Update for scheme members on latest position on reforms to the - - PowerPoint PPT Presentation

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Update for scheme members on latest position on reforms to the - - PowerPoint PPT Presentation

Dec 17, 2022 314 likes •552 views

Update for scheme members on latest position on reforms to the Research Councils pensions. Covers both the increases to contributions that will begin to take effect from April 2012 and the proposed new pension scheme to be introduced in

slide-1
SLIDE 1
slide-2
SLIDE 2

 Update for scheme members on latest position on reforms to the

Research Councils pensions.

 Covers both the increases to contributions that will begin to take

effect from April 2012 and the proposed new pension scheme to be introduced in 2015.

 Answer questions such as:

  • Why are pensions changing?
  • Will I be forced to work longer?
  • How much more will I have to pay?
  • Will my pension be lower under the new scheme?
  • What about the money I have already paid in and the benefits I've
  • btained?
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SLIDE 3

1. 1.

Why Why is the R the Research C Coun uncils pens nsion sche scheme cha changing? g?

2. 2.

The c cur urrent s sche chemes

3. 3.

Wha What i is cha changing? g? Stag tages 1 1 and nd 2 2 a. Reform at a glance - chronologically b. How and will the changes apply to you? c. Stage 1 – Member contribution increases in more detail d. Stage 2 – New pension scheme in more detail e. Reform at a glance – reminder

4. 4.

On On-go going g bene enefi fits ts o

  • f

f a Research C h Counci ncils pension

5. 5.

Fi Find o

  • ut

ut more – he help and and reso esources

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SLIDE 4
  • Changes based on an independent report published in

March 2011.

  • Key points included:
  • 2. Pensions need to be sustainable:

The costs of public service pensions must be affordable in the long term. Recent reforms have not achieved this.

  • 1. People are living longer compared with a few years ago:

Extra years in retirement mean pensions cost more.

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SLIDE 5

premi emium

  • If yo

you u joine ned be d between O Octobe ber 2002 and and July ly 2007 2007 you are re most lik likely to be in in this is schem eme Features es:

  • Fin

inal s sala lary ry

  • Pens

nsion bas n based o d on n 1/60th

th

  • Opt

ption n for lump ump sum um

  • Con
  • ntr

tributi tion

  • n – 3.

3.5% 5%

classi ssic

  • If yo

you u joine ned be d before O Octobe ber 2 2002 yo you u ar are most st likely t to be e in this sc s schem eme u unles ess y you

  • pt

pted t d to join n pr premi mium o um or clas assic pl plus us Features es:

  • Fin

inal s sala lary ry

  • Pens

nsion bas n based o d on n 1/80th

th

  • Lump

ump sum um

  • Con
  • ntr

tributi tion

  • n – 1.

1.5% 5%

classi ssic plu plus

  • You

u may may have have opt pted t d to mo move ve i int nto t thi his sche heme whe when t n the he clas assic s sche heme closed t to ne new e ent ntrant ants Features es:

  • Fin

inal s sala lary ry – hybr hybrid d of clas assic and and pr premi mium um

  • Pens

nsion bas n based o d on n 1/80th

th and 1

and 1/60th

th

  • Lump

ump sum um

  • Con
  • ntr

tributi tion

  • n - 3.

3.5% 5%

nuvo nuvos

  • If yo

you u joine ned af d after J Jul uly y 2007 yo you u ar are mo most lik likely to be in in this is sch cheme Features es:

  • Ca

Care reer a r avera rage s sch cheme

  • Con
  • ntr

tributi tion

  • n – 3.

3.5% 5%

  • Opt

ption n for lump ump sum um

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SLIDE 6

Stag age 1 1:

From

  • m April

ril 2012: Schem eme e member er contr trib ibutio ion increa reases ses to curren rrent t schem emes: s:

  • From
  • m 1 April

ril 2012. Furth rther er increa reases ses are planned from rom April il 2013 and April il 2014 2014

  • You
  • u will

ll stay in you

  • ur curren

rrent scheme e durin ring g this is perio iod

Stag age 2 2:

Fro rom Ap April 2015: New ew sc schem heme wit ith new new ru rules: s:

  • Two
  • main

in differ feren ences es to curr rren ent t schemes es (featu tured ed later er in this is pres esen entatio tion): 1. 1. New age for r claim imin ing g you

  • ur full

ll pensio sion benef efits its 2. 2. New way of calcula lati ting g you

  • ur

r pensi sion benefit efits

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SLIDE 7

Cu Curre rrent s sch cheme

New w Sche Scheme Membe ber c r cont ntribu ributio ion i incre reases

Firs irst increa ease se Seco cond increa ease se Th Third ird increa ease se New ew sc schem eme comme mmenc nces

April 2012 April 2013 April 2014 April 2015

Stage 1 1: : fro rom m Apri ril 2 2012 Member c r contrib ibutio ion in increa eases t to your r curren rrent scheme Stage 2 2: : fro rom m Apri ril 2 2015 New ew pen ension s scheme eme f for r mo most wit ith n new ew ru rules les

