April 2004: Announcement to existing members at 31 March 2004
The Cambridge Colleges Federated Pension Scheme (CCFPS) was established in 1977 to provide pensions and other related benefits to the non-academic staff of a number of Cambridge Colleges and over the years a number of changes have been made to the benefits provided by the Scheme such that the Scheme now provides an excellent benefit package. Over the period since the Scheme was set up the costs of improving the benefits offered by the Scheme have all fallen on the employers who participate in the Scheme.
The triennial actuarial valuation of the Scheme as at 31 March 2002 revealed that the majority of Participating Colleges had insufficient assets in their section of the Fund to cover the benefit liability which had already arisen in respect of its members and former members. Agreement was reached between the CCFPS Management Committee, who is the trustee of the Scheme, and the employers to make good this deficit.
At the same time the Management Committee agreed to undertake a review of the benefits offered by the Scheme with a view to trying to reduce the cost to the employers to provide the benefits provided by the Scheme and to reduce the risk to the employer of further increases in contribution rates due to things such as the increasing longevity of members.
As a result it has been agreed that a number of changes to the benefit package will be introduced for periods of service after 31 March 2004. The changes will not affect any benefits accrued on or before 31 March 2004.
Inter-College Transfer System
Currently if a member of the CCFPS moves from one Participating College to another without a gap in employment, or with a gap of less than three months in employment, then it is usually possible for the benefits that member accrued in respect of their first period of employment to be transferred to their new employment on special terms which gives year for year service at the new College. This has been possible because the benefits offered by each Participating College have been broadly similar. However, for service after 31 March 2004 the benefits offered by different Colleges may be very different and so it will no longer be possible to operate the inter-College transfer system. Transfers between Participating Colleges will remain possible in the majority of cases but the cash equivalent transfer value from the original College and the service credit this will purchase in the new College will be calculated on normal transfer terms as opposed to the special inter-College transfer terms.
The maximum number of years of Pensionable Service a member is able to accrue in the Scheme will be limited to 40 years. This limit includes:
- Service as a member of the Scheme,
- Additional service granted in the Scheme in respect of transfers to the Scheme,
- Additional service granted in respect of the payment of AVCs,
- Additional service granted in respect of any enhancements.
Once a member has achieved 40 years Pensionable Service contributions, both from the employee and the employer will cease to be paid. However, where the member is under the Scheme's Normal Retirement Age and is covered for the Insured Benefits premiums for these will continue to be paid by the employer until the member makes a successful claim for long term disability benefits, reaches Normal Retirement Age, retires or dies whichever comes first.
Where a member reaches 40 years Pensionable Service before retirement the members Final Pensionable Salary will continue to be calculated at age 65 or the date of retirement if this is earlier.
Where a member works part time contributions will cease to be paid when the member has 40 years actual service.
Where a member has in excess of 40 years service at 31 March 2004 (s)he will cease to accrue Pensionable Service at that date.
Where a member retires, except when that retirement is on the grounds of the member's incapacity, before the Scheme's Normal Retirement Age then the pension payable will be calculated in the same way as it would be at the members Normal Retirement Age but will be reduced as advised by the Actuary to take account of early payment. An example of the calculation using the early retirement factors in force as at January 2004 is given below. The early retirement factors are reviewed by the trustees and the Scheme Actuary from time to time and are subject to change.
|Member name||Mr A Smith|
|Date of birth||31 March 1954|
|Date joined scheme||1 April 1984|
|Date of retirement||31 March 2017|
|Scheme Service up to 31/03/2004||20 years, 0 months|
|Scheme Service after 31/03/2004||13 years, 0 months|
|Service from AVCs||0 years, 0 months|
|Total Service||36 years 6 months|
|Final Pensionable Salary||£20,000*|
|Early Retirement Factor||88%|
Benefits are currently reduced by 0.5% for each month between retirement and the Scheme's Normal Retirement Age. In this example the member is retiring 2 years and 0 months early and so the reduction is 24 months × 0.5% = 12%.
|Pension||=||(Service prior to 31/03/2004/60 × Final Pensionable Salary) + (Service after 31 March 2004/60 × Final Pensionable Salary × Early Retirement Factor)|
|=||(23.5 years/60 × £20,000) + (13.0 years/60 × 20,000 × 88%)|
|=||£11,646.66 per annum|
* Where the College has removed the Basic State Pension (BSP) offset there would be a second, lower, figure for Pensionable Salary which would be applied to service before the date the BSP offset was removed to calculate the pension benefit arising from that service. However, for simplicity this adjustment has not been made in these examples.
If you require further information this can be obtained from:
Mrs S E Curryer,
Cambridge Colleges Federated Pension Scheme,
10 Peas Hill,
Cambridge, CB2 3PN