The University of Sheffield Pension Scheme Flexible Retirement Plan Section MEMBER GUIDE
Contents Introduction... 4 Definitions... 5 Joining the Scheme... 8 Who Can Join?... 8 Automatic Enrolment... 8 When Can I Join?... 8 Do I Have To Join?... 9 How Do I Opt In?... 9 What If I Do Not Wish To Join?... 9 Once I Have Joined, Can I Leave The Scheme At A Later Date?... 9 Can I Join The Scheme Later, Or Rejoin After Opting-out?... 10 Can I Transfer Any Previous Pension Benefits Into The Scheme?... 10 Pension Scheme Contributions... 11 How Much Do I Pay?... 11 Can I change my mind about how much I pay?... 11 I Want To Join But I am Unable To Afford To Pay Into The Scheme At The Moment 12 Information for Members Who Contribute at 2%... 12 Can I Change from the 4% Default Level?... 12 How Does Pay Plus For Pensions Affect My Contributions?... 13 Do I Have To Be Part Of Pay Plus For Pensions?... 13 Retirement Benefits... 14 What Benefits Will I Get On Retirement?... 14 What Is Credited To My Retirement Account?... 14 How Much Will My Retirement Account Be Worth At My Normal Pension Age?... 15 What If I Work Part Time?... 16 Can I Exchange My Entire Pension For Cash?... 16 How Will My Retirement Account Be Funded?... 16 Types of Retirement... 17 Normal Retirement... 17 Early Retirement... 17 Late Retirement... 18 Flexible Retirement... 18 Incapacity Retirement (Ill-Health Retirement)... 18 The Retirement Process... 19 I Want To Retire Soon What Do I Need To Do?... 19 How Can I Find Out What My Benefits Will Be At Retirement?... 19 How Long Will It Take To Get A Retirement Estimate?... 19 How Long Will It Take To Process My Retirement?... 19 Death Benefits in Active membership... 20 How Will My Dependants Be Looked After If I Die?... 20 What Happens To My Retirement Account If I Die Before Claiming My Benefits?... 20 Expression of Wish Forms... 20 Leaving Pensionable Service... 21 How Can I Leave Pensionable Service?... 21 What is Opting Out?... 21 Can I Rejoin The Scheme If I Opt Out?... 21 What Happens If I Leave The University?... 21 Leaving Pensionable Service With Less Than Three Months Service.... 22 Leaving Pensionable Service With Less Than Two Years Service.... 22 Page 2
Leaving Pensionable Service With More Than Two Years Service.... 23 How Are Transfer Payments Calculated?... 23 Information For Deferred members... 24 What Is A Deferred member?... 24 Keeping In Touch... 24 Transferring Your Pension... 24 Claiming Your Retirement Account... 24 Death In Deferment... 24 Absence From Work... 25 Absence Other Than Family Leave - Definition of Absence... 25 Paid Absence... 25 Unpaid Absence... 25 Family Leave... 25 Paid Family Leave... 26 Unpaid Family Leave... 26 Returning To Work... 26 Not Returning To Work... 26 Additional Voluntary Contributions... 27 Can I Increase My Contributions To Buy Extra Benefits?... 27 How Much Can I Pay?... 27 Can I Change The Amount of AVCs I Pay?... 27 What Options Do I Have?... 27 Further Information About The Scheme... 28 About The Scheme... 28 Trustees... 28 Data Protection... 28 Combined Pensions Forecasting... 29 Internal Dispute Resolution Procedure... 29 The Pensions Advisory Service (TPAS)... 30 The Pensions Regulator... 30 The Pensions Tracing Service... 31 The Pensions Ombudsman... 31 Page 3
Introduction Welcome to The University of Sheffield Pension Scheme Flexible Retirement Plan Section (referred to as the CB Section in the Scheme Trust Deed and Rules). This booklet contains a summary of the main benefits of membership of the Flexible Retirement Plan Section ( CB Section ) of The University of Sheffield Pension Scheme, which we will refer to in this booklet as the Scheme. The Scheme provides retirement and life assurance benefits for you and your dependants. It is run by a board of Trustees. For more information on the Trustees, (see page 28). The main benefits provided by the Scheme are: A Retirement Account which can be taken as a cash lump sum within statutory limits and/or a retirement income. A life cover equal to 4 times your salary if you die in Pensionable Service. The option to make Additional Voluntary Contributions (AVCs) to increase your retirement fund. The ability to build up entitlement to the State Second Pension, (S2P). Flexible retirement, early retirement and late retirement options when you come to retire. The benefits you receive from the Scheme are in addition to State Pension benefits. The Scheme is Contracted In to the State Second Pension (S2P). This means that you will build up entitlement to S2P in addition to the Basic State Pension (subject to you having a satisfactory National Insurance Contribution history). This booklet provides information to help you understand the Scheme but it is not the official or legal authority for it. The Scheme is governed by the Deed of Amendment and Consolidation relating to the Third Definitive Deed and Rules (and as subsequently amended) (Trust Deed and Rules), and your benefits and options under the Scheme will be determined in accordance with the Trust Deed and Rules. In the event of any discrepancy between this booklet and the Trust Deed and Rules, the latter will be overriding. You may be aware that there is also a Final Salary Section of the Scheme, which closed on 30 November 2011. Please note that this booklet applies to benefits and options under the Flexible Retirement Plan Section ( CB Section ) only. If you have benefits in the Final Salary Section and would like further information in relation to those, please contact the Pensions Office (see below). If you have any questions regarding your pension arrangements or anything in this booklet, please contact the Pensions Office: In writing : Pensions Office In person: Pensions Office Department of Finance The Arts Tower - The University of Sheffield Level 1 Reception Firth Court Western Bank S10 2TN Telephone: Email: 0114 222 1397 or extension 21397 The Pensions Helpline pensions@sheffield.ac.uk Page 4
