bbc final salary pension scheme
This is known as 'commutation'. If you do not make good the arrears, you will be credited with 60% of your unpaid family leave as pensionable service. For some members (e.g. But they can normally adjust the level of future benefits. Your qualifying children will receive, between them, a third of the deferred pension. The scheme will be closed to new entrants and the company will impose a cap of 1% a year on pension salary increases for existing members. You should read the note 'BBC Pension Scheme death in service provisions' for more information. The truth is; moving out of a final salary pension is very rarely a good idea. You must then invest this ‘amount’ in either a pension scheme with another employer or a personal, self-invested or stakeholder pension. You can also pay additional contributions to your own personal pension or to the BBC's defined contribution plan (LifePlan). Couples can choose to offset pension rights against other assets (e.g. Between birthdays the reduction is proportionate. If you are paying into a final salary pension scheme, the amount of money you receive when you retire will depend on your final salary and how long you have worked for the firm. The Pensions Regulator is asking for new powers to stop final-salary pension schemes being dumped when companies are sold. The BBC's Final Salary Pension scheme closed to new members some years ago. those on low pay or receiving State benefits) Smart Pensions may be disadvantageous. Write to the trustees or your pension fund manager. The key issues facing staff are the proposals to cap the BBC's final salary pension benefits for existing members from April 2011 and to close the scheme to new employees. They pay staff a set percentage of their final salary depending on their length of service. The insurance company will then estimate your pension on an assumption of what your final salary pension scheme is at the moment. You will be treated as having opted out and will become a life assurance member. This is called 'Smart Pensions'. Contact 01273 627600. 1. The rate of this late payment factor is determined by the BBC and the Trustees. John retires at age 60. Can I exchange part of my pension for cash? Unpaid absences outside the United Kingdom. a defined contribution pension), it is a guaranteed and reliable source of income. What happens if I opt out or leave service? This can be varied if both the BBC and Trustees agree, although it cannot go above 7.5% without a change to the Scheme rules. Approximately 70% of the NUJ members who voted rejected what director general Mark Thompson referred to earlier this month as a "final offer" on changes to the BBC's final salary pension scheme. BBC announces cap on final salary pension scheme. Under the plans, announced today, new BBC employees will be barred from joining the scheme. It’s fairly simple to explain final salary pensions: They essentially do just what it says on the tin.They’ll pay you a pension based on your final salary at retirement. Your qualifying spouse or qualifying civil partner can choose to take a lump sum cash payment instead of a pension. BBC's closure of final salary pension scheme could be a blueprint for the public sector. The benefits under this type of scheme are defined, for example, 1/60 th x Pensionable Service x Final Salary (known as a final salary scheme) or based on average earnings over the working life (known as a Career Average Revalued Earnings scheme. "The changes are likely to … The Pensions Regulator is asking for new powers to stop final-salary pension schemes being dumped when companies are sold. If you are considering transferring out of your final salary scheme, it is important to speak to a Qualified Pension Transfer Specialist to understand the full value of the benefits you could be giving up as well as the risks and costs involved in doing so. Insight. The schemes have around 23,000 members, of … For members who joined after 30 September 1996 and before 1 November 2006, For members who joined after 31 October 2006 and before 1 December 2010, For members who elected to join between 1 April 2011 and 1 January 2012. Alternatively, pension rights can be 'shared' as part of a 'clean' settlement. Divorce and dissolution of a civil partnership. Since 1986, scheme members have been entitled to obtain this information from their pension fund's trustees. This guide explains how New Benefits members of the BBC Pension Scheme (the Scheme) will receive their pension benefits. it is likely to permanently and substantially impair your earning capacity. Additional restrictions may apply if your secondment is to another EU country. contributions are paid by both you and your employer; you do not join another occupational pension scheme; and. If you are re-employed, you will be eligible to re-join the Scheme as an Old Benefits member provided that you do so at the first possible opportunity (ie immediately you become eligible). “Doing nothing is not an option,” director-general Mark Thompson told staff in a memo. The bad news is that final salary pensions are workplace pensions set up by your employer; you won’t be able to get one of these by yourself.. As the insurance company will now be guaranteeing your pension fund, you may get less than you had expected. If your absence is expected to last more than three months, there must be prior agreement to maintain contributions in order for the period of absence to be treated as pensionable service. The BBC has become the first publicly funded organisation in the UK to announce changes to its final salary pension scheme which will limit the £2 billion deficit which has built up over time. They take into account, but cannot be bound by, your wishes. The other exception is pensions in payment that receive no increases following the recent Pensions Increase Whether you have protection depends on your age on 1 April 2012 and your TPS normal pension age (NPA) (the age at which you can get your pension in full).. The BBC's in-house Pension and Benefits Centre offers prompt help on everything to do with the Scheme. If there is not enough money to fund everyone's scheme, then you may be required to buy a deferred annuity. About this handbook This handbook explains the main provisions for New Benefits members of the BBC Pension Scheme (the Scheme). Annual income before tax Number of years in service. Like most or all other companies who offered one, they are obliged to keep it open for existing and preserved members. Anglo-Dutch oil giant Royal Dutch Shell is to close its final-salary