University of York Pension Fund Scheme Guide Tier 3

Transcription

1 University of York Pension Fund Scheme Guide Tier 3 Version 1.0 (August 2016) Leaving the Fund Joining Retiring Contributions Benefits for dependants Topping up your benefits

2

3 Contents Introduction...5 Joining the Pension Fund...6 Working part-time...6 Salary exchange...7 Transfers into the Fund...7 The State Pension...7 Contributions...8 Tax relief...8 Membership...9 Change of Tier...9 University of York Pension Fund Pensionable salary...10 Topping up your benefits Money Purchase AVCs (MPAVCs)...12 Retiring from employment Retirement age...13 How benefits are calculated...13 Types of retirement...13 Normal retirement...14 Early retirement...14 Premature Retirement Compensation Scheme (PRCS)...14 Late retirement...14 Phased retirement...15 Ill-health retirement...15 Serious ill-health...16 Commutation...16 Tax-free lump sum...16 General information about receiving a Fund pension...17 Leaving the Fund...18 Deferred benefits...18 Transferring out of the Fund...18 Refund of contributions...18 Opting out of the Fund

4 University of York Pension Fund Benefits for dependants...20 Lump sum life cover...20 Pensions for spouses or registered civil partners...20 Children s pensions...22 Pensions for partners...22 Divorce or dissolution of a registered civil partnership Tax limits on pension saving...24 Lump sums...24 Annual allowance...24 Lifetime allowance...24 Protections...25 Governance...25 Employers...25 Committees...26 Member Nominated Directors (MNDs)...26 Joint Negotiating Sub-Committee on the Modification of the Pension Fund...26 Technical detail Data Protection Act Disclosure...27 Compliments, complaints and useful contacts Internal Dispute Resolution Procedure (IDRP)...28 Compliments...28 The Pensions Advisory Service (TPAS)...29 The Pensions Ombudsman...29 The Pensions Regulator...30 The Pension Tracing Service...30 State Pension Forecast...30 HM Revenue and Customs...30 Contact us The University of York Pension Fund...31 Rewards Extra...31 Employee Plus...31 Glossary of terms

5 Introduction The University of York Pension Fund (the Fund) was established in Its aim is to provide its members with a range of worthwhile benefits including: lan income for life upon retirement from the Fund la range of benefits available to eligible dependants llife cover in the form of a lump sum payable should you die whilst contributing to the Fund This booklet is provided to give contributing members general information about the Fund. Its purpose is therefore purely explanatory, and it cannot cover all circumstances. In the event of any discrepancy or dispute between the information provided in this booklet and the Trust Deed and Rules, the Trust Deed and Rules will take precedence. Pension schemes are governed by complex legislation which changes regularly. This booklet describes the Fund benefits and arrangements in place on 1 August In addition, this booklet only describes the arrangements for members of Tier 3. If you are a member of Tier 1 or Tier 2, you will need to refer to a separate Scheme Guide for your Tier. University of York Pension Fund Throughout the booklet, you will notice some words highlighted in bold text. These words are ones which you will find explained in the Glossary of Terms at the end of the booklet. We have also used examples to illustrate particular calculations. The examples are not based on any real member s circumstances, but are meant to provide a simple guide to how a calculation works. The factors and assumptions used in the calculations are subject to regular review by the Trustee and the actual factors in force at the time a calculation is performed may be different from those used in the examples. If you have any questions about this booklet, or how any of the information described in it may apply to you, or require any further information, please contact the Pensions Office using one of the following methods: pensions@york.ac.uk Telephone: / 4805 Post: The Pensions Office Heslington Hall H/B30 York North Yorkshire YO10 5DD 5

6 University of York Pension Fund Joining the Pension Fund You may join the Fund if you are: la permanent employee of the University or a fixed term employee and the University agrees to your membership la permanent employee of a participating subsidiary company (see the Employer s list in Governance section for further details); or a fixed term employee and the University agrees to your membership laged at least 18 and under 60 lnot eligible to be a member of the Universities Superannuation Scheme or NHS Pensions. Membership is by application you are not automatically entered into the Fund. If you want to join, all you need to do is to complete a simple application form (available from our website) and provide evidence of your date of birth (such as a birth certificate, or current valid passport or photo-card driving licence). We may also ask you to complete a short medical questionnaire if you are joining beyond your first opportunity to do so. This doesn t prevent you from joining, but, dependent upon the information you provide, may restrict the amount of life cover that is provided for you as part of your membership of the scheme see page 20 for further details. Working part-time Part-time employees may join the scheme on the same terms as full-time staff, provided they receive payment throughout the year. Part-time members build up membership on a pro-rata basis according to their hours of pensionable work. Example Janet works 16 hours per week. The full-time equivalent hours for her job are 37 per week. If Janet worked full-time, then, over the course of a year, she would build up one year s membership of the Fund. However, as Janet works part-time, her membership is reduced pro-rata. So: (365 days 37 hours) x 16 hours = 158 days membership However, when retirement benefits are calculated for part-time members, it is their full-time equivalent pay (FTE) which is used to calculate their benefits. Example Janet works for the University for 5 years, and decides to retire. During that time, her pro-rata membership is 2 years 59 days. The part-time pay for Janet s job is 9,500 per year. However, it is the full-time equivalent that would be used to calculate her benefits: ( 9,500 actual, pro-rata pay 16 hours) x 37 hours = 21,969 full-time equivalent pay Staff that work term-time only must be paid over twelve months in order to join the University of York Pension Fund. If you think that you may be affected by this please contact the Pensions Office to obtain further details. 6

