Your Pension
When can I receive my pension?
The Normal Pension Age (NPA) under the Scheme is 65. This is the age that will be used for normal funding purposes for Scheme benefits. Your pension can start after NPA, in which case it could be more than you would have received at NPA, or if it starts before NPA, it could be less than you would have received at NPA. For more information click the appropriate link below:
The age for actual retirement from work is an employment issue for agreement with your employer.
What will I get?
If you are a member of one of the Final Salary options in the scheme, your pension at NPA is calculated like this:
1⁄60 or 1/70 X Final Pensionable Earnings X Pensionable Service
For example, if you have been a member of the Scheme for 20 years and your final pensionable earnings are £15,000, your pension will be:
1⁄60 X £15,000 X 20 years = £5,000 a year
or
1/70 X £15,000 X 20 years = £4,285 a year
If you are a member of the CARE option, your pension at NPA is calculated like this (but based on your earnings history and RPI during your membership):
| |
Earnings |
Pension
(1/60th of Earnings ) |
Assumed RPI
Inflation
|
| Year 1 |
£15,000.00 |
£250.00 |
n/a
|
| Year 2 |
£16,000.00 |
£266.66 |
3.0%
|
| Year 3 |
£17,000.00 |
£283.33 |
2.5% |
| Year 4 |
£18,500.00 |
£308.33 |
2.4%
|
| Year 5 |
£20,000.00 |
£333.33 |
2.7% |
Pension at
end of |
Year 1 |
Year 2 |
Year 3 |
Year 4 |
Year 5 |
TOTAL |
| Year 1 |
£250 |
x 1.03 |
x 1.025 |
x 1.024 |
x 1.027 |
£277.56 |
| Year 2 |
|
£266.66 |
x 1.025 |
x 1.024 |
x 1.027 |
£287.44 |
|
Year 3 |
|
|
£283.33 |
x 1.024 |
x 1.027 |
£297.96 |
|
Year 4 |
|
|
|
£308.33 |
x 1.027 |
£316.65
|
|
Year 5 |
|
|
|
|
£333.33 |
£333.33
|
|
Total pension
on retirement
at end of 5
years |
|
|
|
|
|
£1512.94
|
Whichever of the Scheme options you are a member of, the longer you are a member of the Scheme, the larger your pension will be.
Can I draw my pension & continue to work for my current employer?
Yes, provided you are over age 50 (this changes to age 55 from 6 April 2010) and you are not retiring early on grounds of ill-health. In these circumstances you would have to leave employment.
Otherwise you can ask for your pension to be paid whilst continuing to work, perhaps on different terms if you wish, with the same employer. You can even continue to build up pension benefits!
Can my pension be paid early?
Yes. You may arrange for your pension to be paid at any time after you have reached (currently) age 50. The earliest age from which a pension may be taken is to be increased by law to age 55 by 2010.
If your pension starts before NPA it will be reduced to allow for early payment.
Your early pension will be smaller than it would be if you retired at NPA because:
■ you will have been a member of the Scheme for a shorter time; and
■ early pensions are expected to be paid for longer.
If your pension starts early, you still have the option to take a tax-free cash sum. This sum will also be smaller than it would be if you retired at NPA.
If your pension starts at age 60 or later, your pension (excluding AVCs) for pensionable service before April 2002 (if any) will not be reduced for early payment before NPA.
Do I have to provide a survivor's pension?
The Scheme provides for a survivor’s pension, payable in the event of your death. If you do not wish to provide for a survivor’s pension, when your pension starts, you will have the option of retaining the right to nominate someone in the future or taking an increased pension for yourself. Details of the enhancement will be quoted with your retirement benefits.
Because of the regulations governing schemes which are ‘contracted-out’ of the additional State pension, the Widow’s/Widower’s Guaranteed Minimum Pension, or Minimum ‘Reference Scheme’ pension (for any member’s service from 6 April 1997), will always be provided, and must be paid to a legal spouse, if you have one, from the date of your death.
Note: If you have joined the Scheme before October 1997 see the Death Benefits Page: What If I Joined The Scheme Before 1 October 1997 ?
Can I take a cash sum?
Yes, you can give up part of your pension whenever it starts and exchange it for a tax-free cash sum and this will leave you with a smaller pension, reduced according to your age. The calculation is not straightforward but there are some examples in the Guide for Members. The maximum allowable tax free cash sum will be included in your retirement quotation; you can take any amount you wish, up to the maximum allowed.
Can I increase the level of pension for a dependent person?
You can provide a higher level of pension for a dependent person by giving up part of your own pension. If you are interested in this option, you should request a quotation before starting your pension.
Can I delay starting my pension?
If you are still working for your employer, you can continue contributing to the Scheme after NPA. Benefits earned to NPA will be increased to take account of the later payment and added to the benefits earned after NPA.
Death benefits will continue to be provided on the same basis as they were before NPA and the pension must be paid no later than age 75, even if you carry on working.
What happens if I am too ill to work?
Provided there is satisfactory medical evidence that you are, and will continue to be, unable to work again in any capacity, your pension can be paid immediately,
regardless of your age. Guidance on eligibility is available on request.
Your pension will be calculated in the normal way for the period up to the date of early payment; and an enhancement representing half of the pension you would have earned (assuming no change in your earnings) between the date of early payment and age 60 will be added on. There will be no reduction for early payment.
If your pension starts early due to ill-health, you still have the option to take a tax-free cash sum.
If a pension is awarded under these provisions, the Committee will monitor any earnings you receive and may adjust your pension if you are later able to take
other employment. The Committee may periodically request updated medical evidence on your state of health and has the discretion to reduce or suspend your pension if your eligibility changes.
You may also apply for early payment if you are too ill to continue working and have a deferred pension after leaving your employment or leaving the Scheme. In this case, if your application is successful, your deferred pension will not be reduced for early payment.
How will my pension be paid?
You will receive your first payment on the day you have arranged for your pension to start or by seven working days after the receipt of the appropriate forms.
Thereafter pensions are paid quarterly in advance, the due date being 6 April, July, October and January. They will be paid direct to your bank account, building
society account or Giro account.
If tax is due on the pension then it will be deducted under the PAYE system.
How does my pension increase?
These increases apply to your own retirement pension or your survivor’s pension and children’s pensions. They also apply to a deferred pension if you leave the Scheme.
If you have a deferred pension:
| • |
The Guaranteed Minimum Pension (GMP) part of your pension is, where applicable, increased by statutory revaluation (4% for leavers from April
2007) for each complete tax year until you retire.
|
| • |
The rest of the deferred pension will increase each year by LPI (RPI, capped at 5%). |
Once you have retired:
| • |
The GMP part of your pension (applicable for benefits earned before April 1997) after State pension age is guaranteed to increase each year by the rise in the Index. This increase is paid partly by the State and partly by the Scheme.
|
| • |
The rest of your pension will increase each year by LPI (RPI, capped at 5%).
|
If you have a GMP your increases are adjusted if your retirement is before or after State pension age. This is because there are different arrangements for increasing any GMP element before or after State pension age. Also, in some cases the State has different rules for GMP increases if your pension is paid overseas.
The rules provide for pensions in payment to increase by RPI up to a maximum of 5%. For benefits built up before 1 April 2008 the aim is to match inflation if the scheme's funding position is strong enough.
The actual rate of increase, and any discretionary element that may be paid in addition to the level required under the Scheme rules, is determined by the Committee.
When will my pension increase?
Pension increases are based on the rise in the Index in January each year, and your pension will be increased on the following 6 April.