Definitions The formal name of this pension scheme is The University of Sheffield Pension Scheme. Throughout the booklet we have referred to it as the Scheme. The following terms are used throughout this booklet; they are highlighted for easy reference. A-Day Active Annual Allowance Annuity Automatic Enrolment Child/Eligible Child Civil Partner Contracted In Deferred Eligible Jobholder This means 6 April 2006. New pension legislation was brought into effect from this date which allows trustees of pension schemes to adapt their Scheme Rules to allow pension scheme benefits to be taken in a more flexible manner. These changes are not compulsory but many have been adopted by the Scheme. This means that you are an Active member of the Scheme. Contributions are being paid in, credits will be made to your Retirement Account, and you will be covered for death in service. This is the maximum amount of tax-free pensions savings that can made in one tax year. From 2011/12 onwards this is 50,000 (although this is subject to future changes by the Government) Usually in this context an insurance product which provides you with as series of payments, at regular intervals, which may or may not be subject to increase until a specified event such as death. (See page 14) Legislation which requires all employers to enroll their workers into a Qualifying Scheme if they are not already in one, provided they meet age and earnings criteria. This term is used when explaining death benefits and refers to either a natural child, a child who has been legally adopted or a child conceived but not yet born. To be eligible for pension benefits in the event of the death of a member, a child must be: Under age 18, Below age 23 and in full time education or vocational training, or, Any age, but dependent on the member because of a physical or mental impairment. This means a same sex couple who have entered into a legal civil partnership. This confers the majority of legal rights as marriage. This means building up an entitlement to the State Earnings Related Pension Scheme (SERPS), now known as the State Second Pension (S2P) via your National Insurance Contributions to the Government. This is where you stop contributing and leave your Retirement Account in the Scheme. This is someone who is 'eligible' for Automatic Enrolment. This is a jobholder who: is aged at least 22 but has not yet reached state pension age, and earns above the earnings trigger for Automatic Enrolment. Page 5
HMRC Ill-Health Condition Lifetime Allowance Non-Eligible Job Holder Normal Pension Age Opt Out Window PAYE Pay Plus for pensions Pension Protection Fund Pensionable Salary Her Majesty s Revenue and Customs formerly known as the Inland Revenue. l The Ill-Health Condition is set out in Part 1 of Schedule 28 of the Finance Act 2004. This states that: For the purposes of this Part the ill-health condition is met if (a) the scheme administrator has received evidence from a registered medical practitioner that the member is (and will continue to be) incapable of carrying on the member s occupation because of physical or mental impairment, and (b) the member has in fact ceased to carry on the member s occupation. Under the Trust Deed and Rules, it is the Trustees that determine whether a member satisfies the Ill-Health Condition. This is the maximum amount of tax-free pensions savings that can made in a person s lifetime. Any amount over this is subject to tax charges. These are employees who are not eligible for Automatic Enrolment (though they can choose to 'opt in' to an Automatic Enrolment scheme). This is a jobholder who: is aged at least 16 and under 75, and earns above the lower earnings level of Qualifying Earnings but below the earnings trigger for Automatic Enrolment. Or: is aged at least 16 and under 22, or between state pension age and under 75, and earns above the earnings trigger for Automatic Enrolment. The age at which you normally retire under the Scheme Rules and can take your benefits unreduced. This is age 65 for the Flexible Retirement Plan Section. A one month period from the time a member is provided with enrolment information during which they can return an Opt Out form. This is Pay As You Earn and is the method of taxation that will be applied to your pension benefits once your annual pension is in payment. This means that tax will be deducted at source before your benefits are paid to you. This is a salary sacrifice arrangement which works with the pension scheme to lower the cost of pension contributions via National Insurance savings. All new members of staff who join the Scheme will be automatically entered into the Pay Plus for Pensions arrangement, unless they actively opt out. Further information can be obtained from the Pay Plus for pensions pages of the University of Sheffield website or via the Pensions Office. The Pension Protection Fund provides compensation to members of eligible defined benefit pension schemes, when there is a qualifying insolvency event in relation to the employer, where there are insufficient assets in the pension scheme to cover the Pension Protection Fund level of compensation, and where the scheme satisfies certain criteria. Further information can be found at www.pensionprotectionfund.org.uk. This is your basic annual pay plus any regular sum allowed by the University as part of basic pay, excluding bonuses and overtime earnings. Page 6
Pensionable Service Preservation Requirements Primary Threshold / Secondary Threshold Qualifying Earnings Qualifying Scheme Retirement Account Scheme Actuary Scheme Administrators Staging Date State Second Pension (S2P) Spouse Upper Earnings Limit This is the number of years and complete months you have been a member of the Scheme. Means the provisions of Part IV Chapters I, II, IV and 5 of the 1993 Act relating a member's rights on termination of membership before Normal Pension Age. The Primary Threshold and Secondary Threshold represent the points from which payment of National Insurance Contributions arise. This includes all of the following pay elements (gross): Salary Wages Commission Bonuses Overtime Statutory sick pay Statutory maternity, paternity and adoption pay. These earnings are used to identify whether an individual is an Eligible Jobholder or a Non-Eligible Jobholder. This is not the same as Pensionable Salary as some of these elements of pay are not pensionable under the Scheme. Qualifying Earnings only includes earnings between upper and lower limits that are