7 Salary exchange The University and some of the participating subsidiary companies in the Fund operate a salary exchange scheme (sometimes known as salary sacrifice), through which you can make contributions to the Fund. For employees of the University of York, the salary exchange scheme is called Pensions Extra. For employees of York Conferences Ltd, the salary exchange scheme is known as Pensions Plus. Each scheme has its own terms and rules, and you should refer to the terms and conditions of the relevant scheme for the details of how any scheme available to you operates. However, the general principle of how participation in the scheme affects your membership and contributions is the same, and is explained below. Contributing to the Fund through a salary exchange scheme means that, instead of you paying your contributions to the Fund from your pay, your employer pays the contributions on your behalf, but reduces your pay by the same amount. Contributing in this way means that, as your total pay is lower, you will pay less in National Insurance contributions (NI) and thus your take-home pay will be higher. Regardless of whether you contribute to the Fund through a salary exchange scheme or not, your contributions to the Fund will receive tax relief. University of York Pension Fund Example Susan s pay is 20,000 per annum. She pays into the Fund at 7% of her salary. If she does not pay into the Fund through a salary exchange scheme, then, based on 2016/17 rates, she will pay 119 per month in NI. If she pays into the Fund through a salary exchange scheme, then, based on 2016/17 rates, she will pay 105 per month in NI. As the amount of NI that Susan pays is lower through a salary exchange scheme, her take home pay each month will be higher. The amount that she will pay into her Fund pension and receive back from it will be the same. Transfers into the Fund The Rules of the University of York Pension Fund allow it to receive cash equivalent transfer values and provide transfer credits. However, acceptance is subject to the discretion of the Trustee. At their meeting on 8 December 2005, the Directors of the Trust agreed a formal policy of not accepting transfer payments into the Fund. This policy is regularly reviewed, and members will be informed as appropriate if it changes. The State Pension The Fund is not contracted out of the State Second Pension (S2P). 7

8 University of York Pension Fund Contributions The amount of contributions that you pay into the Fund depends upon how much your pensionable salary is. At the time of publication, the contribution rates that apply to the University of York Pension Fund are: lyou pay 7.00% of your pensionable salary into the Fund. lyour employer contributes 16.00% of your pensionable salary into the Fund. The contribution rates that apply are regularly reviewed by the Actuary, and are set by agreement between the Trustee and the University of York. The contribution rate is calculated to ensure that the cost of paying for benefits is met. You can always find details of the latest contribution rates on the Fund s website. In addition to the employer contribution described above, the University also contributes to the cost of administering the Fund. Tax relief The contribution rate quoted is the gross rate that applies; however, pension contributions attract tax relief, so the real cost to you is lower than the rate quoted above, because you pay less in tax. Example John s pay is 18,000 per annum. He is therefore a basic rate taxpayer, at 20%. His tax code is 1100L, which means that the first 11,000 that he earns is tax-free. If John does not contribute to the Pension Fund, then his tax is calculated as follows: ( 18,000 11,000 = 7,000) x 20% = 1,400 tax paid per year If John decides to join the Fund, he will pay 7.00% in contributions. His tax would therefore be calculated as follows: 18,000 x 7.00% = 1260 Pension Fund contributions ( 18, ,000 = 5,740) x 20% = 1,148 tax paid per year 8

9 Membership When you contribute to the Fund, you build up years and days of membership. If you work fulltime, then for each day that you are a member of the scheme and employed, you build up one day of membership in the Fund. Janet s example on page 6 showed the effect that working part-time can have on membership. Each day of membership buys you a pension based on one hundredth of your final pensionable salary. In addition you will also receive a lump sum of three one hundredths for each day of membership. Please note that an overall membership cap of 40 years membership applies in the Fund. No member is allowed to build up more than this amount of membership. Change of Tier University of York Pension Fund It is not possible to change into Tier 1 or Tier 2 as a member of Tier 3. 9

