BBC-CAB handbook-09:Layout 1downloads.bbc.co.uk/mypension/en/bbc_cab_booklet.pdf · EXAMPLE In the...

BBC Pension Scheme

CAPENSION

CAREER AVERAGEBENEFITS HANDBOOK

BBC-CAB handbook-09:Layout 1 20/3/09 11:10

About this handbook

This handbook explains the main provisions for Career AverageBenefits members of the BBC Pension Scheme (the Scheme). It isintended only as guidance. The definitive provisions of the Schemeare set out in the Trust Deed and Rules, which supplement andoverride this handbook in the event of any difference.

Some of the terms used (e.g. qualifying spouse) have a particularmeaning and are in bold type wherever they appear in the text.There is an explanation of the terms used on page 23.


contents

1

page

1 joiningWhat is the Career Average Benefits (CAB) section? 2Who can join? 2Do I have to be a CAB member? 3How much does it cost? 4

2 your pensionHow does my pension build up? 6When can I take my pension? 7Can I exchange part of my pension for cash? 9Does my pension increase after it starts? 9

3 what if...What happens if I opt out or leave service? 10Does temporary absence affect my pension? 11What happens when I die? 12Divorce or dissolution of a civil partnership 14

4 finding outWhat pension benefits will I get from the State? 15Where can I get help? 15What if I have a complaint? 17

5 backgroundHow is the Scheme managed? 18What is the maximum pension I can earn? 19How is my data protected? 21

6 glossaryExplanation of terms 23


2

1 joiningWhat is the Career Average Benefits(CAB) section?

The Career Average Benefits (CAB) section is a pension arrangementunder which benefits build up year on year and reflect your earningsduring your membership of the Scheme. It is compatible with today’svariable work patterns and provides:

� a valuable package of benefits;

� a defined income in retirement;

� a flexible approach to taking your pension;

� protection in the form of life assurance and incapacity benefits; and

� security for your dependants.

Who can join?

EligibilityYou can join the Scheme as a CAB member if you:

� are aged 18 or over and under 64;

� have not passed your final entry date (see page 3);

� are employed on a:

� continuing contract; or

� fixed-term contract, in which case you must have at least twoyears’ continuous employment with the BBC and/or anyparticipating employer; and

� are not a contributing member of the New Benefits Section, the OldBenefits Section or the BBC’s Group Personal Pension Scheme(GPPS). One-off contributions to the GPPS, with the BBC’s consent,do not affect eligibility or continued membership of the Scheme.


3

Voluntary membershipTo join voluntarily all you have to do is complete the application formon the myChoices site of Gateway before your final entry date. If youdo not have access to Gateway, you can phone the pension service line(see page 15).

Your final entry date is the first of the month following the later of:

� the second anniversary of your first becoming eligible to join CAB;and

� your 25th birthday.

Automatic membershipIf you have not already joined, our current practice is to admit you as aCAB member on your final entry date, provided that you do notcancel your automatic entry.

Do I have to be a CAB member?

No, you do not have to be a CAB member.

Opting outYou can end your membership without leaving service, subject to atleast two months’ notice. To do so you will need to complete an opt-out form, which you can get by calling the pension service line (see page 15).

Once you have opted out, you cease to build up benefits and becomea life assurance member. This means your life cover for death inservice reduces from four to two times your pensionable salary.

You can also cancel automatic membership beforehand by completingan opt-out form.

Pension provision is an important element of your reward package. By opting out you will be giving up a valuable benefit. Before makingsuch a decision, you should consider taking independent financial advice(see page 17).

Rejoining the SchemeHaving opted out, you will have no automatic right to rejoin theScheme. In special cases, the Trustees have discretion to re-admit anemployee to CAB membership, subject to satisfactory medicalevidence and such other terms as they think fit.

joining


How much does it cost?

Benefits are paid for partly by you and partly by the BBC.

Your share of the costCurrently, you pay 4% of your pensionable salary. This can be variedjointly by the BBC and the Trustees. It cannot go above 6% without achange to the Scheme rules.

