Date of joining after 30 November 2009
CAMBRIDGE UNIVERSITY ASSISTANTS’
CONTRIBUTORY PENSION SCHEME
EXPLANATORY NOTE
This note is intended for guidance only and is not a substitute for the governing documents of the Scheme. The Pension Scheme is administered in accordance with the Rules which are open to inspection by any member at Pensions Administration Section, Greenwich House, Madingley Road, Cambridge. Any member requiring information about particular aspects of the rules should contact Pensions Administration at the above address (work telephone 32214).
CONTRIBUTORY PENSION SCHEME
The Scheme is a registered pension scheme under the provisions of the Finance Act 2004 and is contracted out of the State Additional Pension Scheme (SAP).
FUND
The Fund was established under the authority of the Oxford and Cambridge Act 1923 under the name of the Contributory Pension Scheme. The Fund is accounted for separately from all other Funds in the hands of the University.
TRUSTEE
The trustee of the Scheme is the C U Pension Trustee Ltd.
MANAGEMENT AND ADMINISTRATION
The directors of the C U Pension Trustee Ltd (the CPS Managing Committee) are responsible for the day to day administration of the Scheme and have delegated this authority to the Pensions Administration Section. The Committee consists of:
A Chairman, who must be a member of the Senate, and is appointed by the Finance Committee.
4 members appointed by University Council.
2 members appointed by Unison and Unite.
1 active member elected by the active members of the Scheme.
1 retired member elected by a postal ballot of pensioners.
Investment of the Fund is the responsibility of the Pension Fund Investments Committee who report to the Managing Committee.
MEMBERSHIP
If on appointment you are aged between 16 and 65 and you are on the permanent payroll of your employer irrespective of the length of your contract of employment you will automatically be entered into the Scheme the first time you are paid, unless you have informed Pensions Administration in advance by completing an opt out form, which is available from Pensions Administration or can be downloaded from the Pensions website: www.admin.cam.ac.uk/offices/pensions/cuacps/guides/, that you do not wish to be a member of the Scheme.
You may withdraw from the Scheme at any time whilst remaining in employment. If you wish to withdraw from the Scheme you will be required to give a full calendar month’s notice to Pensions Administration, in writing, and your membership of the Scheme will cease on the last day of the calendar month in which the period of notice expires.
If you wish to rejoin the Scheme you should apply, in writing, to Pensions Administration. Your readmission to the Scheme will require the consent of the University and will be on such terms as it decides.
WHAT DOES IT COST?
Your own contribution to the Scheme will be 6% of your Pensionable Salary (before tax relief). Your Pensionable Salary is your basic pay plus any allowances that have been determined to be pensionable by your employer. Your employer contributes the balance of the cost of providing the Scheme benefits, as advised by the Scheme Actuary this is currently 20.3% of your Pensionable Salary. In addition the employers who participate in the Scheme are paying deficit recovery contributions of £14.6 million a year between 1 August 2011 and 31 July 2025. The contributions payable by both employees and the employer will be subject to regular review in the light of advice received from the Scheme Actuary.
If your employer operates a ‘salary sacrifice’ arrangement for pension contributions you may be eligible to take part in this. If you take part in a ‘salary sacrifice’ arrangement then your salary will be reduced by an amount equivalent to your employee contributions to the CPS and your employer will pay an additional employer contribution to the CPS equivalent to the reduction in your salary, As your salary will be lower than it would have been prior to the ‘sacrifice’ you will pay lower National Insurance contributions than if you had not taken part in the arrangement. Your employer will be able to tell you if they have this arrangement.
You may also be eligible to pay Additional Voluntary Contributions (AVCs) to the Scheme to provide yourself with additional benefits and these contributions will attract tax relief in the same way as your normal contributions to the Scheme. The Scheme provides two AVC arrangements:
· AVCs may be invested in an AVC account in the name of the Trustee at the Cambridge Building Society where the fund grows free of all taxes and can be used at retirement to provide tax free cash and/or purchase additional pension.
· AVCs may be paid in order to purchase additional years of Pensionable Service in the Scheme.
For more information about AVCs see the leaflet “Bridging your pensions gap” which is available from Pensions Administration, or can be downloaded from the Pensions website: www.admin.cam.ac.uk/offices/pensions/cuacps/guides/.
CONTRACTING OUT
The Scheme is contracted out of the State Additional Pension (SAP) which means that you pay a reduced rate of National Insurance contributions.
Contracted out service before 6 April 1997:
As a condition of contracting out of the State Earnings Related Pension Scheme (SERPS) the Scheme is required to provide you with a pension at least equal to that which you would have received from SERPS if you had not been contracted out. This is termed the Guaranteed Minimum Pension (GMP).
Contracted out service between 6 April 1997 and 5 April 2002:
As a result of the Pensions Act 1995 with effect from 6 April 1997 the link between SERPS and contracted out schemes such as the Scheme has been broken. For contracted out service on or after 6 April 1997 schemes are no longer required to provide a GMP. Instead the Scheme is required to satisfy a “reference scheme” test. The benefits of the Scheme satisfy this test.
Contracted out service on or after 6 April 2002
With effect from 6 April 2002 the second tier of the state pension, SERPS, was replaced by the State Additional Pension Scheme (SAP). The Scheme will remain contracted out of a ‘notional’ SERPS and will continue to satisfy the ‘reference scheme’ test in this respect.
