used,

and

● The resulting pension is

reduced, because you are

taking your pension early.

The size of the reduction will

depend on your age.

The Trustees, with agreement

from the Company, set the

amount of the reduction

following advice from the

Scheme actuary. This is

reviewed regularly and can

change at any time.

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Ill-health early

retirement

Serious Ill Health

If you are unable to

work because of Serious

Ill-Health, you may apply

for Serious Ill-Health early

retirement.

If the Trustees agree that you

qualify for Serious Ill-Health

early retirement, you will

receive an immediate pension.

This pension will be based on

your potential Pensionable

Service until Normal Retirement

Age, using your Final

Pensionable Earnings at the date

you retire, with no reduction

for early payment. The pension

build up rate for your past

service will be the rate or rates

you chose at the time. The

pension build up rate for your

future potential service will be

the rate that applied to you in

the last complete Scheme Year

before retirement.

Partial Ill Health

If you are unable to

work because of Partial

Ill-Health, you may apply

for Partial Ill-Health early

retirement.

If the Trustees agree that you

qualify for Partial Ill-Health

early retirement, you will

receive an immediate pension.

This pension will be based on

your Pensionable Service and

your Final Pensionable Earnings

at the date you retire.

The Trustees will reduce your

pension because you are taking

it early.

Review of ill health pensions

The Trustees may review

any ill-health pensions

that the Scheme is paying.

If there is evidence that your

health has improved and your

circumstances have changed,

the Trustees may reduce or stop

your ill-health pension.

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If you retire late

If the Company agrees,

you may continue working

after Normal Retirement

Age up to age 75.

At that time you must start to

receive any remaining pension.

You stop building up any future

pension, and you stop paying

contributions to the Scheme, at

Normal Retirement Age. Your

pension is increased to reflect

the fact that you are taking

your pension later.

Alternatively, you may choose

to draw your pension at

Normal Retirement Age and

continue working for your

employer.

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Cash option

At retirement, you can take a cash sum as an alternative

to some of your pension.

Under current tax laws, subject to the amount of cash being within

the maximum described here, you do not pay tax on this cash sum.

Example

A man at age 65 exchanges £13.53 of cash* for each £1

of annual pension

His annual pension before taking cash is £1,000

The maximum cash he can take is £4,466

His remaining pension is £670 (£1,000 – (£4,466/£13.53))

The Capital Value is worked out as follows:

4,466 + (20 x 670) = 4,466 + 13,400

25% of the Capital Value = £4,466 (cash sum)

* The cost of exchanging pension for a cash is linked to economic conditions

and can change regularly.

Capital Value = £17,866

Your pension will be reduced to

reflect the cash sum you take,

using factors set by the Trustees

which can be changed at any

time. The maximum cash sum

you can take is 25% of the

Capital Value of your benefits.

Broadly speaking, the Capital

Value is the cash sum you take

plus 20 times the annual

amount of the remaining

pension. This calculation of

Capital Value is the one that

applies for the purpose of

the Lifetime Allowance.

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Drawing a pension

while still working

If you retire early or late,

you will be able to start

drawing your pension

while continuing to work

for the Company.

But you must draw your entire

pension and you will no longer

build up any future benefits

in the Scheme.

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Pension increases

Your pension is reviewed

each year to help protect

its value against price

inflation.

Your pension built up after

5 April 2006 will increase on

1May each year by any

increase in the Retail Prices

Index (RPI) up to a limit of

2.5%. A proportionate increase

will be paid if you have been

receiving your pension for less

than one year.

In times of high inflation, and

if Scheme resources allow,

additional increases may be

payable with the approval

of the Company and Trustees.

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Pension payments

Your pension will be paid

monthly in advance and is

taxed in the same way as

your salary (i.e. through the

Pay As You Earn (PAYE) system).

The payments will start on

the first day of the month after

you retire. Your pension will be

paid directly into your bank or

building society account.

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What will my family get if I die?

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Lump sum

Four times your Pensionable

Earnings in the last complete

Scheme Year before your

death. Your Pensionable

Earnings may be capped at the

Death Benefits Earnings Limit.

This lump sum will be tax-free

below the Lifetime Allowance,

but any lump sum payment

above the Lifetime Allowance

will be subject to tax. You will

find further information on the

Lifetime Allowance in ’Some

information about tax’ on

page 20.

Dependant’s pension

Your Dependant will receive a

pension of 50% of the pension

you could have built up had

you stayed in the Scheme until

Normal Retirement Age. This

pension will be based on your

Final Pensionable Earnings,

which may be capped at the

Death Benefits Earnings Limit,

at the date of your death.

The pension build up rate for

your past service will be the

rate or rates you chose at the

time. The pension build up rate

for your future potential service

will be the rate that applied

to you in the last complete

Scheme Year before the date

of your death.

