No 6282
Wednesday 24 October 2012
Vol cxliii No 5
pp. 54–81
1 November, Thursday. All Saints Day. Scarlet Day.
4 November, Sunday. Commemoration of Benefactors. Scarlet Day. Preacher before the University at 11.15 a.m., The Rt Rev’d Stephen D. Conway, of Selwyn College, Lord Bishop of Ely (Lady Margaret’s Preacher).
6 November, Tuesday. Discussion at 2 p.m. in the Senate-House (see below).
9 November, Friday. Michaelmas Term divides.
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Discussions at 2 p.m. |
Congregations |
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6 November |
24 November, Saturday at 2 p.m. |
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20 November |
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4 December |
The Vice-Chancellor invites those qualified under the regulations for Discussions (Statutes and Ordinances, p. 107) to attend a Discussion in the Senate-House, on Tuesday, 6 October 2012, at 2 p.m., for the discussion of:
1. Report of the General Board, dated 10 October 2012, on the establishment of a Professorship of Hypoxia Signalling and Cell Biology (Reporter, 2012–13, p. 48).
2. Report of the General Board, dated 10 October 2012, on the establishment of a Readership in Quantitative Sociology (Reporter, 2012–13, p. 49).
3. Report of the Council, dated 22 October 2012, seeking authority to commence development of University land at North West Cambridge (see p. 59 below).
Ordinance 5 for the Contributory Pension Scheme (CPS) (Statutes and Ordinances, p. 154), and Rule 5 of the Scheme rules permit the rules of the Contributory Pension Scheme to be amended from time to time. Except where the amendment is required to ensure the Scheme’s continued approval by the Savings, Pensions, and Share Schemes Office of the Inland Revenue (now HM Revenue & Customs) such changes require the authority of a Grace.
Rule 5 of the rules of the CPS further provides that the University shall have the power to amend the rules of the Scheme from time to time provided that the changes have been approved by two-thirds of the Scheme’s Managing Committee. The proposed changes were considered and approved by the Committee on 30 August 2012.
The main purpose of the changes now proposed is to make the amendments required in respect of the changes to the benefits which will accrue for all service after 31 December 2012. Currently, the CPS provides defined benefits on a final salary basis for all members. For service after 31 December 2012, benefits for existing members will continue to be provided on a defined benefit basis but the basis will change to a career-revalued average earnings basis; this will be referred to as a Career-Revalued Benefit (CRB). For members joining the CPS on or after 1 January 2013, benefits will be provided on a hybrid basis with a part of the benefit being a CRB pension provided though the CPS and a part of the benefit being provided on a defined contribution (money purchase) arrangement which will be payable from a separate master trust arrangement established by the University for this purpose.
It is also proposed to amend the rules to take account of the changes required to comply with the provisions of the Pensions Act 2008 in respect of auto-enrolment.
The substance of the proposed changes can be summarized as follows:
1. The Scheme’s benefit structure will change on 1 January 2013.
2. The main change will be that the Scheme will provide career average benefits for future service instead of final salary benefits.
3. Existing members on 1 January 2013 will receive better career average benefits than joiners after that date. The accrual rate for existing members will be 95ths for the five years to 31 December 2017 plus a retirement lump sum of 3 x the starting pension.1 The accrual rate will drop to 100ths plus the retirement lump sum on 1 January 2018.2 These rates will be a reduction from 60ths for pre-December 2009 members3 and 80ths plus a 3/80ths retirement lump sum for post-December 2009 members.4 The contribution rate for existing members will reduce from 6% to 5% of pensionable salary.5
4. New joiners will earn career average pensions at an accrual rate of 150th of revalued career average pensionable salary plus a retirement lump sum of 3 x the starting pension.6 The contribution rate for these members will be 3% of pensionable salary.7 They will also get a 5% employer contribution into a separate defined contribution scheme or arrangement.
5. The Scheme will no longer meet the reference scheme test and will therefore cease to be contracted out of the State Second Pension Scheme.8 Members will earn S2P credits in addition to their CPS accrual but will pay higher National Insurance Contributions of around 1% of pensionable salary.
6. Increases to pensions in payment will be reduced for existing members from Retail Prices Index (RPI) capped at 12% to RPI capped at 5%.9 Increases for new joiners will be Consumer Prices Index (CPI) capped at 5%.10
7. The different treatment of members in relation to early retirement will turn on whether a member joined the Scheme before or after 1 December 2009, rather than before or after 1 January 2013. A pre-2009 member will be able to draw his pre-2013 pension from age 60 without reduction and his post-2013 pension from age 63 without reduction.11 He will also be able to preserve the ability to draw his post-2013 pension from 60 without reduction if he elects before 31 March 2013 to pay extra contributions of 3.5% of pensionable salary.12 Members who joined the Scheme after December 2009 (including joiners after 1 January 2013) will have their pensions reduced on early retirement before age 65.13
8. The death in service lump sum for existing members who joined before December 2009 will be unchanged at 4 x salary at the date of death plus a return of the member’s contributions.14 Post-December 2009 members’ lump sums will be unchanged at 3 x salary and no return of contributions.15 New joiners will receive a 5 x lump sum and no return of contributions.16 Members other than new joiners will receive a refund of Additional Voluntary Contributions (AVCs).17 New joiners will not be allowed to pay AVCs18 but may pay extra contributions into the defined contributions master trust.
