University of Aberdeen Superannuation and Life Assurance Scheme
Get your questions answered about the University of Aberdeen Superannuation and Life Assurance Scheme. Learn about commutation factors, pension calculations, employee options, and more. Find out details on AVCs, Prudential figures, and how new employees are informed about scheme choices.
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University of Aberdeen Superannuation and Life Assurance Scheme Member presentation Questions andAnswers 4 June2019
Question 1 Commutationfactors Recently I have been given an estimation of my pension on my retirement date. I wanted to calculate whatdifference there would be to my pension if I took the maximum25% tax-freelump sum. I know it maybe difficult to generalise, but by taking the maximumtax-freelump sum the value of my pension pot is reduced by about 20k. I don t understandwhy. 37
Answer 1 Commutationfactors See the member presentationfrom the 4 June 2019 AGM which discusses GMP Equalisation. Youcan think of a commutation factor as being the current value of 1 per annum of pension (payable forlife). Pension given up x Commutation Factor= Lump sum received in exchange This is quite a complicated number to calculate! How much money would I need to invest today to be able to payall of the future pension payments(that have been given up)? Year1 pension payment + Year2 pension payment(Year 1 plus inflationary pension increases)+ Year3 pension payment+ For how many years until death? Requires making assumptionsabout future pension increases,mortality,and future investmentreturns. Therefore they change with market conditions, mortality assumptions and with age. Youcan ask for a copy of the current factors in force from the PensionsOffice. 38
Question2 Can we be surethat all new employees at G5/G6 are given thechoiceofUASLAS or USS? 39
Answer 2 UASLAS or USS? Can we be sure that all new employees at G5/G6are given the choice of UASLASor USS? The PensionsOffice emails members as soon as they are informed of a member s promotion/post change. Members are given the option to join USS or stay in UASLAS. Once made, it is an irrevocable decision. 40
Question 3 Are AVCs included in the figures from Prudential (in the pension or the lumpsum)? 41
Answer 3 AVCs inPrudential figures? Are AVCsincluded in the figures from Prudential? Yes,quotationsfrom Prudential should include all AVCsattributableto the member. The quotes show a range of scenarios availablewhere AVCsare concerned. For example, the quotes show the AVCsas part of the pension in one scenario, and as part of the lump sum in another scenario. These figures are clearly labelled on the quotationto show how AVCshave been included and treated ineach scenario. 42
Question4 WhatisGMP Equalisation? 43
Question4 What is GMP Equalisation? From the short report page 5: GMP Equalisation Lloyds Bank CourtCase A Court judgment in the Lloyds Bank case was announced on 26 October 2018, which may havea small impact on members benefits fromtheScheme. Thisrelatesto theequalisationof Guaranteed Minimum Pensions (GMPs) for men and women and applies to any GMPs earned from17 May 1990 (thedateofan earliercourt case onequal treatment).In summary,theHigh Court confirmedthat thereis a legal obligationonpensionschemes to equalisethecalculation of GMPs for men and women. Members who are affected might be due a top-up on their pension,althoughformost members anytop-upis likelytobe small. ThisCourtjudgmentwill have aneffect ona largenumber ofmembers acrosstheScheme and carrying out the calculations will be a complex process, which could take many months and even years to complete. The Trustees will therefore update members again once progress has been madeinthisregard. In plain words, what does this mean? 44
Answer 4 What is GMP Equalisation? See the member presentationfrom the 4 June 2019 AGM which discusses GMP Equalisation. This is not likely to affect most members. For members who are affected, this is likely to have a very small impacton their pension. More information will be sent to affected members in due course. 45
Thankyou JonathanSeedFFA/ Actuary T:01786237014 E:Jonathan.Seed@xpspensions.com XPS Pensions Group, XPS Pensions, XPS Administration, XPS Investment and XPS Transactions are the trading names of Xafinity Consulting Ltd, Punter Southall Ltd and Punter Southall Investment Consulting Ltd. XPS Administration is the trading name of PS Administration Ltd. Registration Xafinity Consulting Ltd, Registered No. 2459442. Registered office: Phoenix House, 1 Station Hill, Reading RG1 1NB. Punter Southall Investment Consulting Ltd Registered No. 6242672, Punter Southall Ltd Registered No. 03842603, PS Administration Ltd Registered No. 9428346. All registered at: 11 Strand, London WC2N 5HR. All companies registered in England and Wales. Authorisation Punter Southall Investment Consulting Ltd (FCA Register number 528774) and Xafinity Consulting Ltd (FCA Register number 194270) are both authorised and regulated by the Financial Conduct Authority (FCA) for investment business.