determined by the government. This is a pension scheme that meets certain minimum standards set by legislation. There are different standards depending on the type of scheme. The University of Sheffield Pension Scheme (USPS) has been verified by the Scheme Actuary to be a Qualifying Scheme for Automatic Enrolment for members who contribute at the 4% contribution level. The account maintained in respect of you under the rules of the Flexible Retirement Plan Section. The individual appointed by the Trustees to advise on the funding of the Scheme. The firm appointed by the Trustees to manage the administration of the Scheme. This is the date from which employers are obliged to automatically enrol Eligible Jobholders into a Qualifying Scheme. For the University of Sheffield, this date is 1 April 2013. This is the additional state pension built up by those earning above a lower earnings limit. The University of Sheffield Pension Scheme is Contracted In to this. This term is used when explaining death benefits and refers to the person you are married to, or in a civil partnership with, at the date of your death, provided the marriage/partnership occurred over six months prior to the date of death. At the discretion of the Trustees, Spouse can also mean the person you were living with (and were financially interdependent with) or someone who was financially dependent on you, at your date of death. This is the highest amount of earnings on which employees pay the higher rate of national insurance contributions. A contribution of 1% is payable on any earnings above the Upper Earnings Limit. Page 7
Joining the Scheme Who Can Join? All members of staff, on grades 1 to 5 inclusive (or equivalent), who are aged 16 or over, are eligible to join the Scheme. This applies equally to full and part time members of staff and also those on fixed term contracts. Automatic Enrolment Under legislation which took effect from 1 October 2012, Employers are obliged to automatically enrol employees into a qualifying workplace pension from their Staging Date provided the meet minimum criteria. Employers will automatically enrol workers into a workplace pension who: are not already in a qualifying pension scheme are aged 22 or over are under State Pension age earn more than 9,440 a year (2013/14) (this figure is reviewed every year), and, work or usually work in the UK. When Can I Join? You will automatically join the Scheme, provided you meet the above eligibility criteria, on the first day you commence employment with the University of Sheffield or one of its participating employers, or any later date specified in a notice to you from your employer. If you do not meet the criteria to be automatically enrolled, please note you can also be automatically put into the scheme if you meet any of the above criteria in the future, such as reaching your 22 nd birthday or meeting or exceeding the monthly amount of qualifying earnings. This is because at the point you meet the criteria, you will then become an Eligible Jobholder under law and must be put into a Qualifying Scheme. If you do not meet the criteria, you can elect to join the Scheme by completing an Opt In Notice and returning it to the University of Sheffield Pensions Office. You will then be entered into the Scheme from the 1 st day of the month following receipt of the Opt In Notice. Page 8
Do I Have To Join? You will be automatically be enrolled into membership of the Scheme, as specified above, but you do not have to remain a member of the Scheme. You can choose to opt out of membership. When you trigger auto enrolment for the first time, you will be contacted to give you details of where to obtain the Opt Out form. Please be aware the form can only be obtained from the Scheme, not the Employer, under law. If you are unsure whether you wish to remain a member of the pension scheme, it is worth bearing in mind that if you decide to make your own retirement, ill-health or death benefit provision, this can be a lot more expensive as you will not have the benefit of the employer contributions to help fund the benefit. How Do I Opt In? If you do not meet the automatic enrolment criteria, or have previously opted out and wish to rejoin membership, simply complete the Opt In Notice and Expression of Wish Form (see page 20), sign them and return them to the Pensions Office. In order to verify your date of birth and marital status, the Pensions Office will also need to see and take a copy of your original birth certificate and your original marriage or civil partnership certificate (where applicable). What If I Do Not Wish To Join? If you are automatically enrolled and wish to opt out, you will need to complete an opt-out form within the Opt Out Window which will be specified to you in the letter you will receive from the University which confirms to you that you have been automatically enrolled. If you do not join the Scheme, the University will not make contributions to any other pension arrangement on your behalf, and you will not be provided with death in service cover. Once I Have Joined, Can I Leave The Scheme At A Later Date? If you leave the University, you will automatically leave the Scheme. You cannot remain an Active member of the Scheme once you have left employment. You can also leave the Scheme whilst remaining in employment. This is known as opting-out. If you decide to opt-out in any circumstances other than in the Opt Out Window, you need to give your employer and the Trustees one months notice, in writing, specifying the date from which you wish to opt out. Please note that by opting-out you will lose all rights to death in service benefits under the Scheme. For further information, please see the Leaving Pensionable Service section on page 21. Page 9