The Trustees have the power

to reduce this pension if your

Dependant is more than

10 years younger than you.

Children’s pensions

A pension equal to 25% of the

Dependants’ pension for each

Child (up to a maximum of four

children) will be paid.

Additional Voluntary

Contributions (AVCs)

Your AVC fund can either be

paid out as a lump sum or used

to purchase a pension

for your Dependants.

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The Scheme provides

valuable benefits on your

death. The benefits will

depend on when you die

and whether you are still

working for ALSTOM.

In service before Normal Retirement Age

The Scheme provides the following benefits if you die in service

before Normal Retirement Age:

After you retire

If you die after you retire, your

Dependants continue to benefit

from protection.

Lump sum payment

If you die within five years

after you retire, the outstanding

pension instalments for the

remainder of the five years will

be paid as a lump sum.

No allowance will be made for

the future pension increases.

Please note that different

provisions may apply if you

retire after age 70.

Dependant’s pension

Your Dependant will receive an

annual pension of 50% of your

ALSTOM Pension before any

reductions made as a result

of exchanging some of it for

a cash sum. It includes all the

increases to your pension

between the date you retired

and the date of your death.

The Trustees have the power

to reduce this pension if your

Dependant is more than

10 years younger than you.

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In service after

Normal Retirement

Age

The Scheme provides the

following benefits if you die in

service after Normal Retirement

Age:

Lump sum

Your retirement pension is

worked out assuming both that

you retired immediately before

death, and that you took the

maximum retirement cash sum.

The lump sum payable on your

death is equal to the first five

years’ pension payments plus

the maximum retirement cash

sum.

No allowance will be made

for any future pension

increases.

Dependant’s pension

Your Dependant will receive

a pension of 50% of your

pension, assuming that you

retired immediately before

death and had not taken any

retirement cash sum.

The Trustees have the power

to reduce this pension if your

Dependant is more than

10 years younger than you.

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Expression of wish

forms

The Trustees have the discretion

to decide who should receive

any lump sum paid when you

die. They will normally consider

any of your beneficiaries

together with anybody named

in your will. They will also

consider your wishes, as shown

on your ’expression of wish’

form. However, the Trustees do

not have to follow your wishes.

Please make sure that you

fill in an ’expression of

wish’ form, so that the

Trustees know who you

would like to receive the

lump sum.

You should check your form

regularly to ensure that it is up

to date.

You should always fill in a

new form if your personal

circumstances change (for

example, if you get married).

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What happens if I stop contributing to the Scheme?

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If you leave the Company

or opt-out of the Scheme,

you can either:

● Leave your benefits in

the Scheme – this is

known as a ’deferred

pension’; or

● Transfer your benefits

to another registered

pension scheme.

Your deferred pension is

increased in line with increases

in the Retail Prices Index,

subject to a maximum increase

of 5%, for each complete year

from the date you leave until

you retire. Your Normal

Retirement Age is 65.

The Scheme allows early

retirement between age 55 and

age 65. You will need the

agreement of the Company and

the Trustees to retire early and

your deferred pension will be

reduced, because you are

taking it early.

The size of the reduction will

depend on your age. The

Trustees, with agreement from

the Company, set the amount of

the reduction following advice

from the Scheme actuary. This

is reviewed regularly and can

change at any time.

You are not eligible for the

ill-health early retirement

benefits described on page 9

once you have stopped

contributions to the Scheme.

Once your pension comes into

payment, it is increased

each year as described on

page 10.

If you choose to keep

your deferred pension in

the Scheme, it is important

that you keep ALSTOM UK

Pensions informed of your

address.

This avoids any delay in

paying your benefits when you

retire.

Please also keep your

‘expression of wish form’ up

to date if your circumstances

change in the future. Details

of this form can be found on

page 12.

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Deferred pension

Your deferred pension is worked out in the same way as

a retirement pension. In other words, it is based on your

Pensionable Service to date of leaving, your Final Pensionable

Earnings at that date and the tiers that you have contributed to.

Transferring your

benefits to another

scheme

You can transfer your benefits

to another registered pension

arrangement.

This might be your new

employer’s scheme, or a

personal or stakeholder

pension. Please note that such

transfers require the approval

of the receiving scheme.

The value of your transfer will

be equivalent in value to the

benefits you would have

received from the Scheme,

although the value may be

reduced if the Scheme’s assets

are insufficient to provide

the full value without

disadvantaging the remaining

Scheme members.

ALSTOM UK Pensions will work

out the transfer value as required

by law, using assumptions

(such as future investment

returns, future pension

increases etc.) set by the

Scheme actuary.

The transfer value will

not allow for any

discretionary benefits

that may be granted

in the future.

