Pensioner and deferred member briefing 2015

Transcription

1 22 June 2015 Pensioner and deferred member briefing 2015 David Williams (EAPF) & Natasha Revill (Capita)

2 Agenda Our pension Funds Governance Celebrating 10 years of Responsible Investment Summary of benefits Topical changes Personal allowances and income tax Death benefits Communications

3 Our pension Funds

4 Our pension Funds

5 Governance

6 Our Pension Funds Environment Agency Pension Fund (EAPF) EAPF Employers Pensions Committee/ Pension Board Environment Agency Natural Resources Wales Investment Sub-Committee Shared Services Connected Limited Future New Employers? Executive Director of Finance & Pension Fund Management Team Other EAPF suppliers Capita (Our Pension Administrators) Member data Retirements, joiners, leavers Interfaces

7 Our pension Funds Investment Performance The fund had a successful year in performance terms. The return on our assets was 15.1%, well ahead of our actuary s assumptions. The Fund outperformed its strategic benchmark by 0.1% (after fees), a reasonable result in a year which was more challenging for our managers. Over three years the fund has returned 12.3% annualised 1.4% above benchmark which is a very strong result. The total return of the Fund over the year and over three years to 31 March 2015 is as follows: Financial Performance 2015 % 2014 % 1 year Fund performance Benchmark performance Active fund relative performance year Fund performance Benchmark performance Active fund relative performance

8 Celebrating 10 years of RI

9 Summary of pension benefits

10 Summary of pension benefits Pension for life increasing in line with inflation Optional lump sum at retirement Pension for dependants All the benefits that you have built up are protected in statute

11 Retirement benefits Type Age Consent required Normal Pension Age (NPA) State Pension Age (SPA) No Early Payment 60 to SPA No Early Payment 55 to 60 Yes - if left before 1 April 2014 Ill Health Any Employer Late SPA to 75 No If you take up new employment you must tell the Pension Fund, however your pension will not usually be affected

12 Cost of living increases LGPS pension and deferred lump sum Pension increases (currently CPI) Guaranteed Minimum Pension (GMP) Pension increases (currently CPI) shared between EAPF and State pension State pension Higher of Pension Increases (currently CPI), average earnings or 2.5% (triple lock guarantee) The annual pension increase this year is 1.2% from 6 April 2015

13 Calculation of pensions increases PI Example 7 April April % Basic Pension p/m p/m PI on Basic 1.20 p/m Pre 88 GMP p/m p/m Post 88 GMP p/m p/m Post 88 GMP PI 1.20 p/m TOTAL monthly pension p/m p/m

14 Topical changes

15 Freedom and choice 2014 Budget announced changes to defined contribution schemes from April 2015 you will have more freedom in how you use your pension pot provided: You have a defined contribution pension pot from a previous employment and you are not already drawing pension benefits You are over 55 Your EAPF pension is called a defined benefit arrangement and is unaffected by these changes.

16 Freedom and choice deferred members From April 2015, anyone wishing to transfer their EAPF benefits to a defined contribution scheme will need to: Take independent advice from a FCA authorised advisor Pay for this financial advice if the value of your pension pot is 30,000+ Provide evidence to the Fund that you have taken mandatory advice There is no legal requirement to take financial advice for pension pots under 30,000 but we would recommend that this advice is sought.

17 Trivial commutation Member may give up pension entitlement for a one off tax free lump sum This applies to new and existing pensioners 25% of pension value paid tax free Strict eligibility criteria applies Capital value of LGPS and other pension rights must be 30,000 or less Eligibility criteria Age 55 or more (male with GMP must be 65 or more & Female with GMP must be over 60) Meet ill-health conditions Must have some lifetime allowance available Must extinguish all entitlement within the LGPS A trivial commutation lump sum must not have been paid by another scheme or if so, there is a 12 month window to commute all benefits

18 Trivial commutation - example Female, age 63 already in receipt of pension 750 annual pension (female, age 63 factor = 18.11) 375 spouse s pension (female, age 63 factor = 1.20) Capital value of LGPS & other pension rights = 29,000 Trivial commutation lump sum payment can be made ( 750 x 18.11) + ( 375 x 1.20) = 14, Full amount subject to tax

19 De minimis payments De minimis payment must be 10,000 or less Only EAPF rights need to be considered Strict eligibility criteria applies Eligibility criteria Ceased active membership on/after 1 April 2008 Age 55 or more (if male with GMP must65 or more & Female with GMP must be over 60) Must not be a controlling director/sponsoring LGPS employer (or connected to such a person) Must extinguish all entitlement within the LGPS Must not have transferred out of LGPS within last 3 years

20 De minimis payment - example Male, age 65 already in receipt of pension 500 annual pension (male, age 65 factor = 16.30) 250 spouse s pension (male, age 65 factor = 3.41) Meets de minimis criteria 500 x 16.30) + ( 250 x 3.41) = 9, De minimis payment can be made (less than 10,000) Full amount subject to tax

21 Personal allowances and Income tax

22 Income tax All income is taxable including: State pension Occupational or personal pension Employment income Interest on savings etc Investment dividends The amount you can earn before you pay tax is shown on the next slide.