10 University of York Pension Fund Pensionable salary Membership is an important factor in calculating your retirement benefits. However, equally important is pensionable salary. Pensionable salary is the pay that you receive, upon which you pay pension contributions. This is not always all the pay that you receive from your employer; for example, bonuses are excluded from being pensionable. If you are an employee of a subsidiary company, then any uncharacteristic pay increases in your last three years of membership of the Fund can also be excluded from pensionable salary, at the discretion of the Trustee. The University of York Pension Fund is a Final Salary Scheme. This means that, when your retirement benefits are calculated, they are normally based on your final salary. As salary generally increases over working life, all the years and days of membership that you built up on lower salaries are based on your salary upon leaving, which is usually highest. However, there may be instances when your salary upon retirement is not the highest salary. To address this, a protection is built into the Fund s rules, which is known as the best of the last three years. When you retire and your retirement benefits are calculated, the Pensions Office will check your pay upon leaving, as well as the amount of pay you have received in each of the preceding two years. If either of these figures is higher, your pension will be calculated using the higher figure. Example 1 Faye is retiring and has recently received a promotion, which has increased her pensionable salary. When calculating her retirement benefits, the Pensions Office check her last year s salary, and the two years before this: Year Pay , , ,000 As Faye s pay is highest upon leaving, the figure of 21,500 is the figure that is used in the calculation of her benefits. Example 2 Edith is retiring and has recently experienced a pay cut as a result of her taking a lower graded job. When calculating her retirement benefits, the Pensions Office check her last year s salary, and the two years before this: Year Pay , , ,300 As Edith s pay was highest the year before she retired, the figure of 25,000 is the figure that is used in the calculation of her benefits. 10

11 It is important to note that your final pensionable salary is not the salary scale that you were on at retirement, but your total pensionable earnings over the course of your final year. Example Elspeth retired on 31 August On 1 August 2016, Elspeth received an incremental progression. Her pay progression is shown below: 1 August ,000 1 August ,400 Elspeth therefore only received her higher salary for 31 days in August Elspeth s final pensionable salary is calculated as: ( 23, ) x 31 days = 1,953 ( 22, ) x 334 days = 20,498 University of York Pension Fund 1, ,498 = 22,451 Final Pensionable Salary 11

12 University of York Pension Fund Topping up your benefits As well as paying your normal contributions into the Fund, you are also able to make Additional Voluntary Contributions (AVCs). Paying AVCs is a way of increasing the pension and/or lump sum that you may receive upon retiring from the Fund. Paying an AVC also attracts further tax-relief, although you are not able to pay an AVC through a salary exchange scheme. Money Purchase AVCs (MPAVCs) The University of York Pension Fund offers a Money Purchase AVC through Aegon. In taking out a MPAVC, you are paying into your own pot of money which is invested in a manner of your choosing from a range of investment funds chosen for you by the Trustee. Once you have set up an AVC policy, you can increase, decrease, stop or re-start your contributions, and can monitor and manage your investments online. Upon retirement, the money in your AVC policy can be used in a number of ways, including taking it as a tax free cash lump sum (subject to limits), or drawing it as a pension. More details on the options available to you are available in the AVC booklet that you can find on Fund s website, or request a hard copy from the Pensions Office. Just like your ordinary pension scheme contributions, contributions paid into an AVC policy attract tax relief meaning that you don t pay tax on the amounts you pay into your policy (subject to limits). This can make the net cost of contributing cheaper for you. You can find a modeller showing you how much you might save in tax relief on the Fund s website. 12

13 Retiring from employment There are a number of factors to take into account when considering retiring and drawing your benefits from the Fund. Retirement age The Fund s Normal Pension Age is 65. If a member retires before age 65, there are usually early retirement reductions applied to their benefits. The Fund s Minimum Pension Age is 55. This is normally the earliest age at which it is possible for a member to receive their benefits, except for retirement on the grounds of ill health or where the member has a protected right to retire earlier than 55. To retire from age 55, you must have at least 10 years membership in the Fund, and your employer must agree to you retiring early. From the age of 60, you are able to retire without your employer s permission. There is also no requirement that you have 10 years membership to retire from the age of 60. University of York Pension Fund How benefits are calculated We have already shown how membership is built up and how final pensionable pay is calculated. These factors are both important in the calculation of your retirement benefits. The pension that you finally receive is calculated by multiplying one hundredth of your final pensionable salary for each year and day of membership in the Fund. You also receive a lump sum of three hundredths of your final pensionable salary for each year and day of membership in the Fund. This may sound complicated, but the following example shows that the formulas are simpler than they sound! Example Richard will shortly be retiring at age 65 and has built up 24 years membership in the Fund. His final pensionable salary is 18,000. His pension is calculated: (24 100) x 18,000 = 4,320 per annum In addition, Richard would receive a one-off tax-free lump sum calculated: 3 x (24 100) x 18,000 = 12,960 Types of retirement There are also different types of retirement, which can have an impact on the amount of pension that you will receive in retirement. These are explained in more detail overleaf. 13