If you have stopped

contributions to the Scheme

and are considering transferring

your pension benefits:

● Please contact ALSTOM

UK Pensions and ask for

a statement that shows

the transfer value.

The transfer value will be

guaranteed for three months

from the date it is worked out.

You will lose the right to this

guaranteed transfer value if

you do not take it within the

three month period.

● You can ask ALSTOM UK

Pensions to work out

your transfer value once

a year.

You can transfer your benefits

at any time before they are

paid, even if it is several years

since you stopped contributions

to the Scheme.

● You may wish to take

independent financial

advice.

Neither the Company nor the

Trustees can provide this

advice.

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Death after leaving

the Scheme

If you die after leaving

the Scheme, there are

benefits for the people

who matter to you.

These benefits will not be paid

if you have transferred your

benefits to another pension

scheme.

If you die before you retire

and before age 65

Your Dependant will receive a

pension equal to 50% of your

deferred pension at your date

of death. If your Dependant is

more than 10 years younger

than you, the Trustees have the

power to reduce this pension.

If no Dependant’s pension is

payable, a refund of your

Scheme contributions, with

interest of 3% per annum

compound, will be paid.

Your AVC fund can either be

paid out as a lump sum or used

to purchase a pension

for your Dependant.

If you die before you retire

but after age 65.

Your Dependant will receive a

pension equal to 50% of your

deferred pension, assuming you

had retired immediately before

your death and had not taken

any retirement cash sum.

If your Dependant is more

than 10 years younger than

you, the Trustees have the

power to reduce this pension.

A lump sum is also payable

equal to the first five years’

pension payments, plus the

maximum retirement cash lump

sum that you could have taken,

assuming you had retired

immediately before your death

and had taken the maximum

retirement cash lump sum.

If you die after you retire

The benefits payable will be

those described on page 12.

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Keeping you informed

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The Trustees are keen to

ensure that members have

all the information they

need about the Scheme.

Online

ALSTOM UK Pensions maintain an up-to-date pensions website for

the Scheme.

Information for members

In addition to this guide, the following items are issued

to members:

In future, the Trustees will also

issue information each year

about the funding of the

Scheme.

You have the right to request

further information about the

Scheme. For example, you may

ask to see the annual report

and accounts and the Statement

of Investment Principles drawn

up by the Trustees.

If there is anything else you

would like to know about your

benefits, or about the Scheme

in general, please contact

ALSTOM UK Pensions at the

address on page 3.

It contains detailed information

about how the Scheme works,

along with the forms you need

to make the most of your

membership.

....

It also has details of the people

involved in running the Scheme

and all the latest pensions

news.

● Benefit statement - an

illustration of the benefits

that are building up for your

retirement and for your family

following your death which is

issued each year.

● Dimension - a newsletter

issued by the Trustees from

time to time, designed to

update you on information

about the Scheme and

pension issues generally.

You can look up past issues

on the pensions website.

State Pensions

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As well as the benefits

provided by the Scheme,

you may be entitled

to a State pension.

There are two parts

to the State pension:

● The Basic State Pension;

and

● The State Second

Pension (S2P).

The Basic State

Pension

The Basic State Pension is

a weekly benefit paid

from State pension age.

Everyone who has paid

sufficient National Insurance

contributions receives

the Basic State Pension.

In the tax year 2005/2006,

the full annual Basic State

Pension for a single person

is £4,266.60.

It typically increases each year

by the increase in the Retail

Prices Index (RPI).

....

The State Second

Pension

In addition to the Basic

State Pension, there is a

further State pension

called the State Second

Pension (S2P).

S2P is payable from State

Pension Age and is related

to your earnings.

The Scheme is “contracted-in”

to S2P. This means that whilst

you are a member of the

Scheme your build up of

benefits in S2P will be

unaffected.

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Finding out what

your State pension

might be

To find out what your

State pension might be,

fill in the ’State pension

forecast’ form (BR19).

If you call the Government’s

Retirement Pension and

Forecasting Team on

0845 3000 168, they will fill

in the form for you over the

phone.

The form is also on the

Government’s Pension Service

website at

www.thepensionservice.gov.uk

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General details

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About the Scheme

The Scheme is set up under trust and is managed according to

a Trust Deed and Rules. The Scheme assets are kept entirely separate

from Company investments. The Scheme is approved by the HM

Revenue & Customs under the Income and Corporation Taxes Act

1988. This gives the Scheme some valuable tax advantages.

relationship between the

Scheme’s assets and its

liabilities. The Scheme actuary

is a financial expert in pension

scheme assets and liabilities

and is appointed by the

Trustees.

The Scheme actuary’s role

includes carrying out a regular

financial health check of the

Scheme (actuarial valuation), at

least once every three years.

