CAB 2006

For members who joined after 31 October 2006 and before 1 December 2010.

what if...

You cease to build up benefits when you opt out or leave service.

What happens if I opt out or leave service?

You stop building up benefits when you opt out or leave service.

You will be entitled to a deferred pension payable at normal pension age. Your pension will be calculated as outlined in the guide to building up your pension.

Deferred CAB 2006 pensions receive the same discretionary increases as active CAB 2006 members (see the guide to pension increases).

You can ask for your deferred pension to be paid before normal pension age, either because of incapacity or from age 55 onwards. Payment is subject to the agreement of the Trustees and your pension will be reduced for early payment. The reduction will be decided by the BBC and Trustees after consulting the scheme's actuary. In cases of incapacity, the Trustees have discretion to waive some or all of the reduction.

You can choose to transfer the value of your Scheme deferred pension to another registered pension arrangement in the UK or overseas at any time before your pension starts.  Unless you confirm otherwise, the Scheme Trustees will assume that the purpose of the transfer is to provide defined contribution (DC) benefits under another pension arrangement.  The transfer value will be calculated in line with overriding legal requirements and is designed to represent the actuarial value of your benefits. Please contact the pension service line for further information.  If you choose to transfer the value of your benefits to a DC arrangement, unless its total value is £30,000 or less on the valuation date, the Scheme Trustees will be required to check that you have recevied appropriate independent financial advice from a suitable financial adviser approved by the Financial Conduct Authority.

Different pension providers offer different options in relation to what you can do with flexible benefits, including the option to select an annuity. Different options have different features, different rates of payment, different charges and different tax implications.

There may be tax implications associated with accessing flexible benefits. Pension income is taxable and the rate at which income from a pension is taxable depends on the amount of income your receive from your pension and other sources.

Does temporary absence affect my pension?

Temporary absence from work does not affect how your benefits build up while you remain in service on full pay.

During authorised unpaid absence, you are opted out of Smart Pensions automatically and will not build up career average benefits. On return to work, you are re-admitted to Smart Pensions and your benefits start to build up normally again. You cannot make good the 'lost' benefits.

If you do not return to work at the end of an unpaid absence, you will be treated as having left service on the day your pay stopped.

During all temporary absences, whether paid or unpaid, you will be covered in full for death in service benefits.

Sickness and family leave

While on paid sickness absence or family leave (ie maternity, adoption, paternity or parental support leave) you continue to participate in Smart Pensions.

However, you are opted out of Smart Pensions automatically in the month in which you start to receive statutory pay only through payroll. Your contributions will then be collected temporarily through the payroll and based on your actual pay.

Your pension will usually build up based on your original pensionable salary.

Secondments

Members seconded to work for another, non-participating employer cease to participate in Smart Pensions but can continue to build up career average benefits on condition that:

  • contributions are paid by the non-participating employer and the member during the same scheme year in which the benefits build up;
  • there is a definite expectation that the member will return to work for the BBC, or another participating employer;
  • the secondment, in total, does not exceed 10 years; and
  • benefits build up using the pensionable salary that the member would have received, if they hadn't been seconded.

Career breaks

If your employer agrees to you taking a career break, you will be treated as having left service. If you are re-employed, you will be able to re-join CAB 2006 provided you were an active CAB 2006 member at the time you go on the career break. If you re-join CAB 2006, then your pensionable salary will not be greater than that it would have been had you not taken a career break. When planning a career break, you should consider carefully the impact it will have on your career average benefits. Help is available from the pension service line.

What happens when I die?

Death in service

If you are an active CAB member and die in service before taking your pension, the following benefits are payable:

A lump sum

The Trustees will make a lump sum payment, which is currently free of inheritance tax. It will be equal to the lesser of four times your life cover pensionable salary as at the date of your death and your remaining Lifetime Allowance. You should read the note "BBC Pension Scheme death in service provisions" for more information. The note is available from the documents section.

The Trustees have discretion over who receives the cash and in what proportion. They take into account, but cannot be bound by, your wishes. You are therefore asked to let the Trustees know your choice of beneficiaries by completing an expression of wish form available from the documents section.