9. The spouses’ death-in-service pension will change in respect of service from 1 January 2013. Pre-December 2009 members’ spouses will get a two-thirds pension for service before January 2013 and a three-quarters pension for future service, including prospective service to 65.19 The spouses of post-December 2009 members and new joiners will get a 50% pension, including in respect of prospective service to 65.20
10. The spouses’ death-in-retirement pensions will differ between members in the same way as the death-in-service spouses’ pension. Pre-December 2009 members’ spouses will get a two-thirds pension for past service and a three-quarters pension for future service,21 while the spouses of post-December 2009 members will get 50% pensions.22
11. Existing AVC arrangements, both added years and with the Cambridge Building Society, will continue but may not be increased. No new AVCs will be permitted.23
Summary of auto-enrolment related changes
12. The University will be required to automatically enrol certain employees in a ‘qualifying pension scheme’ with effect from 1 March 2013 (the ‘staging date’). For Assistant Staff who are eligible to join the CPS, the CPS will be the ‘qualifying scheme’. However in order to comply with the provisions of the Pensions Act 2008, which introduced the duty to auto-enrol employees in a ‘qualifying scheme’ some minor amendments are required to be made to the rules of the CPS.
(a)Rule 1 – This amendment introduces a definition of the Pensions Act 2008.
(b)Rule 46 – Rule 46.1 contains the Scheme opt-out provision. While this is the mechanism by which employees who are contractually enrolled into the Scheme would withdraw from Scheme membership, an insertion of a separate provision is introduced at 46.3 to cover the scenario where a jobholder exercises his right to opt-out under section 8 of the Act with the month following the date of effective statutory enrolment. Where a jobholder provides an employer with a valid opt-out notice, the legislation operates to require that that member is treated as never having been a member of the qualifying scheme in question. The drafting of 46.3 makes this clear and provides that the refund to the jobholder required under the legislation is dealt with under Rule 51.
(c)Rule 51 – Where a jobholder exercises his right to opt-out under section 8 of the Act, the relevant legislation requires the employer to refund any contributions deducted from the jobholder’s pay back to the jobholder within a specified timeframe. The Trustee is under a separate obligation to forward any contributions paid into the Scheme by or on behalf of the jobholder to the employer. The new Rule 51.7 builds this facility into the Scheme.
A Schedule outlining the amendments in detail is available at http://www.admin.cam.ac.uk/reporter/2012-13/weekly/6282/CPS-Schedule.pdf. The current rules are available online at: http://www.admin.cam.ac.uk/offices/pensions/cps/rules/.
The Council has submitted a Grace (Grace 1, p. 71) for the approval of the amendments to the rules of the Cambridge University Assistants’ Contributory Pension Scheme.
1Rule 52.6 read with the definitions of Annual CRB Pension, CRB Revaluation Percentage, Revalued Annual CRB Pension, and Total Revalued Annual CRB Pension in Rule 1. The retirement lump sum is covered in Rule 57.7(b).
2Annual CRB Pension paras (a)(ii)(B) and (iii) and Rule 57.7(b).
3Rule 52.2.
4Rules 52.5 and 57.7(a).
5Rule 45.1(a).
6Rule 52.6 read with Annual CRB Pension para (b) and Rule 57.7(b).
7Rule 45.1(a).
8Rule 2.2(e).
9Rule 60.3(b)(ii)(A).
10Rule 60.3(b)(ii)(B).
11Rule 52.1 for pre-2013 pension, Rule 52.6(b)(i) for post-2013 pension, and Rule 71, requiring all elements of pension to be taken together.
12Rule 52.6(b)(i) and Rule 45.6.
13Rule 52.6(b)(ii) and Rule 54.5.
14Rule 61.2(a)(i) and (ii).
15Rule 61.2(d).
16Rule 61.2(e).
17Rule 61.2(a)(iii) and (iv).
18Rule 26.5.
19Rule 61.3(a)(i).
20Rule 61.3(a)(ii).
21Rule 62.4(a)(i).
22Rule 62.4(a)(ii).
23Rule 26.5.
In June 2011, the Council appointed a panel to conduct a review of the University’s IT infrastructure and support, and invited members of the University to submit comments (Reporter, 2010–11, p. 901). The Review Panel has received evidence from many parties across the University and presented a report to the Council on 22 October 2012, on its findings and recommendations. The report is available online at http://www.admin.cam.ac.uk/reporter/2012-13/weekly/6282/IT-Review-Consultation.pdf.
The Council and the General Board have given preliminary consideration to the report, and agreed to approve it as the basis for consultation in the University. A period of consultation on the recommendations will be held until the end of November 2012, and members of the University are invited to submit their comments to Dr Jim Bellingham, Secretary of the School of the Physical Sciences and Secretary to the Review Panel (email: jrb13@cam.ac.uk), by 30 November 2012. The Review Panel will then consider the responses to the report in December. It is anticipated that the Council and General Board will publish a Report on the final recommendations in the Lent Term.
As part of the consultation process, the report will be discussed at the Discussion on 20 November 2012, the web forum will continue to be available (https://forum.cam.ac.uk/viewforum.php?f=31&sid=87c927ebdb89077dd7508d5a491f19c0), and open meetings will be held in November where the recommendations will be discussed. The open meetings will take place on Tuesday, 6 November, from 3 p.m. to 5 p.m. (Mill Lane, Room 9) and Wednesday, 14 November, from 3 p.m. to 5 p.m. (Lady Mitchell Hall, Sidgwick Site).
USS Limited has published their Report and Accounts for the year ended 31 March 2012. The Trustees have issued a short report to all members giving details of the information contained in the full Report and Accounts, and this will be circulated to all members. Copies of the full Report and Accounts can be obtained on request from the Pensions Office, Human Resources Division, 4 Mill Lane, Cambridge, CB2 1RZ, and are available on the USS website (http://www.uss.co.uk/Annual Reports/Report and Accounts 2012.pdf).