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Finance Department

Benefits at retirement

At Normal Pension Date you will receive a pension, which is payable for life calculated as follows:

1/75 x Pensionable Service x
Final Pensionable Salary = pension

How to calculate your own pension

In the calculation below it has been assumed for illustration purposes that the Final Pensionable Salary is the same as the Pensionable Salary.

 

EXAMPLE

YOUR DETAILS

Divide Final Pensionable Salary by 75

£15,000 ÷ 75 = £200.00

 

Multiply the answer by Pensionable Service

£200.00 x 30 = £6,000

 

*Your annual pension from  the Plan

£6,000 per annum

 

*The above example is based on your current Pensionable Salary.  In practice your Final Pensionable Salary may be different from your Pensionable Salary, however, the example does give you a fair idea of the pension you can expect assuming you remain in Pensionable Service until your Normal Pension Date.

Payment

Your pension will be paid by the University as payment agent to the Trustees, in monthly instalments for the rest of your life. The first instalment of your pension will be due from your Normal Pension Date.

Cash Lump Sum Option

At retirement you will have the option of exchanging part of your pension for a cash sum which under the present law is tax-free.

Your pension will be reduced in order to provide the cash sum. Different reduction rates apply depending on your age at retirement.

Important Note:

If you joined the Scheme before 6 April 1997, the Scheme must provide you with a minimum level of pension. The option of a cash lump sum may have to be restricted or removed to ensure that this minimum level of pension is paid (see Section 17). You will be told if these restrictions apply to you at the time your pension is quoted.

Full details will be provided at retirement.

The maximum tax free cash lump sum allowed is 25% of the value of your benefits at retirement. However, some members who joined the Scheme before 6 April 2006 may be entitled to a higher amount and will be advised of this on their retirement. The pension from the Scheme is valued by multiplying the pension by 20.

An example calculation follows:

Using the previous example, if you retire at 65 with a pension of £6,000.

 

EXAMPLE

YOUR DETAILS

Multiply your pension by 20

£6,000 x 20 = £120,000

 

Multiply the answer by the commutation factor 12.0*

£120,000 x 12.0 = £1,440,000

 

Divide by 20 + (3 x 12.0*)

£1,440,00 ÷ 56 = £25,714.29

 

The tax-free cash sum you may be able to take at Normal Retirement Date

£25,714.29

 

Pension from Section 3

£6,000

 

Reduction for cash £25,714.29 ÷ 12.0* = 2,142.86

£6,000 - £2,142.86 = £3,857.14

 

Pension and Cash Benefits

£25,714.29 cash £3,857.14 pension

 

Note 1 It is not compulsory to take the cash sum and you can take any amount up to the maximum quoted to you with the appropriate adjustment being made to the pension.

Note 2* The rate at which cash is exchanged for pension is reviewed from time to time by the Scheme Actuary and therefore, the above figures should be viewed as an illustration only.

Note 3 It is recommended that you seek advice when considering the cash option.