Existing Members as at 31 March 2014 Active members as at 31 March 2014, will have transferred automatically to the New Scheme on 1 April 2014. Benefits built up until 31 March 2014 will be protected under the current regulations and will continue to be linked to your Final Salary upon their retirement. Additional protection has been awarded if (as at 31 March 2012) you were within 10 years of their Normal Pension Age as at 1 April 2012 i.e. over age 55 as at 1 April 2012.
How much will I pay? A ‘Contribution Banding Arrangement’ will still exist. Under the 2008 scheme, contribution rates were based on your annual full time equivalent pay, even if part time. From 1 April 2014, your rate is to be calculated in accordance with your annual ‘actual pensionable pay’ . ‘Non - contractual overtime’ will become pensionable from 1 April 2014.
Contribution Banding Arrangement Band Actual Pensionable Pay Gross Rate (%) 1 Up to £13,500 5.50 2 £13,501 to £21,000 5.80 3 £21,001 to £34,000 6.50 4 £34,001 to £43,000 6.80 5 £43,001 to £60,000 8.50 6 £60,001 to £85,000 9.90 7 £85,001 to £100,000 10.50 8 £100,001 to £150,000 11.40 9 £150,001 or more 12.50
When can I retire? You will be able to retire at anytime from age 55 to 75. Employer Consent NO longer needed to draw benefits between age 55 and 60. Your Normal Pension Age (NPA) will be linked to your ‘current’ State Pension Age (SPA), which will sit between age 65 and 68!! Any future change in SPA, will mean a change to your NPA! You can calculate your State Pension Age online: - https://www.gov.uk/calculate-state-pension
How will my benefits be calculated? NO LONGER a ‘final salary’ scheme from 1 April 2014. The new Scheme will operate on a ‘Career Average Re - valued Earnings’ (CARE) basis. Benefits will be calculated with reference to ‘actual pensionable pay’ (from 1 April to 31 March) and will build up at a ‘1/49th’ accrual rate. You will have a ‘pension pot’ for each of your employments, which will be credited annually with the amount of pension built up for that year (from 1 April to 31 March). Your pot will then accumulate and will be re-valued annually in line with the Consumer Price Index (CPI).
’97 Scheme ’08 Scheme FS FS ’14 Scheme CARE Membership ... Membership ... From ... up to 31 March 2008 1 April 2008 to 1 April 2014 Annual Pension (80th) 31 March 2014 + Annual Pension ONLY Automatic Lump Sum Annual Pension ONLY (60th) (49th) (3/80th) Commutation Total Benefits Option Annual Pension £1 pension = Automatic Lump Sum £12 tax free cash (subject to HMRC limit)
Calculating your ‘CARE’ Benefits Assess ‘actual pensionable pay’ from 1 April to 31 March . Actual Pensionable Pay ÷ 49 = ... Y4 Y3 Y5 Pension deposited to ‘pension pot’. Y2 Y1 Pension pot to be re-valued annually by CPI.
Calculating your ‘Pre / Post 2014’ Benefits Example Sian joined the LGPS on 1 April 1998 and has decided to retire on 31 March 2019 i.e. her Normal Pension Age. She has always been full time with her employer.
STEP 1 - Calculating the ‘CARE’ element Y1 2014 / 2015 1/49 x £29,000 = £591.84 £591.84 + CPI Y2 2015 / 2016 1/49 x £29,290 = £597.76 £1,189.60 + CPI Y3 2016 / 2017 1/49 x £29,582 = £603.71 £1,793.31 + CPI Y4 2017 / 2018 1/49 x £29,877 = £609.73 £2,403.04 + CPI Y5 2018 / 2019 1/49 x £30,175 = £615.82 £3,018.86 + CPI Total value of ‘CARE Pension Pot’ £3,018.86
STEP 2 - Calculating the ‘Final Salary’ element Membership from 1 April 1998 to 31 March 2008: 10 years Membership from 1 April 2008 to 31 March 2014: 6 years Final pay as at 31 March 2019: £ 30,175 Annual Pension: = £ 6,789 (10 ÷ 80 x £30,175 = £3,772 + 6 ÷ 60 x £30,175 = £3,017) Automatic Lump Sum: 10 ÷ 80 x £30,175 = £3,772 x 3 = £ 11,316
STEP 3 - Total value of Pension Benefits CARE pension pot : Annual Pension: £ 3,018.86 Final Salary element : Annual Pension: £ 6,789.00 Automatic Lump Sum: £ 11,316.00 Total Value of Annual Pension: £ 9,807.86 Automatic Lump Sum: £ 11,316.00
STEP 4 - Commutation Option Annual Pension: £ 9,807.86 Automatic Lump Sum: £ 11,316.00 Amount of Annual Pension to be given up: £ 2,896.59 Remaining Annual Pension: (£9,807.86 - £2,896.59) £ 6,911.27 Maximum Tax Free Lump Sum: (12 x £2,896.59 + £11,316) £ 46,075.08
Will my benefits be reduced? Benefits payable before ‘Normal Pension Age’ (NPA) will continue to be actuarially reduced to take account of early payment, although certain ‘85 year rule’ protections will continue. Exclusions to the rule... benefits payable on the grounds of ill health, redundancy or efficiency. Benefits paid later than your NPA will continue to be actuarially increased to take account of late payment.
