Associated British Ports Group Pension Scheme (the “Scheme”)

Preamble

1. Introduction

1.1 The Scheme was formed out of an amalgamation on 1 October 1996 (the First Merger Date) of the ABP (Salaried Staff) Pension Scheme (the Salaried Staff Scheme), the ABP (Wages Grades) Pension Scheme (the Wages Grades Scheme), the Associated British Ports Pension Scheme (the ABP Scheme) and the ABP Additional Voluntary Contributions Scheme (the AVC Scheme).

1.2 A second merger took place on 6 April 2002 (the Second Merger Date) when the Exxtor Shipping Services Pension Scheme (the Exxtor Scheme), the ABP Ipswich Port Limited Pension and Life Assurance Scheme (the Ipswich Scheme), the Teignmouth Quay Co Ltd Pension and Life Assurance Scheme (1979) (the Teignmouth Scheme) and the Stevedores (Goole) Ltd Pension and Life Assurance Scheme (the Stevedores Scheme) were merged into the Scheme.

2. The First Merger

2.1 The Salaried Staff Scheme and the Wages Grades Scheme each pre-dated the privatisation of Associated British Ports. Each was closed (subject to certain exceptions) to new entrants from 1 July 1985. The ABP Scheme was set up for employees joining the ABPH Group on or after that date (save to the extent that such employees joined other pension schemes of the ABPH Group or were excluded by their contract of employment from joining any of the ABPH Group schemes). The AVC Scheme allowed members of the Salaried Staff and Wages Grades Schemes to pay additional voluntary contributions.

2.2 The terms of the First Merger were as follows:

· for persons who were deferred members at the First Merger Date, their benefits under the Scheme are identical to the benefits which had accrued to them prior to the First Merger Date subject to, in the case of those transferring from the Wages Grades and Salaried Staff Schemes, an increase of 5% in the deferred pension and deferred lump sum as at 1 January 1996;

· for persons who were pensioners at the First Merger Date, their benefits under the Scheme are identical to the benefits which had accrued to them prior to the First Merger Date subject to:

(i) in the case of those transferring from the Wages Grades Scheme, an increase of 5% plus £200 to the annual pension as at 1 January 1996 (with consequential increases to contingent benefits) and the introduction of a 50% widow’s pension for pensioners who retired before 1974; and

(ii) in the case of those transferring from the Salaried Staff Pension Scheme, an increase of 5% to the annual pension as at 1 January 1996 (with consequential increases to contingent benefits) and the extension of the 50% widow’s pension to cover all transferred-in service;

· for persons who were active members immediately before the First Merger Date and who became active members of the Scheme on the First Merger Date, the pension service credit awarded to them in the Scheme was exactly the same as that which had accrued to them under the Scheme subject:

(i) in the case of those transferring from the Wages Grades Scheme, to a 95% reduction in the Flat Rate State Pension deduction used in calculating pensionable pay when determining the past service credit; and

(ii) in the case of those transferring members from the Salaried Staff Scheme, to a 60% reduction in the Flat Rate State Pension deduction used in calculating pensionable pay when determining the past service credit.

In addition to these benefit improvements, the transferring members were given certain guarantees which are set out in the rules of the Scheme.

2.3 The First Definitive Deed dated 20 February 1998 set out the benefits for active members joining the Scheme on or after the First Merger Date and for those who transferred into the Scheme as active members from the previous schemes. The First Definitive Deed did not, however, set out the benefits to which transferring deferred members and transferring pensioners were entitled, relying instead on the general obligation placed on the Trustee by the various transfer agreements to provide the benefits promised.

3. The Second Merger

3.1 With effect from the Second Merger Date, the Exxtor, Ipswich, Teignmouth and Stevedores Schemes were merged into the Scheme.

3.2 As part of the Second Merger, certain benefit improvements were granted to members of the Scheme on 5 April 2002. These were:

· the equalisation of the early retirement reduction for men and women on retirement from active status on or after 1 April 2002;

· a reduction in the early retirement reduction to 3% per annum for active members retiring on or after 1 April 2002;

· a 1% increase to pensions in payment on 1 April 2002;

· an increase in the lump sum death in service cover from three times to four times salary;

· the extension of the right to annual pension increases to those aged 55 or less in receipt of certain early retirement pensions;

· the extension of the right to ask for early retirement to deferred members who left before age 40;

· the reduction of the qualifying service condition for an ill-health retirement pension and a spouse’s death in service pension from 5 years of pensionable service to 2 years of pensionable service; and

· the removal of the ceiling of 44 years on the calculation of pensionable service.

