VOCATIONAL QUALIFICATIONS

Transcription

1 VOCATIONAL QUALIFICATIONS RETIREMENTS PART 2 RETIREMENT BENEFITS WITH SPECIAL CIRCUMSTANCES TUESDAY 5 SEPTEMBER 2017 TIME ALLOWED: 9.30 AM PM 3 HOURS 1. Answer ALL the questions. 2. Write all your answers in the answer book provided. 3. Begin each questions on a new page. 4. Show all workings clearly. 5. Calculate the benefits using only the information given. 6. Where the benefits are likely to exceed the remaining Individual Lifetime Allowance, state in your answer book that you would refer the case to your manager. 7. Factors must be rounded in accordance with the instruction in the Table of Factors. Round all other figures to two decimal places (or whatever is the normal practice where you work).

2 Questions Section A Calculate the retirement benefits / options for: 1. JAMES CRANE (RST) 2. LEANNE LIVINGSTONE (XYZ) 3. ASMAR RASHID (OPQ) 4. SIMON MORGAN (XYZ) 5. DOMINIQUE MALAN (RST) Section B 6. Write a letter explaining the benefits payable and the options available to JAMES CRANE. The letter may be addressed either to the member or to the Trustees (whichever is the normal practice in the organisation for which you work). Please note: Candidates must not sign letters with their own names. Letters should be signed A N Other.

3 CASE STUDY DETAILS RST SCHEME RETIREMENTS PART 2 QUESTION 1 Event history Date of first event 02/09/2017 First event RETIREMENT Date of second event Second event Member details Surname CRANE Forenames JAMES Date of birth 02/09/1952 Gender MALE Spouse s date of birth 13/01/1964 Dependent child s date of birth Date of joining company 12/09/1994 Date of joining scheme 06/04/1995 Earnings history for the scheme year ending 5 April ,000 61,000 63,500 65,750 68,000 70,200 73,000 75,000 77,375 Contribution history Total member s normal contributions 79, Total member s AVCs Current value of AVCs Single life AVC pension (per annum) payable immediately Joint life AVC pension (per annum) payable immediately

4 Pre 6 April 2006 pension accrued as at 5 April 2017 CARE pension (per annum) 12, Post 5 April 2006 pension accrued as at 5 April 2017 CARE pension (per annum) 13, Special circumstances / additional information Contractual Salary at date of first event 79, Pro-rata CPI from 6 April 2017 to date of first event is 1.03%. The Trustees (at the request of the Company) agreed that the accrual rate for James Crane s CARE Pension should be uplifted to 60ths of his Pensionable Earnings for all Pensionable Service from 6 April 2006 onwards. It was also agreed that the percentage rate for the associated spouse s pension should be increased to 50% for this period of Pensionable Service. For the purpose of any comparisons, the uplift should be included in the CARE Pension but excluded from the Underpin Pension. When being provided with the tax-free cash sum option, James Crane has specified that he would like to take 100, as a cash sum, subject to this amount being within the maximum permitted under the rules of the RST Pension Scheme. James Crane s current available Lifetime Allowance is %. THIS QUESTION ALSO REQUIRES A LETTER (QUESTION 6) RETIREMENTS 2 QUESTION 1

5 CASE STUDY DETAILS XYZ SCHEME RETIREMENTS PART 2 QUESTION 2 Event history Date of first event 05/09/2017 First event RETIREMENT Date of second event Second event Member details Surname LIVINGSTONE Forenames LEANNE Date of birth 02/10/1948 Gender FEMALE Spouse s date of birth 04/02/1946 Dependent child s date of birth Date of joining company 14/03/1994 Date of joining scheme 14/04/1994 Category of membership A Pensionable salary history for the scheme year commencing 6 April ,500 29,400 31,400 33,000 35,200 36,200 37,000 38,000 39,250 Contribution history Total member s normal contributions 37, Total member s AVCs Current value of AVCs Single life AVC pension (per annum) payable immediately Joint life AVC pension (per annum) payable immediately

6 Contracting-out details at date of first event Pre 06/04/1988 GMP (per annum) Post 05/04/1988 GMP (per annum) Contribution equivalent premium Certified amount Special circumstances / additional information Leanne Livingstone paid the default contribution rate (70ths accrual) throughout her period of membership of the XYZ Pension and Life Assurance Scheme. Leanne Livingstone reduced her working days from full time (five days a week) to four days a week for the period from 1 February 2008 to 1 April 2011, inclusive. Leanne Livingstone then further reduced her working days to three days a week for the period from 2 April 2011 to 31 May 2015, inclusive. Leanne Livingstone reduced her working days again to two days a week from 1 June 2015 onwards. Leanne Livingstone s current available Lifetime Allowance is %. RETIREMENTS 2 QUESTION 2

