A Guide to your 2017 Annual Benefit Statement - Deferred members

Transcription

1 A Guide to your 2017 Annual Benefit Statement - Deferred members

2 Your annual benefit statement provides information about the benefits you have in the BBC Pension Scheme as at 1 April This guide supplements the information provided in the benefit statement. If you would like more detailed information please refer to the member handbook for your section of the Scheme. If a term is shown in bold, a specific definition will pop up. Click on your section of the Scheme: Old Benefits New Benefits Career Average Benefits 2006 Career Average Benefits 2011

3 Old Benefits members Deferred pension at date of leaving As an Old Benefits member your pension is calculated as follows: final pensionable salary x (pensionable service up to date of leaving + any credits) = pension 60 If you paid Additional Voluntary Contributions (AVCs) you will receive a separate statement from the AVC provider. The normal pension age for Old Benefits members is age 60. Deferred pension as at 1 April 2017 Your deferred pension increases annually on 1 April by the rise in the Retail Prices Index (RPI) as at the previous 31 December or 10%, whichever is the lower. The first increase will be proportionate for the number of complete months between date of leaving and the following 1 April. The deferred pension as at 1 April 2017 includes all the increases since your date of leaving. If you divorced and had a pension sharing order your pension at 1 April 2017 may be lower than your pension at date of leaving. This is because we have adjusted your pension in accordance with the Court s instructions.

4 Claiming your pension - Early payment Old Benefits members You can ask for your pension to be paid before your normal pension age due to ill health or from your 55th birthday. For an early payment quotation, please contact the pension service line. Early payment is subject to the agreement of the Trustees and because your pension will be in payment for a longer period of time, your pension will be reduced for early payment. The percentages currently in use are as follows: Age Reduction to pension 24% 20% 16% 11% 6% 0% between birthdays the reduction is proportionate The factors are reviewed at the start of each calendar year and are subject to change. In cases of ill health, the Trustees have discretion to waive some or all of the early payment reduction. You will need to provide your doctor s details so we can write to them for a report on your fitness for work and you may need to see an independent doctor for an assessment. Claiming your pension - Late payment The normal pension age for the Old Benefits section is 60. However, we appreciate that you may not want to claim your pension then. The pension will continue to receive increases annually on 1 April and it will also receive a late payment uplift which is currently 6% per year. A pro-rata uplift will apply for a part year.

5 Claiming your pension - Options Old Benefits members When you claim your pension you may be able to exchange some of your pension for a tax free cash lump sum and receive a smaller pension. There are limits to the amount of tax free cash you can receive and we will quote the maximum allowable when we send you a retirement quotation. As an Old Benefits member, if you do not have a spouse, civil partner or an adult dependant you can receive a partial refund of your contributions plus interest instead of a dependant s pension. This would be included in any tax free cash you elect to receive. Please tell us if your would like details of this option when you request your pension quotation. Death Benefits - In deferment If you die before your pension is paid there would be a pension payable to your spouse, civil partner or nominated dependant. Pensions are also payable to your children up to their 18th birthday and can continue up to age 23 while in full time education. If you are unmarried, not in a civil partnership or separated, you can nominate a dependant to receive benefits similar to those of a spouse. A dependant is someone who is financially dependant on you or dependant on you because of physical or mental impairment. He or she must be at least 18 years old. You can nominate a dependant via mypension online or by completing and returning the form on our website, bbc.co.uk/mypension. If you do not have a spouse, civil partner or nominated dependant the Trustees would make a lump

6 sum payment of five times your deferred pension. If this situation applies to you, please update your Expression of Wish by completing and returning the form on our website, bbc.co.uk/mypension. Death Benefits - In payment If you die once your pension is in payment there would be a pension payable to your spouse, civil partner or nominated dependant. Pensions are also payable to your children up to their 18th birthday and can continue up to age 23 while in full time education. Your pension payments are guaranteed for five years so if you were to die two years after your pension started, the balance of the remaining three years payments would be paid as a lump sum. If you are not married but live with someone as if you are, it is important that you let the Trustees know. You can nominate a dependant via mypension online or by completing and returning the form on our website, bbc.co.uk/mypension. More information You can choose to transfer the benefit to another registered pension arrangement either in the UK or overseas at any time before your pension starts. More details can be found here. There is a limit on the amount of pension you can build up without incurring a tax charge. This is called the Lifetime Allowance. More information about the Lifetime Allowance can be found here. If you need any help or support our pension service line on is available from 08:30 to 17:30 Monday to Friday, excluding bank holidays. back to contents Old Benefits members