3.3 Members of the Exxtor Scheme were transferred on terms that entitle them to exactly the same benefits as under the Exxtor Scheme except as set out in the transfer agreement dated 5 April 2002. These terms are set out in the Second Definitive Deed.

3.4 Members of the Ipswich Scheme were transferred on terms that entitle them to exactly the same benefits as under the Ipswich Scheme except as set out in the transfer agreement dated 13 March 2002. These terms are set out in the Second Definitive Deed.

3.5 Members of the Teignmouth Scheme were transferred on terms that entitle them to exactly the same benefits as under the Teignmouth Scheme as clarified in the transfer agreement dated 29 March 2002. These terms are set out in the Second Definitive Deed.

3.6 Members of the Stevedores Scheme were transferred on terms that entitle them to exactly the same benefits as under the Stevedores Scheme except as set out in the transfer agreement dated 27 March 2002. These terms are set out in the transfer agreement and not in the Second Definitive Deed.

4. The Scheme’s documentation

4.1 The Scheme was established by an interim deed dated 20 May 1996 to start on 30 August 1996.

4.2 The first Definitive Deed was dated 20 February 1998.

4.3 The first Definitive Deed was amended by the first deed of amendment dated 6 April 1999:

· to make certain changes which corrected errors in the first Definitive Deed; and

· to remove the requirement that limited discretionary admission to membership to those aged 50 or under.

4.4 The second deed of amendment dated 28 March 2002:

· divided the Scheme into the defined benefit section and the defined contribution section with effect from 6 April 2002;

· closed the defined benefit section to anyone who become an employee after 6 April 2002 except at the discretion of the Principal Employer and the Trustee; and

· made certain benefit improvements as set out in paragraph 3.2 above.

4.5 The third deed of amendment dated 2 April 2003 amended the definitions of Pensionable Pay and Final Pensionable Pay for Exxtor Members, the definition of Pensionable Salary for Ipswich Members and the amount payable on the death of a member of the defined contribution section.

4.6 The second Definitive Deed replaced the first Definitive Deed (as amended) in its entirety. The principal differences between the two documents is that the latter sets out the detailed rules for the defined contribution section and introduces the special rules for those transferring from the Exxtor, Ipswich and Teignmouth Schemes. It also contains the rules applicable to the defined benefit members (the ABP Section).

4.7 The second Definitive Deed was amended by a deed dated 14 December 2004 with the introduction of SMART pensions with effect from 26 November 2004. This allowed members to elect reduce their salary in return for making the Scheme non-contributory. The principal purpose of the amendments was to make sure that members’ benefits were calculated as if their salaries had not been reduced.

4.8 The second Definitive Deed was amended by a deed dated 29 March 2006. With effect from 1 April 2006, the rules were amended:

(i) to reduce the amount by which pensions in payment accruing after 31 March 2006 must be increased;

(ii) to remove, in certain instances, the need for a member to obtain consent to exchange part of his pension for a lump sum; and

(iii) to specify, where a member commutes part of his pension for a lump sum, which part of the pension is commuted.

4.9 The second Definitive Deed was amended by an interim Deed of Amendment dated 6^th April 2006. The principal purpose of this deed of amendment was to allow the scheme to take advantage of the changes that were made from 6^th April 2006 to the tax regime for occupational pension schemes whilst ensuring members did not gain unintended windfall benefits from the removal of HMRC limits. These amendments were made on an interim basis with a view to definitive amendments being made within two years. In addition, however, amendments were made in respect of the following matters:

(i) eligibility to join the DC Section was relaxed to cover TUPE transfers;

(ii) the introduction of a scheme specific earnings cap;

(iii) the removal of the existing limits on the maximum contributions members may pay;

(iv) new early leaver rules;

(v) changes in minimum retirement age;

(vi) provisions to allow pensions to be drawn whilst a member is still working;

(vii) the definition of incapacity;

(viii) the limit on the amount of the AVC fund that can be taken as cash;

(ix) changes to trivial commutation;

(x) the removal of a limit on the amount that an ABP Member may commute;

(xi) the amendment of the definition of Relevant Benefits so that it continues to apply notwithstanding the repeal of the relevant statutory definition.

4.10 The second Definitive Deed was amended by a deed dated 30 November 2006 with effect from 1 December 2006;

(i) to eliminate features of the Scheme that were identified as being contrary to the age discrimination provisions contained in the Employment Equality (Age) Regulations 2006; and

(ii) to increase the amount that may be paid as a lump sum on the death of a DC Member as permitted by the tax simplification changes made by the Finance Act 2004.

4.11 The second Definitive Deed was amended by a deed dated 20 December 2006 with effect from 1 January 2007.