What about previous service?
When the Scheme started there were a lot of staff who transferred in but retained benefits in their previous section (1995 or 2008) of the old scheme.
The most important to thing to mention about Previous Service is:
IT DOES NOT TRANSFER IN TO THE 2015 SCHEME
If you transferred in on 1st April 2015 or you are tapered in over the coming 6 years the pension that you build up prior to that point will be separate, this is called your ‘preserved benefits’.
Let’s look at an example:
Janet is 45 years old and has joined the 2015 pension scheme on 1st April 2015.
She is at the top of AfC band 6 and has 17 years full time service in the scheme at transfer in the 1995 section.
New Scheme:
Janet will start to accrue benefits in the 2015 scheme in the career averaging method, this will be based upon a 1/54th of her annual salary and her normal pension age to draw benefits is 67
Preserved Benefits’
Her 17 years in the ‘1995 Section’ will provide her with benefits based upon the scheme rules final salary method and will be available at age 60. Therefore, whatever Janet’s pensionable salary will be at 60 or when she chooses to draw the pension she will have 17/80ths as a pension and she will also retain the same lump sum entitlement.
In effect Janet and many others will have multiple pension pots and you can decide when and how you draw each one. This could be early, or you can take them all at the same time.
IT IS VITAL TO NOTE THAT UNDER PRESENT RULES WHEN JANET DRAWS HER 1995 SECTION BENEFITS SHE WILL BE UNABLE TO STAY AN ACTIVE MEMBER OF THE 2015 SECTION. THIS DOES NOT APPLY TO DRAWING PRESERVED 2008 BENEFITS BEFORE 2015 BENEFITS.
If you would like help to confirm how best you can stage your pension benefits and how this fits in with your retirement plans, please get in touch with one our advisors and we will be happy to help.