What is the Structure of the new Scheme?
The basic structure of the new scheme will still be based on the familiar final salary set up, but on 1/60th of final salary for each year of membership (as opposed to the old 1/80th). What will change is that for each year of membership you accrue you will earn a bigger annual pension, but the tax-free lump sum on retirement will not be automatic.
How does the new Scheme compare with the old Scheme?
A 60th Scheme will give you a greater pension for each year of membership.
How will benefits be calculated?
The benefits you built up before 1 April 2008 will be worked out as they were in the old Scheme on a 1/80th basis. This ensures that all the pension earned will maintain its value in the New Scheme. Benefits built up from 1 April 2008 will consist of a bigger pension but no automatic lump sum.
Can I still take a lump sum?
You can give up some of you pension to take out a lump sum if you wish, at the rate of £1 of pension for every £12 of lump sum (restricting the size of your lump to 25% of your pension pot).
What does it cost to join the Scheme?
Membership costs are banded from 5.5% to 7.5% of your pensionable pay, depending on your full time equivalent salary. You also get tax relief and you pay a lower rate of National Insurance Contribution.
How will I know which band my contribution rate falls into?
Your band will be determined on your full time equivalent salary at 1 April each year, and will go up in line with the Retail Price Index each year from 2009.
|
Annual Rate of Pay |
Rate of Contributions |
|
More Than £75,000 |
7.5% |
|
More Than £40,000 |
7.2% |
|
More Than £30,000 |
6.8% |
|
More Than £18,000 |
6.5% |
|
More Than £14,000 |
5.9% |
|
More Than £12,000 |
5.8% |
|
Up to £12,000 |
5.5% |
Note - Former manual staff that used to pay a protected rate of 5% will have their new contributions rates phased in gradually. Equalisation of contribution rates will take place over three years until April 2011 as follows:
Year 1 = 2008/09 - 5.25%
Year 2 = 2009/10 - 5.5%
Year 3 = 2010/11 - as per appropriate pay band.
How will my band be determined if I am a new employee?
Contribution bands for new employees will be decided on actual pay, plus the total of any recurring pensionable allowances. Examples would include contractual night work, standby or contractual overtime.
Can I increase my benefits?
You will continue to be able to boost your benefits by paying AVCs and Additional Regular Contributions (ARCs), which allows you to buy extra annual pension, in multiples of £250.
What is the normal retirement age?
The Scheme's normal retirement age will stay at 65. Members will still be able to choose to retire from 60, although their benefits may be subject to a reduction unless they:
- joined the Scheme before 1 October 2006 and have full or partial protection against reduction because of the 85 year rule.
- are retired on the ground of ill- health, redundancy or efficiency or (in very limited circumstances) on compassionate grounds.
- choose to draw their benefits from age 65.
What are the changes to Ill Health Retirements?
There will be three different tiers of incapacity, with different levels of enhancement for each.
First Tier - If a member is certified as permanently incapable of gainful employment before age 65, the Fund will pay an ill health pension with benefits based on the years they have built up so far, plus enhancement of their potential service to age 65. You will need two years pensionable service to qualify for this tier of ill health retirement benefits.
Second Tier - If a member is certified as permanently incapable of any alternative gainful employment within a reasonable period of time, but is likely to be capable of gainful employment before age 65, the Fund will pay an ill health pension with benefits based on 25% enhancement to accrued retirement benefits. You will need two years pensionable service to qualify for this or ill health retirement benefits.
For members aged 45 or over at 1 April 2008, if the enhancement under the 'old' rules would be greater they would apply instead.
Third Tier - For those employees who are permanently incapable of their local authority but are judged by a Occupational Health Practitioner to be capable of gainful employment within three years of leaving employment, a pension equivalent to the members accrued benefits at the point of ill health retirement with a qualifying period of three months service will be paid. The pension will be based on accrued pensionable service at leaving with no enhancement. It will be subject to review after 18 months and ex-employees will be required to notify the council when employment is found and the pension may be suspended.
How will my final Pensionable Pay be calculated?
Benefits are usually calculated on your final year's whole time equivalent pay. You can choose one of the previous two years if it is higher.
How will my final Pensionable Pay be calculated if I have a reduction in pay?
You may choose to have your final years pay calculated as an average of your pay in any three consecutive years (in the last 10 years) ending 31 March and revalued in line with the Retail Price Index.
Are there any Changes if I Leave on Redundancy/Efficiency?
The right to draw benefits in cases of redundancy or efficiency will carry on; however the minimum age for this will go up to 55 from 1 April 2010 for members in employment at 31 March 2008 and from 1 April 2008 for new members.
Can I Still Take Flexible Retirement?
This option is available in the New Scheme for those over 50 (55 from 1 April 2010), but with the chance to draw all or part of the benefits you have built up, whilst continuing to work in some reduced capacity - for example by a reduction of hours. This will be subject to the agreement of the council. Please note that when you eventually retire after taking flexible retirement you will not be able to choose the three year average over the last 10 years option of annual pensionable pay.
Can I retire After Age 65?
There will still be enhanced benefits for members who continue to work and stay in the New Scheme and so draw their benefits after 65. Benefits must be drawn on the eve of the 75th birthday - even if the member works on.
Will my Pension Increase when in Payment?
Yes, it will increase in line with the Retail Price Index every April.
What is the Death in Service Lump Sum?
Lump sum life cover for death in service is three times your pay. If a member who has retired and is receipt of a pension dies before their pension has been paid for ten years a tax free lump sum would be payable. The lump sum is the members' pension multiplied by ten, less any payments already made.
What are the Death in Service Survivors Benefits?
From 1 April 2008 pensions for partners were introduced - both opposite and same sex. You must have lived with your partner as a husband, wife, or civil partner, for a minimum of 2 years and must have been financially interdependent on each other.
If you want to nominate a cohabiting partner you will be required to complete a separate nomination form from the one you may have already completed in respect of the Death Grant.
Currently when a member dies during employment, a short term pension based on the member's pay is paid to a surviving spouse, civil partner for up to six months. Under the New Scheme, this benefit is replaced with a long term survivor's pension becoming payable immediately on death.
Survivor's pensions are based on the 1/160th of the pension the member would have received had they retired due to health grounds on the day they died. This is calculated using the membership built up to date of death, plus potential membership to age 65. Survivor's pensions for co-habiting and registered civil partner's are based on membership since 6th April 1988.
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