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Changing or ending

the Scheme

The Company has the power to

end the Scheme at any time, in

accordance with the Trust Deed

and Rules. With the Trustees’

permission, the Company also

has the power to change the

Trust Deed and Rules of the

Scheme. Any changes must

satisfy legal restrictions.

This section contains

general information about

the Scheme to help you to

answer any questions you

may have.

The Trustees

The trust is administered by

a corporate Trustee (ALSTOM

Pension Trust Limited). There

are currently nine directors

(or Trustees). The Trustees have

a legal duty to act in the best

interests of you and your

Dependants at all times and

to ensure that the Scheme is

operated in accordance with

the Trust Deed and Rules.

The Trustees appoint

professional advisers to help

run the Scheme. These include

actuaries, administrators,

investment managers and

solicitors. Each year the

Scheme is audited by

independent accountants.

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Scheme actuary

The Trustees work with the

Scheme actuary to monitor the

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Transfers in

If you wish to transfer the value

of a pension from a previous

personal or company pension

plan to the Scheme, you can

apply to ALSTOM UK Pensions.

The Trustees have discretion to

decide whether or not to

accept such transfers-in. At

present the Trustees are not

allowing any transfers-in.

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Part-time employees

If you work part-time, you will

receive pension benefits on

a pro-rated basis. Your

Pensionable Earnings will be

grossed up to a full-time

equivalent and your

Pensionable Service will be

pro-rated. This will maintain

continuity if you change

working hours.

....

Maternity leave,

paternity leave and

family leave

If you are absent on statutory

maternity, paternity or family

leave (or the period during

which pay is received, if

longer), your membership of

the Scheme will continue.

You will continue to pay

contributions, but these

will be based on your pay

during your period of

leave.

You will continue to be covered

for the death in service

benefits described on pages

11 and 12 and the ill-health

retirement benefits throughout

your period of absence, as

long as you are expected to

return to work.

Any further unpaid maternity,

paternity or family leave (up to

six months) may be treated as

pensionable, if you return to

work. Whether or not such a

period is pensionable will be

decided by the Company.

If you do not return to work

at the end of your maternity,

paternity or family leave,

you will be treated as leaving

service and benefits will be

payable as described on

page 13.

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Temporary absence

If you have a period of

temporary absence, you should

consult ALSTOM UK Pensions

regarding your options and

their impact on your benefits.

....

Pensions and divorce

If you divorce, the court has

the option to split your pension

between you and your former

spouse. This can happen even

if you are already receiving a

pension. Part of your pension

will then belong to your former

spouse. This process is known

as ’Pensions Sharing’. Your

pension will be reduced to

reflect the amount transferred

to your former spouse.

You can obtain further details

from the Citizens Advice

Bureau or your legal adviser.

....

Sorting out problems

If you have a question

about the Scheme,

ALSTOM UK Pensions will

usually be able to answer it.

However, if you are not

satisfied with the response,

there is a formal procedure for

sorting it out. You can get a

copy of the full procedure from

ALSTOM UK Pensions at the

address on page 3.

If you wish to make a complaint

under this procedure, please

contact the secretary to the

Trustees at the address on

page 3.

....

........................................................................................

Other organisations

that can help

These organisations can help

you and your family with any

questions or worries that you

have about your pension

arrangements:

The Pensions Advisory Service

(TPAS)

TPAS is an independent and

voluntary organisation. It

provides free help and advice

to members and beneficiaries

who have a problem with

a personal or company

pension plan.

Pensions Ombudsman

The Pensions Ombudsman

can investigate and make a

decision about any complaint

or dispute of fact or law about

pension schemes if TPAS has

not been able to resolve

the issue.

Both TPAS and the Pensions

Ombudsman can be contacted

at:

11 Belgrave Road

London

SW1V 1RB.

The Pensions Regulator

The Pensions Regulator is a

regulatory body. It is able to

intervene in the running of

schemes. The Pensions

Regulator can be contacted at:

Napier House

Trafalgar Place

Brighton

East Sussex

BN1 4DW.

The Pensions Tracing Service

You may have previously been

a member of other pension

arrangements, but no longer

have the contact details.

The Pensions Tracing Service,

operated by the Pensions

Regulator, has been set up to

help people who have lost

contact with their former

scheme.

If you think you have a benefit

that you need to trace you can

fill in a ’pensions tracking’

form available from the

Pensions Regulator direct or

from their website at

www.thepensionservice.gov.uk

The Pension Schemes Tracing

Service can also be contacted

at:

Pensions Tracing Service,

The Pensions Service

Tyneview Park

Whiteley Road

Newcastle upon Tyne

NE98 1BA.

Information about the ALSTOM

Pension Scheme has been

supplied to the Pensions

Tracing Service.

....

Looking after

your data

Data about you is held for

the purposes of administering

and operating the Scheme and

paying benefits. The Trustees

may pass this data to the

Company and to other relevant

parties such as the Scheme’s

actuary, auditor and

administrator.

