Between April 1978 and April 2002, the Additional State Pension was provided through the State Earnings-Related Pension Scheme (SERPS). From April 2002, the SERPS benefit has been replaced by the new State Second Pension (also known as S2P), which is designed to provide a more generous Additional State Pension for low and moderate earners, and for certain carers and people with a long-term illness or disability.

If you are a member of the RHM Pension Scheme, you do not earn any Additional State Pension while you are a member, because the Scheme is contracted out (see below) of the Additional State Pension.

However, you may have an entitlement to the Additional State Pension for any period after April 1978 when you were in non-pensionable employment or were a member of another pension scheme that was not contracted out.

Additional payments you can make from your salary to your pension to increase your retirement benefits.

The Basic State Pension is paid to everyone who has a full National Insurance contribution record. If you do not have a complete record, you may be entitled to a proportion of the full Basic State Pension.

For 2010/2011, the full State Basic Pension is £97.65 a week for a single person and £156.15 a week for a married couple.

You will receive your State Basic Pension entitlement in addition to your pension from the RHM Pension Scheme.

Any woman retiring from RHM after State Pension Age will stop paying National Insurance contributions at State Pension Age but will not normally be able to draw her Basic State Pension until she actually retires. However, it will then be increased to take account of its late payment.

Premier Foods plc.

The RHM Pension Scheme is contracted out of the earnings related part of the State Pension Scheme. This means that you do not earn an Additional State Pension while you are a member of the RHM Pension Scheme and, as a result, you pay lower National Insurance contributions.

Contracting out does not affect your entitlement to the Basic State Pension.

In order to be able to contract out, the RHM Pension Scheme must meet certain statutory requirements. These include:

• Paying you a pension at retirement which is at least equal to your Guaranteed Minimum Pension (GMP) for Pensionable Service in the RHM Pension Scheme completed between 6 April 1978 and 6 April 1997.

• Paying you a pension at retirement which is at least equal to the Protected Rights Pension for Pensionable Service completed after 6 April 1997.

This definition applies to members who joined the Company before 6 April 2005 and the Scheme before 6 April 2006

Final Pensionable Earnings are normally ^†your average annual Pensionable Earnings [see below] over the last three tax years before retirement or leaving.

^† There is one alternative definition of Final Pensionable Earnings which can be used if it produces a higher pension figure - annual average Pensionable Earnings over any three consecutive complete tax years out of the last 13 before retirement or leaving.

If you joined the Scheme before 6 April 2005, for Pensionable Service before 6 September 2005 your Final Pensionable Earnings are normally* your Pensionable Earnings [see below] in the last tax year before retirement or leaving (increased by ¼% for each complete month between the end of the tax year and your retirement date).

^* There are three alternative definitions of Final Pensionable Earnings which will be applied if they produce a higher figure.

The Guaranteed Minimum Pension (GMP) is the minimum amount of pension which the RHM Pension Scheme undertakes to pay you for any Pensionable Service which you have completed in the Scheme between 6 April 1978 and 6 April 1997. It is broadly equivalent to the pension you would have received from the State Earnings-Related Pension Scheme (SERPS) if the RHM Pension Scheme had not been contracted out of SERPS.

This is the total amount of pension benefits you can build up without paying an additional tax charge. The LTA for the 2010/11 tax year is £1.8 million.

This is the minimum level of earnings that an employee needs to qualify for benefits, such as the Basic State Pension.

This is the earliest age at which you can take your pension without Company consent, or without having it reduced. The Normal Pension Age for members of the Scheme is 65.

This definition applies to members who joined the Company before 6 April 2005 and the Scheme before 6 April 2006

There is a choice of definitions of Pensionable Earnings for calculating contributions and benefits:

Full earnings definition

The full earnings which count towards Pensionable Earnings [see below]

Or

Lower Earnings Limit (LEL) definition

The full earnings which count towards Pensionable Earnings [see below] LESS the State Lower Earnings Limit. For Scheme purposes, the LEL deduction will remain fixed until at least 5 April 2009 at the level applying for the tax year ended 5 April 2005 (£4,108 a year).