7 New Benefits members Deferred pension at date of leaving As a New Benefits member your pension is calculated as follows: final pensionable salary x (pensionable service up to date of leaving + any credits) = pension 60 If you paid Additional Voluntary Contributions (AVCs) you will receive a separate statement from the AVC provider. The normal pension age for New Benefits members is age 60. Deferred pension as at 1 April 2017 Your deferred pension increases annually on 1 April by the rise in the Retail Prices Index (RPI) as at the previous 31 December or 5%, whichever is the lower. The first increase will be proportionate for the number of complete months between date of leaving and the following 1 April. The deferred pension as at 1 April 2017 includes all the increases since your date of leaving. If you have divorced and had a pension sharing order then your pension at 1 April 2017 may be lower than your pension at date of leaving. This is because we have adjusted your pension in accordance with the Court s instructions.

8 Claiming your pension - Early payment New Benefits members You can ask for your pension to be paid before your normal pension age due to ill health or from your 55th birthday. For an early payment quotation, please contact the pension service line. Early payment is subject to the agreement of the Trustees and because your pension will be in payment for a longer period of time, your pension will be reduced for early payment. The percentages currently in use are as follows: Age Reduction to pension 24% 20% 16% 11% 6% 0% between birthdays the reduction is proportionate The factors are reviewed at the start of each calendar year and are subject to change. In cases of ill health, the Trustees have discretion to waive some or all of the early payment reduction. You will need to provide your doctor s details so we can write to them for a report on your fitness for work and you may need to see an independent doctor for an assessment. Claiming your pension - Late payment The normal pension age for the New Benefits section is 60. However, we appreciate that you may not want to claim your pension then. The pension will continue to receive increases annually on 1 April and it will also receive a late payment uplift which is currently 6% per year. A pro-rata uplift will apply for a part year.

9 Claiming your pension - Options New Benefits members When you claim your pension you may be able to exchange some of your pension for a tax free cash lump sum and receive a smaller pension. There are limits to the amount of tax free cash you can receive and we will quote the maximum allowable when we send you a retirement quotation. Death Benefits - In deferment If you die before your pension is paid there would be a pension payable to your spouse, civil partner or nominated dependant. Pensions are also payable to your children up to their 18th birthday and can continue up to age 23 while in full time education. If you are unmarried, not in a civil partnership or separated, you can nominate a dependant to receive benefits similar to those of a spouse. A dependant is someone who is financially dependant on you or dependant on you because of physical or mental impairment. He or she must be at least 18 years old. You can nominate a dependant via mypension online or by completing and returning the form on our website, bbc.co.uk/mypension. If you do not have a spouse, civil partner or nominated dependant the Trustees would make a lump sum payment of five times your deferred pension. If this situation applies to you, please update your Expression of Wish by completing and returning the form on our website, bbc.co.uk/mypension.

10 Death Benefits - In payment New Benefits members If you die once your pension is in payment there would be a pension payable to your spouse, civil partner or nominated dependant. Pensions are also payable to your children up to their 18th birthday and can continue up to age 23 while in full time education. Your pension payments are guaranteed for five years so if you were to die two years after your pension started, the balance of the remaining three years payments would be paid as a lump sum. If you are not married but live with someone as if you are, it is important that you let the Trustees know. You can nominate a dependant via mypension online or by completing and returning the form on our website, bbc.co.uk/mypension. More information You can choose to transfer the benefit to another registered pension arrangement either in the UK or overseas at any time before your pension starts. More details can be found here. There is a limit on the amount of pension you can build up without incurring a tax charge. This is called the Lifetime Allowance. More information about the Lifetime Allowance can be found here. If you need any help or support our pension service line on is available from 08:30 to 17:30 Monday to Friday, excluding bank holidays. back to contents

11 Career Average Benefits 2006 members Deferred pension at date of leaving As a CAB 2006 member you build up a block of pension for each year (or part year) that you were an active member. In the three years of her CAB 2006 membership, Kate s pensionable salary is 30,000, 30,300 and 30,603 respectively. During that time, the discretionary increases awarded each year were 2% and 1.5% respectively. Increase of 1.5% x = 7.67 p.a. Increase of 2% x = p.a. Increase of 1.5% x = 7.59 p.a. The diagram shows the build up of Kate s pension. 1.67% x 30,000 = p.a. 1.67% x 30,300 + = p.a % x 30,603 = p.a. Year 1 Year 2 Year 3 The total deferred pension is 1, p.a. The normal pension age for CAB 2006 Benefits members is age 65.

