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WHY CAN M.P’S RETIRE AT 60?

Why can MP’s retire on a full pension at 60, while the rest of us have to wait till we are 70? Well, maybe there is a good reason for this, for instance MP’s who were -

Younger than 51 years and six months on 1 April 2013 could for instance - Currently the scheme rules allow you to buy added years of service in the final salary scheme. Added years contracts end on your 65th birthday. You can begin paying into an added a year contract while you are still a member of the final salary scheme and any contracts that have started before 7 May 2015 will continue but you will not be able to begin a new contract after the move. The new CARE scheme will include an option to buy added pension. This is similar to added years, but rather than buying extra years of service (tied to final salary) you would be buying a specific amount of pension that is payable on retirement.  Also If you have other pension benefits that you built up before you became an MP, you may be able to transfer in those benefits to the final salary scheme in exchange for additional years and days of service while you remain in that scheme. Once in the new CARE scheme, future transfers would be to that scheme and are likely to be capped. From 8 May 2015 the 64 age requirement will be removed so you can transfer in at any age. It continues to remain possible to transfer your PCPF benefits to another pension arrangement. But transfers out will be subject to safeguards put in place by overriding pensions legislation for public sector schemes. Please note that the option to transfer out is not available for members who are over age 65 when they leave Parliament, as the scheme rules require immediate payment of your pension benefits. I guess that about covers that, but then –

 If you were aged between 51 years six months and 55 years on 1 April 2013... Which states - Currently you can buy added years of service in the final salary scheme. If you already have an added years contract before you enter the new scheme, this can continue after you do so, but after the move you will not be able to begin a new contract. However, in the new CARE scheme you will be able to buy added pension. This is similar to added years, but rather than buying extra years of service (tied to final salary) you would be buying a specific amount of pension that is payable on retirement. If you have other pension benefits that you built up before you became an MP, you may be able to transfer in those benefits to the final salary scheme in exchange for additional years and days of service while you remain in that scheme. Once in the new CARE scheme, future transfers would be to that scheme and are likely to be capped. From 8 May 2015 the 64 age requirement will be removed so you can transfer in at any age. It continues to remain possible to transfer your PCPF benefits to another pension arrangement. But transfers out will be subject to safeguards put in place by overriding pensions legislation for public sector schemes. Please note that the option to transfer out is not available for members who are over age 65 when they leave Parliament, as the scheme rules require immediate payment of your pension benefits. Okay, I think I am getting there.

Or If you were aged 55 or over on 1 April 2013 You Can[KL1]  -Currently the scheme rules allow you to buy added years of service in the final salary scheme by paying up to an extra 10% of salary on top of your normal pension contribution. You can continue to do this as long as you are under age 64 when the Contract begins. Added years contracts end on your 65th birthday. I will get this in a minute, I think? If you have other pension benefits that you built up before you became an MP and you are under age 64, you may be able to transfer in those benefits to the final salary scheme in exchange for additional years and days of service. From 8 May 2015 the 64 age requirement will be removed so you can transfer in at any age. It continues to remain possible to transfer your PCPF benefits to another pension arrangement. But transfers out will be subject to safeguards put in place by overriding pensions legislation for public sector schemes. Please note that the option to transfer out is not available for members who are over age 65 when they leave Parliament, as the scheme rules require immediate payment of your pension benefits. I am still none the wiser this comes from their own leaflet which you can find online at www.mypcpfpension.co.uk/docs/librariesprovider4/2015-change/change-guide.pdf?sfvrsn=2 and then you could make up your own mind, this has totally confused me!!

Here is are some examples, see what you think?

Pension - £19,456.50 – Care - £16,026.00- total - £34,681.0

Spouse’s pension (payable on death) £12,160.00 – Care - £6,010.00 – Total - £18,170.00

Children’s pension (paid each to two children, if eligible under scheme rules) - £3,648.00 – Care -  £4,808.00 – Total - £8,456.00.

It also has this underneath,

This example is for illustrative purposes only. Personal CARE estimates are not available at this time. If your final salary and CARE pensions are payable at different ages, you can have them paid separately at the different ages, or paid together with CARE reduced for early payment. Assumptions: Salaries increase by 1.5% pa. CPI is 2.6% each year. Early retirement reduction of 5% included in the total figure above, as CARE benefits are being paid one year early. Actual salary increases, rates of CPI, and early retirement factors will differ from those used in the example above. This is from their leaflet and finally –

Financial advice The Trustees, the scheme administrators and staff in the Pensions Unit cannot provide financial advice and it is impossible for us to state whether any of the options in this booklet would be financially beneficial to you given your personal circumstances. We recommend that you take advice from an independent financial adviser (IFA). You can find an IFA near you by visiting www.unbiased.co.uk. So there you have it, the main reason why MP’S can retire before the rest of us, or at least I think it is the reason. It certainly hasn’t made any sense to me, maybe it will do you, who knows?

Empower Admin (Ray Patrick)

 


 

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