For members who joined after 31 October 2006 and before 1 December 2010.
How does my pension build up?
The scheme year runs from 1 April to 31 March. For each Scheme year (or part year) that you are an active CAB member you, build up a block of pension equal to 1.67% of your pensionable salary, payable at normal pension age.
The intention is that at the end of the following scheme year, and annually thereafter, the BBC and the Trustees will jointly consider increasing each block of pension in line with price inflation.
Increases are discretionary and subject, amongst other things, to the scheme's investments performing in line with expectations. Once awarded, increases cannot be reduced.
Your pension is the total of all the blocks of pension you have built up, plus discretionary increases.
In the first three years of her CAB 2006 membership, Kate's pensionable salary is £30,000, £30,300, and £30,603 respectively. During that time, the discretionary increases awarded each year are 2% and 1.5% respectively. The following diagram shows the build-up of Kate's pension:
Pensions build up in: Year one Year two Year three
Year one salary 1.67% x £30,000 = £501 £501 x 2.0% = £10.02
£501 + £10.02 = £511.02 £511.02 x 1.5% = £7.67
Year two salary 1.67% x £30,300 = £506.01 £506.01 x 1.5% = £7.59
Year three salary 1.67% x £30,603 = £511.07
The Scheme does not accept transfers-in from other pension schemes.
When can I take my pension?
If you have two or more years' pensionable service, you can leave service and ask for your pension to be paid early at any time from age 55 onwards. Early payment requires the BBC's agreement, and your pension will be less than that payable at normal pension age. This is because:
- it is based on the pension you have built up when you leave service and is, therefore, less than if you had continued as an active CAB 2006 member until normal pension age; and
- it will be reduced to allow for it being paid for a longer period than expected.
The reduction depends on your age at the time your pension comes into payment. The scale of reductions is set by the BBC and the Trustees at the beginning of each calendar year. The following percentages are currently in use:
Between birthdays a proportion of the reduction is applied.
Here is an example of how an early pension is calculated:
Total pension built up to date - Early retirement reduction = Early retirement pension
John leaves the BBC on his 60th birthday. His pension, including discretionary increases awarded to date, is £10,000 pa. If he decides to defer taking it until normal pension age, it will continue to attract the same discretionary increases as are awarded to active CAB members. It will then be paid without reduction when he reaches age 65. If he asks for immediate early payment of his pension, it will be reduced by 28% (see table above).
John's early retirement pension is £10,000 pa less 28% = £7,200 pa.
You can continue working after age 65 and remain an active CAB 2006 member. Your pension will continue to build up and be paid when you eventually leave service or reach age 75, whichever is earlier.
You will stay in Smart Pensions, but will not have to pay National Insurance contributions after State Pension Age.
If you have two or more years' pensionable service and are aged at least 55, you can ask for your pension to be paid, while continuing to work for your employer, provided that the BBC agrees. Any pension taken before normal pension age under the flexible payment provisions will be reduced for early payment. A leaflet explaining flexible payment in more detail is available from the documents section.
Incapacity means physical or mental impairment as a result of which, on the evidence of a doctor or other qualified person appointed by the BBC, the Trustees are satisfied:
- that you are incapable of carrying out your normal occupation; and
- it is likely to permanently and substantially impair your earning capacity.
If you leave service because of incapacity before normal pension age, you will receive an immediate pension provided the BBC agrees.
If you have completed less than two years' continuous pensionable service, the pension will be reduced for early payment. If you have completed two or more years' continuous pensionable service and you are:
- unable to carry on your normal occupation, the pension will not be reduced for early payment; or
- unable to follow any occupation, the unreduced pension will be increased by the additional pension you would have built up, without revaluation, had you remained an active CAB 2006 member until normal pension age on your current pensionable salary.
Incapacity pensions are subject to review and can be reduced or stopped if the Trustees believe that a member has recovered to any extent.
Can I exchange part of my pension for cash?
You can exchange part of your pension for a lump sum cash payment, which is currently tax-free. This is known as 'commutation'.
The maximum lump sum you can take is currently four times your pension. If you take cash, your pension will be reduced. The commutation factors are set by the BBC and the trustees at the start of each calendar year.
Currently, for every £12 cash that you take your pension is reduced by £1 p.a. Full details will be sent to you before your pension comes into payment.
Taking cash does not affect the pension payable to your qualifying spouse, qualifying civil partner or dependants. It will still be calculated on your full pension, as though you had not chosen to exchange part of it for cash.
Before making the decision to exchange pension for cash, you should consider taking independent financial advice
Does my pension increase after it starts?
CAB 2006 pensions are reviewed annually and any increases are awarded on 1 April. The Trustees increase pensions in payment by the lesser of:
- the rise in the retail prices index (RPI) for the previous calendar year ending 31 December; or
Increases are calculated on your actual pension in payment.
When the rise in the RPI is greater than 2.5%, the BBC and the Trustees may jointly award a discretionary increase.
Increases are reported on the news section of this site and in the Annual Report.