Reduction Factors Years Early Pension (M) Pension (F) Auto Lump Sum (B) 1 6% 5% 3% 2 11% 11% 6% 3 16% 15% 8% 4 20% 20% 11% 5 25% 24% 14% 6 29% 27% 16% 7 32% 31% 19% 8 36% 34% 21% 9 39% 37% 23% 10 42% 40% 26%
Additional Voluntary Contributions (AVC) Arrangement set up on Arrangement set up on or before 31 March 2014 or after 1 April 2014 Limit on Up to 100% of 50% of pensionable pay Contributions pensionable pay Tax Free Cash Limited to Max. Up to 100% of AVC Fund Option upon 25% of AVC Fund (Subject to HMRC limits) Retirement
Additional Pension Contributions (APC) Replaces the Additional Regular Contributions (ARC) option. ALL existing ‘Added Years’ / ARC contracts will be honoured . In-house option to purchase an additional pension amount (maximum amount that can be purchased is £6,500). The cost of the ‘contract’ is calculated by the Fund, which can then be paid monthly via the payroll or as a ‘one off lump sum’. Contributions must NOT exceed 100% of monthly pensionable pay. Members gain tax relief on the additional contributions made. Application subject to medical examination (as paid by the member).
What if I leave the Scheme? You are still able to ‘opt out’ of the Scheme at any time. You MUST obtain the ‘Opting Out Form’ from the Dyfed Pension Fund and return directly to your employer. Qualification period has increased from 3 months to 2 years. If decide to opt out or leave the Scheme with under 2 years membership, you will have the option to claim a refund, defer your benefits or transfer to another pension arrangement.
Can I pay less into the Scheme? Members will have the option to pay 50% of normal contribution, to receive 50% of benefits during that period (per employment) under the new ‘50 / 50 option’. For example... instead of paying 6.50% a member can elect to pay 3.25% but benefits will then be calculated at a 1/98th for that period. However, FULL ‘ill health / death cover’ will be retained during the 50/50 period. You will need to complete an Election Form (available from your Employer), which will then need to be returned to your Employer.
What are the other changes? Ill health Retirement - Same 3 tier arrangement will apply. - Payable from any age, if you have 2 years membership. Retirement on the grounds of Redundancy / Efficiency - Immediate payment of unreduced pension benefits. - Payable from age 55, if you have 2 years membership. Flexible Retirement - With Employer consent ... reduction in working hours or grade. - Payable from age 55, if you have 2 years membership.
What happens if I die? Added Life Assurance - Active - 3 x ‘assumed pensionable pay’ (inc. non-contractual overtime) - Deferred - 5 x annual pension - Pensioner - 10 x annual pension (less any already paid) Survivor’s Pension - Will continue to be calculated at a rate of 1/160th. - Automatically payable to a Spouse & registered Civil Partner. - Now automatically payable to a Co-habiting Partner. - Pensions still payable to any ‘eligible children’.
Have you registered to MPO? Interactive web portal providing you with 24 / 7 access to your pension details via the Fund website: www.dyfedpensionfund.org.uk You will be able to: - update your contact details - update your death grant expression of wish - perform benefit calculations - view your annual benefit statement - view important Scheme information
Thank you for listening Any questions? Mathew James MaJames@carmarthenshire.gov.uk (01267) 224 043 www.dyfedpensionfund.org.uk
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