14 University of York Pension Fund Normal retirement A normal retirement is when a member retires at the Normal Pension Age of 65. As the member would be retiring at the scheme s normal retirement age, there would be no early retirement reductions to their pension. The example of Richard shows how retirement benefits are calculated at Normal Pension Age. Early retirement An early retirement is when a member chooses to retire before the Fund s Normal Pension Age of 65. Your pension is calculated in the same way as a normal retirement, but is reduced by an actuarial reduction factor to take account of the fact that the pension is being paid earlier than expected, and so will be in payment for a longer period. The actuarial reduction factors are calculated by the actuary and are revised from time to time. Example Chris decides that he would like to retire at age 60. He has 38 years membership and his final pensionable salary is 24,000 His benefits are calculated as follows: Pension (38 100) x 24,000 = 9,120 x (actuarial reduction factor) = 7,633 Lump sum 3 x (38 100) x 24,000 = 27,360 x (actuarial reduction factor) = 24,542 Total reduced pension: 7,633 Total reduced lump sum: 24,542 Premature Retirement Compensation Scheme (PRCS) At its discretion, the University of York operates a PRCS scheme. This means that, in certain circumstances, and only by prior agreement with the University, a member may be able to retire from the age of 55 with no (or limited) reduction to their pension. The PRCS also gives the University the discretion to award additional pension. The award of additional pension or the waiving of early retirement reductions are entirely at the University s discretion, and the Trustee has no influence in this matter. As the University s permission is required in order to access the PRCS, estimates of your benefits payable under the PRCS are not available unless an award has been made. Late retirement You are able to continue to work after the Fund s Normal Pension Age of 65. If you continue to work you are also able to continue contributing to the Fund, provided you have not reached the overall membership limit of 40 years. Your pension will normally be paid from the date you leave employment, and will be based on your final pensionable salary and your total membership at the date of retirement. You should note that you are not able to receive your pension and continue in employment unless your employer agrees to a phased retirement. No increases are applied to your benefits to take account of it being drawn later than the Fund s Normal Pension Age. You must draw your benefits in the Fund before your 75th birthday and cannot contribute beyond this date. 14

15 Phased retirement Phased retirement is a type of retirement which potentially allows you to draw your pension and tax free lump sum whilst continuing to work. The actual provisions regarding phased retirement are for each employer to set out in a separate policy. Not all employers in the Fund currently offer phased retirement. You may ask the Pensions Office or your employer for further details. Ill-health retirement Sometimes, your circumstances will be such that you may not be able to continue working in your job or perform the duties of a job with comparable demands until the Fund s Normal Pension Age because of ill-health or incapacity. In these circumstances, there is provision in the Fund s rules for you to be able to access your pension benefits early on an unreduced basis. If you are under the age of 63½, then you can also be awarded the additional membership that you could have built up until that age on the accrual rate that you on are at the time (again, the Fund s overall 40 year membership limit applies). You can qualify for an ill-health retirement at any age you do not need to have reached the Fund s minimum pension age in order to access your retirement benefits on health grounds. University of York Pension Fund However, retirement on the grounds of ill-health requires the University of York to agree that your ill-health or incapacity does mean that you can no longer do your job or any other comparable job. The Trustee must also agree to you receiving an ill-health or incapacity pension and may require medical evidence and doctor s reports to make its determination about your eligibility. You must also have five years membership of the Fund to qualify for an ill-health retirement. Example The University has recommended that Linda is eligible to retire on the grounds of ill-health, and the Trustee has agreed. Linda is 56 years old, and has built up 35 years membership in the Fund. Her final pensionable salary upon retirement is 16,000. As Linda is retiring on ill-health grounds she can be awarded membership equivalent to that which she would have built up by 63½. Linda could have built up a further 7½ years membership by 63½, but this would take her over the 40 year membership limit. The most membership she can therefore be awarded is 5 extra years. Linda s annual pension would therefore be calculated: (40 100) x 16,000 = 6,400 ill-health pension Linda would also receive a one-off lump sum calculated: 3 x (40 100) x 16,000 = 19,200 ill health lump sum. An ill-health pension is normally payable for the rest of your life. However, if you are receiving an ill-health pension and your health improves, the Trustee has the discretion to suspend or reduce your pension in the period up to your Normal Pension Age. As the University s recommendation is required in order for you to receive an ill-health pension, estimates are not available. 15

16 University of York Pension Fund Serious ill-health If a member who has not yet received their pension is diagnosed with a life-expectancy of less than one year, the Trustee may, if the member requests it, pay the member s benefits in the form of a oneoff lump sum instead of an on-going ill-health pension. The Trustee and University must receive and be satisfied with medical evidence provided. Payment of a serious ill-health lump sum does mean that there is no lump sum payable in the event of the member s death, but does not extinguish any entitlement to an on-going spouse s, registered civil partner s or child s pension that may be payable. Commutation Where a member reaches age 55 and has a very small pension, they may request that, instead of receiving a small monthly pension, they receive a one-off lump sum instead. The Trustee is able to decline this request. There are strict criteria that must be met in order to receive a commutation, which are imposed and regulated by HMRC. The payment of a one-off lump sum extinguishes all the member s entitlement to benefits in the Fund, including any lump sum that may be payable in the event of the member s death, and any entitlement to an on-going spouse s, registered civil partner s or child s pension that may be payable. Part of the lump sum is taxable. If this option is potentially available to you when you retire, the Pensions Team will let you know. Tax-free lump sum Your standard package of benefits includes a tax-free lump sum. However, you are able to give up some of your pension for a bigger lump sum. If you have paid MPAVCs then you may also be able to take all or some of your AVC fund as tax-free cash. The amount of tax-free lump sum that you are able to take from a pension scheme is limited by HMRC. The amount of lump sum that you receive for each pound of pension that you commute is different depending on the age that you are when you retire, and is determined by a table of cash factors which are calculated by the Actuary and periodically reviewed by the Trustee. The formula for calculating the additional tax-free lump sum that you are able to receive is: (Standard Pension x 20) - (3 x standard lump sum) 3 + (20 cash factor) The formula is different if you have paid MPAVCs, and other limits may apply which can reduce the amount of tax-free cash that you are able to take from the Fund. 16

