NIPS Annual Report and Accounts 2012-13 - Department of Justice

2012-2013
Pensions
Pension benefits are provided through the NICS
pension arrangements which are administered by
Civil Service Pensions (CSP). Staff in post prior to
30 July 2007 may be in one of three statutory based
‘final salary’ defined benefit arrangements (classic,
premium, and classic plus). These arrangements
are unfunded with the cost of benefits met by
monies voted by Parliament each year. From April
2011 pensions payable under classic, premium,
and classic plus are increased annually in line with
changes in the Consumer Prices Index (CPI). Prior to
2011, pensions were increased in line with changes
in the Retail Prices Index (RPI). New entrants
joining on or after 1 October 2002 and before 30
July 2007 could choose between membership of
premium or joining a good quality ‘money purchase’
stakeholder arrangement with a significant employer
contribution (partnership pension account). New
entrants joining on or after 30 July 2007 are eligible
for membership of the nuvos arrangement or they
can opt for a partnership pension account. Nuvos
is a ‘Career Average Revalued Earnings’ (CARE)
arrangement in which members accrue pension
benefits at a percentage rate of annual pensionable
earnings throughout the period of scheme
membership. The current rate is 2.3%. CARE pension
benefits are increased annually in line with increases
in the CPI. For 2013, public service pensions will be
increased by 2.2% with effect from 8 April 2013.
Employee contributions are determined by the level
of pensionable earnings. The current rates are as
follows:
Members of classic:
Annual New 2013
pensionable
contribution
earnings (full-time
rate before
equivalent basis)
tax relief
Up to £15,000 1.50%
£15,001-£21,000 2.70%
£21,001-£30,000 3.88%
£30,001-£50,000 4.67%
£50,001-£60,000 5.46%
Over £60,000 6.25%
Members of premium, nuvos and classic plus:
Annual New 2013
pensionable
contribution
earnings (full-time
rate before
equivalent basis)
tax relief
Up to £15,000 3.50%
£15,001-£21,000 4.70%
£21,001-£30,000 5.88%
£30,001-£50,000 6.67%
£50,001-£60,000 7.46%
Over £60,000 8.25%
Benefits in classic accrue at the rate of 1/80th
of pensionable salary for each year of service. In
addition, a lump sum equivalent to three years’
pension is payable on retirement. For premium,
benefits accrue at the rate of 1/60th of final
pensionable earnings for each year of service.
Unlike classic, there is no automatic lump sum
(but members may give up (commute) some of
their pension to provide a lump sum). Classic plus
is essentially a variation of premium, but with
benefits in respect of service before 1 October 2002
calculated broadly as per classic.
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