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I'm in Plan 18

About our consultation

Clarks has a number of pension schemes, including the C & J Clark Pension Fund. Plan 18 is the defined contribution (DC) section of the Fund. There is also Plan 35, which is the Fund’s defined benefit (DB) section.

In a scheme providing a DB pension, the pension amount received is defined under the rules of the scheme and the company has to pay whatever it costs to meet that pension over and above employee contributions. The costs of providing any form of DB pension have escalated hugely over recent years. For example, ongoing pension costs for Plan 35 members in the C & J Clark Pension Fund have more than doubled over the last ten years. This has made these types of arrangements unsustainable for Clarks and many other companies. Although, the cost of our DB arrangements has been a major driver for our review, there are other factors that currently impact Plan 18 members which we want to address.

As we mention in the consultation pack sent to you recently, there is more to our proposal for change than just costs. Here are some other reasons why we believe we need to change our pensions:

Rebalance our pension spend more equally between employees
At the moment, we spend the majority of our annual pension spend on a minority of our employees in DB pension schemes. This means there are significant variations in overall benefit packages for two people doing the same job. We want to share our pension spend more equally across our workforce.

Modernise our pension
The world of pensions has moved on in the last few years; there are new rules about how pension savers can take their defined contribution (DC) pension pots. We think many of our employees would welcome access to these flexibilities. For example, many DC savers can now take their pension as cash (subject to tax), or keep it invested and take money from it as and when they need it – with the added bonus that if they choose, they can pass their unused pension savings on to their loved ones as a lump sum on death. This is explained in more detail in the Q&As.

Offer more options for saving
We want pension savings to be only one part of our reward package. We want to be able to offer our employees a variety of ways to save – not only for their retirement but also for their more immediate needs, such as saving up to buy a home. This means creating a benefit package that is flexible enough to work for all of our employees, no matter what their age, circumstances or salary.

In brief, the company’s proposals are to:

  • Close all our existing pension schemes to the future accrual of benefits on 31 July 2018. This means you would become a deferred member of the Plan 18 Section of the C & J Clark Pension Fund. Your pension account up to closure date would be unaffected.
  • Launch a new defined contribution pension plan, with generous company contributions and full flexibility at retirement, which would be open to all our employees. Under our proposals, you would become a member of the proposed Clarks Flexible Savings Plan on 1 August 2018. Under the proposed Clarks Flexible Savings Plan, you would be able to get higher contributions from the company than are currently available under Plan 18.
  • Make available more flexible options to all our employees to build up savings and take benefits in a way that works best for them.
  • Increase your death-in-service lump sum benefit to 8 x Basic Pay if you join the Clarks Flexible Savings Plan. There would be other changes to the Plan 18 benefits that would be payable if you were to die in service. These changes are explained in more detail in your booklet and the Q&A section.

If you have any questions or comments on our proposal, there are a number of ways you can get in touch:

Email: pensionshelpdesk@Clarks.com

Call us: 01458 842664

Or, you can use our online contact form, which will send your query through to the Pensions Team.

Here’s a timeline of what to expect during the consultation.

Start date of consultation 15 January 2018
Employee sessions at Distribution Centres and HQ 17-19, 23 January 2018
Closing date of consultation 15 March 2018
Update on outcome of consultation posted to all employees’ home addresses April 2018
Anticipated closure of Clarks’ existing pensions arrangements 31 July 2018
Anticipated launch date for proposed Clarks Flexible Savings Plan 1 August 2018

The employee sessions have now finished.

Useful documents & video

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Your questions answered

We know that the proposed changes might raise a number of questions, so we will try to answer as many of these as possible in a set of questions and answers on this website.

The questions and answers will be updated regularly in response to questions raised by employees during the consultation. If you can’t find the answer to the question you are looking for, you can submit a question through this online contact form.

New questions

Under our current proposals, if you wish to see an IFA, this would be at your expense.

This will be an option and we will provide more details on how this will happen, if we proceed with these changes.

