Hampshire Pension Fund 2009 pensions briefing ‘Your retirement choices’

1. Hampshire Pension Fund2009 pensions briefing‘Your retirement choices’ Phil Villiers Pensions Communications Officer Hampshire County Council

3. Summary • A very, very, quick scheme overview • ‘Deal or no deal’ – your retirement choices • Early retirement – ‘worth considering?’ • Death-in service benefits - ‘to nominate or not to nominate’ • ‘Please sir, can I have some more?’ – paying extra contributions • ‘What should I do now?’ - some suggested action points • Where can I get more information?

4. A very, very, quick scheme overview

5. A very, very, quick scheme overview What it costs • contributory………..and your employer pays too • contributions attract tax relief – so you pay less tax! • the scheme is ‘contracted out’ – so you pay less NI! What it provides • final salary benefits • pension and tax-free lump sum • normal retirement at age 65, with early, flexible, and late retirement options • ill-health pensions • pensions increase in payment (‘index-linking’) • death benefits

6. ‘Deal or no deal’ Your retirement choices

7. The building blocks -final salary, membership, pay, final pay Final salary benefits • membership x fraction x final pay Membership • years and days as a member • includes service purchased by transfer from a previous scheme • part-time/term-time service converted to a ‘whole-time equivalent’ Pay • basic pay plus other contractual, taxable pay elements Final pay • normally pay in last year before retirement • ‘whole-time equivalent pay’ used for part-timer/term-timer

8. Your retirement choices Pre-April 2008 service: • Automatic: 80ths pension + 3/80ths tax-free lump sum Post-April 2008 service: • Introduction of ‘choice’: • 60ths pension with no additional tax-free lump sum • Option to give up pension for tax-free lump sum: • £12 lump sum per £1 pension • Maximum total lump sum of 25% x pension fund value

9. For example……….. • Mr/Mrs Member • joined scheme 1 April 1988 • 40 years’ whole-time membership • 20 years pre-April 2008 • 20 years post-April 2008 • retires at 65 on 31 March 2028 • final pay of £12000

10. For example……….. Basis Lump sum Pension • Old basis: for information £18000 £6000 per year • New basis: takes all £ 9000 £7000 per year post 4/2008 as pension • New basis: gives up £750 £18000 £6250 per year post-4/2008 pension for lump sum • New basis: takes £33214 £4982 per year maximum lump sum allowed

11. Early retirement – worth considering?

12. Early retirement:Factors to take into consideration Will my employer let me retire early? • From age 60 – can retire without employer consent • Below age 60 – need employer consent (additional cost!!) Will my pension be reduced? • Yes – its based on completed membership, also • Early payment reduction will apply, except…. • …..‘85-year rule’ may apply to all/some of benefit if you joined before 1 October 2006 and your ‘age + service’ = 85 • Special terms also apply on redundancy/efficiency/ill-health What about flexible retirement? • Option to draw benefits early and continue working: • You need your employer’s consent…which is not guaranteed • You need to reduce your hours or go to a lower grade • You can re-join scheme and build up more pension

13. Death-in service benefits‘to nominate or not to nominate’

14. Death-in service benefits Lump sum death grant • 3 x final pay (not ‘whole-time equivalent’ for part-timer/term-timer) • Death grant ‘expression of wish’ form needs to be completed for this benefit • If ‘expression of wish’ form not received or ‘invalid’, death grant paid to estate Widow’s/widower’s/civil partner’s pension • Automatically paid to legal spouse/civil partner • no ‘expression of wish’ form needed Nominated cohabiting partner’s pension • Only paid if certain conditions satisfied: • special ‘nomination’ form completed • ‘free to marry’ • 2 year qualifying period • financial interdependent or fully dependent Children’s pensions • Paid to ‘eligible children’ in addition to any widow’s, widower’s, civil partner’s or nominated cohabiting partner’s pension • no ‘expression of wish’ needed

15. ‘Please sir, can I have some more?’ – paying extra contributions

16. Paying extra contributions Additional regular contributions (‘ARCs’) • Buy pension, in multiples of £250 pa, payable from age 65 • Choice of member pension only or with dependant pension on death • Fixed monthly payment + choice of payment term • On-line calculator on our web site Additional voluntary contributions (‘AVCs’) • invested in funds managed by Zurich • can pay up to 50% of pay • can use fund to • buy extra pension or, • increase tax-free lump sum or • combination of both Both options • Tax relief on contributions!

17. What should I do now?Some suggested action points

18. What should I do now?Some suggested action points • It’s never too early to think about your pension….but it can be too late! • Pension v lump sum? • Update death grant ‘expression of wish’? • Nominate cohabiting partner for pension? • ARCs or AVCs (or both!)? • Independent financial advice? IFA Promotions at www.unbiased.co.uk

19. Where can I get more information? Come and speak to me afterwards! Employee guide Website: www.hants.gov.uk/finance/pensions Pensions Services: Email pensions@hants.gov.uk Tel 01962 845588