17 Example Matthew retires at age 65 with a pension of 10,000 a year, and a standard lump sum of 30,000. The cash factor at age 65 is currently To calculate the additional tax-free lump sum that Matthew is able to take: ( 10,000 x 20) - (3 x 30,000) (3 + ( )) = 24,420 This increases Matthew s total scheme lump sum to: 30, ,420 = 54,420 In order to receive this additional tax-free lump sum, Matthew must commute some pension. This is calculated as: 24, = 1,836 pension per year that Matthew must commute. Matthew s reduced pension would therefore be: 10,000-1,836 = 8,164 pension per year University of York Pension Fund General information about receiving a Fund pension lpensions are paid in arrears on the last working day of each month. lyour first pension payment is payable the month after your last payment of salary. lincome tax is deducted at source using a tax code supplied by HMRC. lni is not payable on pension income. lincreases on pensions in payment are payable at the discretion of the University and Trustee. lwhere an increase is payable, it is payable from 1 April, based on the rate of CPI inflation in the preceding September, subject to a cap of 2.5% p/a lthe University and Trustee may, at their discretion, decided to pay full CPI inflation increases where CPI exceeds 2.5%. lif an increase is payable, it applies at the same rate to member s, spouse s, registered civil partner s or children s pensions. lyour first increase will be calculated pro-rata according to the number of completed months of retirement between your date of retirement and the following April. lbenefits in payment cannot otherwise be increased. 17

18 University of York Pension Fund Leaving the Fund If you leave your job before you are able to retire then there are a number of options available, which are explained below. Deferred benefits If you leave the Fund with more than two years membership, have had a transfer of benefits into the Fund or have more than three months membership and have contributed through a salary exchange scheme, then you will be eligible to receive a deferred benefit. Increases to benefits in deferment are applied at the discretion of the Trustee. If an increase is awarded, it will be applicable from 1 April each year. Where increases are granted your deferred pension will be increased each year by the lower of the rate of inflation* or 2.5%. *Inflation is currently based on the rate of CPI inflation announced during the September before the increase is applied in April. Transferring out of the Fund If you enter another employer s pension scheme you may be able to transfer your deferred benefits from the University of York Pension Fund. A request in writing will be required and you will be provided with a Cash Equivalent Transfer Value (CETV) which is normally guaranteed for three months. If you wish to proceed with the transfer, you will be required to reply within the guarantee period. Legally you are only entitled to request a CETV once every twelve months. If an additional CETV is required within twelve months of your previous request, you may be charged for it. The CETV is the amount calculated by the Actuary, using assumptions considered reasonable and taking account of current market conditions, to have the same value as your preserved benefits, allowing for increases both before and after the benefits become payable. Currently, the CETV would include the value of any discretionary benefits that you might receive if you kept your pension in the Fund. You and your dependants will cease to be entitled to any benefits from the Fund after the transfer takes place. Refund of contributions If you have less than two years membership and have not contributed through a salary exchange scheme, then you may be able to receive a refund of your contributions, less the tax relief that you have received on your contributions. If this option is available to you, you will be notified by the Pensions Office when you leave the Fund. 18

19 Opting out of the Fund You may opt out of the Fund by obtaining a form to do so from the Pensions Office. You must give at least one month s notice of your decision to opt out. If you later decide that you would like to rejoin the Fund, you will only be able to re-join at the University s discretion and subject to the normal rules of membership of the Fund. You will only be able to re-join after serving the appropriate notice period and your terms and conditions of membership may be varied. If you opt out, but your employment continues then you will not be able to draw your deferred benefits until your employment has ended. University of York Pension Fund 19

