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Hampshire Pension Fund 2009 pensions briefing ‘Your retirement choices’. Phil Villiers Pensions Communications Officer Hampshire County Council. Summary. A very, very, quick scheme overview ‘Deal or no deal’ – your retirement choices Early retirement – ‘worth considering?’ - PowerPoint PPT Presentation
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Hampshire Pension Fund2009 pensions briefing
‘Your retirement choices’
Phil Villiers
Pensions Communications Officer
Hampshire County Council
Summary• A very, very, quick scheme overview
• ‘Deal or no deal’ – your retirement choices
• Early retirement – ‘worth considering?’
• Death-in service benefits - ‘to nominate or not to nominate’
• ‘Please sir, can I have some more?’ – paying extra contributions
• ‘What should I do now?’ - some suggested action points
• Where can I get more information?
A very, very, quick scheme overview
A very, very, quick scheme overview
What it costs• contributory………..and your employer pays too• contributions attract tax relief – so you pay less tax!• the scheme is ‘contracted out’ – so you pay less NI!
What it provides• final salary benefits• pension and tax-free lump sum• normal retirement at age 65, with early, flexible, and late
retirement options• ill-health pensions• pensions increase in payment (‘index-linking’)• death benefits
‘Deal or no deal’ Your retirement choices
The building blocks -final salary, membership, pay, final pay
Final salary benefits• membership x fraction x final pay
Membership• years and days as a member
• includes service purchased by transfer from a previous scheme
• part-time/term-time service converted to a ‘whole-time equivalent’
Pay • basic pay plus other contractual, taxable pay elements
Final pay• normally pay in last year before retirement
• ‘whole-time equivalent pay’ used for part-timer/term-timer
Your retirement choices
Pre-April 2008 service:
• Automatic: 80ths pension + 3/80ths tax-free lump sum
Post-April 2008 service:
• Introduction of ‘choice’:
• 60ths pension with no additional tax-free lump sum
• Option to give up pension for tax-free lump sum:
– £12 lump sum per £1 pension
– Maximum total lump sum of 25% x pension fund value
For example………..
• Mr/Mrs Member
• joined scheme 1 April 1988
• 40 years’ whole-time membership
– 20 years pre-April 2008
– 20 years post-April 2008
• retires at 65 on 31 March 2028
• final pay of £12000
For example………..
Basis Lump sum Pension
1) Old basis: for information £18000 £6000 per year
2) New basis: takes all £ 9000 £7000 per yearpost 4/2008 as pension
3) New basis: gives up £750 £18000 £6250 per yearpost-4/2008 pension for lump sum
4) New basis: takes £33214 £4982 per yearmaximum lump sum allowed
Early retirement – worth considering?
Early retirement:Factors to take into consideration
Will my employer let me retire early?• From age 60 – can retire without employer consent
• Below age 60 – need employer consent (additional cost!!)
Will my pension be reduced?• Yes – its based on completed membership, also
• Early payment reduction will apply, except….
• …..‘85-year rule’ may apply to all/some of benefit if you joined before 1 October 2006 and your ‘age + service’ = 85
• Special terms also apply on redundancy/efficiency/ill-health
What about flexible retirement?• Option to draw benefits early and continue working:
– You need your employer’s consent…which is not guaranteed
– You need to reduce your hours or go to a lower grade
– You can re-join scheme and build up more pension
Death-in service benefits‘to nominate or not to nominate’
Death-in service benefitsLump sum death grant• 3 x final pay (not ‘whole-time equivalent’ for part-timer/term-timer)
– Death grant ‘expression of wish’ form needs to be completed for this benefit
– If ‘expression of wish’ form not received or ‘invalid’, death grant paid to estate
Widow’s/widower’s/civil partner’s pension• Automatically paid to legal spouse/civil partner
– no ‘expression of wish’ form needed
Nominated cohabiting partner’s pension• Only paid if certain conditions satisfied:
– special ‘nomination’ form completed
– ‘free to marry’
– 2 year qualifying period
– financial interdependent or fully dependent
Children’s pensions • Paid to ‘eligible children’ in addition to any widow’s, widower’s, civil partner’s
or nominated cohabiting partner’s pension– no ‘expression of wish’ needed
‘Please sir, can I have some more?’ – paying extra contributions
Paying extra contributions
Additional regular contributions (‘ARCs’)• Buy pension, in multiples of £250 pa, payable from age 65
• Choice of member pension only or with dependant pension on death
• Fixed monthly payment + choice of payment term
• On-line calculator on our web site
Additional voluntary contributions (‘AVCs’)• invested in funds managed by Zurich
• can pay up to 50% of pay
• can use fund to– buy extra pension or,
– increase tax-free lump sum or
– combination of both
Both options• Tax relief on contributions!
What should I do now?Some suggested action points
What should I do now?Some suggested action points
• It’s never too early to think about your pension….but it can be too late!
• Pension v lump sum?
• Update death grant ‘expression of wish’?
• Nominate cohabiting partner for pension?
• ARCs or AVCs (or both!)?
• Independent financial advice? IFA Promotions at www.unbiased.co.uk
Where can I get more information?
• Come and speak to me afterwards!
• Employee guide
• Website: www.hants.gov.uk/finance/pensions
• Pensions Services:• Email [email protected]• Tel 01962 845588