It is a condition of membership

of the Scheme that you agree

to this. If you want to know

more about the details held,

please contact ALSTOM UK

Pensions.

....

You receive tax relief on

all the payments you

make to the Scheme. The

cash sums paid out when

you retire, or if you die

before retirement, are

normally tax-free.

The Scheme also benefits

from reduced tax on some

of its investment income.

In return, the HM Revenue

& Customs has rules about

the amounts you can pay

into the Scheme and the

benefits that the Scheme

can pay out.

Some information about tax

.........................................................................

................................

...................

The HM Revenue & Customs has registered the Scheme under the

Income and Corporation Taxes Act 1988 and this gives the Scheme

some valuable tax advantages.

New tax rules

The Government is introducing

a new single tax regime for

all registered UK pension

arrangements, from April 2006.

The main features of the

new regime are:

● You will have a Lifetime

pension saving allowance.

This will start at £1.5 million,

but will increase to

£1.8 million by April 2010.

The ’Lifetime Allowance’ will

be in respect of all your tax

advantaged pension funds.

In addition to your Scheme

benefits, this will include;

- any other occupational

pension arrangements in

which you have participated

with previous employers,

- any personal or stakeholder

pensions you may have, or

-any such arrangements that

you may join in the future.

However, it excludes State

pension entitlements. If your

total pension funds are greater

than the Lifetime Allowance

when you retire, you will have

to pay an additional tax on the

amount above the Lifetime

Allowance.

The Capital Value of your

benefits, to compare against

the Lifetime Allowance, can

normally be worked out as:

- 20 times any final salary or

defined benefit pensions; plus

- the value of any defined

contribution accounts.

● The ’Annual Allowance’ is the

increase in the value of an

individual’s pension

entitlement each year without

an immediate tax charge

arising. This will initially be

set at £215,000, increasing

to £255,000 by April 2010.

........................................................................................

The value of benefits you have

built up during the year, to

compare against the Annual

Allowance, can be worked out

as:

- 10 times the increase over the

year in any final salary or

defined benefit pensions; plus

- the amount of any

contributions paid over the

year to defined contribution

arrangements.

● You can get tax relief on your

pension contributions up to

100% of your total earnings

each year (subject to the

’Annual Allowance’

detailed above).

● Roughly 25% of the value

of your benefits within the

Lifetime Allowance may be

taken as a tax free cash sum

at retirement.

Remember, these limits

do not apply to your

payments to, and benefits

from, the State pension

schemes.

....

The Legal background

Where statements are made

in this booklet relating to

legislative or tax issues, those

statements are based on the

Trustees’ understanding of these

issues as at the date of this

edition of this booklet. These

statements are subject to both

changes in legislation and to

changes in HM Revenue &

Customs practice.

The Company’s obligation to

contribute to the Scheme is as

provided for in the Trust Deed

and Rules and by overriding

legislation. Nothing in this

booklet imposes any

requirement on the Company to

contribute to the Scheme to any

greater degree than required

by the Trust Deed and Rules

or by overriding legislation.

A participating employer in

the Scheme may terminate

participation of the Scheme in

accordance with the Trust Deed

and Rules.

The Company reserves the right

to amend or discontinue

the Scheme in accordance with

the Trust Deed and Rules.

In case of conflict between

this guide and the Trust

Deed and Rules, the Trust

Deed and Rules will prevail.

....

Words with a special meaning

.........................................................................

................................

...................

Additional Voluntary

Contributions (AVCs):

Extra member contributions

which can be tax efficient and

which you can choose to pay

into the Scheme to increase

your future pension benefits.

Annual Allowance:

The maximum increase in the

value of an individual’s

pension entitlement each year,

without an immediate tax

charge. This will initially be set

at £215,000 in April 2006,

increasing to £255,000 by

April 2010. (See “Some

information about tax” on

page 20 for further details.)

Basic State Pension:

The flat rate pension paid by

the Government to all

pensioners who have paid

sufficient National Insurance

Contributions.

Capital Value:

Each benefit must be expressed

as a Capital Value, to allow it

to be compared against the

Lifetime Allowance and the

Annual Allowance:

● The Capital Value of your

Scheme benefits for

comparison with the Lifetime

Allowance is the cash sum

you take plus 20 times the

annual amount of the

remaining pension, plus any

AVC balance.

● For comparison with the

Annual Allowance, the

Capital Value of your Scheme

benefits is any AVCs paid

during the year plus 10 times

the increase over the year in

the annual pension, payable

from Normal Retirement Age,

that you have earned for

service completed.

(See “What you need to know

about tax” on page 20 for

further details.)