pension scheme to new employees in the UK. Having opted out, you will not be permitted to rejoin the Scheme. John's early payment pension is calculated as £15,000 less 24% = £11,400 p.a. Drawdown your final salary pension that’s frozen. Pension provision is an important element of your reward package. The scheme was made up of several sections. Full details will be sent to you before your pension starts. If you work part time and your contractual hours are constant, your scale pension will be as calculated above. You are therefore asked to let the Trustees know your choice of beneficiaries by keeping your expression of wish form up to date. it will be reduced to allow for it being paid for a longer period than expected. This is because PAYE income tax is always applied to earnings after any pension contributions have been deducted. It must be sent to you within two months. The Royal Mail back in 2008 became the first major public sector organisation to change the terms of its pension scheme, moving from a final salary to a career average scheme. If your part time hours vary and you have a mixture of part time and full time pensionable service , there is a different formula that must be used. On your death, providing you have not taken the partial refund of contributions, the following benefits are payable: Your qualifying spouse or qualifying civil partner will receive a dependant's pension. Lesley Titcomb would like firms with large pension … there is a definite expectation that you will return to work for the BBC or a participating employer. It is subject to periodic reviews and can go up or down. The scale of reductions is set by the BBC and the Trustees at the beginning of each calendar year. If an employee retires after 40 years, that employee would receive a pension of 40/60ths (2/3rds) of their final earnings before retirement. This is because: The reduction depends on your age at the time your pension comes into payment. From early 2013, new staff at Shell will be offered membership of a scheme … The newsletter for members of the Industry-Wide Defined Contribution (IWDC) Section of the Scheme. BBC Pension Scheme. Yes, 1/60 is 1.6% but it's of your salary not your pension! The Trustees have discretion over who receives the cash and in what proportion. Prof David Blake, Director of the Pensions Institute at Cass Business School, John Ralfe, pensions consultant who was formerly in charge of the Boots pension scheme. If you have completed less than 24 years' pensionable service, your pensionable service will be uplifted to the lesser of 24 years and what it would have been at age 60. If you have a dispute that you can not resolve with your employer or Opas you have the legal right to refer your complaint to The Pension Ombudsman deals with serious complaints. It is payable as part of your maximum cash payment (see above). your Scheme pension at age 60 will be less than two-thirds of your final pensionable salary; you intend to take your pension early; you would like to maximise tax-free cash and pension benefits at retirement. If you become a life assurance member after 31 March 2011, this benefit will be reduced by any lump sum death benefit payable in respect of your deferred pension. Enter your details below to get an estimate of what your pension income could be if you have a final salary or defined benefit pension. The BBC closed its final salary pension scheme to new members in 2006, when it introduced a career average scheme. Does temporary absence affect my pension? Transferring out of my Final Salary Pension Scheme. The deficit of final-salary pension schemes in the UK collectively widened in June, the Pension Protection Fund (PPF) has said. Periods of paid family leave (ie maternity, adoption, paternity or parental support leave) are treated as pensionable service and normal contributions are deducted. Arrears of contributions will be calculated on your current pensionable salary and must be paid within six months. Related links: BBC: Unilever closes final-salary pension scheme to staff. The BBC has become the latest in a long list of UK employers to make changes to its final salary pension scheme. Pension income is taxable and the rate at which income from a pension is taxable depends on the amount of income your receive from your pension and other sources. If you want to know more about Smart Pensions, there is a leaflet you can get by contacting the pension service line. The rate of this late payment factor is determined by the BBC and the Trustees. THE BAA PENSION SCHEME. For members who joined before 30 September 1996. Here is an example of how an early pension is calculated: scale pension built up to date - early payment reduction = early pension. It does so by matching your savings, Write to Pension Ombudsman, 11 Belgrave Road, London SW1V 1RB. This figure is how much the scheme will pay you in exchange for your pension. You can pay Additional Voluntary Contributions (AVCs) to boost your pension benefits. It will be equal to four times your pensionable salary (ignoring the earnings cap) as at the date you left service, less any cash you took in exchange for pension (see Commutation.). Here we take a look at some of the reasons why and explore the main benefits of this type of scheme. If you are investing in a pension, make sure that you spread the risk across different fund management companies, so that if one company goes bust - you will not lose all your money. By … More recently, reports have highlighted concerns over the funding of final salary schemes, with a number of FTSE 100 companies now thought to be facing a cash shortfall. You will be treated as having opted out and will automatically become a life assurance member. "Information from the actuary can be complicated and the full valuation is anything up to fifty pages long and is not an easy read," says Joe Robertson, regulatory director at the Occupational Pensions Regulatory Authority (Opra). Those benefits will still be calculated on your scale pension, as though you had not taken any cash. Your pension will be less than that payable at normal pension age. The same conditions as for absences of three months or less apply and the period of absence should not last for more than 10 years. BBC Pension Scheme. Unilever becomes the latest in a long line of companies to shut its UK final-salary pension scheme to the existing members. "We have had so many people saying that they have had everything with Equitable Life in recent months.". (Pensionable service + credits/60) x final pensionable salary = Scale pension. Both you