As a CAB member your contributions will normally be met throughsalary sacrifice. This is called ‘Smart Pensions’. Your basic salary isreduced, currently by 4%, and the BBC pays this amount to theScheme. Because your basic salary is lower, you will usually pay lowerNational Insurance contributions.

Your pensionable salary is your basic salary before adjustment forSmart Pensions, or any other salary sacrifice. It is the amount used tocalculate your career average benefits and all other BBC salary-relatedbenefits (e.g. salary increases, bonuses, overtime, and life assurance), andit is the amount used in letters to third parties when they needconfirmation of your salary. This means that Smart Pensions does notaffect future pay reviews or the other salary-related benefits youreceive from working at the BBC.

The income tax you pay is unaffected by Smart Pensions. This isbecause PAYE income tax is always applied to earnings after anypension contributions have been deducted.

For high earners, there is a maximum pensionable salary on whichcontributions and pension benefits are based. It is called the earningscap (£123,600 for the 2009/10 tax year) and is expected to increaseeach year in line with the Retail Prices Index (RPI).

There are a few CAB members (i.e. those on low pay or receivingState benefits) for whom Smart Pensions may be disadvantageous. If you are one of them, you will be excluded automatically andalternative arrangements will be made to collect your contributions.

If you want to know more about Smart Pensions, there is a leaflet youcan get by calling the pension service line (see page 15).

4


5

Employer contributionsIn addition to whatever contributions they pay under Smart Pensions,the BBC and other participating employers pay contributions to coverthe balance of the cost of providing your Scheme benefits, as agreedwith the Trustees. In other words, your employer carries theinvestment and longevity risks associated with providing the benefitsyou have been promised.

Personal pensionsAs well as being a CAB member, you can also contribute to your ownpersonal pension outside the BBC if you wish to save more for yourretirement. You cannot however contribute more to the Scheme thanthe standard contribution (see page 4).

joining


How does my pension build up?

The Scheme year runs from 1 April to 31 March. For each Schemeyear (or part year) that you are an active CAB member, you build up ablock of pension equal to 1.67% of your pensionable salary, payable atnormal pension age. The intention is that at the end of the followingScheme year, and annually thereafter, the BBC and the Trustees willjointly consider increasing each block of pension in line with priceinflation. Increases are discretionary and subject, amongst other things,to the Scheme’s investments performing in line with expectations.Once awarded, increases cannot be reduced.

Your pension is the total of all the blocks of pension you have built up,plus discretionary increases.

6

EXAMPLE

In the first four years of herCAB membership, Kate’spensionable salary is£30,000, £31,000, £32,000 and£33,000 respectively. Duringthat time, the discretionaryincreases awarded each year are 2%, 1.5% and 1.8%respectively. The followingdiagram shows the build up of Kate’s pension.

2 your pension

Year 4

Total pensionafter

Year 4

Total pensionafter Year 4

Year 3

Year 2

Year 1

Pension build upin year 1




1.67% x £30,000

= £501.00

1.67% x £31,000

= £517.70

£501.00 x 2.0% = £10.02

£501.00 + £10.02 = £511.02

1.67% x £32,000

= £534.40

£517.70 x 1.5% = £7.77

£517.70 + £7.77 = £525.47

£511.02 x 1.5% = £7.67

£511.02 + £7.67 = £518.69

1.67% x £33,000

= £551.10

£534.40 x 1.8% = £9.62

£534.40 + £9.62 = £544.02

£525.47 x 1.8% = £9.46

£525.47 + £9.46 = £534.93

£518.69 x 1.8% = £9.34

£518.69 + £9.34 = £528.03

£2,158.08 p.a.

=

£551.10

+

£544.02

+

£528.03

£534.93

+


your

pension

Transfers-inCurrently, the Scheme does not accept transfers-in from other pension schemes.

When can I take my pension?

Payment at normal pension ageYou can leave service at normal pension age, age 65, with animmediate pension that is payable for life.