You can continue to pay AVCs to the current pension schemes until they are closed. If they are replaced by the new Plan, you can then pay AVCs to the new Plan.

The rate of investment return will depend on the type of investments you choose to make. We have provided different examples to show how returns can vary.

We have not finalised the new provider or the other savings options that will be provided in the new Clarks Flexible Savings Plan. However, we anticipate that there will be a cash ISA, as well as an alternative ISA where you can invest in shares and other investment funds.

Yes.

This 60-day consultation only relates to the pension changes.

The purpose of the consultation is to get feedback on the current proposals and for employees to suggest options to the company on how the current proposals could be modified/improved.

We do not anticipate this go-live date changing, having planned adequate time for a thorough consultation period.

We are in a period of consultation regarding the proposed changes. During this consultation, we want to provide you with the opportunity to understand the business drivers behind this review and also recognise the inequality that currently exists between employees on different pension arrangements. We welcome your thoughts on these proposals and will listen to all of the feedback from our employees and the Unions throughout this consultation period before taking stock and determining whether the proposals should go ahead as they are, or whether we need to consider other options. In the event that employees do not agree with any final proposals after the consultation period, we would have to review at that time and take further advice on what options are available to allow us to proceed with these critical changes for our business.

Questions about the consultation

The Trustee of the Fund is aware of the changes Clarks is proposing. However, the proposals being made are company proposals and the Trustee has not been involved in formulating them. The agreement of the Trustee is not required to implement the proposed changes if they go ahead and are implemented in the manner proposed (by having individual members enter into contractual agreements with their employers).

Clarks will continue to liaise with the Trustee about the proposals during the consultation process and, should the proposals go ahead, until any final changes are documented and brought into effect.

We have made the appropriate trade unions aware of our proposals.

The law says we must consult on the proposed changes for a minimum period of 60 days. Our consultation runs from 15 January to 15 March 2018.

Yes, under pension law, Clarks can propose changes relating to the way in which future pension benefits are built up. The law requires that we actively engage in consultation with affected employees, which is what we’re doing now. If the changes go ahead as proposed, we will be asking for your agreement to implement them.

Following consultation, if the proposals were to go ahead, we would propose to implement the changes by asking for your agreement to them (which would include you agreeing to opt out of Plan 18). This would mean that you would become a deferred member of Plan 18.

You should note that there are two ways commonly used to implement these types of changes: 1) the way we are proposing above, or 2) by the employer and the trustee agreeing a change to the rules that govern how a scheme is run and what benefits are paid under it.

In this case, however, the Rules of the Fund contain a restriction which means that it might not be possible for them to be changed so as to close the Fund and put in place the other elements of the proposals. This is why you would be asked to provide your agreement to the changes if they go ahead. We will provide further details on this during the consultation period.

Yes, as part of our comprehensive review, Clarks considered a number of potential options to change our pensions. We believe that the proposals we have outlined to you best meet our objectives.

The proposal affects all Clarks current and future employees in the UK because we are proposing to close all our existing pension arrangements to future accrual, not just Plan 18.

The proposals do not affect deferred or pensioner members of the Fund, who would continue to receive the benefits they have built up under the Fund.

We know that the proposed changes might raise a number of questions, so we will try to answer as many of these as possible in a set of questions and answers on this website. The questions and answers will be updated regularly in response to questions raised by employees during the consultation. If you can’t find the answer to the question you are looking for, you can submit a question through this online form, via email to pensionshelpdesk@Clarks.com or call us on 01458 842664.

Some of you will also be able to attend one of the sessions we are holding at our Distribution Centres or HQ, where you can put questions directly to members of the Pensions Team and our advisers. Find out more about the sessions at DCs and HQ.

Questions about the Clarks Flexible Savings Plan

Yes – although you would need to have left service and would require the consent of the Trustee of the Fund to take your Plan 18 benefits before your 65th birthday. Currently, the earliest age that you can retire is age 55 unless you are retiring early due to ill health. Note that the Government may change this age in the future.

