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daa Defined Contribution Retirement Savings Scheme

May 2016

Quick Guide

Welcome to the daa Defined Contribution Retirement Savings Scheme (the DC Scheme).

Your future, your savings.

At daa, retirement savings form an important part of the benefits available to our people. The DC Scheme has been established to provide members with future savings to ensure that their retirement years are spent doing the things they always wanted to and not regretting missed opportunities.

When saving for retirement, it is important to start early. The more thought and planning you give to your retirement, the more likely you are to achieve your retirement goals.

This guide summarises the key features of the DC Scheme and outlines what options you have now, and what options you will have when you retire. Please refer to the DC Scheme’s Member Guide (ex-IASS or non-IASS) and Investment Guide for more detailed information.

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The importance of saving early

Saving €150 per fortnight (12% of a €32,500 salary, 5% employee and 7% employer) from age 25 results in savings of nearly €400,0001 at age 65, which is some €160,000 more than would be accumulated by someone starting at age 35. Therefore, now is the time to start saving and by starting now the less likely you are to have to make up a shortfall in your savings when you near retirement.

saving

s

25 30 35 40 45 50 55 60 65

€50k€0k

€100k€150k

€200k€250k€300k€350k€400k

age

1 These figures assume an annual rate of investment return up to age 65 of 4%. This example is solely for illustration purposes. It is based on a series of assumptions including that a member makes regular contributions at a set level and remains in the DC Scheme until normal retirement date. This graph cannot be relied on as an indication or guarantee that any particular level of contribution will result in a particular final amount of retirement savings, not least as actual future investment returns are not known.

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Your saving optionsYou choose how much of your salary you wish to contribute each fortnight, with a minimum contribution of 5%. If you contribute to the DC Scheme, your employer will also pay a fortnightly contribution on your behalf. The amount that your employer will contribute depends on your own contribution rate.

The more you pay, the higher the contribution from your employer. By contributing the minimum 5% of salary to the DC Scheme your employer will contribute at 7% on your behalf. Therefore, for every €100 that you contribute at this level of contribution, your employer is contributing an additional €140 to your savings. Keeping in mind that you receive full income tax relief on your €100 contribution, it’s actually only costing you between €60 and €80, depending on your marginal tax rate.

Anna, aged 47, is a member of the DC Scheme and has a salary of €39,105. She currently makes a fortnightly contribution of 5% of her salary and her employer contributes 7% of her salary to her retirement savings. This means that €180 is added to her savings every fortnight; €75 from her own gross salary (i.e. before tax) and €105 from her employer. As Anna’s contributions are subject to tax relief, the cost to her will be less than €75, with the amount of the saving depending on her marginal tax rate. If she increased her contribution to 8% (€120 per fortnight), her employer would contribute 10% (€150) resulting in a total fortnightly contribution of €270.

anna’s savings

you pay

your employer2

pays

Contribution rates

5%

6%

7%

8%

7%

8%

9%

10%

2 If you were an active member of the Irish Airlines (General Employees) Superannuation Scheme (IASS) on 31st December 2014 and your Normal Retirement Date is before 31st December 2026, daa will pay an additional employer contribution of 1% up to the maximum matching contribution as set out above. If you were an active member of the IASS on 31st December 2014 and earned less than a basic salary of €40,000, daa will pay an additional employer contribution of 1% up to the maximum matching contribution as set out above. Please refer to the Expert Panel’s Final Determination for full details.

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As well as deciding on your contribution rate, you have a choice in where your savings are invested. The main decision to make with regard to where your money is invested is:

To have your investments

managed for you.

or To make your own

investment decisions.

Your investment

options

Someone else makes your decisions If you choose to have your investments managed for you, or you make no choice at all, your contributions will be invested at the direction of the Trustee in the daa Growth Fund until seven years before your retirement. Once you are within seven years of retirement, your investment in the daa Growth Fund will be gradually reduced in favour of lower risk funds in order to protect the value of your savings as you prepare for retirement.

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For further information on all the funds

please refer to the DC Scheme’s Investment Guide.

fund investment Goaldaa Equity Fund

To replicate the long term returns that global equity markets provide in the most cost-effective way possible

daa Cautious Growth Fund

To target growth of between 1% and 2% in excess of inflation over the long term

daa Growth Fund

To target growth of between 2% and 4% in excess of inflation over the long term

daa Annuity Fund

To protect the pension (annuity) purchasing power (rather than the capital value) of investments

daa Cash Fund To minimise risk of capital value loss and deliver a positive return insofar as positive market returns are achievable

The daa Growth Fund is invested in a mix of assets including equities, property, alternative assets and bonds. It has been designed and is managed exclusively for DC Scheme members. The aim of the daa Growth Fund is to achieve real long-term growth in excess of the level of inflation.

Making your own investment decisions If you are familiar with investments and feel comfortable selecting your own funds, then you can choose to invest in one or a combination of the funds outlined below.

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Your retirement

optionsThe final amount of money you will have accumulated at retirement will depend on the amount of contributions paid into your retirement savings account and the investment returns achieved over the period of time you have been a member of the DC Scheme.

At retirement you can use your Retirement Savings Account to do a number of things:

If you are more than seven years from normal retirement age, you do not need to make a decision about the use of your savings at retirement today. However, when the time comes to make this decision, you will be contacted by the DC Scheme’s Administrator. More detailed information about the Glidepaths for members within seven years of normal retirement age is available in the Investment Guide.

Take a tax-free lump sum.3

Take a tax-free lump sum and use the remainder to buy an income for life (annuity), which pays you a monthly income for the rest of your life.

Take a tax-free lump sum and continue to invest the rest, taking money out as you require it during retirement.

3 Subject to Revenue limits

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Once you have read this guide and the accompanying Member Guide and Investment Guide, you should have a clear idea of how much you wish to save and where you want your retirement savings invested.

If you are not already a member and wish to join the DC Scheme, please contact iHR on freephone 1800 804 313 or internally on extension 46200.

If you are already a member and wish to make changes to your contribution levels please visit the iHR Portal, freephone 1800 804 313 or internally on extension 46200.

If you would like to make your own investment choices, you must log in to your online account at www.invescoonline.ie and make your investment selections.

If you would like your investments managed for you by the Trustee, you can select this option by logging in to your online account at www.invescoonline.ie. If you make no selection, your savings will also be automatically managed for you.

Alternatively, you can also complete a paper form, which is available on iConnect, and return this to Invesco, the DC Scheme Administrator.

How do I make my contribution and investment decisions?

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Need help? If you need any technical support, or don’t have your log-in details, please contact iHR on 1800 804 313 and select option 1.

If you need help with your contributions or have any other questions, please contact:

Invesco Limited 2 Sandyford Business Centre, Burtonhall Road, Sandyford, Dublin 18

T +353 1 294 7600 E info@invesco.ie W www.invescoonline.ie

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