If the lump sum is restricted because of the Lifetime Allowance the balance will be used to provide additional pension for your dependants.

A dependant's pension

Your qualifying spouse, qualifying civil partner or nominated dependant will receive a dependant's pension calculated as follows:

50% of your pension built up to date, plus

50% of the future pension you would have built up, without revaluation, had you remained an active CAB member until normal pension age on your pensionable salary as at the date of your death

Example:

Janet dies at age 55. She therefore has a further 10 years' potential pensionable service to normal pension age. Her pension built up to date is £5,000 pa. Her pensionable salary when she dies is £25,000.

The dependant's pension is:

[50% of £5,000 = £2,500] plus [50% of {(1.67%* of £25,000) x 10} = £2,087.50] = £4,587.50 pa

* 1.67% is the rate at which your pension builds up.

Children's pensions

Your qualifying children (up to a maximum of two) will each receive a pension equal to half of the dependant's pension. If no dependant's pension is payable, the children's pensions will be doubled.

Death before your deferred pension starts

If you die before normal pension age and have a deferred pension, the following benefits are payable:

A dependant's pension

Your qualifying spouse, qualifying civil partner or nominated dependant will receive a dependant's pension of half of your deferred pension.

Children's pensions

Your qualifying children (up to a maximum of two) will each receive a pension equal to half of the dependant's pension. If no dependant's pension is payable, the children's pensions will be doubled.

Death after your pension starts

Your pension is payable for life. On your death, the following benefits are payable:

A dependant's pension

Your qualifying spouse, qualifying civil partner or nominated dependant will receive a dependant's pension of half your pension, as it would have been ignoring any cash you chose to take.

Example (ignoring increases):

John retires at the age of 65. His annual pension is £8,000 ignoring increases. He exchanges some of his pension for cash and receives a lower pension. He nominates his father, Jack, as his dependant.

Following John's death, Jack will receive a pension of £4,000 for the rest of his life.

Children's pensions

Your qualifying children (up to a maximum of two) will each receive a pension equal to half of the dependant's pension. If no dependant's pension is payable, the children's pensions will be doubled.

An incapacity pension lump sum

If you are being paid an incapacity pension and die before normal pension age, the Trustees will make a lump sum payment, which is currently free of inheritance tax. It will be equal to the lesser of four times your life cover pensionable salary as at the date you left service less any commutation lump sum, and your remaining Lifetime Allowance. If the lump sum is restricted because of the Lifetime Allowance the balance will be used to provide additional pension for your dependants.

The Trustees have discretion over who receives the cash and in what proportion. They take into account, but cannot be bound by, your wishes. You are therefore asked to let the Trustees know your choice of beneficiaries by completing an expression of wish form from the documents section.

Divorce or dissolution of a civil partnership

Your pension rights may be taken into account on divorce or dissolution of a civil partnership. The court can order your pension to be divided between you and your ex-spouse or ex-civil partner (ex-partner), although this depends on the terms of the settlement.

Couples can choose to offset pension rights against other assets (eg the family home) or 'earmark' some (or all) of a member's benefits to go direct to the ex-partner when they come into payment. Alternatively pension rights can be shared as part of a 'clean break' settlement. Pension sharing creates a 'pension credit' for the ex-partner and a corresponding 'pension debit' for the member.

The scheme's current policy is to use a pension credit to make a transfer payment to another pension scheme that will provide retirement benefits for the ex-partner. Scheme membership is not offered to an ex-partner.

The scheme makes a charge for:

  • providing information in connection with divorce proceedings, over and above that which it has a duty to provide free of charge under the existing statutory disclosure requirements;
  • compliance with a pension sharing order or agreement; and
  • any other activities in connection with pension sharing.

A more detailed explanation of pension sharing, how the scheme operates a pension sharing order or agreement, and a schedule of its charges are available from the pension service line.

You should consult and be guided by a suitably qualified family law practitioner on all matters relating to divorce or dissolution of a civil partnership.