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SLIDE 8

Are yo e you les ess t than an 10 year 10 years from y m you

  • ur

r sch chem eme e pens nsion n ag age? e? Yes es No No You

  • u w

wou

  • uld

ld re rema main in in in you

  • ur

r cu curren ent s sch chem eme e an and p pay ay contribu tribution tion incr creas eases es on

  • nly

ly No No Yes es

  • 1. C

Contrib ribution tion incr creas eases es

  • 2. Y

. You u wo woul uld mov move to th to the new sch chem eme f e from April 2 pril 2015

  • 1. C

Contrib ribution tion incr creas eases es

  • 2. Y

. You u coul uld mov move to th to the new sch chem eme at e at a a lat ater er date te b beyond A d Apri pril l 2015 2015 Are yo e you 10 10 yea years

  • r ov
  • r over bu

r but t le less tha han n 13. 13.5 5 year years f from yo your s sch chem eme e pen ension ag age? e?

To find out how these changes would apply to you, use the:

  • 2012 contributions calculator: www.civilservice.gov.uk/pension/reform/contribution-increases
  • 2015 new scheme calculator: www.civilservice.gov.uk/pensions/reform/key-elements

NB: nuvos scheme pension age = 65 years. classic, classic plus and premium scheme pension age generally = 60 years.

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SLIDE 9

 Member contributions will increase by an average of 3.2% of pay over

the next three years, starting from 1 April 2012.

 The increase from 1 April 2012 will be an average 1.3% of pay. The

exact increase will be dependant on your salary (details in later slides).

 Further increases will take effect from April 2013 and April 2014.

The structure of these increases will be subject to further discussions with trade unions.

 You will remain in your current scheme whilst these increases are

taking place.

 Those earning £15,000 or less will see no increases in contributions

from 1 April 2012. Stage 1: 1: fro rom April ril 201 2012 Contr tributi ution i increa eases es

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SLIDE 10

40% o

  • f

to total incr crease 40% o

  • f

to total incr crease 20% o

  • f

to total incr crease

+ + =

Average of 3.2% of salary by year three Stage 1: 1: fro rom April ril 201 2012 Contr tributi ution i increa eases es

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SLIDE 11

Annual nnual pe pens nsiona nable ear arni ning ngs

(f (full-time e equivalent b basi asis)

Cla Classic Clas assic pl plus us, pr premi mium um, nuvo nuvos Cu Curre rrent ( (%) April ril 2012 2012 (%) Cu Curre rrent ( (%) April ril 2012 2012 (%) Up t to £15, £15,000 000 1. 1.5 1. 1.5 3. 3.5 3. 3.5 £15, £15,001 001 - £21, £21,000 000 1. 1.5 2. 2.1 3. 3.5 4. 4.1 £21, £21,001 001 - £30, £30,000 000 1. 1.5 2. 2.7 3. 3.5 4. 4.7 £30, £30,001 001 - £50, £50,000 000 1. 1.5 3. 3.1 3. 3.5 5. 5.1 £50, £50,001 001 - £60, £60,000 000 1. 1.5 3. 3.5 3. 3.5 5. 5.5 Over £60, r £60,000 000 1. 1.5 3. 3.9 3. 3.5 5. 5.9

Stage 1: 1: fro rom April ril 201 2012 Contr tributi ution i increa eases es

NB: The rates are gross - before tax relief. The amount of tax relief you receive will depend on your individual circumstances.

You can find out what these contribution increases mean for your take home pay in more detail by using the 2012 contributions calculator on the Civil Service Website

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SLIDE 12

 On 9 March 2012, the Government reached a conclusion in its

discussions with the trade unions on Civil Service pension reform.

 A ‘Proposed Final Agreement’ (PFA) has been put to the trade unions

and it is now for them to consult their members.

 The Government has reserved the right to make further changes if

the PFA does not receive sufficient trade union support.

 The two main differences of the new 2015 scheme are featured in

this presentation. For further information on the PFA, see the Civil Service Website Stage 2: 2: fro rom April ril 201 2015 New p pensi nsion s sche cheme

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SLIDE 13

 New scheme for most from April 2015  Two main changes:

Stage 2: 2: fro rom April ril 201 2015 New p pens nsion s sche cheme 1. 1. New age f age for cl clai aiming yo g your ur ful ull p pens nsion benefits: Scheme P Pens nsion Age Age i in n line wi with th S Stat tate P Pens nsion Age Age 2. . New wa way y of cal calculating y g your ur pens nsion b bene nefits: Ca Care reer er avera rage s e scheme

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SLIDE 14

 Scheme Pension Age = the age at which you can take your pension in

full.

 State Pension Age is due to increase to 68 over time. You can work out

your State Pension Age on the Directgov website. Calculating your State Pension Age

 You would not have to work until this age. You can retire earlier but

your new scheme pension would normally be reduced because it would be paid out for longer.

Stage 2: 2: fro rom April ril 201 2015 New p pens nsion s sche cheme 1. 1. New age f age for cl clai aiming yo g your ur ful ull p pens nsion benefits: Scheme P Pens nsion Age Age i in n line wi with th S Stat tate P Pens nsion Age Age

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SLIDE 15

Three steps to calculate your career average pension: 1. Your pay each year x 2.32% (or as a fraction, “1/43.1ths ths”). 2. The pension you earn each year is increased in line with inflation until you retire. 3. At retirement each year’s total is added together to get annual pension.

