Reporter 22/11/00: Contributory Pension Scheme: Notice

Contributory Pension Scheme: Notice

20 November 2000

The Council give notice that, subject to the approval of Grace 2, p. 230, they have approved amendments of the Rules of the Contributory Pension Scheme in order to give effect to changes in the Scheme as set out below. These changes have been recommended by the Managing Committee of the Scheme.

The purposes of the amendments are as follows:

1. Pensions Increases (Rule 60.3)

The amendment to Rule 60.3 reinstates the discretion of the Managing Committee to pay increases in pensions in excess of 12 per cent should the Retail Prices Index (RPI) for the relevant 12-month period exceed this. This discretion was removed in error in the extensive revision of the rules which took place in 1999.

2. Eligibility and Admission (Rule 43)

Currently all Assistant Staff, or the relevant employees of the Associated Employers, who are on the permanent payroll of their employer, are aged between 18 and 63, and have a contract for one year or more, are eligible to join the Contributory Pension Scheme on appointment. For new employees aged between 21 and 60 admission to the Scheme is automatic, unless the employee has informed the Pensions Office in advance that he or she does not wish to join the Scheme. The proposed amendment would extend eligibility to join the scheme to age 65 and would make entry automatic for all eligible employees.

3. Pensions and Divorce (Rules 53 & 67)

The Welfare Reform Act 1999 introduced new measures for dealing with pension benefits on divorce and the provisions of the Act are required to be included in the rules governing occupational pension schemes such as the Contributory Pension Scheme. The proposed amendments follow the model rules issued by the Pensions Schemes Office of the Inland Revenue.

It is, however, likely that the Trustees would require an ex-spouse to transfer his or her Pension Credit out of the scheme. It has been necessary to include the provisions to retain the Pension Credit because, if at any time the Scheme was not fully funded in accordance with the Minimum Funding Requirement introduced by the Pensions Act 1995, transfer payments made by the Scheme would be required to be reduced to reflect the funding level of the Scheme. It is not possible to reduce the amount of the Pensions Credit and so under these circumstances it would have to be retained by the Scheme.

It is also unlikely, due to the additional administration that would result, that the Trustees would knowingly accept a transfer value from another pension scheme which had a Pensions Credit or Pensions Debit attaching to it. It was decided by the Managing Committee that the provisions for dealing with such transfer payments to the Scheme should be included in the Scheme rules in case such a Pensions Credit or Debit was inadvertently accepted by the Scheme.

4. Unpaid Parental Leave (Rule 68)

The Employee Relations Act 1999 permits employees, who satisfy certain requirements to take up to 13 weeks of unpaid parental leave during the first five years of each of the children's lives.

Under the current Scheme rules if a member on such a period of unpaid leave were to die he or she would be treated as if they had left the University on the last day for which they were paid and would not therefore have an entitlement to death in service benefits. This is at variance to the position of a member who is on a period of unpaid maternity leave who would be treated as if she had died in service. The proposed rule amendment gives the same rights to members on unpaid parental leave as it does to female members on unpaid maternity leave.

Full details of the amendments and copies of the Rules of the Contributory Pension Scheme can be obtained from: Mrs S. E. Curryer, Head of Pensions Administration, 10 Peas Hill, Cambridge CB2 3PN.

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