You would be able to access your pension account in the Clarks Flexible Savings Plan from age 55.

You would be able to choose to pay a contribution as a percentage of your pay in the same way that you do now. Contributions are based on your actual part-time salary rather than full-time equivalent earnings.

Yes, in the proposed Clarks Flexible Savings Plan you could choose what contribution you paid. If you continued to pay 4%, Clarks would contribute 7%, which is 1% more than Clarks currently pays in Plan 18. If you choose to contribute more, you could get even higher contributions from Clarks.

Details of how to change your contribution rates will be provided if the proposed changes go ahead.

No, currently you contribute 4% of Pensionable Pay to Plan 18. Pensionable Pay is your Basic Pay less the amount of the single person’s Basic State Pension (£6,360 for 2017/18 tax year). For these purposes, your ‘Basic Pay’ is equal to your gross earnings and excludes any bonuses or other allowances you may receive and that the company treats as non-pensionable. So if you earn £22,000, you would pay contributions on £15,640. There would be no deduction in respect of the Basic State Pension in your eligible pay for the Clarks Flexible Savings Plan.

This table illustrates how your monthly take-home pay may change if you joined the Clarks Flexible Savings Plan and paid contributions of either 4% or 7% of your Basic Pay (see below), compared to your current contributions of 4% of Pensionable Pay in Plan 18.

Contribution rate into Clarks Flexible Savings Plan (% of Basic Pay) Approximate impact on your monthly take-home pay of joining the Clarks Flexible Savings Plan if your annual Basic Pay is…
£10,000 £20,000 £30,000
4% £21 lower £17 lower £17 lower
7% £46 lower £57 lower £77 lower

The figures shown are examples only and may not reflect your own circumstances. The figures assume that you pay your contributions through Smart Pensions (salary sacrifice) in both Plan 18 and the proposed Clarks Flexible Savings Plan, and that your gross earnings are equal to your Basic Pay (and excludes any bonuses or other allowances you receive and that the company treats as non-pensionable).

Please note that your Pensionable Pay is lower than your Basic Pay as it includes a deduction in respect of the State Pension Offset. For example, if your Basic Pay is £20,000 (and your gross earnings are also equal to this amount), then your Pensionable Pay would be £13,640 (based on the current Basic State Pension of £6,360 or a pro-rated amount if you are part time).

This means that, if you pay the same percentage of your Basic Pay into the Clarks Flexible Savings Plan as you currently pay into Plan 18 from your Pensionable Pay, you would be paying more into your pension and your take-home pay would therefore be likely to reduce. You would also get the benefit of Clarks paying contributions based on your Basic Pay rather than your Pensionable Pay.

The final details on the alternative savings products are still to be agreed but we expect ISAs to be one of the options available.

If you paid
(% of Basic Pay)
Clarks would pay
(% of Basic Pay)
Total paid into your pension account
(% of Basic Pay)
2% 5% 7%
3% 6% 9%
4% 7% 11% Choice over 2% If the total paid into your pension account was at least 9%, you would be able to choose to pay the balance into an alternative workplace savings product.
5% 8% 13% Choice over 4%
6% 9% 15% Choice over 6%
7% 10% 17% Choice over 8%

Should the proposals go ahead, Clarks would appoint a trusted and well-known UK pension provider to run the Clarks Flexible Savings Plan. We expect to make details available to you in the coming weeks.

Yes, you would contribute via Smart Pensions in the same way that you do now.

No, but we expect that the Clarks Flexible Savings Plan would be our only pension arrangement, so you would be missing out on valuable company contributions, if you choose not to join. Note that under current legislation, if you meet certain criteria, we have to automatically enrol you into a pension scheme. Even if you choose not to join the Clarks Flexible Savings Plan, you may be automatically enrolled into it at a later date.

The new Clarks Flexible Savings Plan is a DC mastertrust, which is a trust-based defined contribution scheme designed for multiple employers. Membership is set up and administered separately for each participating employer. The governance of a mastertrust is often delegated to a corporate trustee independent of the employers.