and your employer and you must agree with the Service Delivery Manager before the absence begins that normal contributions will continue. Final salary pension schemes are advantageous for members because the scheme takes all the investment risk and is obliged to meet the 'pension promise' of a pre-defined amount of income made to each member, regardless of how underlying investments have performed. The Trustees have discretion over who receives the cash and in what proportion. You build up pension at the rate of 1/60th of your final pensionable salary for each year (up to a maximum of 40) you are an active member (part years count proportionately). The income tax you pay is unaffected by Smart Pensions. The definitive provisions of the Scheme are set out in the Trust Deed and Rules, which supplement and override this guide in the event of any difference. The Trustees' consent to the enhanced pension, which is available if you are unable to pursue any occupation, will only be given if you are expected to continue to be unable to pursue any occupation until normal pension age. that you cannot carry out your normal occupation; and. It was permissible for the BBC to put a cap of 1 per cent on the part of a pay rise that would be used to calculate pensionable pay for employees in the final salary sections of its pension scheme. Pension rights may be taken into account on divorce or dissolution of a civil partnership. Before making such a decision, you should consider taking independent financial advice. When planning a career break, you should consider carefully the impact it will have on your pension. The BBC has become the latest in a long list of UK employers to make changes to its final salary pension scheme. If you joined the Scheme before December 1975, your scale pension will be reduced by £1.33 for any year during which you chose to pay reduced contributions (know as rate A) on the first £400 of your pensionable salary up to 31 July 1991. This kind of pension guaranteed employees an income in retirement that was linked to how much they earned in work and their length of service. Many final salary schemes have either been closed to new members or to all members over recent years, although they are still offered by some, mainly larger, employers. The note is available from the pension service line. Before making the decision to exchange pension for cash, you should consider taking independent financial advice. As an Old Benefits member your contributions will normally be met through salary sacrifice. You will be able to join LifePlan - the BBC's defined contribution plan at any time in the future. Different options have different features, different rates of payment, different charges and different tax implications. The refund is an alternative to providing a dependant's pension after your death. it is based on your final pensionable salary, pensionable service and any credits at the date you leave, rather than normal pension age; and. Lesley Titcomb would like firms with large pension … The factor that applies from that date is 5% per annum. Am I in the final salary section? Lloyds staff who are members of the defined benefit scheme had their pensionable pay capped in 2014. The schemes have around 23,000 members, of … The trustees of your pension fund can not retrospectively cut your accrued benefits without your consent. You can end your membership without leaving service, subject to at least two months' notice. Scheme membership is not offered to an ex-partner. Disclaimer: Final Salary Pensions are suitable for the vast majority of members. Steve Webb replies. From age 55 onwards, you can leave service and ask for your pension to be paid early. The exact income you will get from a final salary pension depends on: your salary when you retire If there is no qualifying spouse or qualifying civil partner's pension is payable, the children's pensions will be doubled. You're a member of a highly-valued pension scheme – and you can find out how to get the most out of your RPS membership right here. If you are an active member and die in service, the following benefits are payable: The Trustees will make a lump sum payment, which is currently free of inheritance tax. Between 2008 and 2009, the BBC was faced with a growing deficit in its pension scheme. providing information in connection with divorce proceedings, over and above that which it has a duty to provide free of charge under the existing statutory disclosure requirements; compliance with a pension sharing order or agreement; and. If you have no qualifying spouse or qualifying civil partner, your nominated dependant will receive a pension. Final salary pension calculator. Barclays recently froze its final-salary pension scheme to existing members. A more detailed explanation of pension sharing, how the scheme operates a pension sharing order or agreement, and a schedule of its charges are available from the pension service line. The proposals include closing the final-salary scheme to new joiners and imposing a … The election to take a refund must be made before your pension starts and cannot then be cancelled. Lord Hutton made clear that final salary schemes should end in the public sector. If you are seconded to work for another, non-participating employer, you can continue to build up pensionable service, on condition that: The benefits build up using the pensionable salary that you would have received, if you hadn't been seconded. Index-linking. Your pension is payable for life. About 8.5 million people have a final salary pension scheme. Lump sum payments are currently free of inheritance tax. Old Benefits is closed to new members. New staff will have the option of joining a pension scheme where benefits are paid according to their average BBC career salary. If you die and have a deferred pension, the following benefits are payable: It will be two thirds of the pension you would have received if you had taken it immediately before the date of your death (ignoring any reduction there would have been for early payment). The BBC has also agreed to limit employee contributions in the new scheme to 6% rather than the 7% originally proposed. Further information is available from the pension service line. The BAA Pension Scheme (“the Scheme”) was established in April 1966. This is explained in a separate leaflet available from the pension service line or on our documents section. The key issues facing staff are the proposals to cap the BBC's final salary pension benefits for existing members from April 2011 and to close the scheme to new employees.