Early paymentIf you have two or more years’ continuous pensionable service, youcan leave service and ask for your pension to be paid early at any timefrom age 55 onwards. Early payment requires the BBC’s agreement,and your pension will be less than that payable at normal pension age.This is because:

� it is based on the pension you have built up when you leave serviceand is, therefore, less than if you had continued as an active CABmember until normal pension age; and

� it will be reduced for early payment.

The reduction depends on your age at the time your pension comesinto payment. The scale of reductions is set by the BBC and theTrustees at the beginning of each calendar year. The followingpercentages are currently in use:

Between birthdays a proportion of the reduction is applied.

Here is an example of how an early payment pension is calculated:

EXAMPLE

Total pension built up to date – Early payment reduction = Early payment pension

John leaves the BBC on his 60th birthday. His pension, includingdiscretionary increases awarded to date, is £10,000 p.a. If he decides todefer taking it until normal pension age, it will continue to attract thesame discretionary increases as are awarded to active CAB members. It will then be paid without reduction when he reaches age 65. If he asks for immediate early payment of his pension, it will be reduced by 30% (see table above).

John’s early payment pension is: £10,000 less 30% = £7,000 p.a.

7

Age 55 56 57 58 59 60 61 62 63 64 65

% Reduction 50 46 42 38 34 30 24 18 12 6 0


Late paymentIf your employer agrees, you can continue working after age 65 andremain an active CAB member. You will stay in Smart Pensions (seepage 4), but will not have to pay National Insurance.

Your pension will continue to build up and be paid when youeventually leave service or reach age 75, whichever is earlier.

Flexible paymentIf you have two or more years’ continuous pensionable service and areaged at least 55, you can ask for your pension to be paid, in whole orin part, while continuing to work for your employer, provided that theBBC agrees. Any pension taken before normal pension age under theflexible payment provisions will be reduced for early payment (seepage 7). You will have the choice of remaining an active CAB memberand continuing to build up pension on your future service. A leafletexplaining flexible payment in more detail is available from the pensionservice line (see page 15).

Incapacity pensionsIncapacity means physical or mental impairment that, on the evidenceof a doctor or other qualified person appointed by the BBC, theTrustees are satisfied:

� that you cannot carry out your normal occupation; and

� it is likely permanently and substantially to impair your earningcapacity.

If you leave service because of incapacity before normal pension age,you will receive an immediate pension, provided the BBC and theTrustees agree.

If you have completed less than two years’ continuous pensionableservice, the pension will be reduced for early payment. The reductionwill depend on your age when the pension comes into payment andwill be decided by the Trustees after consulting the Scheme’s actuary.

If you have completed two or more years’ continuous pensionableservice and:

� you are unable to carry on your normal occupation, the pension willnot be reduced for early payment; or

� you are unable to follow any occupation, the unreduced pension willbe increased by the additional pension you would have built up,without revaluation, had you remained an active CAB member untilnormal pension age on your current pensionable salary.

Incapacity pensions are subject to review and can be stopped if theTrustees believe that a member has recovered to any extent.

8


your

pension

9

Can I exchange part of my pension for cash?

You can exchange part of your pension for a lump sum cash payment,which is currently tax-free. This is known as ‘commutation’.

The maximum lump sum you can take is currently four times yourpension. If you take cash, your pension will be reduced. Thecommutation factors are set by the BBC and the Trustees at the startof each calendar year. Currently, for every £12 cash that you take yourpension is reduced by £1 p.a. Full details will be sent to you beforeyour pension comes into payment.

Taking cash does not affect the pension payable to your qualifyingspouse, qualifying civil partner or dependants. It will still be calculatedon your full pension, as though you had not chosen to exchange partof it for cash.

Before making the decision to exchange pension for cash, you shouldconsider taking independent financial advice (see page 17).

Does my pension increase after it starts?

CAB pensions are reviewed annually and any increases are awarded on1 April. The Trustees increase pensions in payment by the lesser of:

� the rise in the Retail Prices Index (RPI) for the previous calendaryear (January to December); or

� 2.5%.

