|
The Superannuation Arrangements of the University of London |
|||||||||||||||||||||||||||||||||||||||||||||||
|
SAUL Employer Consultation: Frequently Asked Questions for members who join SAUL on or after 1 July 2012 If you have any questions about the proposals which aren’t answered here, please contact your employer’s Pensions Officer or put your question on the Consultation section of the website. The consultation is between you and your employer so SAUL Trustee Company cannot enter into individual correspondence. The website will publish all questions put through the online consultation, and the responses. |
||||||||||||||||||||||||||||||||||||||||||||||
|
Quick Links |
Why are changes to SAUL needed? The funding shortfall is so small – why does SAUL need to change? When are the proposed changes going to start? How have my interests been represented in the negotations? Can I opt to join the Final Salary section? How will pensions increase in the CARE section? How will my pension be reduced if I retire early? Why are pensions reduced for early retirement and how does this work? What are the changes to qualification for ill-health retirement? What about the benefits for my family and dependants if I die? If I’m not currently an active member of SAUL can I join on a Final Salary basis? Will there be any more changes? Will my responses be considered? Will changes to State Pension Age affect when I can receive my SAUL pension? If I’m made redundant will I get a different entitlement in the CARE section? I have more questions – who should I ask?
Why are changes to SAUL needed? The cost of providing defined benefit pension schemes has been rising in recent years. This increase has been due to a combination of improving life expectancy and lower expected investment returns. Also, the preliminary results of the 2011 Actuarial Valuation show that SAUL has a funding shortfall. The proposals are expected to safeguard the sustainability of SAUL so it remains affordable for members and employers while continuing to provide high-quality pension, lump sum and death benefits. You can find out more about why changes are needed here.
No – and there is no need to be concerned. The funding shortfall is small since the £81 million shortfall is only 5% of SAUL’s liabilities. The proposals are expected to tackle the funding shortfall and long-term funding pressures so SAUL returns to full funding.
A funding shortfall occurs when the value of the pension fund is not enough to cover the liabilities (the benefits promised to members).
The funding shortfall is so small – why does SAUL need to change? The funding shortfall is equal to only 5% of SAUL’s liabilities but the continued uncertainty since the financial crisis means that SAUL cannot rely on future investment returns to reduce the deficit.
When are the proposed changes going to start? 1 July 2012.
No. The Employers and Trade Unions do not want to make SAUL unaffordable for members or Employers. Therefore, under the proposals, contributions will stay at 6% of Salary for members and 13% of Salary for Employers. The changes are expected to tackle the funding shortfall while maintaining the current contribution rates. SAUL pensions are currently calculated using normal Salary which includes permanent allowances, contractual overtime and shift allowances, but excludes bonuses and non-regular overtime. The Employers and recognised Trade Unions are discussing how non-regular overtime will be pensionable under CARE.
How have my interests been represented in the negotiations? Your interests have been represented by the recognised Trade Unions: Unison and Unite. They have represented the interests of all eligible employees regardless of whether they are Trade Union members.
I’ve heard that if I join SAUL after 1 July 2012 I will be in a new section of SAUL called CARE – what is it? Under the current basis a member receives 1/80 of Final Salary for each year of service. Under CARE a member receives 1/80 of the Salary paid in each year. Each year’s benefit is then increased to retirement in line with the Consumer Prices Index, which is capped as described here. Put simply: The example below shows how CARE works for a member of SAUL over four years. It shows:
Can I opt to join the Final Salary section? No – you’ll be in the Final Salary section of SAUL only if you’re an active member of SAUL before 1 July 2012 (or you have deferred benefits in SAUL and rejoin before 31 December 2014).
How will pensions increase in the CARE section? The proposals say that when you receive your SAUL pension, benefits built up from 1 July 2012 will increase in line with the Consumer Prices Index (CPI) but will be capped if the increase is above 5%. You can find details about how the cap works here.
How will my pension be reduced if I retire early? If you retire before Normal Pension Date benefits will be reduced for early payment.
Why are pensions reduced for early retirement and how does this work? If you retire early we expect to pay your pension for longer. We calculate members’ benefits with reference to Normal Pension Date (currently the last day of the month before your 65th birthday). If you retire at age 55 your pension will be paid 10 years earlier than expected – which is why it is reduced. Your benefits will be reduced if you retire before Normal Pension Date.
What are the changes to qualification for ill-health retirement? The proposals say members of the CARE section must contribute to SAUL for two years before qualifying for an ill-health pension.
What about the benefits for my family and dependants if I die? There are no proposed changes to the pension payable on a member’s death. The proportion of pension paid to dependants will remain the same, but will be calculated using CARE rather than Final Salary.
If I’m not currently an active member of SAUL can I join on a Final Salary basis? If you previously opted out of SAUL membership, you can apply to rejoin SAUL, subject to being in good health. If you rejoin before 1 July 2012, you will build up benefits on the existing Final Salary basis. If you have deferred benefits in SAUL, you have 30 months from 1 July 2012 to rejoin SAUL on a Final Salary basis. If you would like to apply to rejoin SAUL on the Final Salary basis, please contact your employer’s Pensions Officer. You should apply before 31 May 2012.
Will there be any more changes? We can’t predict what will happen in the future but there are no plans to make further changes to SAUL. The proposals aim to tackle the funding shortfall – and ensure the sustainability of SAUL - so that no further changes will be required.
Will my response be considered? The Employers must genuinely consider all feedback to the proposed changes. Under the Rules of SAUL, the Negotiating Committee, which has an equal number of representatives from the Employers and the recognised Trade Unions, is the body with the power to propose changes to the Rules to the Trustee. So the SAUL Negotiating Committee will consider all the individual Employers’ responses and make a final recommendation to the Trustee.
Will changes to State Pension Age affect when I can receive my SAUL pension? The proposals say that Normal Pension Date for members joining from 1 July 2012 will be 65. Afterwards it will be linked to increases in State Pension Age. The government has proposed that State Pension Age will increase to 66 from April 2020. So SAUL’s Normal Pension Date will be 66 for benefits built up after April 2020. If State Pension Age increases again, SAUL’s Normal Pension Date will also increase. The revised Normal Pension Datewill apply only to benefits built up after the date that State Pension Age changes. Members will still be able to retire before Normal Pension Date, but with a reduced pension.
If I’m made redundant will I get a different entitlement in the CARE section? Members of the CARE section of SAUL who are made redundant above the minimum retirement age and have completed five years qualifying service, will receive a reduced pension due to early payment.
I have more questions – who should I ask? If you have any questions about the proposals which aren’t answered here, please contact your employer’s Pensions Officer or put your question on the Consultation section of the website. The consultation is between you and your employer so SAUL Trustee Company cannot enter into individual correspondence. The website will publish all questions put through the online consultation, and the responses. |
|||||||||||||||||||||||||||||||||||||||||||||
|
|||||||||||||||||||||||||||||||||||||||||||||||
| Site mapDisclaimerLinks Your Feedback Problems Recruitment | |||||||||||||||||||||||||||||||||||||||||||||||
