Date posted: 01/08/2010
Audience: This Notice will be of particular interest to: HR staff involved in pension issues
Action: To note the information we have put on our website and to consider putting it on your intranet To issue the attached letter to those that have already received estimates on the processes outlined in paragraph 2 or to ask your Pension Service Centre to issue the letter on your behalf.
- On Tuesday 22nd June 2010, as part of the Emergency Budget statement, the Chancellor announced that the uprating of most social security benefits and public service pensions will be based on the CPI measure of price movements rather than the RPI. This change will take effect from April 2011 when Civil Service pensions are next uprated.
- However this has an immediate impact upon the actuarial factors used in a variety of other calculations used by the scheme. Cabinet Office Scheme Management Executive (SME) instructed the Pension Service Centres (PSCs) in MyCSP on 24 June to suspend any administration work that takes account of these factors until Treasury indicates how to take account of the CPI change. Some of the processes that have been suspended are Cash Equivalent Transfer Values (CETVs - non club transfers into and out of the Civil Service pension schemes), pension sharing on divorce, purchase of added pension, inverse commutation (classic only), allocation and actuarially reduced retirement including the member buy-out of the actuarial reduction.
- Suspending these processes even for a short period is not ideal and therefore, SME and MyCSP, jointly consulted with Treasury and other Public Sector pension schemes to discuss and agree an acceptable way forward.
- Revised scheme factors will now take effect from a future date, sometime in the autumn. We have already told your PSC that they can now start processing the suspended awards. The exception to this is CETVs which include non club transfers in and out of the scheme, pension sharing on divorce and the transfer out option for those who leave with less than 2 years service. Your PSC is not able to process these until HM Treasury have reissued their CETV guidance, which we hope to receive within the next few weeks (we will tell you when the guidance has been received). We have attached a notice that we put on our website to inform members of the delay to CETV estimates and you may wish to consider putting this message on your intranet.
- When members request any estimate, your PSC will tell them, where necessary, about the change from RPI to CPI and to treat the estimate as an indication only as, if the new factors are implemented before their process is completed, their estimate may need to be revised.
- Those who have already received estimates or quotes since 22 June will need to be told of the possibility of a revision. We have attached a letter to go to anyone who has already had an estimate for any of the processes listed in paragraph 2. A letter will not be required for CETVs which includes non club transfers in or out of the scheme, pension sharing on divorce or the transfer out option for those who have under 2 years service. If you have sent any estimates or quotes to members please send them the attached letter or ask your PSC to do this on your behalf.
- Your PSC will write to any member who requests a CETV for a non club transfer in or out of the scheme, pension sharing on divorce or a transfer out option for those who have under 2 years service. They will tell them that there will be a delay in issuing their estimate.
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