Can I Join The Scheme Later, Or Rejoin After Opting-out? If you do not join the Scheme at the times described above or you opt-out of membership after joining, you may join or rejoin at a later date at the discretion of your employer and the Trustees of the Scheme. You would need to complete the Opt In Notice to request membership and also a new Expression of Wish Form. Your admission into membership may be subject to evidence of your good health and death/ill-health benefits may be restricted. You may need to complete a medical questionnaire. Approval for rejoining may be subject to the terms offered by the Scheme s insurers who underwrite the death in service benefit. Life cover may be restricted for those who have pre-existing medical conditions. Please contact the Pensions Office for further information. Can I Transfer Any Previous Pension Benefits Into The Scheme? The Trustees of the Scheme do not allow transfers into the Scheme. Page 10
Pension Scheme Contributions How Much Do I Pay? As a member of the Scheme, you will be able to choose how much of your Pensionable Salary you wish to contribute towards your Retirement Account from the amounts shown in the table below. Your Pensionable Salary is your basic annual pay, plus any regular sum allowed by The University of Sheffield as part of basic pay, excluding bonuses and overtime earnings. If you join the Scheme and do not select which level of contribution you wish to pay, or are automatically enrolled into the Scheme once you attain Eligible Jobholder status, you will automatically be entered at the 4% Member contribution level. Eligibility All members Employee contribution (% of Pensionable Salary) 2% 4% 6% 8% 10% Contributions will be deducted directly from your monthly salary. You will automatically receive Income Tax relief on these contributions through payroll when your Pay As You Earn (PAYE) tax deduction is calculated. The following is an example of how this will work for a standard rate taxpayer: who decides to join the scheme at the 6% employee contribution level: Higher rate tax payers or Pay Plus for pensions members may be eligible for further relief from tax and National Insurance. Your basic pay Your contributions at 6% 500 per month 30 per month 24 per month 1000 per month 60 per month 48 per month 1500 per month 90 per month 72 per month Actual cost to you after tax relief at 20% (difference in take home pay) Can I change my mind about how much I pay? You can alter your contribution level from each 1 April and this will then apply for the year ahead. If your circumstances change and you have a lifestyle event, such as getting married or divorced, you will also be able to alter how much you wish to pay at that time. Please contact the Pensions Office for details of the relevant lifestyle events and how to change your contribution. Page 11
I Want To Join But I am Unable To Afford To Pay Into The Scheme At The Moment If you would like to join the Scheme but are concerned about affordability, you may wish to consider the Scheme s lowest contribution rate of 2%. By joining the Scheme at this level you will also benefit from death in service cover and the employer s contributions (see page 14) to your Retirement Account giving you a total credit at Normal Pension Age of 10% for each year of membership. Over time, if you feel you are able to afford to pay more, you can increase your contributions gradually through the stepped contribution levels, until you find a level which is suitable for you. You can choose to increase or reduce your contributions each year in April or if you experience a lifestyle event. Information for Members Who Contribute at 2% Please be aware that under the automatic enrolment provisions, an employer is obliged, under legislation, to re-enrol any eligible member of staff back into a Qualifying Scheme once every 3 years. The qualifying contribution level for the University of Sheffield Pension Scheme is 4%. This means that at the 3 year anniversary date for automatic enrolment, anyone who contributes at the 2% level will be automatically increased to the 4% contribution level. Can I Change from the 4% Default Level? You can alter your contribution level to pay more or less into the Scheme by completing the Change of Contributions Form, which is available on the University of Sheffield web pages. You can change contribution rates from each 1 April and this will then apply for the year ahead. For the purpose of the change of contribution rates at each 3 year automatic enrolment event, this change can be considered a lifestyle event, which means you are able to alter how much you wish to pay at that time. Please contact the Pensions Office if you require any further details of the relevant lifestyle events and how to change your contribution. Page 12
How Does Pay Plus For Pensions Affect My Contributions? If you decide to join the Scheme, you will automatically be entered into the Pay Plus for pensions arrangement once you have been in membership for 3 months, unless you complete a form to opt out. If you do not take any action upon joining the Scheme, you will automatically participate in Pay Plus for pensions. By participating in Pay Plus for pensions, you are effectively agreeing to reduce your annual salary by an amount equal to the annual employee pension contribution. The University will then pay both the normal employer pension contribution and an additional contribution equivalent to the Employee contribution you would normally have had deducted from your salary. This means the University pays the Employee contribution on your behalf and both contributions are classed as employer contributions. Both employee and employer National Insurance contributions are based on the reduced salary, making these contributions lower. This should result in the pension scheme member receiving more take home pay and a reduction in costs for the University. The pre reduction salary remains on payslips for reference, and overtime etc continue to be based on this figure. Pension benefits also continue to be based on the pre reduction basic salary plus any other pensionable payments you may receive. This means the amount of contributions you pay during your working life will be based on the salary amount before the reduction is applied. It should be noted that if you are a Pay Plus for pensions member the scheme it will be classed that NO employee contributions have been made to the Scheme. This will prevent you from being able to reclaim your employee contributions if you leave the scheme in the first 24 months (i.e. you will not have an option to receive a refund of your contributions). Further information can be found on the University website on the Pay Plus for pensions pages. Do I Have To Be Part Of Pay Plus For Pensions? If you do not wish to be part of this salary sacrifice arrangement you must complete an opt out form which is available online at: http://hr.dept.shef.ac.uk/forms/opt_out_new_starter.pdf (for new members of staff), or, http://hr.dept.shef.ac.uk/forms/opt_out_le_april.pdf (for those opting out on 1 April or after a lifestyle event, or on request from the Pensions Office. Further information can be found on the University website on the Pay Plus for pensions pages at: http://www.shef.ac.uk/hr/reward/mybenefits/payplus/pensions. Page 13
