University of Aberdeen Superannuation and Life

Transcript:University of Aberdeen Superannuation and Life:
University of Aberdeen Superannuation and Life Assurance Scheme Member presentation – Questions and Answers 4 June 2019 Question 1 – Commutation factors 36 Question 1 – Commutation factors 37 Recently I have been given an estimation of my pension on my retirement date. I wanted to calculate what difference there would be to my pension if I took the maximum 25% tax-free lump sum. I know it may be difficult to generalise, but by taking the maximum tax-free lump sum the value of my pension pot is reduced by about £20k. I don’t understand why. Answer 1 – Commutation factors 38 See the member presentation from the 4 June 2019 AGM which discusses GMP Equalisation. You can think of a commutation factor as being the current value of £1 per annum of pension (payable for life). 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 pay all of the future pension payments (that have been given up)?” Year 1 pension payment + Year 2 pension payment (Year 1 plus inflationary pension increases) + Year 3 pension payment + … For how many years until death? Requires making assumptions about future pension increases, mortality, and future investment returns. Therefore they change with market conditions, mortality assumptions and with age. You can ask for a copy of the current factors in force from the Pensions Office. Question 2 – Can we be sure that all new employees at G5/G6 are given the choice of UASLAS or USS? 39 Answer 2 – UASLAS or USS? 40 Can we be sure that all new employees at G5/G6 are given the choice of UASLAS or USS? The Pensions Office 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. Question 3 – Are AVCs included in the figures from Prudential (in the pension or the lump sum)? 41 Answer 3 –AVCs in Prudential figures? 42 Are AVCs included in the figures from Prudential? Yes, quotations from Prudential should include all AVCs attributable to the member. The quotes show a range of scenarios available where AVCs are concerned. For example, the quotes show the AVCs as part of the pension