Subject to the outcome of this consultation, Plan 18 would close to future contributions on 31 July 2018.

Questions about my Plan 18 benefits

If the changes go ahead, the benefits payable from the Fund if you die in service would change.

Currently, if you die in service before your 65th birthday, the following benefits are payable:

  1. a lump sum equal to four times your Final Earnings (this is your annual earnings at the date of your death or, if higher, your gross earnings in any complete tax year in the five years before your death) plus an amount equal to the contributions you have paid into the Fund, together with any investment return on those contributions determined by the Trustee;
  2. a pension for your spouse, payable for life, equal to 25% of your Final Earnings; plus
  3. a pension for each of your eligible children calculated as 5% of your Final Earnings, up to a maximum of four children.

Full details of the benefits currently payable under the Fund on death in service are given in the Q&As.

If the changes go ahead and you die in service after 31 July 2018, a lump sum equal to eight times your Basic Pay (see - 'What would the impact on my take-home pay be if I joined the Clarks Flexible Savings Plan?' in the section above) would be payable from a separate arrangement, together with a lump sum equal to your pension account under the Clarks Flexible Savings Plan.

However, your spouse and any eligible children or dependants would not receive a pension from the Fund calculated on the basis described above. Instead, the value of your Plan 18 account would be used to secure a pension for your spouse, with any balance used to secure a pension for any eligible children or other dependants or to provide a lump sum.

Depending on the value of your account, this may mean that the pension payable to your spouse and to any dependants or children from the Fund would be lower than if the Fund had remained open.

If the changes go ahead, the benefits that you would receive if you retired because of ill-health and satisfied the criteria for ‘incapacity’ specified under the Rules of the Fund would be different. Under the current Rules of the Fund, if the company and the Trustee are both satisfied that you are unable to work because of ill-health, you are entitled to a pension that is calculated as though you were a Plan 18 member (this means that a pension would be payable calculated by reference to your ‘Final Pensionable Pay’ at the date you retire and the Pensionable Service you have completed in the Fund (for these purposes, you would be treated as having stayed in Pensionable Service until your 65th birthday).

If the changes go ahead, this pension would no longer be payable. Your Plan 18 account would still be available to secure a pension, but the amount of that pension would depend on the value of your account at the date of your retirement and the cost of securing a pension at that date. You would also be able to access your pension account in the Clarks Flexible Savings Plan if you satisfied the relevant ill-health criteria.

The Rules of the Fund allow members to convert their Plan 18 accounts into a pension within the Fund but only if the Trustee agrees to do so. This means that you would only be able to convert your Plan 18 account into a pension within the Fund if the Trustee gave its consent.

The impact of these proposals for all individuals would vary. Therefore, as part of the consultation and communication process, we have prepared some generic examples to show what impact the change might have on a typical employee who has benefits in Plan 18, based on a number of assumptions about what might happen in the future. These examples are enclosed in the booklet that was sent to you.

Other questions

The Pensions Regulator (TPR) is the UK regulator of work-based pension schemes. It works with trustees, employers, pension specialists and business advisers, giving guidance on what is expected of them. If you have any concerns about this consultation process that you are unable to resolve by speaking to the Clarks Pensions Department first, you can contact TPR:

Napier House
Trafalgar Place
Brighton BN1 4DW

Telephone: 0845 600 0707

Email: customersupport@tpr.gov.uk

Got a question or feedback?

The consultation will run from 15 January 2018 to 15 March 2018 and allows you to give us your comments and ask questions on the proposal.

You can provide your feedback via the contact form below. This will send your question or comment direct to a member of the Pensions Team. Please do not include personal financial information in the form, as the link is not secure.

Other ways to submit your questions or comments

Email: pensionshelpdesk@Clarks.com

Call us: 01458 842664

You can also write to us at: Clarks Pensions Department, 40 High Street, Street, Somerset BA16 0EQ, Internal Box 123.