Retirement Benefits What Benefits Will I Get On Retirement? At the point of retirement, you will use your Retirement Account, less any tax free cash you decide to take, to buy yourself an income during retirement. Usually, this will be provided by an Annuity. An Annuity can be bought from a range of providers and your retirement income can be tailored to match your needs. For example, (subject to the terms offered by the provider), you can decide whether or not to include a pension for your spouse/dependants after you die and by how much you would like your pension to increase in payment (subject to minimum statutory requirements). You may also choose to take up to 25% of your Retirement Account as a tax free cash sum (under current legislation). Once arranged, your Annuity will provide a predictable pension income for life. The amount of pension that you will be able to purchase will depend on the value of your Retirement Account, the amount of tax free cash you choose to take, and your age, health and the cost of annuities at the time you retire. The Scheme does not guarantee that you will receive a certain amount of pension and/or cash lump sum on retirement. You will also receive your entitlement (if any) to State Pension benefits (Basic State Pension and S2P) which will be paid by the Government. Please note that your State Pension benefits may be payable from a different age to your Normal Pension Age under the Scheme. What Is Credited To My Retirement Account? Your employer is committed to providing you with a set credit for each year that you are in Pensionable Service. The value of this credit depends on the rate of employee contributions that you have chosen. The aggregate value of your credits will be available in full when you reach Normal Pension Age. The table below shows the total credit that will be available in your Retirement Account at Normal Pension Age, depending on the rate of employee contributions that you have made. Eligibility All members Employee contribution (% of Pensionable Salary) 2% 4% 6% 8% 10% Total contribution at Normal Pension Age including member contribution (% of Pensionable Salary at the time the employee contribution is made) 10% 15% 20% 25% 27% Page 14
Below are some examples of how much credit can be built up in a Retirement Account over different periods based on a 6% contribution: Salary per annum Amount of time as a member of the Scheme 10 years 20 years 30 years 40 years 10,000 20,000 40,000 60,000 80,000 15,000 30,000 60,000 90,000 120,000 20,000 40,000 80,000 120,000 160,000 25,000 50,000 100,000 150,000 200,000 How Much Will My Retirement Account Be Worth At My Normal Pension Age? The credit made to your Retirement Account for a particular year will be based on your Pensionable Salary in that year. As there may be some time between the credit being made and your Normal Pension Age, the credit will be "revalued" during this time. Revaluation will be in line with the Consumer Price Index (CPI), up to a maximum of 5% each year, and is intended to help protect your Retirement Account from the effects of inflation. At Normal Pension Age your Retirement Account will be worth the full amount of the revalued credits that have been made. An illustrative example of how benefits would build up in a cash balance account is provided below: Page 15
What If I Work Part Time? If you have worked on a part-time basis at any time during your employment, your Retirement Account will be calculated accordingly, based on the amount you earned during that period and the percentage of your Pensionable Salary you have chosen as your employee contribution level. Can I Exchange My Entire Pension For Cash? This can only be achieved between after the age of 60 and before the age of 75 where the value of all your pension benefits FROM ALL SCHEMES (meaning any pensions, excluding the State Pension, that are provided by companies or organisations other than the University of Sheffield, in addition to benefits from the Scheme) is less than 18,000. You must also take all such benefits within a 12 month period. Part of the sum will be tax-free, but the rest is taxable at your normal rate of income tax. This is known as Trivial Commutation. There is also a scheme specific trivial commutation limit where the value of pension benefits is less than 2,000.00. If you think this may apply to you, please contact the Pensions Office. How Will My Retirement Account Be Funded? Both you and your employer will contribute to your Retirement Account each month. The amount payable by the employer will be determined by a Schedule of Contributions agreed by the Trustees and the Scheme Actuary. The contributions made to your Retirement Account will be invested by the Trustees, who will aim to grow these investments sufficiently to pay for your aggregate revalued credits at Normal Pension Age. However the investments perform, you will be entitled to your aggregate revalued credits at Normal Pension Age. This means that if the investments do not return enough growth, the University will provide the additional funding needed to provide the credits promised. Your employer also pays the cost of the Pension Protection Fund (PPF) Levy. This is a statutory arrangement that aims to provide prescribed benefits in the event that a pension scheme should fail. Page 16
