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The Superannuation Arrangements of the University of London |
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About SAUL ► Contracting out | ||||
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State benefits The State pension is made up of two parts: (a) the basic State retirement pension; and (b) the additional pension from the State Second Pension (S2P). If you have paid enough National Insurance contributions, the basic State pension is payable at a flat rate. Being a SAUL member does not change your basic state pension. The S2P pension is related to your earnings. S2P replaced the State Earnings Related Pension Scheme (SERPS) in April 2002. An occupational pension scheme like SAUL can ‘contract out’ of part of the S2P. This means that employees and employers pay lower rates of National Insurance contributions. Many members of SAUL will build up benefits in the S2P as well as in SAUL. Service before 6 April 1997 SAUL has been contracted-out of SERPS and S2P since 1978. For service up to April 1997, SAUL has agreed to pay you a Guaranteed Minimum Pension (GMP). We increase this each year and pay it at age 65 for men and 60 for women. The GMP is roughly equal to the SERPS pension that you would have received if you had stayed in SERPS. In a few cases, we need to reduce the amount of the lump sum (due at retirement) to meet the GMP. The State will pay part of the increase on your GMP once it starts being paid. SAUL also has to give GMPs to spouses and civil partners on your death. Service after 5 April 1997 The Guaranteed Minimum Pension test ended in April 1997 and was replaced by the Reference Scheme test. This requires SAUL to meet an overall test on the quality of our benefits, compared with those offered by a notional ‘standard scheme’ called the Reference Scheme (this is defined under statutory regulations). Our Actuary has confirmed that SAUL does fulfil all the requirements of the Reference Scheme test, and that the benefits SAUL offers exceed, for most members, those requirements. |
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