20 University of York Pension Fund Benefits for dependants As well as a pension for you, the Fund provides a range of benefits for your dependants in the event of your death. These benefits are part of your ordinary scheme membership and are paid for through the cost of your normal contributions. There is no additional cost to you for any of these benefits. Lump sum life cover In some circumstances, the University of York Pension Fund provides for a lump sum to be paid in the event of your death. The amount payable is dependent on your status in the Fund at the time of your death. lif you die whilst contributing to the Fund and are under 65: the amount payable is three times the amount of your actual salary at the date of your death. lif you die whilst contributing to the Fund and are 65 or over: the amount payable is equal to five years worth of pension calculated at your date of death. lif you die whilst your benefits are deferred and are under 65: the amount payable is the balance of your MPAVC account (if any). If you have no MPAVCs, no lump sum is payable in these circumstances. lif you die whilst your benefits are deferred and are 65 or over: the amount payable is equal to five years worth of pension calculated at your date of death. lif you die whilst receiving a pension: the amount payable is the balance of five years pension. If you have drawn your pension for more than five years, no lump sum is payable. You are able to inform the Trustee of who you would like this payment to be made to by completing a nomination form which is available on the Fund s website. Whilst the Trustee retains the discretion of who to pay, your wishes will normally be taken into account. You can nominate one person, or can split the amount payable between a number of beneficiaries. You can even nominate a charity to receive some or all of the lump sum. You can also change your nomination at any time if your circumstances change. If you have not completed a nomination form, the Trustee will make any payment due to your dependants, relatives or estate as it sees fit. It is important to keep your nomination up to date and you are asked to re-complete a nomination form every 3 5 years, even if your wishes haven t changed. You should note that this lump sum payment is subject to medical underwriting and is only payable to the extent that it is underwritten by the Fund s insurers. Some exclusions and limitations apply; the latest version of these is detailed on our website. Pensions for spouses or registered civil partners If you are married or in a registered civil partnership, then an on-going pension may be payable to your partner for the rest of their life in the event of your death. The pension that may be payable to a spouse or a registered civil partner is different depending upon whether you die whilst in receipt of a Fund pension, with a deferred benefit or whilst contributing to the Fund. If your spouse or registered civil partner is more than 10 years younger than you, then any pension payable to them upon your death may be reduced. If your spouse or registered civil partner is able to receive a pension in the event of your death, then it will be payable from the day after the date of your death. The pension is paid by monthly instalments and is subject to tax deducted under PAYE. 20

21 Who counts as a spouse? A spouse is the person to whom you were married at the time that you left or retired from the Fund. Registered civil partners are treated the same as spouses in the Fund. If you die whilst contributing to the Fund and are under Normal Pension Age at your date of death, then any spouse or registered civil partner may be entitled to a pension equal to 50% of the value of the pension you have built up at the date of your death. In addition, they may also receive a pension equal to the value of 50% of the pension that you would have built up between your date of death and Normal Pension Age, based on your Tier of membership, part-time hours (if any) and final pensionable salary at the date of your death. Example Edna dies whilst contributing to the University of York Pension Fund. She is 55 years old when she dies, has built up twenty years membership in the Fund and her pensionable salary at the date of her death is 18,000. University of York Pension Fund Edna was married when she died, and so her husband Edward is able to receive a spouse s pension. Edward s spouse s pension is 50% of the pension that Edna has built up and is calculated as: ((20 100) x 18,000 = 3,600) x 50% = 1,800 Edward is also able to receive 50% of the pension that Edna would have built up by Normal Pension Age. This is calculated as follows: ((10 100) x 18,000 = 1,800) x 50% = 900 Edward s total spouse s pension is therefore 2,700 per year. If you die whilst contributing to the Fund and have reached or passed the Fund s Normal Pension Age at the date of your death, then any spouse or registered civil partner may be entitled to a pension equal to 50% of the value of the pension you have built up, based on your membership at the date of your death, and your final pensionable salary at Normal Pension Age, increased at a rate determined by the Actuary. The pension available to spouses and registered civil partners is calculated slightly differently from above depending upon whether members are deferred or retired, or under or over Normal Pension Age, when they die. Please contact the Pensions Office for more information. 21

22 University of York Pension Fund Children s pensions In the event of your death, a pension may be payable to an eligible child in addition to any spouse s or registered civil partner s pension that may be being paid. A child is deemed to be eligible to receive a child s pension if they are the legitimate, legitimated or adopted child of the member. Eligible children may qualify for a children s pension whilst they are under age 16, or whilst they are under 23 and in full-time education or vocational training approved by the Trustee. The amount payable depends upon the number of eligible children and whether or not you are married or in a registered civil partnership at the date of your death. The eligibility conditions and calculations are complex so please ask the Pensions Office if you require more information. Pensions for partners Pensions are not payable to a partner to whom you are not married or with whom you have not formed a registered civil partnership. 22