Types of Retirement Normal Retirement Normal Retirement Age is 65, however this may be reviewed in the future to increase in line with the State Pension Age. If you wish to retire at your normal retirement age, you will need to give advance notice to your department so they can officially confirm your retirement date to the Department of Human Resources and the Pensions Office. Early Retirement You can apply to take your benefits early from the age of 55 years, in line with Government legislation. If you retire before Normal Pension Age benefits will be reduced by reference to the Normal Pension Age (i.e. taking account of the number of years the benefit is taken early). If you wish to retire from the Pension Scheme before Normal Pension Age, this will require both the consent of the University and of the Trustees. In the first instance, you need to contact your Head of Department. They will then liaise with Human Resources and will confirm whether or not the University will give consent. Once the consent of the University is received, this will be confirmed to the Pensions Office. The Pensions Office will then approach the Trustees for their consent. Please note that this process can take several weeks. Requests for retirement benefits should be made at least 3 months before the retirement date, wherever possible, or payment of benefits may be delayed. The Pensions Office will notify you in writing of the Trustees decision. If consent is given, your Retirement Account will then be processed. Further information on early retirement can be obtained upon application to the Pensions Office. Page 17
Late Retirement It may be the case that you continue to work past your Normal Pension Age. If so, you may, with the consent of the University, choose to access your Retirement Account from the Scheme, whilst still working for your employer. Alternatively, again with the consent of the University, you may choose to remain in Scheme membership and continue to build up your Retirement Account up until the date you leave employment or age 75, whichever is the earlier. Life cover may also still be provided beyond Normal Pension Age, subject to the agreement of the Scheme insurers. Flexible Retirement It is also possible, if you wish, to build up a new Retirement Account (technically rejoining the Scheme), after you have retired, although you can only do this once. Please note that permission is required from the University and the Trustees to rejoin the Scheme. Any benefits taken early will be reduced for early payment. Please see the section on early retirement for further information. Further information on flexible retirement can be obtained upon application to the Pensions Office. Incapacity Retirement (Ill-Health Retirement) Early retirement is permitted, at any age, if you have five or more years Pensionable Service and satisfy the criteria for retirement on the grounds of incapacity or serious ill-health. The Rules are very strict in defining ill-health in the context of qualifying for incapacity retirement. You will need the consent of the University in order to start the application process. In order to qualify for ill-health retirement, satisfactory medical evidence must be provided to show that you fulfil the Ill-Health Condition which is defined in law. Any application will be considered by the Trustees, who may request additional medical evidence, if required. All cases for ill-health retirement must be referred to the Pensions Office via the University Staff Occupational Health Service and Human Resources. Further information on incapacity retirement can be obtained upon application to the Pensions Office. Page 18
The Retirement Process I Want To Retire Soon What Do I Need To Do? You need to be aware that the retirement process can take quite some time, depending upon your circumstances. The previous section gives some indication of the processes involved and the fact that some retirements need both University and Trustee consent. In all cases, it is usually wise to contact the Pensions Office to check what you need to do to start the retirement process. The Pensions Office will then let you know how to proceed, based on your personal circumstances. How Can I Find Out What My Benefits Will Be At Retirement? Whilst you are an Active member of the Scheme, you will receive annual Benefit Statements. These will give you an estimate of what your Retirement Account will be at your Normal Pension Age, assuming you remain a member of the Scheme until that age. Before you make any decisions about retirement, it is usually best to obtain an estimate of what your Retirement Account is likely to be at your chosen retirement date. This can help you to plan your finances at retirement. If you are thinking of retiring you can request an estimate of your Retirement Account from the Pensions Office. However, you should note that this will be an estimate based on the current value of your Retirement Account and it is usually more accurate if estimates are carried out as near to the retirement date as possible. Retirement estimates do not constitute an entitlement to benefits. How Long Will It Take To Get A Retirement Estimate? Retirement estimates are carried out by the Pensions Team. The Pensions Office will give you an idea of timescales when you make your request. How Long Will It Take To Process My Retirement? There is no set time limit for processing your retirement benefits. Each case will be different as it depends upon individual circumstances. It is usually recommended that members start the retirement process at least three months before their intended retirement date. This should then allow time to obtain consent (if required) and process all the relevant forms that are needed to allow pension benefits to be put into payment. Page 19