23 Personal Allowances & Income Tax Personal allowance 2015/16 Income limit Basic 10, ,000 Born between 6/4/38 & 5/4/48 10, 600* 27,700 Born before 6/4/38 10,660* 27,700 *These allowances have been frozen until they align with the basic allowance Income Tax Rate 2015/16 Starting rate for savings 10%* * 0-5,000 Basic rate 20% 0 31,785 Higher rate 40% 31, ,000 Additional rate 45% Over 150,000 **This rate refers to savings income only

24 Death benefits

25 Death Grants Date of Leaving 01/04/1974 to 31/03/2008 Deferred members equivalent to scheme lump sum (usually 3 x deferred annual pension) 01/04/2008 or after 5 x deferred annual pension Pensioner members 01/04/1974 to 31/03/ /04/1998 to 31/03/2008 On or after 01/04/2008 Dependant on: But not always payable Period of membership Reason for retirement Age at date of retirement Pay at leaving 5 x pension less any pension already paid 10 x pension less any pension already paid DEATH GRANTS CANNOT BE PAID AFTER AGE 75

26 Nominating beneficiaries Nominate who you wish to receive a death grant in the event of your death Not legally binding, but the Environment Agency Pensions Committee will endeavour to abide by your wishes May enable payment to be made to your loved ones more quickly Payments made in this manner are not subject to inheritance tax Forms available at

27 Survivor s pensions Payable to your Spouse (including same-sex marriages) Civil Partner Cohabiting Partner - Leavers after 31 March 2008 only - Leavers between 1 April 2008 and 31 March 2014 must nominate their partner Eligible children Up to age 23 in full time education Any age if unable to work due to permanent incapacity or impairment

28 Survivor s pensions Spouse / partner normally 1/160 X Your membership* up to 31/03/2014 X Your final pay 49/160 X your pension on or after 1/4/14 Children normally ½ spouse / partner s pension Higher if no spouse Payable for life Cost of living increases (Currently CPI) *Survivor s benefits may not be based on all of your membership

29 Your State pension The 2014 Pensions Act introduces a new flat rate State pension from retirees after April 2016: Need 35 qualifying years for a full pension Flat rate State pension of Actual amount will be confirmed in Autumn 2015 It applies to: Women born after 5 April 1953 Men born after 5 April 1951 This does not apply to anyone already receiving a pension in payment To calculate or forecast your State pension contact

30 State pension Increase in minimum pension age The government will amend the minimum age for claiming your pension from 55 to 57 in The minimum retirement age going forward is likely to be ten years before State Pension Age The State Pension Age is set to rise to 67 by 2026

31 Communication

32 Communication We have developed a new Brand & Style to help members identify with the Pension Fund We have restructured the website to make it easier to navigate and find information easily Webinars have been introduced for the first time so that it allows us to run presentations with contributing members remotely, right across the country Feedback from members the information is clear and well presented videos are a good way of presenting the difference between old and new and gives me a good grasp of what I m getting the Retirement Illustrator is an excellent addition and will make it easier for me to make a personal forecast worked examples in the factsheets are relevant and helpful

33 An increase in our EAPF Online registrations which is up from 14% to 20% over the last year Our member helpline has seen a dramatic decrease by 37% in call volume since the launch of the new website, and this is largely attributed to the improved navigation Our member engagement work proved particularly successful with 1071 attendees providing positive feedback on content and the presentation style. 60% of the attendees responded to our evaluation questionnaire and perhaps the most revealing aspect of the exercise was that 48% of respondents preferred this methodology, 19% preferred face to face presentations with 33% having no preference

34 How A new has platform my pension for member changed engagement since April 2014? A redesigned pensions portal (HOP) accessible straight from eapf.org.uk

35 Contact us Please contact us if you: Move house Change your bank account Have a change in circumstances such as marriage/divorce or enter/dissolution a civil partnership Please make sure your dependents/carer know they should contact Capita with details of: Your death they should provide original/certified copy of death certificate You becoming incapable of looking after your own affairs they should provide copy of Enduring Power of Attorney

36 How has my pension changed since April 2014? Any questions?

37 Disclaimer This briefing has been compiled by Capita, unless stated otherwise on individual slides and is based on our understanding of legislation and events on 22 June The figures and situations quoted in all of the slides are merely examples and are not intended to constitute advice, nor should they be considered a substitute for specific advice in relation to your individual circumstances. Capita accepts no liability for errors or omissions. If you require advice on this subject you should contact an independent financial advisor.