Earnings which count toward Pensionable Earnings

For Pensionable Service before 6 September 2005

For Pensionable Service before 6 September 2005, the earnings which count towards Pensionable Earnings are your basic earnings plus specified variable pay, subject to the following restrictions:

• The basic earnings component of Pensionable Earnings will be frozen for a minimum of four tax years starting 6 April 2005

• The variable pay component of Pensionable Earnings will be frozen for an indefinite period starting 6 September 2005*

^* An underpin will apply so that the variable pay component of Pensionable Earnings will not be less than if all the relevant variable pay components for the tax year in question were taken into account, but calculated by reference to the rates or amounts at which the relevant variable pay components were paid as at 5 April 2005.

For Pensionable Service on or after 6 September 2005

For Pensionable Service on or after 6 September 2005, there are three definitions of the earnings which count towards Pensionable Earnings. The definition which applies to you will depend on which of the following three categories you fall into:

Your Pensionable Earnings will be frozen from 6 April 2005 to 5 April 2009. This means that any increase during this period in your basic pay or in the rates of variable pay which would normally be included in the definition of Pensionable Earnings will not count towards Pensionable Earnings. The Company will review the position towards the end of this freeze period, taking into consideration the financial position of the RHM Pension Scheme at that time. However, if the freeze is then lifted, the increases which have been excluded from Pensionable Earnings during the freeze period will not be brought back into the pension calculation at a later date.

Notional Earnings Cap

HM Revenue & Customs abolished its Earnings Cap from 6 April 2006, however the RHM Pension Scheme, like many other schemes, retained the Earnings Cap.

If you joined the RHM Pension Scheme on or after 1 June 1989, your total earnings which can count for pension purposes under the Scheme are subject to the Earnings Cap. For 2004/2005, this limit was £102,000. While this amount has since increased, the limit is being maintained at £102,000 under the Scheme due to the Pensionable Earnings freeze.

Pensionable Service is the number of years and months of continuous service you complete as a member of the RHM Pension Scheme. It may also include any service credited to you as a result of the transfer to the RHM Pension Scheme of benefits from a previous pension arrangement.

The Protected Rights Pension is the minimum amount of pension which the RHM Pension Scheme undertakes to pay you for any Pensionable Service which you have completed in the Scheme after 6 April 1997. It is the pension which could be purchased at retirement with the sum of money accumulated from the employer and employer National Insurance rebates received as a result of the RHM Pension Scheme being contracted out of the Additional State Pension (S2P) – formerly known as SERPS – plus any employee contributions to the Scheme (in excess of the National Insurance rebate) as required by the contracting out regulations.

The All Items Index of Retail Prices published by the Government each month, which records the movement in prices of regular household expenditure, including mortgages, fuel, food and consumables.

The RHM Pension Scheme.

The company that operates the RHM Pension Scheme pensioner payroll.

State pensions are payable from State Pension Age, which is currently 65 for men and 60 for women. This will gradually increase to age 65 for both men and women over a 10-year period, with the following effect:

All women born before 6 April 1950 will receive their State pension at age 60.

Women born between 6 April 1950 and 5 April 1955 will receive their State pension at age 60 plus one month for each month or part-month that their date of birth falls after 5 April 1950.

Example

For a woman who was born on 5 July 1953, her birthday falls 3 years (36 months) and 2 full months after 5 April 1950, so she will start to receive her State pension from 6 September 2016, i.e. at age 63 years and 2 months.

All women born on or after 6 April 1955 will receive their State pension at age 65.

In addition, the State Pension Age for both men and women is to increase from age 65 to 68 between 2024 and 2046, with each change phased in over two consecutive years in each decade. The first increase, from age 65 to 66, will be phased in between April 2024 and April 2026; the second, from age 66 to 67, will be phased in between April 2034 and April 2036; and the third, from age 67 to 68, between April 2044 and April 2046.

RHM Pension Trust Limited is the corporate trustee of the RHM Pension Scheme and holds all the investments of the Scheme on behalf of the members.

The Trustees are the directors of the Trustee Company. They sit on a Trustee Board and are responsible for ensuring that the interests of members of the Scheme are protected. Half of the Trustees are nominated by the Company, the other half are nominated from within the membership of the Scheme and there is an independent external Chairman of the Trustee Board.