Death Benefits in Active membership How Will My Dependants Be Looked After If I Die? Death in service benefits will be allocated by the Trustees at their discretion. This may be for the benefit of one or more of your dependents or relatives, nominated charities, or paid to your personal representatives. You may indicate to the Trustees whom you would like to receive these benefits by completing an Expression of Wish form. What Happens To My Retirement Account If I Die Before Claiming My Benefits? If you die in Active membership before you take your Retirement Account and before age 75, the person(s) you have nominated on your Expression of Wish Form will receive, at the Trustees' discretion, a lump sum (or proportion as appropriate) equal to: 4 x your Pensionable Salary, plus The value of the your employee contributions (if any) with interest, plus The value of your AVCs (if any) Please note that the benefits payable on death may be restricted if special terms were applied to you upon joining the Scheme. In this event, you will have received written confirmation of the terms applicable. Expression of Wish Forms The Trustees will always consider your Expression of Wish form and details of your personal circumstances, before reaching any decision as to whom the benefits should be paid to. It is always recommended that you complete a new Expression of Wish form every time your personal circumstances change (such as marriage/civil partnership or divorce) and in any event, at least every 3 years. Each new form you complete will supersede the previous one. The Expression of Wish form is not legally binding upon the Trustees. The reason for this is that if benefits were automatically payable to the nominated persons they would then be subject to inheritance tax. Currently, discretionary lump sum death benefits are usually paid free of tax (unless these are paid into your estate). Copies of the Expression of Wish Form are available online at http://www.shef.ac.uk/polopoly_fs/1.121486!/file/2011_11_25_- _Expression_of_Wish_Form.pdf, or from the Pensions Office. Page 20
Leaving Pensionable Service How Can I Leave Pensionable Service? There are two ways in which you can leave the Scheme before Normal Pension Age, either: By opting out of the Scheme By leaving employment with the University. In either case, you will stop paying towards building up your Retirement Account and your life cover will cease. The options you have will differ, depending upon how long you have been a member of the Scheme, and these are explained below: What is Opting Out? If you decide to leave the Scheme whilst remaining in employment, this is known as opting-out. If you are automatically enrolled and opt out within the one month opt out window, all contributions taken will be refunded to you and you will have no membership with the University of Sheffield Pension Scheme. To opt-out at any other time, you need to give the Trustees and your Employer one months notice, in writing, specifying the date from which you wish to opt out. Please note that by opting-out you will lose all rights to death in service benefits under the Scheme. Can I Rejoin The Scheme If I Opt Out? Should you wish to rejoin the scheme at a later date, you would need to complete the Opt In Notice and Expression of Wish Form and return these to the Pensions Office. You may also need to complete a medical questionnaire. Approval for death in service cover is subject to the terms offered by the Scheme s insurers who underwrite the death in service benefit. Life cover and ill-health benefits may be restricted for those who have pre-existing medical conditions. What Happens If I Leave The University? On leaving employment with the University you may not continue as an Active member of the Scheme, under any circumstances (unless you move to work for another participating employer). Page 21
Leaving Pensionable Service With Less Than Three Months Service. If you leave service or opt out of the Scheme within the first three months of membership, you can receive a refund of your own contributions (you will be treated as though you never joined). Please note: if you have been a member of the Pay Plus for pensions scheme at any time during your membership, the contribution refund for this period will be NIL. This is due to the fact all contributions under the Pay Plus for pensions arrangement are deemed to be employer contributions. Leaving Pensionable Service With Less Than Two Years Service. If you have not completed two years as a Scheme member, but have completed more than 3 months at your date of leaving, your options are: A refund of your own contributions. Interest will be added to the refund less a deduction for tax. Please note: if you have been a member of the Pay Plus for pensions scheme at any time during your membership, the contribution refund for this period will be NIL. This is due to the fact all contributions under the Pay Plus for pensions arrangement are deemed employer contributions. Please see the Pay Plus for pensions web pages on the University website for further details. A transfer payment to another qualifying arrangement. Your Retirement Account can be moved to another pension scheme provider, for example with another employer (subject to the rules of that employer s scheme). In this event, you will receive details of the transfer value available from the Scheme Administrators. Page 22
Leaving Pensionable Service With More Than Two Years Service. If you have been a member of the Scheme for two or more years, you have two options upon leaving the Scheme: 1. Deferral of your Retirement Account. Your Retirement Account will remain in the Scheme and will be accessible from your Normal Pension Age. Your Retirement Account will be revalued each year in line with the Preservation Requirements up to a cap of 5% for each year, and at Normal Pension Age will be available to you in full. 2. A transfer payment to another qualifying arrangement. Your Retirement Account can be moved to another pension scheme provider, for example with another employer (subject to the rules of that employer s scheme). In this event, you will receive details of the transfer value available from the Scheme Administrators. You may also elect to: access your Retirement Account early from age 55, subject to Trustee consent and reduction for early payment (see early retirement); access your Retirement Account from any age on the grounds of incapacity, subject to satisfying the relevant criteria and reduction for early payment (see incapacity retirement); or postpone accessing your Retirement Account until after your Normal Pension Age (but before age 75), subject to Trustee consent (see late retirement). How Are Transfer Payments Calculated? Regulations state that the responsibility for determining the transfer basis lies with the Trustees, and this has been the case since 1 October 2008. Any transfer granted to a member will be at least equal to the value of a member s alternative Deferred Retirement Account. Page 23
