Window on Warwick

Pensions9 NOVEMBER 2018

BEN MOULDING

PENSIONS ADMINISTRATION TEAM LEADER

Introductions

Ben Moulding

Pensions Administration Team Leader

Joined University of Warwick March 2017

Worked in Pensions Administration for the last 16 years with various Third

Party Administrators e.g. Mercer Limited, AON

Overview

Who the pensions team are?

What is a defined benefit or defined contribution pension scheme

The pension schemes available at the University of Warwick

The role of the pensions team

The support the pensions team provide to employees at the University of

Warwick

The Pensions Team

Joseph Devlin

Pension Manager

Ben Moulding

Pension Administration

Team Leader

Lauren Smalley

Pensions

Analyst

Ruhi Nurun

Pensions

Analyst

hr.pensions@warwick.ac.uk

Hands up if you know what a Defined

Benefit Pension is?

What is a defined benefit pension?

Defined Benefit – also known commonly as DB

Also can be called Final Salary or Career Average Revalued Earnings

(CARE)

A defined benefit (DB) pension scheme is one where the amount you are

paid is based on how many years you have worked for your employer and

the salary you have earned.

Your employer contributes to the Scheme and is responsible for ensuring

there’s enough money at the time you retire to pay your pension income

How is a Defined Benefit Pension

Calculated?

Pensionable service - The number of years you have been a member of

the scheme

Pensionable earnings - This could be your salary at retirement (‘final

salary’), salary averaged over a career (‘career average’) or another

formula

Accrual rate - The proportion of your earnings you will get as a pension for

each year in the scheme (e.g. 1/75th (1.33%) )

Example of a Defined Benefit Pension

Bob has worked at Warwick for 10 years. His Scheme accrual rate is 1/75th

and his salary is £30,000

Pensionable Service x Accrual Rate x Pensionable Earnings = Pension

10 years x 1/75 x 30,000 = £4,000 p.a.

Or if you look at it on a yearly basis

1 year x 1/75 x 30,000 = £400.00 p.a.

Hands up if you know what a Defined

Contribution Pension is?

What is a Defined Contribution Pension

Scheme?

These are sometimes known as ‘money purchase’ pensions.

Employee and Employer contributions are paid into your pension pot.

These contributions are then invested in line with your chosen investment strategy

If you do not select an investment strategy you will be invested in the default lifestyle strategy the Trustee have chosen

The value of your pot can go up or down depending on your investments.

The amount you get when you come to take your pot depends on how much was paid in and how well the investments have done.

With defined contribution pensions you decide how to take your money out.

Tax saving Employer’s

payments

Potential

investment

growth

Retirement savings

Your

payments

How does a Defined Contribution Pension

Scheme Work?

Source: Zurich

Lifestyle Investment Strategy

Risk

High

LowAge20 65

Investing for retirement Saving Pre-retirement Retirement Post-retirement

phase phase destination phase

Growth

Target: Annuity

Target: Drawdown

Target: Cash

Drawdown

Cash

Source: Zurich

Retirement Options for DC Arrangements

Use your Retirement Pot to provide the following:

• Annuity

• Uncrystallised Funds Lump Sum

• Small Pots Lump Sum

• Drawdown (after transfer)

Hands up if you know which pension

scheme you are in?

University of Warwick Pension

Arrangements

Universities Superannuation Scheme (USS)

University of Warwick Pension Scheme – DC Section (UPS DC)

University of Warwick Pension Scheme – DB Section (UPS DB)

University of Warwick Pension Scheme – Enterprise Section

NHS Pension Scheme

USS

Grade 5 upwards

Scheme Retirement Age = 65

Historically was Final Salary

Hybrid Scheme (Both DB and DC)

Accrual Rate of 1/75 per year based on yearly earnings up to the salary threshold of £57,216.50 for the Retirement Income Builder (DB)

Earnings in excess of £57,216.50 will go towards the Investment Builder (DC)

Automatic 3 x pension tax free cash

Employees currently pay 8%

Employer currently pay 18%

Employees can pay extra contributions into the Investment Builder

USS is the Scheme Administrator and they calculate employees pension benefits and forward them to the Pensions Team to pass on

UPS DC

Grades 1 – 4

Scheme Retirement Age = 65

DC arrangement

Employees pay between 2 and 5%

Employer pays double the rate. e.g. 2% = 4%

Employees can pay extra contributions above the 5% just no extra employer contributions

Contributions based on full pensionable earnings

Zurich is the Scheme Administrator

UPS DB

Closed to New Entrants in April 2010

Normal Retirement Age = 65

DB arrangement

Employee Contribution Rate: 5.5%

Employer Contribution: £3.29 million per annum

Accrual Rate pre 1 April 2010 was 1/60th

Accrual Rate post 1 April 2010 is 1/100th , and a compulsory tax free cash sum of 3/80ths per year of pensionable service

Barnett Waddingham is the Scheme Administrator

UPS Enterprise

Scheme for Unitemps Workers

Scheme Retirement Age = 65

DC arrangement

Employees pay 3%

Employer pays 2%

Contributions based on Qualifying Earnings e.g. Earnings in excess of £503 per month, and less than £3,863 per month

Employees can make extra contributions

Zurich is the Scheme Administrator

NHS Pension Scheme

Only for employees who work in the Medical School and in the preceding

12 months have contributed to the Scheme. Only applicable to Clinical

and Research roles

DB Arrangement

Employee Contribution Bandings linked to Salary (from 5% up to 14.5%)

Employer pays 14.38%

Depending on when member originally joined the scheme will determine

the benefit basis as there is currently 3 types of Scheme

NHS Pensions is the Scheme Administrator

The Role of the Pensions Team

Ensure pension contributions are paid across to the respective schemes in

line with timeframes specified within the Scheme Rules and Legislation

Request retirement quotations

Assist with pension queries

Engage with membership

Provide support to the Trustee

The Pensions Team do not calculate member benefits

The Pensions Team are unable to provide Financial Advice

Engaging and Supporting Members

Answer enquiries by telephone and email

We hold face to face meetings via drop in or pre-arrangement

These can be in University House or at your department if preferred

Presentations (WOW, Welcome to Warwick, Zurich (UPS DC), Scheme,

Departmental)

Drop in Sessions

Intranet Site has been updated with FAQs and more scheme information

Intranet Site

www.warwick.ac.uk/pensions

FAQS

Scheme Booklets

Expression of Wish Forms

Links to Retirement Modellers and Illustrators

Retirement Process Guide for UPS DC Scheme

We are continuing to update the site and any feedback/suggestions are gratefully received

Need to Contact Us?

Intranet: www.warwick.ac.uk/pensions

Email: hr.pensions@warwick.ac.uk

Telephone: x22629 or x22720

If you want a face to face meeting or presentation for your team or department then get in touch

Any Questions?