UBPAS: Retirement benefits
How will my pension be calculated?
The following formula will be used:
For benefits accrued before 1st November 2013: 1/80th x Final Pensionable Salary x Pensionable Service in scheme prior to 1st November 2013.
Plus, for benefits accrued from 1st November 2013: accrual rate x Final Pensionable Salary x Pensionable Service in scheme from 1st November 2013.
Plus, for benefits accrued from 1 February 2017: accrual rate x Final Pensionable Salary x Pensionable Service in scheme from 1 February 2017.
In addition you will receive a cash lump sum (which under present legislation will be tax free) calculated by the following formula:
3 times annual pension (as calculated above)
What is my Final Pensionable Salary?
UBPAS is designed to provide you with benefits when you retire which reflects your earnings progression throughout your career. As such they are normally based on your earnings close to retirement – your Final Pensionable Salary.
Can you show an example of how the benefits will be calculated for a member?
Yes. Mrs P is leaving the University after ten years of employment and membership of UBPAS. She will retire on 1st February 2018 and elected to accrue benefits at 1/100th from 1st November 2013, plus 1/135th from 1 February 2017. She has worked full time for the whole period, and her pensionable salary has been calculated as £20,000 per annum.
Her benefits will be calculated as follows:
Final Pensionable Salary: £20,000
Pensionable Service: 13 years 3 months
Annual Pension accrued before 1 November 2013: 1/80th x £20,000 x 9 years = £2,250 p.a
Annual Pension accrued from 1 November 2013-31 January 2017: 1/110th x £20,000 x 3 years 3 months = £591.28 p.a
Annual Pension accrued from 1 February 2017: 1/135th x £20,000 x 1 year = £148.15 p.a
Total annual pension payable = £2,250 + £591.28 + £148.15 = £2,989.43 p.a
Tax-free lump sum: 3x £2,989.43 = £8,968.29
What is my Pensionable Service?
This means your period of service in years and days as an Active Member of UBPAS and any further period credited to you by the Trustees (e.g. due to AVCs paid to the Scheme or service credited by transfers in from other schemes).
The University will contribute towards your Pensionable Service up to 40 years. UBPAS will allow members to continue beyond 40 years but the University will not generally contribute to the employers element.
Can I take out a larger lump sum?
UBPAS allows you to convert some of your annual pension into a cash lump sum. In total, you are able take out a tax-free lump sum up to 25% of the capital value of your benefits (subject to commutation factors and HM Treasury limits). Your annual pension will be reduced accordingly.
Can I convert some or all of the lump sum into extra pensions?
When can I retire?
You can retire with immediate benefit at any time after your 55th birthday provided you have completed at least 5 years' pensionable service and you have the consent of the principal employer and the Trustees.
The pension and lump sum will be calculated as above, but will be reduced to reflect the fact that they are paid early, unless you are an active member age 60 or more with at least 25 years’ completed Scheme Service.
If you have less than 5 years pensionable service the benefits could be paid but would be subject to an additional reduction. Please check with the Pensions team.