Increases are calculated on your actual pension in payment.

When the rise in the RPI is greater than 2.5%, the BBC and theTrustees may jointly award a discretionary increase.

Increases are reported in the annual report.


What happens if I opt out or leaveservice?

You cease to build up benefits when you opt out or leave service.

Less than two years’ pensionable serviceIf you have completed at least three months’ pensionable service, youcan choose to transfer the value of your benefits to a pension plan ofyour choice. The transfer will be calculated in line with overriding legalrequirements and is designed to represent the actuarial value of yourbenefits. The decision to transfer must be made within three monthsof you receiving information about the transfer value. The otherpension scheme must be willing and able to accept the transfer valuewithin a reasonable time.

If you do not take a transfer value, you will receive a payment from theBBC (not the Scheme) equal to the amount of salary you gave upthrough Smart Pensions. The payment will be subject to deductions forincome tax and National Insurance. If you didn’t participate in SmartPensions, you will receive a refund of your contributions less adeduction for tax from the Scheme.

If you do not complete three months’ pensionable service whilst inSmart Pensions, no benefits will be paid. If you didn’t participate inSmart Pensions, you will receive a refund of your contributions less adeduction for tax from the Scheme.

Two or more years’ pensionable serviceYou will be entitled to a deferred pension payable at normal pensionage. Your pension will be calculated as outlined on page 6.

Deferred CAB pensions receive the same discretionary increases asactive CAB members (see page 6).

You can ask for your deferred pension to be paid before normalpension age, either because of incapacity or from age 55 onwards.Payment is subject to the agreement of the Trustees and your pensionwill be reduced for early payment. The reduction will be decided bythe BBC and Trustees after consulting the Scheme’s actuary. In cases of incapacity, the Trustees have discretion to waive some or all of the reduction.

Instead of being entitled to a deferred pension from the Scheme, youcan choose to transfer the value of your benefits to a pension schemeof your choice. The transfer will be calculated in line with overridinglegal requirements and is designed to represent the actuarial value ofyour benefits. Please contact the pension service line for furtherinformation (see page 15).

10

3 what if...


11

what if...

Does temporary absence affect mypension?

Temporary absence from work does not affect how your benefits buildup while you remain in service on full pay.

During authorised unpaid absence, you are opted out of SmartPensions automatically and will not build up career average benefits.On return to work, you are re-admitted to Smart Pensions and yourbenefits start to build up normally again. You cannot make good the‘lost’ benefits.

If you do not return to work at the end of an unpaid absence, you will be treated as having left service (see opposite) on the day your pay stopped.

During all temporary absences, whether paid or unpaid, you will becovered in full for death in service benefits (see page 12).

Sickness absence and family leaveWhile on paid sickness absence or family leave (i.e. maternity, adoption,paternity or parental support leave) you continue to participate inSmart Pensions.

However, you are opted out of Smart Pensions automatically in themonth in which you start to receive statutory pay only through payroll.Your contributions will then be collected temporarily through thepayroll and based on your actual pay. Your pension will usually build upbased on your original pensionable salary.

SecondmentsMembers seconded to work for another, non-participating employercease to participate in Smart Pensions but can continue to build upcareer average benefits on condition that:

� contributions are paid by the non-participating employer and themember during the same Scheme year in which the benefits build up;

� there is a definite expectation that the member will return to workfor the BBC, or another participating employer;

� the secondment, in total, does not exceed 10 years; and

� benefits build up using the pensionable salary that the memberwould have received, if they hadn’t been seconded.


Career breaksIf your employer agrees to you taking a career break, you will betreated as having left service (see page 10). If you are re-employed,you will be able to re-join the Scheme on the terms available at thetime, provided you are still eligible.

When planning a career break, you should consider carefully the impactit will have on your career average benefits. Help is available from thepension service line (see page 15).

What happens when I die?