12 Deferred pension as at 1 April 2017 CAB 2006 members At the end of the following Scheme year, and annually thereafter, the BBC and the Trustees will jointly consider increasing each block of pension in line with price inflation. Increases are discretionary and subject, amongst other things, to the Scheme s investments performing in line with expectations. Once awarded, increases cannot be reduced. The deferred pension as at 1 April 2017 includes all the increases since your date of leaving. If you have divorced and had a pension sharing order then your pension at 1 April 2017 may be lower than your pension at date of leaving. This is because we have adjusted your pension in accordance with the Court s instructions. Claiming your pension - Early payment You can ask for your pension to be paid before your normal pension age due to ill health or from your 55th birthday. For an early payment quotation, please contact the pension service line. Early payment is subject to the agreement of the Trustees and because your pension will be in payment for a longer period of time, your pension will be reduced for early payment. The percentages currently in use are as follows: Age Reduction to pension 46% 43% 40% 36% 32% 28% 24% 18% 12% 6% 0% between birthdays the reduction is proportionate The factors are reviewed at the start of each calendar year and are subject to change.

13 In cases of ill health, the Trustees have discretion to waive some or all of the early payment reduction. You will need to provide your doctor s details so we can write to them for a report on your fitness for work and you may need to see an independent doctor for an assessment. Claiming your pension - Late payment The normal pension age for the CAB 2006 section is 65. However, we appreciate that you may not want to claim your pension then. The pension will continue to receive increases annually on 1 April and it will also receive a late payment uplift which is currently 6% per year. A pro-rata uplift will apply for a part year. Claiming your pension - Options When you claim your pension you may be able to exchange some of your pension for a tax free cash lump sum and receive a smaller pension CAB 2006 members There are limits to the amount of tax free cash you can receive and we will quote the maximum allowable when we send you a retirement quotation.

14 Death Benefits - In deferment CAB 2006 members If you die before your pension is paid there would be a pension payable to your spouse, civil partner or nominated dependant. Pensions are also payable to your children up to their 18th birthday and can continue up to age 23 while in full time education. If you are unmarried, not in a civil partnership or separated, you can nominate a dependant to receive benefits similar to those of a spouse. A dependant is someone who is financially dependant on you or dependant on you because of physical or mental impairment. He or she must be at least 18 years old. You can nominate a dependant via mypension online or by completing and returning the form on our website, bbc.co.uk/mypension. Death Benefits - In payment If you die once your pension is in payment there would be a pension payable to your spouse, civil partner or nominated dependant. Pensions are also payable to your children up to their 18th birthday and can continue up to age 23 while in full time education. If you are not married but live with someone as if you are, it is important that you let the Trustees know. You can nominate a dependant via mypension online or by completing and returning the form on our website, bbc.co.uk/mypension.

15 More information CAB 2006 members You can choose to transfer the benefit to another registered pension arrangement either in the UK or overseas at any time before your pension starts. More details can be found here. There is a limit on the amount of pension you can build up without incurring a tax charge. This is called the Lifetime Allowance. More information about the Lifetime Allowance can be found here. If you need any help or support our pension service line on is available from 08:30 to 17:30 Monday to Friday, excluding bank holidays. back to contents

16 Career Average Benefits 2011 members Deferred pension at date of leaving As a CAB 2011 member you build up a block of pension for each year (or part year) that you were an active member. In the three years of her CAB 2011 membership, Kate s pensionable salary is 30,000, 30,300 and 30,603 respectively. During that time, the discretionary increases awarded each year were 2% and 1.5% respectively. Increase of 1.5% x = 7.67 p.a. Increase of 2% x = p.a. Increase of 1.5% x = 7.59 p.a. The diagram shows the build up of Kate s pension. 1.67% x 30,000 = p.a. 1.67% x 30,300 + = p.a % x 30,603 = p.a. Year 1 Year 2 Year 3 The total deferred pension is 1, p.a. The normal pension age for CAB 2011 Benefits members is age 65.

17 Deferred pension as at 1 April 2017 CAB 2011 members At the end of the following Scheme year, and annually thereafter, each block of pension will increase in line with the lower of the percentage increase in the Government s consumer prices index (CPI) published for the previous calendar year ending 31 December and 4%. Once awarded, increases cannot be reduced. From 1 April 2017, the BBC may ask the Trustees to jointly agree a different revaluation percentage in certain circumstances, such as following periods of sustained negative deflation or if the BBC s income has reduced significantly. In the event that agreement cannot be reached between the BBC and Trustees the Scheme actuary will decide. The deferred pension as at 1 April 2017 includes all the increases since your date of leaving. If you paid into the LifePlan top-up arrangement, you will receive a separate statement from Friends Life showing the current value of your fund. If you have a pension sharing order then your pension at 1 April 2017 may be lower than your pension at date of leaving. This is because we have adjusted your pension in accordance with the court instructions. Claiming your pension - Early payment You can ask for your pension to be paid before your normal pension age due to ill health or from your 55th birthday. For an early payment quotation, please contact the pension service line.