Stage 2: 2: fro rom April ril 201 2015 New p pens nsion s sche cheme

2015 2016 2017

+ + +….. =

New Scheme Pension

2. . New wa way y of cal calculating y g your ur pens nsion b bene nefits: Ca Care reer er avera rage s e scheme

  • The move to a career average scheme from a final salary one means that for many,

benefits earned after April 2015 would be calculated in a different way.

  • Your pension would be based on an average of your earnings for each year you work

(after April 2015) until you leave or retire, rather than on the last salary you are on.

  • Some Civil Servants are already in a career average schemes (nuvos).
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SLIDE 16

 The pension and lump sum you have already earned up to April

2015, based on your current scheme rules, will not be affected (Part 1). It will be preserved until you leave or retire.

 To work out what amount you would get, use the 2015 new scheme

calculator on the Civil Service Website Part rt 1 1: : Pens ension e earned before 2015 i in n the the cur curren ent sche scheme Part rt 2 2: : Pens ension e earned fro rom 2015 in the n the ne new s sche cheme Stage 2: 2: fro rom April ril 201 2015 New p pens nsion s sche cheme

  • For most, based on the proposed changes, when you retire or leave

after 2015 your Research Council pension would look like this:

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SLIDE 17

 If you are less than 10 years from your current scheme pension age

  • n 1 April 2012, you would remain in your current scheme (cl

clas assic, cl classic p plus, prem emium or nuv nuvos) until you retire and draw your

  • pension. However, you will pay the increased contributions phased in
  • ver the next three years.

 Your scheme pension age (60 or 65 – depending on when you joined)

will remain the same.

 The rules for the scheme you were in prior to the 2015 change

(including those on contribution rates) will continue to apply. Stage 2: 2: fro rom April ril 201 2015 New p pens nsion s sche cheme

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SLIDE 18

 If you are 10 years or over but less than 13.5 years from your current

scheme pension age on 1 April 2012, you could also stay in your current scheme for a period beyond April 2015, the length of which will be calculated according to your age. You would then move to the new scheme and will also pay the increased contributions phased in

  • ver the next three years.

 This is designed to ease the transition for those who fall just outside

the ten year full protection period.

 The longer you have until retirement the sooner you would go into

the new scheme. Stage 2: 2: fro rom April ril 201 2015 New p pens nsion s sche cheme

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SLIDE 19

Years to current scheme pension age after 1 April 2022 Date of move to the new pension scheme arrangements

3.5 years and over 01/04/2015 3 years 01/04/2016 2.5 years 01/04/2017 2 years 01/04/2018 1.5 years 01/04/2019 1 year 01/04/2020 0.5 years 01/04/2021 0 year Protected

Stage 2: 2: fro rom April ril 201 2015 New p pens nsion s sche cheme

NB: nuvos scheme pension age = 65 years. classic, classic plus and premium scheme pension age generally = 60 years.

  • Example: if you are 48 on 1 April 2012, and your current scheme pension age in the classic

scheme is 60, you will be 2 years away from your current scheme pension age on 1 April

  • 2022. You would have the right to remain in your current pension scheme until 1 April 2018,

and move over to the new scheme after that.

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SLIDE 20

St Stage ge 2 2:

New ew pens pensio ion n schem heme f e for r most wit ith new h new rules rules

St Stage ge 1 1:

Mem Member c ber cont ntribut ributio ion n inc increa reases es to you to your current urrent s schem heme

April 2012 April 2013 April 2014 April 2015

  • 1. N

New age for c r cla laiming y your f r full p ll pension b benefits: Sc Schem eme P e Pen ension A Age e in line e with St State P e Pen ension A Age

  • 2. N

New way ay of c cal alculating yo your pensi sion b benefits: Career eer a aver erage s e scheme eme

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SLIDE 21

Gener eral l pensio sion benef efits: its:

 Tax effic

icien ient t way to save.

 Pensio

sion paid to you

  • ur depen

endants ts if you die before them.

 Dea

eath in in se serv rvice lum lump sum sum if you die before you retire. Particular to

  • a Civ

ivil il Serv Service e pen ensi sion:

 Your em

employer pays s the he majority of

  • f the

the cost

  • st of
  • f your pen

ensi sion (currently 26% of pay on average).

Yo You will ill keep p a guara ranteed d le level l of pe pension – ‘defined benefit’ so and will not need to make decisions on how a fund delivers your benefits when you retire. Unlike most other pension schemes, your scheme is based on a proportion of your pay rather than investment returns where the income is less predictable.

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SLIDE 22

 You can find further information about the following:

  • 2012 scheme member increases (inc calculator and Q&A)
  • 2015 new scheme (inc calculator and Q&A)
  • Glossary of terms

at the Civil Service Website

  • You can also contact JSS via email at JSSStatements@ph.rc
  • And look out for more information from your internal

communications and HR.