Death in serviceIf you are an active CAB member and die in service before taking yourpension, the following benefits are payable:

A lump sumThe Trustees will make a lump sum payment, which is currently free ofinheritance tax. It will be equal to the lesser of four times yourpensionable salary (ignoring the earnings cap) as at the date of yourdeath and the Lifetime Allowance (see page 20).

The Trustees have discretion over who receives the cash and in whatproportion. They take into account, but cannot be bound by, yourwishes. You are therefore asked to let the Trustees know your choiceof beneficiaries by completing an expression of wish form availablefrom the pension service line (see page 15).

If the lump sum is restricted because the Lifetime Allowance is less than four times your pensionable salary (ignoring the earningscap), the difference will be used to provide additional pension for your dependants.

A dependant’s pension Your qualifying spouse, qualifying civil partner or nominateddependant will receive a dependant’s pension calculated as follows:

50% of the future pension you would 50% of your have built up, without revaluation,pension built plus had you remained an active CABup to date member until normal pension age

based on your pensionable salary as at the date of your death

12

what if...


Children’s pensionsYour qualifying children (up to a maximum of two) will each receive apension equal to half of the dependant’s pension. If no dependant’spension is payable, the children’s pensions will be doubled.

Death before your deferred pension startsIf you die before normal pension age and have a deferred pension, thefollowing benefits are payable:

A dependant’s pensionYour qualifying spouse, qualifying civil partner or nominateddependant will receive a dependant’s pension of half of your deferredpension.


Death after your pension startsYour pension is payable for life. On your death, the following benefitsare payable:

A dependant’s pensionYour qualifying spouse, qualifying civil partner or nominateddependant will receive a dependant’s pension of half your pension, as itwould have been ignoring any cash you chose to take.


13

EXAMPLE

Janet dies at age 55. She has a further 10 years’ potential pensionableservice to normal pension age. Her pension built up to date is£5,000 p.a. Her pensionable salary when she dies is £25,000.

The dependant’s pension is:[50% of £5,000 = £2,500] plus [50% of {(1.67%* of £25,000) x 10} = £2,087.50] = £4,587.50 p.a.

*1.67% is the rate at which your pension builds up.

EXAMPLE

John retires at age 65. Hisannual pension is £8,000 p.a.He exchanges some of his pension for cash and receives alower pension. He nominateshis father, Jack, as his dependant.

Following John’s death, Jack willreceive a pension of £4,000 p.a.for the rest of his life.


what if...

An incapacity pension lump sumIf you are being paid an incapacity pension and die before normalpension age, the Trustees will make a lump sum payment (ignoring theearnings cap), which is currently free of inheritance tax. It will be equalto four times your pensionable salary as at the date you left service,less any lump sum you took in exchange for pension (see page 9).

The Trustees have discretion over who receives the cash and in whatproportion. They take into account, but cannot be bound by, yourwishes. You are therefore asked to let the Trustees know your choice ofbeneficiaries by completing an expression of wish form available fromthe pension service line (see page 15).

Divorce or dissolution of a civilpartnership

Your pension rights may be taken into account on divorce ordissolution of a civil partnership. The court can order your pension tobe divided between you and your ex-spouse or ex-civil partner (ex-partner), although this depends on the terms of the settlement.

Couples can choose to offset pension rights against other assets (e.g. the family home) or ‘earmark’ some (or all) of a member’s benefitsto go direct to the ex-partner when they come into payment.Alternatively, pension rights can be ‘shared’ as part of a ‘clean break’settlement. Pension sharing creates a ‘pension credit’ for the ex-partner and a corresponding ‘pension debit’ for the member.

The Scheme’s current policy is to use a pension credit to make atransfer payment to another pension scheme that will provideretirement benefits for the ex-partner. Scheme membership is notoffered to an ex-partner.

The Scheme makes a charge for :

� providing information in connection with divorce proceedings, overand above that which it has a duty to provide free of charge underthe existing statutory disclosure requirements;

� compliance with a pension sharing order or agreement; and

� any other activities in connection with pension sharing.