18 Early payment is subject to the agreement of the Trustees and because your pension will be in payment for a longer period of time, your pension will be reduced for early payment. The percentages currently in use are as follows: Age Reduction to pension 46% 43% 40% 36% 32% 28% 24% 18% 12% 6% 0% between birthdays the reduction is proportionate The factors are reviewed at the start of each calendar year and are subject to change. In cases of ill health, the Trustees have discretion to waive some or all of the early payment reduction. You will need to provide your doctor s details so we can write to them for a report on your fitness for work and you may need to see an independent doctor for an assessment. Claiming your pension - Late payment CAB 2011 members The normal pension age for the CAB 2011 section is 65. However, we appreciate that you may not want to claim your pension then. The pension will continue to receive increases annually on 1 April and it will also receive a late payment uplift which is currently 6% per year. A pro-rata uplift will apply for a part year.

19 Claiming your pension - Options CAB 2011 members When you claim your pension you may be able to exchange some of your pension for a tax free cash lump sum and receive a smaller pension There are limits to the amount of tax free cash you can receive and we will quote the maximum allowable when we send you a retirement quotation. Death Benefits - In deferment If you die before your pension is paid there would be a pension payable to your spouse, civil partner or nominated dependant. Pensions are also payable to your children up to their 18th birthday and can continue up to age 23 while in full time education. If you are unmarried, not in a civil partnership or separated, you can nominate a dependant to receive benefits similar to those of a spouse. A dependant is someone who is financially dependant on you or dependant on you because of physical or mental impairment. He or she must be at least 18 years old. You can nominate a dependant via mypension online or by completing and returning the form on our website, bbc.co.uk/mypension.

20 Death Benefits - In payment CAB 2011 members If you die once your pension is in payment there would be a pension payable to your spouse, civil partner or nominated dependant. Pensions are also payable to your children up to their 18th birthday and can continue up to age 23 while in full time education. If you are not married but live with someone as if you are, it is important that you let the Trustees know. You can nominate a dependant via mypension online or by completing and returning the form on our website, bbc.co.uk/mypension. More information You can choose to transfer the benefit to another registered pension arrangement either in the UK or overseas at any time before your pension starts. More details can be found here. There is a limit on the amount of pension you can build up without incurring a tax charge. This is called the Lifetime Allowance. More information about the Lifetime Allowance can be found here. If you need any help or support our pension service line on is available from 08:30 to 17:30 Monday to Friday, excluding bank holidays. back to contents

21 Transfer Option You can choose to transfer your benefits to another registered pension arrangement either in the UK or overseas at any time before your pension starts. Unless you confirm otherwise, the Trustees will assume that the purpose of any transfer is to provide defined contribution (DC) benefits in another pension arrangement. The transfer value is calculated in line with over-riding legal requirements and is designed to represent the actuarial value of your benefits. If you choose to transfer your benefits to a DC arrangement and the transfer value is 30,000 or more, the Trustees are required to check that you have received appropriate independent financial advice from a suitable financial adviser approved by the Financial Conduct Authority. Benefits from a DC arrangement are classed as flexible benefits. Different pension providers offer different options in relation to what you can do with flexible benefits, including the options to select an annuity. Different options can have different features, rates of payment, charges and tax implications. Pension income is taxable and the rate of tax depends on the amount of income you receive from your pension and other sources. back to contents

22 Lifetime Allowance This is an overall limit on the value of pension benefits you can build up across all types of registered pension schemes without additional tax charges. When your pension comes into payment, its capital value (calculated by multiplying your initial annual pension by a factor of 20) plus any lump sum must be checked against your remaining Lifetime Allowance. Each time you take benefits from a scheme your remaining Lifetime Allowance will be reduced. The value of benefits which exceed your remaining Lifetime Allowance will be subject to a one-off tax charge of 25%. Any Lifetime Allowance charge will be paid by the Scheme with a corresponding adjustment applied to your benefits. If you think you may be affected by the Lifetime Allowance, then you should consider seeking specialist pensions advice. You are responsible for keeping track of how much of your Lifetime Allowance you have used up. On taking your scheme benefits, you will be asked to provide details of your pension benefits under other pension arrangements. back to contents