Child:

Any Child, stepchild, adopted

Child or other Child who, in

the opinion of the Trustees, was

dependent upon you and is

either:

● Under age 18; or

● Under age 21 and still in

full-time education

● Under age 21 and has a

physical or mental disability

and relied on you for support.

Company:

ALSTOM Ltd, the Scheme’s

principal employer.

Dependant:

If you are married when you

die, your Dependant is your

legal spouse. If you are in a

registered civil partnership

when you die, your Dependant

is your civil partner in relation

to pension benefits accrued

and lump sum benefits payable

on or after 5 December 2005.

If you are not married or in a

civil partnership or are living

apart when you die, your

Dependant is another adult

who, in the opinion of the

Trustees, was financially

dependent or interdependent

with you at the time of your

death. There may be no

Dependant if the Trustees do

not believe that any

individual satisfies this test.

Death Benefits Earnings Limit:

If you joined the Scheme on or

after 1 June 1989, a limit will

be applied to the Pensionable

Earnings and the Final

Pensionable Earnings used to

calculate your death in

service benefits.

The limit that will be applied

will, initially, be based on the

Earnings Cap calculated

annually by HM Revenue &

Customs. For the tax year

ending April 2006, the

Earnings Cap is £105,600.

This limit will be reviewed

annually having regard to any

increase in the Retail Prices

Index.

Final Pensionable Earnings:

The average of your best three

consecutive Scheme Years’

Pensionable Earnings in

the last ten Scheme Years

of membership.

........................................................................................

Lifetime Allowance:

This starts at £1.5 million from

April 2006, and will rise to

£1.8 million by April 2010.

The ’Lifetime Allowance’ covers

of all of an individual’s tax

advantaged pension funds.

Total benefits valued below

this level are tax-free to the

member until benefits are paid,

but a tax charge must be paid

on the value of benefits above

the Lifetime Allowance. (See

“Some information about tax”

on page 20 for further details.)

Normal Retirement Age:

65.

Partial Ill-Health:

This is any physical or mental

illness that the Trustees agree is

permanent and is serious

enough to stop you doing your

normal work or any other work

which you could be expected to

do with the Company.

Pensionable Earnings:

Your basic pay plus other fixed

allowances decided by the

Company from time to time.

You can get an up to date list

of the allowances included

from the pensions website or

from ALSTOM UK Pensions.

Pensionable Service:

The number of years and

complete months of Scheme

membership. The benefits set

out in this guide are those

for Pensionable Service on

or after 6 April 2006.

Retail Prices Index (RPI):

The official Government index

of retail prices inflation, often

referred to as the rate of

headline inflation.

Scheme:

The ALSTOM Pension Scheme.

Scheme Year:

6th April to the following

5th April.

Serious Ill-Health:

Any physical or mental illness

that the Trustees agree will stop

you permanently from doing

any work.

State Second Pension (S2P):

The additional State pension

which replaced the State

Earnings Related Pension

Scheme (SERPS) in April 2002.

State Pension Age:

The age when people start

to receive the Basic State

Pension and any State Second

Pension benefits. It is currently

65 for men and 65 for women

born after 5 April 1955.

It is 60 for women born before

6 April 1950. For women

born between 6 April 1950

and 6 April 1955, the State

Pension Age falls between ages

60 and 65.

Trust Deed and Rules:

This document, as amended

from time to time, is the

document under which the

Scheme operates and sets out

the full details of your benefits.

If there is any conflict between

this guide and the Trust Deed

and Rules, we will follow the

Trust Deed and Rules.

Trustees:

These are the directors of

ALSTOM Pension Trust Limited,

the corporate Trustee that

manages the ALSTOM Pension

Scheme.

UNITED KINGDOM

Pensions

Alstom Pension Scheme

2006 Defined Benefit Section

Salary Sacrifice for pension contributions:

an addendum to your Member Booklet

An efficient way

for contributions

to be paid to

the Scheme

ALSTOM Ltd (the ‘Company’) provides Salary

Sacrifice for pension contributions. This is an

efficient way for contributions to be paid to the

Alstom Pension Scheme (the ‘Scheme’) designed

to help save you money as you save for retirement.

This guide tells you what you

need to know about Salary

Sacrifice for pension

contributions, and supplements

the information in your

Member Booklet about the

Scheme. This guide should be

read together with your

Member Booklet.

How Salary Sacrifice works

Salary Sacrifice arrangements allow companies to provide

employees with certain pension benefits in a way that

reduces the amount of National Insurance that has to

be paid.

If you are taking part in Salary Sacrifice for pension

contributions, you will not pay regular contributions to

the Scheme, as set out on page 6 of the Member Booklet,

– instead, the Company will pay additional contributions equal

to the contributions that you would otherwise have paid.

Your basic contractual annual salary and pensionable fixed

allowances will be reduced by an amount equal to the pension

contributions that you would have paid if you had not been

taking part in Salary Sacrifice.