A more detailed explanation of pension sharing, how the Schemeoperates a pension sharing order or agreement, and a schedule of itscharges are available from the pension service line (see page 15).

You should consult and be guided by a suitably qualified family lawpractitioner on matters relating to divorce or dissolution of a civil partnership.

14


15

What pension benefits will I get from the State?

CAB members pay National Insurance contributions towards the Statesecond pension. This means that you can receive both the basic Statepension and State second pension in addition to your Scheme benefits.

You can find out more about State benefits by visitingthepensionservice.gov.uk or by asking the pension service line (seebelow) for a leaflet.

Where can I get help?

Pension service lineThe in-house Pension and Benefits Centre offers prompt help oneverything to do with the Scheme. Our pension service line isavailable from 08.30 to 17.30, Monday to Friday on:

Phone: 029 2032 2811 (external), or 01 22811 (internal)

Alternatively you can write to:

The Pension Operations ManagerPension and Benefits Centre (M1017, Ty Oldfield)Broadcasting HouseCardiffCF5 2YQ

Or you can email us at [email protected]

We aim to deal with 95% or more of all cases within best-practicetimes for the pensions industry. Our service standard is to acknowledgeall the correspondence within five working days of receipt, and to giveyou a firm commitment of when we will deal with the matter. Thereare standard times for processing all routine work. When there is adelay, we will let you know and keep you informed of progress.

Under the terms of the Financial Services Act 1986, we are notauthorised to give you financial advice. However, we will give you theinformation you need to get independent financial advice and helpmake your own decisions.

We welcome suggestions for improving the service we offer.

Pension websiteYou can find out more about the BBC’s pension arrangements byvisiting: bbc.co.uk/mypension

4 finding out


16

View your pension details onlineYou can view details of your pension benefits through myDetails & Payon Gateway. You will be able to:

� view your current benefit statement, showing the pension you havebuilt up to date, your projected pension at normal pension age andcurrent death-in-service benefits;

� view your State pension forecast;

� once you have completed two years’ pensionable service, run ‘whatif?’ statements to see the effect of leaving service or taking yourpension early;

� get a copy of an expression of wish form to say how you want anylump sum distributed on your death; and

� if you are not married or in a civil partnership, get a form tonominate a dependant to receive a pension on your death.

Pension Tracing ServiceIf you have lost track of your pension benefits with a previousemployer or scheme, you can contact the Department for Work andPensions’ (DWP’s) Pension Tracing Service. They will give you an up-to-date address for the trustees of that scheme.

Phone: 0845 600 2537

Post: The Pension Tracing ServiceTyneview ParkWhitley RoadNewcastle-upon-TyneNE98 1BA

Web: thepensionservice.gov.uk

Pensions Advisory ServiceThe Pensions Advisory Service (TPAS) provides free help and advice at any time to members and beneficiaries of pension schemes inconnection with any question they may have or difficulty, which theyhave failed to resolve with the trustees or administrators of the scheme.

Phone: 0845 601 2923

Post: The Pensions Advisory Service11 Belgrave RoadLondonSW1V 1RB

Web: pensionsadvisoryservice.org.uk


finding out

17

Independent financial adviceIf you want specific financial advice about CAB or other pension optionsyou need to speak to an independent financial adviser. A panel ofindependent financial advisers has been selected by the BBC. Further details can be found on the myReward site of Gateway.

More information about financial advice is also available from theFinancial Services Authority.

Web: moneymadeclear.fsa.gov.uk

What if I have a complaint?

Internal Dispute Resolution ProcedureThe following is a summary of the two-stage procedure adopted bythe Trustees for the resolution of internal disputes.

If you are dissatisfied with anything to do with the Scheme and want tomake a formal complaint you, or your representative, should writegiving details to the Pension Operations Manager, Pension and BenefitsCentre, (M1017, Ty Oldfield), Broadcasting House, Cardiff CF5 2YQ.Normally the Pension Operations Manager or the Pension Accountantwill respond to your complaint within 10 working days.