23 Divorce or dissolution of a registered civil partnership Your pension benefits are valuable and, in the event that you become divorced, or your registered civil partnership is dissolved, the courts can take them into account. The main possibilities are: lpension sharing: This is where your benefits are split, and your ex-spouse or ex-civil partner can receive a pension in their own right. The University is able to exercise its discretion as to whether the ex-spouse or ex-civil partner can receive a benefit entitlement in the Fund, or whether they must transfer this to an external provider. Your pension benefits will be permanently reduced as a result of this. learmarking: This is where a portion of your benefits is earmarked, and paid to your exspouse or ex-civil partner when they become payable to you. University of York Pension Fund loffsetting: This is where the value of your pension is offset against any other assets. For example, you can keep your pension, but your ex-spouse or ex-civil partner may receive a larger portion of the house equivalent to the value of your pension. If you are going through a divorce, or your registered civil partnership is being dissolved, your solicitor may ask you to obtain the Cash Equivalent Transfer Value (CETV) of your pension. It is important that you ask us for this quickly, as there are strict time limits that apply. When you make your request, please let us know that you require the information for the purposes of divorce or dissolution of a registered civil partnership, and whether the application with the Court has been lodged in England or Scotland. If the application has been made to a Court in Scotland, please also let us know the date of separation. You should note that charges apply for the implementation of a pension sharing order, and for the provision of information in addition to that which members are entitled to receive for free. 23

24 University of York Pension Fund Tax limits on pension saving Savings that you make to a pension scheme are generally tax-free; however, there are limits that apply to the amount that you can save and draw tax-free from a pension scheme, which are outlined in this section of the Scheme Guide. Lump sums The lump sum that can be drawn upon retirement by commuting some of your pension in addition to the standard scheme lump sum is usually tax-free. However, there is a limit to how much taxfree cash you can draw from a pension scheme, which is usually 25% of the value of your pension pot. The Pensions Office will calculate this amount for you at the time of your retirement. Annual allowance The annual allowance is a limit set by HM Revenue & Customs which gives a maximum amount that your pension can increase by within a year. The year against which the increase in your pension is tested is known as the Pension Input Period (PIP). Previously in the University of York Pension Fund, the PIP ran from 1 August to 31 July however, from 6 April 2016 the PIP was changed to run in line with tax years. The annual allowance is currently 40,000 per annum, unless your income exceeds 150,000 a year, in which case the annual allowance is reduced on a tapered basis, reducing to a minimum of 10,000 per annum for those earning 210,000 or more. If you exceed the limit in a given PIP, you may have to pay a tax charge to HM Revenue & Customs on the excess saving. Very few members of the University of York Pension Fund are expected to exceed the annual allowance but statements are sent to affected members each year. You are also able to ask the Pensions Office for a calculation if you require it. If the increase in your benefits in the University of York Pension Fund means that you do exceed the annual allowance, you are able to offset the excess against any unused annual allowance that you may have from the previous three years. If, despite this, the increase in your benefits in the University of York Pension Fund means that you still exceed the annual allowance, then you are able to ask the Trustee to pay any tax charge on your behalf. The Trustee will arrange for a reduction to be made to your benefits when you draw them to take account of this. If you do exceed the annual allowance, it is your responsibility to inform HM Revenue & Customs. Lifetime allowance The lifetime allowance is a limit set by HM Revenue & Customs and represents the maximum amount that you are able to receive tax free from approved pension schemes. When you draw benefits from a scheme, you will be provided with the details of how much of your lifetime allowance those benefits have used up. You will be asked for information about other pension benefits that you may have when you ask to receive your benefits in the University of York Pension Fund. If you do exceed the lifetime allowance, then you will have to pay extra tax on the excess over the lifetime allowance. The lifetime allowance is currently 1 million, but is expected to increase in line with the consumer prices index from 6 April 2018 onwards. 24

25 Protections If you have any form of enhanced, fixed, individual or primary protection in place, you should let the Pensions Office know immediately. Governance The assets of the Fund are held under Trust and are kept separately from the monies of the University of York. They are managed by the University of York Pension Trust Limited, which is also responsible for the correct payment of benefits and for determining the Fund s rules. The Rules of the Fund define how the Fund is operated and the benefits provided by it. They are prepared by the Fund s solicitors and approved by the Trustee. The rules are updated periodically by Deeds of Amendment, and are supplemented by actuarial factors and guidance. They operate in conjunction with the Definitive Trust Deed (under which the Fund is established) and Articles of Association (which define the constituency of the Trustee Company and the role of its Directors). The current version of the Rules is available for viewing on the University s pensions website. Please note that if you began receiving a pension from the Fund (or left and have a deferred benefit), before the date that the current version of the rules became effective from, then the current version of the rules does not usually apply to you. Instead, the version of the rules that was in force at the time of your retirement/leaving would apply. Those rules are not generally published on the website, but are available for inspection, upon your written request to the Fund s administrators in the Pensions Office. University of York Pension Fund The Fund is also subject to overriding UK legislation and the requirements of HM Revenue & Customs. The Fund is approved by Her Majesty s Revenue & Customs (HMRC). The valuable tax relief applicable to the Fund necessitates its continued approval by HMRC. One of the conditions of HMRC approval is that certain levels of benefit and contributions are not exceeded. If this should happen in your case, you will be notified and your benefits and/or contributions adjusted appropriately. The limits and restrictions imposed by HMRC override any statement made in this Guide. All references in this booklet to tax relief are based on current legislation which may of course change. Any change would override anything said in this booklet. Employers A number of the University s subsidiary companies are also associated employers of the University of York Pension Fund. Employees of those companies are also eligible to apply to join the University of York Pension Fund. The table below shows the Fund s participating employers and the date that they began to participate in the Fund. The University of York: 1 January 1965 York Conferences Ltd: 20 August 2002 York EMC Services (2007) Ltd: 11 January 2007 YHEC: 1 September 2003 York Science Park Ltd: 15 June