Only regular pension contributions can be made through

Salary Sacrifice (ie ordinary contributions and any regular

extra, or Additional Voluntary Contributions (AVCs), as set

out on page 6 of the Member Booklet). One-off AVCs cannot

be made through Salary Sacrifice – you can pay these out of

your salary instead.

How you benefit

If you are eligible for Salary Sacrifice and have not

reached State Pension Age, you will pay less National

Insurance by taking part in Salary Sacrifice. This is

because you pay National Insurance on your gross pay

and when you take part in Salary Sacrifice your pay is

reduced. (Remember that the reduction to your gross

pay does not mean you are losing out. You have

simply agreed to give up some of your contractual

salary and pensionable fixed allowances in return for

you not paying certain pension contributions and the

Company paying the same amount as additional

contributions to the Scheme instead.)

As a result of paying less National Insurance, your

take home pay should be higher than if you were not

taking part in Salary Sacrifice.

The savings that result from Salary Sacrifice will vary

from member to member. Broadly members earning

below the Upper Earnings Limit will benefit from a

higher rate of National Insurance contribution savings

than those members earning above this limit. (For the

2011/12 tax year, the Upper Earnings Limit is

£42,484 a year.)

Salary Sacrifice and

other alstom benefits

Taking part in Salary Sacrifice for pension

contributions results in a reduction in your pay.

However it will not affect the amount of pension

benefits you are building up in the Scheme or any

other payments or benefits that the Company

provides based on your salary.

A Pre-Sacrificed Annual Salary (which is what your

basic salary would have been if you had not taken part

in any salary sacrifice arrangement) is recorded and

used to calculate salary related payments and benefits

that the Company provides.

Your Pensionable Earnings under the Scheme will

be calculated based on what your basic salary

and pensionable fixed allowances would have been

if you had not been taking part in any salary

sacrifice arrangement.

The Company will also explain that you are

participating in a Salary Sacrifice arrangement and

provide your Pre-Sacrificed Annual Salary if you are

applying for a mortgage or loan.

If you are absent from work

The Company will continue to make pension

contributions to the Scheme during any period

when you are receiving an absence related payment.

These pension contributions will be based on your

Pensionable Earnings immediately before you went

on leave.

Salary Sacrifice and

state benefits

Contribution based benefits

Some State benefits (such as the basic state pension,

employment and support allowance, and jobseeker’s

allowance) are based on the National Insurance

contributions you pay. This means that taking part in

Salary Sacrifice might affect your entitlement to these

benefits, either while you are working for the

Company or in the future.

To build up an entitlement, you need to earn over the

Government’s Lower Earnings Limit (which in the

2011/12 tax year is £5,304 a year).

In an effort to ensure that no one’s entitlement

to contribution based State benefits will be

adversely affected by taking part in Salary

Sacrifice for pension contributions, the Company

will not let an employee take part if his or her

annual basic salary is below a minimum

threshold (£7,500 as at April 2011). This

minimum threshold will be reviewed each year.

Earnings related benefits

Certain State benefits such as the State Second

Pension are based on your level of earnings after any

Salary Sacrifice has taken place.

If your pay (after reduction as a result of Salary

Sacrifice) is between the Government’s Lower

Earnings Threshold (£14,100 in the 2011/12 tax

year) and the Upper Accrual Point (£40,040 in the

2011/12 tax year), taking part in Salary Sacrifice for

pension contributions may reduce the amount of the

State Second Pension you build up.

Although the Company cannot give a guarantee, for

most members it is expected that the savings in

National Insurance contributions as a result of taking

part in Salary Sacrifice will be greater than the value

of the loss in State Second Pension.

Work related payments

Certain state benefits (such as statutory maternity,

paternity, adoption and sick pay) are based on average

weekly earnings. Taking part in Salary Sacrifice

reduces these earnings, meaning the amount of these

work related payments could be reduced as a result of

taking part in a Salary Sacrifice arrangement.

However, the checks the Company has built into

Salary Sacrifice mean that the only payments likely

to be affected are the first six weeks of Statutory

Maternity Pay (which is based on 90% of average

weekly earnings.)

If you are taking part in Salary Sacrifice you can ask

the Company to allow you to opt out if you become

pregnant. If you would like further details please

contact your HR partner.

signing up to Salary Sacrifice

for pension contributions

Members of the Scheme who initially chose not to

take part in Salary Sacrifice can choose to enrol for

ordinary pension contributions from 6 April each year

by completing and returning the Annual Tier Change

form for the 2006 Defined Benefit Section of the

Alstom Pension Scheme (Scheme).

All members can elect from 6 April each year for

regular AVCs to be made through Salary Sacrifice.

If this is something you want to do, please complete

and return the Additional Voluntary Contributions

(AVCs) – APS14 Form.