If the matter is not resolved to your satisfaction, you should write tothe Secretary of the BBC Pension Scheme at the same address as forthe first stage, explaining why you are still dissatisfied and asking thatthe Trustees reconsider your complaint. A committee of the Trustees(including at least one elected Trustee – see page 18) will consideryour complaint. Normally, you will receive a written decision within 20 working days.

If you are not satisfied with the outcome, you have the option ofreferring the matter to the Pensions Advisory Service (TPAS) or thePensions Ombudsman (see below).

You can get a copy of the full procedure from the pension service line(see page 15).

Pensions OmbudsmanThe Pensions Ombudsman has the power to investigate and determineany complaint or dispute of fact or law to do with occupational andpersonal pension plans.

Phone: 0207 834 9144

Post: The Pensions Ombudsman11 Belgrave RoadLondonSW1V 1RB

Web: pensions-ombudsman.org.uk


18

How is the Scheme managed?

The TrusteesBBC Pension Trust Limited is the sole Trustee of the Scheme. Its board,commonly referred to as ‘the Trustees’, consists of nine directors:

� one appointed by the BBC Trust;

� four appointed by the BBC;

� three elected by members employed by the BBC;

� one elected by the pensioners.

The member elected directors serve for six years and retire inrotation. The pensioner director serves for four years.

The Trustees are responsible for running the Scheme and protectingthe interests of members.

The FundPension contributions are paid into a trust fund and invested by theTrustees to produce income from which benefits are paid. The Fund is quite separate from the finances of the BBC and participatingemployers. It is used to provide benefits for the Scheme’s membersand their dependants.

The Scheme is registered for tax purposes with HM Revenue & Customs.

Trust Deed and RulesThe Trustees administer the Scheme and pay benefits in accordancewith the Trust Deed and Rules. You can get a copy from the pensionservice line (see page 15).

Annual ReportCopies are available on request from the pension service line (see page 15).

5 background


background

19

The Pensions RegulatorThe Pensions Regulator oversees the running of pension schemes andcan intervene in cases where scheme trustees, employers or advisersmay have failed in their duties. The Regulator has powers to protectfunds held in pension schemes. It also aims to promote high standardsand good practice in the pensions industry.

Phone: 0870 606 3636

Post: The Pensions Regulator Napier HouseTrafalgar PlaceBrightonBN1 4DW

Web: thepensionsregulator.gov.uk

Discontinuance and alterationThe BBC has the power to discontinue or, with the consent of theTrustees, alter the Scheme.

What is the maximum pension I can earn?

Pension limitsCurrent tax law allows you to be a member of more than one pensionscheme at the same time. There are however two allowances that limit the total value of pension benefits you can build up withoutincurring additional liabilities for tax. These allowances do not affectmany people. The following is based on the Trustees’ understanding ofthese allowances.

The Annual AllowanceThis limits the contributions and/or benefits that you can build up tax-efficiently each year. The Annual Allowance is £245,000 for the2009/10 tax year and will rise to £255,000 in 2010/11. The AnnualAllowance does not apply in the last year of Scheme membershipwhen you take your benefits.

It is not possible for you to pay additional contributions to the Scheme. You can however currently pay into a personal pension whilst also building up benefits under CAB to boost your pensionsavings. You will have to make your own arrangements to pay into apersonal pension.


You will normally be able to pay up to 100% of your UK earningstowards your pension and receive tax relief. Your contributions andbenefits will be tested against the Annual Allowance (apart from theyear you take your benefits). The amount tested will be:

� the amount by which any defined benefit pensions (e.g. your Scheme pension) have increased, multiplied by a factor of 10; and

� the value of any contributions you or your employer have paid to a defined contribution pension (e.g. contributions to a personal pension).

Any contributions paid or benefits built up above the Annual Allowancewill be taxed as income at 40%.

