SAAS Annual Report and Accounts 2013-2014 - page 23

SAAS
Civil Service Pensions
Pension benefits are provided through the Civil Service pension arrangements. From 30 July 2007, civil
servants may be in one of four defined benefit schemes; either a final salary scheme (
classic, premium or
classic plus
) or a whole career scheme (
nuvos
). These statutory arrangements are unfunded with the cost
of benefits met by monies voted by Parliament each year. Pensions payable under
classic, premium,
classic plus
and
nuvos
are increased annually in line with Pensions Increase legislation. Members joining
from October 2002 may opt for either the appropriate defined benefit arrangement or a ‘money
purchase’ stakeholder pension with an employer contribution (
partnership
pension account).
Employee contributions are salary-related and range between 1.5% and 6.25% of pensionable earnings
for
classic
and 3.5% and 8.25% for
premium, classic plus
and
nuvos
. Increases to employee
contributions will apply from 1 April 2014. Benefits in
classic
accrue at the rate of 1/80th of final
pensionable earnings for each year of service. In addition, a lump sum equivalent to three years initial
pension is payable on retirement. For
premium
, benefits accrue at the rate of 1/60th of final pensionable
earnings for each year of service. Unlike
classic
, there is no automatic lump sum.
Classic plus
is essentially
a hybrid with benefits for service before 1 October 2002 calculated broadly as per
classic
and benefits
for service from October 2002 worked out as in
premium
. In
nuvos
a member builds up a pension based
on his pensionable earnings during their period of scheme membership. At the end of the scheme year
(31 March) the member’s earned pension account is credited with 2.3%of their pensionable earnings in that
scheme year and the accrued pension is uprated in line with Pensions Increase legislation. In all cases members
may opt to give up (commute) pension for a lump sum up to the limits set up by the Finance Act 2004.
The
partnership
pension account is a stakeholder pension arrangement. The employer makes a basic
contribution of between 3% and 12.5% (depending on the age of the member) into a stakeholder
pension product chosen by the employee from a panel of three providers. The employee does not have to
contribute, but where they do make contributions, the employer will match these up to a limit of 3% of
pensionable salary (in addition to the employer’s basic contribution). Employers also contribute a further
0.8% of pensionable salary to cover the cost of centrally provided risk benefit cover (death in service and
ill health retirement).
The accrued pension quoted is the pension the member is entitled to receive when they reach pension
age, or immediately on ceasing to be an active member of the scheme if they are already at or over pension
age. Pension age is 60 for members of
classic, premium
and
classic plus
and 65 for members of
nuvos
.
Further details about the Civil Service pension arrangements can be found at the website
.
Cash Equivalent Transfer Values
A cash equivalent transfer value (CETV) is the actuarially assessed capitalised value of the pension scheme
benefits accrued by a member at a particular point in time. The benefits valued are the member’s accrued
benefits and any contingent spouse’s pension payable from the scheme. A CETV is a payment made by a
pension scheme or arrangement to secure pension benefits in another pension scheme or arrangement
when the member leaves a scheme and chooses to transfer the benefits accrued in their former scheme.
The pension figures shown relate to the benefits that the individual has accrued as a consequence of their
total membership of the pension scheme, not just their service in a senior capacity to which disclosure applies.
The figures include the value of any pension benefit in another scheme or arrangement which the
member has transferred to the Civil Service pension arrangements. They also include any additional
pension benefit accrued to the member as a result of their buying additional pension benefits at their own
cost. CETVs are worked out in accordance with The Occupational Pension Schemes (Transfer Values)
(Amendment) Regulations 2008 and do not take account of any actual or potential reduction to benefits
resulting from Lifetime Allowance Tax which may be due when pension benefits are taken.
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