If you are one of the very small number of employees

who are not eligible to take part in Salary Sacrifice for

pension contributions the Company will contact you

separately. There are two situations where this might

apply:

1. If the Company is aware that taking part would

adversely affect your entitlement to contribution-

based State benefits (see the section headed

‘Salary Sacrifice and State benefits’).

2. If the Company is aware that taking part would

reduce your pay below the UK National Minimum

Wage. In this case, the Company would have to

exclude you from Salary Sacrifice in order to comply

with the minimum wage legislation.

Changing your Salary Sacrifice

arrangements

The occasions on which you may be able to change

the amount of contributions being made through

Salary Sacrifice are as follows.

Lifestyle Events

If you experience one of the lifestyle events listed

below, you can request a change to the level of regular

AVCs that you may be making through Salary Sacrifice

or opt out of Salary Sacrifice (you will need the

Company’s consent to either of these changes).

Please contact your HR partner for more details.

Lifestyle events involve a major change in your life or

working pattern and include:

z Getting married, entering into a civil partnership or

moving in with a partner

z Going through a separation, getting divorced,

having a civil partnership dissolved

z Becoming pregnant or on the birth or adoption

of a child

z The death of a partner or dependant

z Going on, or returning from, leave with reduced

pay (or no pay at all)

z A significant change to your working hours or pay

z Your husband, wife or partner losing their job

z Moving overseas to work

z Moving back to the UK to work

If the Company has previously informed you that you

are not eligible to take part in Salary Sacrifice, but your

situation changes and you subsequently become

eligible, this also counts as a lifestyle event.

At annual renewal

You can only change your chosen rate of ordinary

contributions from 6 April each year.

Unless you experience a lifestyle event, you will only be

able to change your chosen rate of regular AVCs from

6 April each year if you choose to make these through

Salary Sacrifice. If you want to increase your AVCs

during the year (either on a regular basis or as a

one-off), you can do so by paying additional AVCs out

of your salary rather than through Salary Sacrifice.

Each year, in advance of the annual renewal date

(6 April), the Company will review members’ eligibility

to take part in Salary Sacrifice for pension

contributions.

z If you are already taking part in Salary Sacrifice for

pension contributions the arrangements in place at

that time will continue automatically, unless you

indicate that you want to change ordinary

contribution rates or the level of AVCs being made

through Salary Sacrifice. You will not be allowed to

opt out of Salary Sacrifice for ordinary pension

contributions unless you experience a lifestyle event

or fail an eligibility condition.

z If you want to switch ordinary contribution rates for

the following Scheme year or change the level of

any regular AVCs being made through Salary

Sacrifice, you can do so by completing and

returning the appropriate forms. (The Company

will write to remind you of your options around

February of each year.)

If you need more information

If you have any questions about Salary Sacrifice for pension contributions or the

Scheme, please contact your HR partner and, for general queries about the plan,

please contact the administrators MNPA.

More detailed information about salary sacrifice arrangements is available on the

HM Revenue & Customs website. www.hmrc.gov.uk/specialist/salary_sacrifice.htm

If you want some advice

It is not possible for the Company to know each member’s circumstances and the law

does not allow anyone employed by the Company to provide individual financial advice.

If you feel that financial advice would be helpful, www.unbiased.co.uk provides

details of independent financial advisers (IFAs) in your area. It is important to

check that whoever advises you on financial services and products is qualified

and authorised to do so. Visit the Financial Services Authority website at

www.fsa.gov.uk/register/home.do or phone their consumer helpline on

0845 606 1234.

The Money Advice Service – an independent organisation set up by the Government and

funded by the financial services industry – provides free, unbiased information about all

aspects of financial planning. This includes information on how to find an adviser and

what questions to ask. Visit their website at www.moneyadviceservice.org.uk or phone

0300 500 5000 (call rates may vary).

Please remember that you may have to pay for any advice that you receive.

APS SS Guide © – ALSTOM 2011. ALSTOM, the ALSTOM logo and any alternative version thereof are trademarks and service marks of ALSTOM. The other names mentioned, registered or not, are the property of their respective companies. The technical and other data

contained in this document is provided for information only. ALSTOM reserves the right to revise or change this data at any time without further notice.

ALSTOM UK Pensions

Newbold Road

Rugby

CV21 2NH

Tel: 01788 557 402 or 01788 557 403

www.pensions.uk.alstom.com

www.alstom.com

SB2597

The Company intends to keep providing the Salary Sacrifice arrangement for pension

contributions as long as it continues to reduce the National Insurance contributions

that you and the Company pay. However, the Company may alter or end this Salary

Sacrifice arrangement at any time.

If there is a conflict between this booklet and the Scheme’s Trust Deed and Rules,

the Trust Deed and Rules will override this booklet.