7 CASE STUDY DETAILS OPQ PLAN RETIREMENTS PART 2 QUESTION 3 Event history Date of first event 02/09/2017 First event RETIREMENT Date of second event Second event Member details Surname RASHID Forenames ASMAR Date of birth 05/09/1955 Gender MALE Spouse's date of birth 04/02/1956 Dependent child's date of birth Date of joining company 16/05/1998 Date of joining plan 16/05/1998 Target retirement date 05/09/2020 Annual salary history for the plan year commencing 6 April ,200 53,250 55,000 57,200 59,000 60,150 61,400 62,900 64,500 Contribution history Total member's normal contributions 40, Total employer s normal contributions 67, Total member's AVCs

8 Personal Retirement Account details Member s Current Unit Holdings Fund Member s normal contributions Employer s normal contributions Member s AVCs Unit Holdings Unit Holdings Global Equity Fund Index Linked Bond Fund Balanced Fund Corporate Bond Fund Cash Fund Lifestyle Fund 23, , Unit Holdings Investment Fund Unit Prices Fund Current Unit Price ( ) Global Equity Fund Index Linked Bond Fund Balanced Fund Corporate Bond Fund Cash Fund Special circumstances / additional information As part of a Compromise Agreement, the Company (with the consent of the Trustees) has agreed to contribute an additional one-off payment of 10, into Asmar Rashid s Personal Retirement Account at retirement. This amount is not included in the above figures. Asmar Rashid has requested quotations assuming (a) he takes no tax-free cash sum and uses the whole of his Personal Retirement Account (including the augmentation) to purchase a single life pension and (b) he takes 25% of the overall value of his Personal Retirement Account (including the augmentation) as a tax-free cash sum, with the balance being used to purchase a 50% joint life pension. The quotations for both the single life and joint life pensions should be based on the Annuity Bureau factors and should assume that the pensions increase annually at the lower of RPI / 3.0%. Asmar Rashid s current available Lifetime Allowance is 73.98%. RETIREMENTS 2 QUESTION 3

9 CASE STUDY DETAILS XYZ SCHEME RETIREMENTS PART 2 QUESTION 4 Event history Date of first event 12/03/2012 First event PRESERVED LEAVER Date of second event 02/09/2017 Second event RETIREMENT Member details Surname MORGAN Forename SIMON Date of birth 02/09/1952 Gender MALE Spouse s date of birth 21/08/1962 Dependent child s date of birth Date of joining company 06/11/1997 Date of joining scheme 06/11/1997 Category of membership B Pensionable salary history for the scheme year commencing 6 April Contribution history Total member s normal contributions Total member s AVCs Current value of AVCs Single life AVC pension (per annum) payable immediately Joint life AVC pension (per annum) payable immediately

10 Contracting-out details at date of first event Pre 06/04/1988 GMP (per annum) Post 05/04/1988 GMP (per annum) Contribution equivalent premium Certified amount Special circumstances / additional information Preserved pension (per annum) at date of first event 9, Lower of 5.0% / RPI increases from date of first event to date of second event is 19.7%. On 11 June 1998, Simon Morgan transferred into the XYZ Pension and Life Assurance Scheme his non-contracted out benefits from a registered pension scheme of one of his former employers. The transfer in secured a fixed single-life pension of 4, per annum, payable from Simon Morgan s Normal Pension Date. The transferred in pension is not included in the Scheme pension quoted above but should be included in the calculation of Simon Morgan s benefit options at retirement. Simon Morgan s current available Lifetime Allowance is %. RETIREMENTS 2 QUESTION 4

11 CASE STUDY DETAILS RST SCHEME RETIREMENTS PART 2 QUESTION 5 Event history Date of first event 03/09/2017 First event ILL HEALTH Date of second event Second event Member details Surname MALAN Forenames DOMINIQUE Date of birth 20/03/1960 Gender FEMALE Spouse s date of birth 19/02/1960 Dependent child s date of birth Date of joining company 07/02/2004 Date of joining scheme 06/04/2004 Earnings history for the scheme year ending 5 April ,500 30,000 31,000 33,500 35,000 36,500 37,500 39,000 40,250 Contribution history Total member s normal contributions 20, Total member s AVCs 21, Current value of AVCs 29, Single life AVC pension (per annum) payable immediately 1, Joint life AVC pension (per annum) payable immediately 1,379.68

12 Pre 6 April 2006 pension accrued as at 5 April 2017 CARE pension (per annum) Post 5 April 2006 pension accrued as at 5 April 2017 CARE pension (per annum) 5, Special circumstances / additional information Contractual Salary at date of first event 43, Pro-rata CPI from 6 April 2017 to date of first event is 1.03%. In the event of taking the tax-free cash sum, Dominique Malan has advised that the value of her AVCs should be taken as a lump sum first before commuting any other benefits. Any AVCs taken as pension should be deemed to be post 5 April 2006 AVCs. Dominique Malan s current available Lifetime Allowance is %. RETIREMENTS 2 QUESTION 5