Information For Deferred members What Is A Deferred member? A Deferred member is one who has left the Scheme, either by leaving service (i.e. employment) or by opting out of the Scheme, but who has not taken their Retirement Account. The Retirement Account is then Deferred in the Scheme, meaning preserved to take at a later date. Some members may also be Active members for a subsequent period of Pensionable Service. Keeping In Touch Once you have left the University, it is important that you notify the Scheme of any changes of personal details such as name or address. This will enable the Scheme to contact you with any important information about your benefits or past membership and also to get in touch with you easily when your Retirement Account is due. All changes to personal or contact information can be sent, in writing, to the Scheme Administrators. Once a member of the Scheme has left the University, all enquiries will be dealt with by the Scheme Administrators, on behalf of the Trustees. The contact details for the Scheme Administrators will be provided on your leaving service options paperwork. However, if it is a significant length of time since you have left service, and you are not sure if the contact details are still applicable, please contact the Pensions Office in the first instance. Transferring Your Pension Once you have left the Scheme, you can apply to transfer the value of your Retirement Account to another pension arrangement. You should contact your current pension provider in the first instance to ensure they are willing to, and capable of, accepting the transfer. They will then advise as to whether or not they or you should contact the Scheme to obtain a transfer value. Claiming Your Retirement Account If you would like to claim your Deferred Retirement Account, you will need to contact the Scheme around three months prior to your retirement date so that all paperwork can be processed in a timely manner. Death In Deferment If you die whilst a Deferred member of the Scheme (i.e. you are no longer contributing and you have not elected to take your Retirement Account or transferred it to another arrangement), the value of your Retirement Account will be payable as a lump sum at the Trustees discretion. The value of your Retirement Account will be reduced to take account of early payment. Page 24
Absence From Work Absence Other Than Family Leave - Definition of Absence Members are sometimes absent from work for a variety of reasons such as ill-health or secondment. Under the Trust Deed and Rules, absence from work is described as a period not exceeding: twelve consecutive months (if the absence is due to reasons other than injury, ill-health or secondment and is with the University's approval); or thirty consecutive months if the absence is due to injury or ill-health; or thirty six months if a member is temporarily seconded to another employer. In all cases, the member will be expected to return to work after the absence. Paid Absence If you are absent from work but still receiving pay from the University, you can choose to continue making employee contributions. If you continue your employee contributions, credits will continue to be made to your Retirement Account, the period will count towards Pensionable Service and you will continue to be covered for death in service benefits, subject to the agreement of the Scheme insurers. Your contributions will be based on the Pensionable Salary that you were receiving immediately before the absence, unless you are absent because of ill-health or injury in which case they will be based on the pay that you actually receive during the period of absence. Unpaid Absence If you are absent from work and you are not receiving any pay from the University, you can still choose to continue making employee contributions, but to do so you must also pay the employer contributions for the period of absence. If you continue both the employee and employer contributions, credits will continue to be made to your Retirement Account and the period will count towards Pensionable Service. You will also continue to be covered for death in service benefits, subject to the agreement of the Scheme insurers. Your contributions will be based on the Pensionable Salary that you were receiving immediately before the absence. Family Leave This covers statutory maternity, paternity, adoption and parental leave. Page 25
Paid Family Leave If you are on paid family leave, you will continue to pay your employee contributions, but these will be based on the Pensionable Salary that you actually receive during the period of leave. Credits will continue to be made to your Retirement Account, the period will count towards Pensionable Service and you will continue to benefit from death in service cover based on your normal Pensionable Salary. Unpaid Family Leave If you are on unpaid family leave, you can still choose to continue making employee contributions, but to do so you must also pay the employer contributions for the period of leave. Your contributions will be based on your normal Pensionable Salary. If you continue both the employee and employer contributions, credits will continue to be made to your Retirement Account and the period will count towards Pensionable Service. You will also continue to be covered for death in service benefits, subject to the agreement of the Scheme insurers. Returning To Work If you have not made any contributions to the Scheme during a period of absence or leave, but you wish for your unpaid leave to be treated as Pensionable Service, and for credits to be made to your Retirement Account, then you must pay the relevant contributions that should have been paid during that period on returning to work. Not Returning To Work If you do not return to work, then Scheme membership will usually end on the day your pay ceased. Different rules relating to contributions will be applicable to those participating in Pay Plus for pensions. Further information can be found on the University website on the Pay Plus for pensions pages. Page 26