In phasing out the CNPP and Magnox ESPS schemes it is important to note the following:
- The new CARE scheme continues to provide defined benefits
- Members’ higher rate contributions to CARE will not be back dated and will increase gradually over the first three years of CARE
- Affected members will continue to accrue final salary benefits up to the date the CARE scheme goes live
- There will be no change to the benefits built up in the final salary schemes; and the calculation of those benefits will continue to be linked to final salaries after CARE goes live.
- There will be no change to existing retirement ages.
CARE design key features
- Career Averaged Revalued Earnings is a defined benefit scheme
- No change in existing pension ages (for examples 60, 63, 65)
- Accrual rate 1/58th
- CPI revaluation during accrual
- CPI indexation of pensions in deferment and payment
- Exchange £1 pension for £12 lump sum
Employee contributions
- Average 8.2%
- Tiered rates by earnings
- Will in most cases be introduced in 1% steps over 3 years and where required a fourth year increase
- Earnings bands updated in line with CPI
Benefits in the new CARE scheme
BENEFIT | CARE SCHEME |
---|---|
Pension Age | No change to current provision |
Past Service | Protected |
Accrual Rate | 1/58th (= 1.724% of earnings) |
Revaluation Rate | Inflation (CPI) |
Pension Increases | Inflation (CPI) |
Retirement Lump Sum | None (Can take £12 lump sum for every £1 pension given up to maximum allowed) |
Member Contribution | Tiered |
Pensionable Pay | No change to current provision |
Ill Health Benefits | No change to current provision |
Adult Dependents Benefits Pension | 37.5% of members pension |
Enhancement on Death in Service | No change to current provision |
Lump Sum Payable on Death | No change to current provision |
Children’s Pension | 1 or 2 children: 30% (50% if no adult dependent’s pension in payment) of member’s pension each. 2 or more children: equals shares of 60% (100% if no adult dependent’s pension in payment) of member’s pension. |
Early or Late Retirement | No change to current provision |
‘Added Years’ | Existing contracts honoured, in future can buy “Added Pension” |
AVC’s | No change to current provision |
Shift Pay Pension Plan | No change to current provision |
Statutory Protections | Pension protections will be modified to enable the implementation of pension reform only |
Access to Pension on Redundancy | No change to current provision |
Transitional Protection | Not applicable because no change to pension age |