TRANSFERS INTO THE SCHEME
With the consent of the University the Scheme is able to accept transfers of cash equivalents into the Scheme from other registered pension arrangements. In exchange for the transfer value you will be granted additional Pensionable Service in the Scheme.
If you are interested in investigating the possibility of transferring benefits into the Scheme you should contact Pensions Administration.
WHAT ARE THE BENEFITS?
NORMAL RETIREMENT
The Normal Retirement Age (NRA) for all members is 65. The pension is equal to 1/80th of your Final Pensionable Salary for each year of Pensionable Service. In addition there will be a tax free lump sum of 3 times your initial annual pension.
Your Final Pensionable Salary is the best of:
· your Pensionable Salary over the last 12 months
· your best indexed Pensionable Salary for any one year in the last 3 years
· the average of your best indexed Pensionable Salaries for any 3 consecutive years in the last 13 years
· your Pensionable Salary in the 12 months ending 3 years before your retirement, but without any increase in line with the index
· your Pensionable Salary in the 12 months ending 4 years before your retirement, but without any increase in line with the index
Your Pensionable Service is composed of:
· the number of years and days contributory membership of the Scheme with a Participating Employer; plus
· the number of years and days service, if any, you have been granted in respect of a transfer value paid to the Scheme; plus
· the number of years and days service, if any, you have been granted in respect of Additional Voluntary Contributions.
You may elect to give up part of your pension in exchange for an additional tax-free lump sum on your retirement, subject to the maximum level permitted by Her Majesty’s Revenue & Customs (HMRC).
DEATH AFTER RETIREMENT
If you die within 5 years of retirement there will be a tax free lump sum equivalent to the balance of five years pension payable.
If you leave a Spouse there will be a pension payable of 50% of the pension you were receiving at the date of your death, assuming you took no additional lump sum at retirement. If you elected to receive an additional lump sum on retirement then the pension will be 50% of the pension you would have been receiving at the date of your death if you had not elected to take an additional lump sum. The pension will continue to be payable for the remainder of your Spouse’s life.
If you die more than 5 years after retirement leaving a Spouse there will be a pension payable of 50% of the pension you were receiving at the date of your death, assuming you took no additional lump sum at retirement. If you elected to receive an additional lump sum on retirement then the pension will be 50% of the pension you would have been receiving at the date of your death if you had not elected to take an additional lump sum. The pension will continue to be payable for the remainder of your Spouse’s life.
Your Spouse is defined as:-
· the person (if any) who was married to you or was your Registered Partner under the Civil Partnership Act 2004 at the date of your death; and
· the person (if any) of the same or opposite sex to you with whom you were co-habiting at the time of your death provided that the person was financially dependant on you or you were financially interdependent at the time of your death
If more than one person fits into the above categories the Managing Committee in their absolute discretion and in accordance with the relevant legislation will decide to whom and in what proportions the Spouse’s pension will be paid.
There is also a Child Allowance of ¼ of the Spouse’s pension in respect of each of your Eligible Children (up to a maximum of 4). An Eligible Child is a Child who: -
· is below age 18; or
· is below age 23 and undergoing full time education or vocational training; or
· is suffering from some mental or physical disability rendering him unable to support himself (irrespective of age).
If your Spouse subsequently dies leaving an Eligible Child(ren), the Spouse’s pension would continue to be paid until the last Child ceased to be an Eligible Child.
N.B. The total Spouse’s and children’s pensions cannot be more than the pension you were entitled to at the date of your death, assuming you did not elect to take an additional lump sum at retirement
There is also a funeral grant of £2,500 payable in respect of all former contributing members of the Scheme who die after retirement. Under current legislation (December 2009) if you retired after 6 April 2006 and are aged 75 or more at the date of your death this payment will be subject to a deduction for tax.
EARLY RETIREMENT
Between the ages of 50 and 65 you may retire with the consent of the Managing Committee and your employer and receive an immediate pension, calculated as described above, but the pension payable to you will be subject to an actuarial reduction to take account of its early payment. However, with effect from 6 April 2010 in accordance with the provisions of the Finance Act 2004 the earliest age at which you can retire and receive an immediate pension, unless the retirement is on health grounds, will be 55.
RETIREMENT ON THE GROUNDS OF ILL HEALTH
If due to your ill health you retire from Service because you are unable to carry out the job for which you were employed then, subject to the receipt of satisfactory medical evidence by the Managing Committee, there will be a pension payable to you of 1/80th of your Final Pensionable Salary for each year of Ranking Service, plus 1/80th of your Final Pensionable Salary for each year of Pensionable Service purchased by added years AVCs, increased by one year for each completed five years of Ranking Service. Your Ranking Service is your actual Pensionable Service plus any additional Pensionable Service credit you have received in respect of a transfer value paid into the Scheme. The enhancement will be limited such that your total service cannot be more than you would have had if you had continued in employment and membership of the CPS to age 65. You will also receive a tax free lump sum equivalent to three times your initial annual pension.
RETIREMENT ON THE GROUNDS OF INCAPACITY
If due to your ill health you retire from Service and the Managing Committee are satisfied (acting on medical advice) that you are suffering from ill health or some other disability rendering you totally incapable of carrying out work of any kind or of taking up any other employment or occupation and that such incapacity is likely to be permanent, there will be a pension payable to you of 1/80th of your Final Pensionable Salary at your date of retirement for each year of Pensionable Service, but calculated as if you had continued in Service to your 65th birthday. There will also be a tax free lump sum equal to three times your initial annual pension.