The Lifetime Allowance (LTA)This is a limit on the value of total pension benefits you can build uptax-efficiently. It is £1.75 million for the 2009/10 tax year and will riseto £1.8 million in 2010/11. When your CAB pension comes intopayment, its capital value (calculated by multiplying your initial annualpension by 20) plus any lump sum must be checked against theremaining LTA.

Each time you take benefits from a scheme your remaining LTA will bereduced. Benefits which exceed your remaining LTA will be subject toa one-off tax charge of 55% if taken as a lump sum, or 25% if taken asa pension in addition to income tax.

Keeping track of your benefitsBecause the LTA will take into account all your pension schemebenefits, including those from other employers and personal pensions,you will need to keep track of all the pension scheme benefits you arebuilding up over your working life. You are ultimately responsible forkeeping track of these benefits and checking how they compare withthe LTA. On taking CAB benefits, you will be asked about yourprevious benefits and asked to confirm whether or not your pensionbenefits exceed the LTA.

If you have lost touch with a previous pension plan and need help inmaking contact again, turn to page 16 for details of the Pension Tracing Service.

20


background

21

How is my data protected?

BBC Pension Trust Limited, the BBC and participating employers mustprocess (i.e. gather, hold and use) information about you in connectionwith your membership of the Scheme. This processing is necessary:

� to calculate and pay benefits;

� for statistical and reference purposes; and

� to manage the Scheme as a whole.

It can involve passing information about you to the Scheme’s actuary,auditor, advisers and administrator (listed in the annual report), and toanyone else who may need it to run the Scheme.

The Scheme is registered under the Data Protection Act 1998. If youwant to know about your rights under the Act, you can call the pensionservice line (see page 15).


22

glossary


Explanation of terms

These terms are in bold type wherever theyappear in this handbook.

Earnings capThe pensionable salary limit on whichcontributions and pension benefits are based.

For the 2009/10 tax year it is £123,600 and isexpected to increase each year in line with theRetail Prices Index (RPI).

IncapacityA physical or mental impairment which means that, on the evidence of a doctor or other qualified person appointed by the BBC, theTrustees are satisfied:

� that you cannot carry out your normaloccupation; and

� it is likely permanently and substantially to impairyour earning capacity.

Life assurance memberAn employee who is not a CAB member, but iscovered for a lump sum on death in service.

Nominated dependantA person nominated by you in writing asprescribed by the Trustees and accepted by themas satisfying the requirements set out in formPENS26, available from the pension service line(see page 15). The Trustees may reduce thepension, after consulting the actuary, if yournominated dependant is younger than you by more than 10 years.

Normal pension ageAge 65.

Pensionable salaryIn any Scheme year, your basic pay including anyother earnings as may be recognised by the BBC aspensionable before Smart Pensions, subject to theearnings cap.

Pensionable serviceThe number of years and days of CAB membership.

Qualifying childrenYour natural (including any not yet born) andadopted children, and any that the Trustees acceptwere financially dependent on you at the date ofyour death. Benefits are payable to your qualifyingchildren up to age 18 or, at the Trustees’ discretion,up to age 23 while in full-time education.

Qualifying civil partnerThe person with whom you have entered into acivil partnership and with whom you are living atthe date of your death. If the civil partnership isregistered after leaving the BBC, your partner willbe treated as a qualifying civil partner only if thecivil partnership was registered at least six monthsbefore your death.

The Trustees can reduce the pension, if your civil partner is younger than you by more than 10 years. The Trustees will decide the amount ofany reduction after having consulted the Scheme’s actuary.

Qualifying spouseThe person to whom you are married and withwhom you are living at the date of your death. If you marry after leaving the BBC, your spouse willbe treated as a qualifying spouse only if themarriage took place at least six months before your death.

The Trustees can reduce the pension, if your spouseis younger than you by more than 10 years. TheTrustees will decide the amount of any reductionafter having consulted the Scheme’s actuary.

23

6 glossary


524

notes


March 2009

Produced by: Pension and Benefits CentreTelephone: 029 2032 2811Fax: 029 2032 2408Email: [email protected]: bbc.co.uk/mypension


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