26 University of York Pension Fund The terms of membership in the Fund for employees of subsidiary companies are identical to terms on which employees of the University of York participate, except that the Trustee has the discretion to exclude any uncharacteristic pay increases received in the three years before retirement or leaving from the calculation of final pensionable salary. The rules of the Pension Fund do not allow membership of the Fund from subsidiary companies to exceed one quarter of the total membership of the Fund. The Directors of the Pension Trust have decided not to agree to the participation of any further employers in the Fund for the present time. Committees The University of York Pension Trust is run by a Board of Directors. The Directors meet three times a year, and also by exception when required. The Trust has nine Directors, one of whom is independent. Four of the Board of Directors are nominated by the University of York and are Employer Nominated Directors. The remainder of the Board of Directors are Member Nominated Directors. Member Nominated Directors (MNDs) Legislation requires that at least a third of Directors of a pension scheme must be Member Nominated Directors (MNDs). The Fund has established terms by which a MND can be appointed and remain in office. The term of office for a MND is four years, and this can be renewable several times. Three of the MNDs will preferably come from the active membership, and one from the pensioners (Pensioner Member Nominated Director PMND). If an active member is not available, then MNDs can come from other sources such as deferred members, or from nonmembership sources, if the University consents. MNDs are elected by ballot if there are more candidates than there are vacancies. A separate ballot will be held for the PMND should there be more than one candidate for that position. If there are no nominations for a PMND, the position can be filled by an elected MND but each subsequent vacancy will be for a PMND until the position is filled. Joint Negotiating Sub-Committee on the Modification of the Pension Fund Recommendations for alterations and additions to the rules are made to the Trustee by a Joint Negotiating Sub-Committee. The Joint Negotiating Sub-Committee is comprised of Employer and Employee representatives, and meets at least three times each year. 26

27 Technical detail The University of York Pension Fund is a salary-related, tax-approved occupational pension scheme. You may not assign, charge or otherwise dispose of your benefits under the Fund. Data Protection Act 1998 Your details are held on computer and used by the Trustee, its advisers and administrators in order to calculate and pay benefits, for statistical purposes, for reference purposes and to administer the Fund as a whole. This data may be shared with or transferred to your employer or third parties (for example insurers, pension scheme administrators or banks) providing services in connection with the administration of the Fund. Details of its use has been registered with the Information Commissioner as required under the Act which sets out certain principles concerning the processing of data relating to individuals, with which the Trustee must comply. By completing the Fund s application form you gave your consent to the holding and processing of the data relating to you. If your circumstances change at any time in the future please inform the Pensions Office as soon as possible in order to ensure that all member information remains accurate. If you have any queries concerning the Trustees compliance with the Data Protection Act, please contact the Pensions Office. University of York Pension Fund Disclosure Legislation places a duty on the Trustee of the University of York Pension Fund to disclose certain information to members. Much of that information is covered in this Guide. Other information which the Trustee is required to disclose upon request is already published on the Fund s website. Copies of documents which the Trustee is required to disclose which are not already publicly available can be requested in writing from the Pensions Office. The Fund produces an Annual Report, which is sent to all contributing members of the Fund. It is also available for download from the Fund s website. In addition, the Rules of the University of York Pension Fund and other technical documents regarding its administration are also available for download from the Fund s website. 27

28 University of York Pension Fund Compliments, complaints and useful contacts We strive to deliver the highest standard of service to our members, and we hope that you will always be pleased with the service that you receive from the Pensions Office. However, we recognise that sometimes things go wrong. Should this happen, please contact us as soon as possible. It is usually possible to resolve any concerns informally. Internal Dispute Resolution Procedure (IDRP) If your concerns are unresolved after having made an informal enquiry, then you can use the Fund s Internal Dispute Resolution Procedure (IDRP). The IDRP is a two stage process. In the first instance, and within six months of the event about which you wish to complain, or within six months of you having reasonably known about the event, you must address your complaint to: Miss G Hamilton, Company Secretary Heslington Hall H/B30 York North Yorkshire YO10 5DD In normal circumstances you will receive a response within two months. If your complaint is not resolved, you are able to refer the complaint to the Trustee within six months of the date of the response from Miss Hamilton. They will reply directly to you, again, where possible, within two months. You can find a full copy of the Fund s IDRP on the website, which includes a form on which you can register your appeal. Compliments We are always happy to receive your feedback, and if you have received excellent service from the Pensions Office, please do contact us and let us know. Both positive and negative feedback can help us to improve our service. 28