1. Introduction to University of Salford Pension Plan February 2019
Katy Hayes
Barnett Waddingham LLP

2. Regulatory information
The information in this presentation is based on our understanding of current taxation law, proposed legislation and HM Revenue & Customs practice, which may be subject to future variation.
This presentation is not intended to provide and must not be construed as regulated investment advice. Returns are not guaranteed and the value of investments may go down as well as up.
Barnett Waddingham LLP is a limited liability partnership registered in England and Wales.
Registered Number OC
Registered Office: 2 London Wall Place, London, EC2Y 5AU
Barnett Waddingham LLP is authorised and regulated by the Financial Conduct Authority and is licensed by the Institute and Faculty of Actuaries for a range of investment business activities.

3. Defined Benefit & Defined Contribution - an overview

4. Final Pensionable Salary
Defined Benefit (DB)
Final Salary
Accrual
Rate i.e. 1/80
Final Pensionable Salary
Final Salary
Pension
Career Average – calculated in “year” segments
Accrual
Rate i.e. 1/80
Total Pensionable Pay
Career Average
Pension

5. LGPS – GMPF* ‘Career Average’ pension calculated as: Accrual
Rate (1/49)
Total Pensionable Pay
Career Average
Pension
Trustee and Company may agree to give discretionary increases to Pensionable Pay records
For service before 1 April 2014 a ‘Final Salary’ pension applied
* Source:

6. The basics of Defined Contribution (DC)
Timeframe how long employee is in it
Payments amount going in from employee/employer/taxman
Net investment return potential growth of investments less charges
Pot of money what is the value of the pot/likely income levels

7. ‘New’ retirement options
Member can usually take 25% of their DC pot tax free.
The remaining 75% can be taken as:
Guaranteed income for life
Cash lump sum
Flexible withdrawals

8. University of Salford Pension Plan (UoSPP)

9. Master Trust Provider (Aviva)
University of Salford
Other employers
UoSPP
Other Plan
A Master Trust is a large DC pension plan that is used by multiple employers, with each employer having their own section within the Master Trust.
A Master Trust is run by a Trustee Board. The Trustees’ are in charge of ensuring the Master Trust is governed well, administered efficiently and that the investments available through the Master Trust remain appropriate for members to use.

10. Employee contribution* University contribution*
Auto-enrolment minimums
Employee contribution*
University contribution*
Total contribution
Until 5 April 2019 3% 6%
From 6 April 2019 5% 4% 9%
The University is offering a contributions structure which goes beyond the requirements of the legislation (see next slide)
* Contributions are to be based on Pensionable Pay.
- Pensionable Pay = basic pay plus overtime, acting-up allowances and various other allowances. Further details are available from HR/Payroll.

11. Employee contribution* University contribution*
University of Salford Pension Plan: contribution structure
Employee contribution*
University contribution*
Total contribution
Default level 0% 9% 1%
10%
11% 2%
13% 3%
12%
15%
4% or more
17% or more
* Contributions are to be based on Pensionable Pay.
- Pensionable Pay = basic pay plus overtime, acting-up allowances and various other allowances. Further details are available from HR/Payroll.

12. How are contributions made up?
£1,350
(total payment)
£1,350
(employer payment) £0
(employee payment)
(Assumptions: annual pensionable income of £15,000, employee contributes 0%, Company contributes 9%)
£1,950
(total payment)
£1,650
(employer payment)
£60
(tax relief)
£240
(employee payment)
(Assumptions: annual pensionable income of £15,000, employee contributes 2%, Company contributes 11% and pension payments will receive basic rate tax relief of 20%)

13. Salary Sacrifice An alternative way to pay pension contributions
Employee payment method
Employee pays
University pays
2% pension payment
11% pension payment
13% total pension payment
Salary Sacrifice method
Employee gives up
University pays
Advantage
2% of your salary
13% total pension payment
Employee (and University) make a National Insurance saving

14. Salary Sacrifice example
Earnings of £15,000 per year: employee pays 2% and University pays 11%
Take home pay
Before Salary Exchange
After Salary Exchange
Gross pay
£15,000
£14,700
Tax
-£570
National Insurance
-£789
-£753
Pension payment
-£300 £0
Net pay
£13,341
£13,377
Pension payment
Before Salary Exchange
After Salary Exchange
Company
£1,650
£1,950
Employee
£300 £0
Total
Employee NI saving: £36 p.a.
Rates based on 2018/19 tax year (net pay method)

15. Salary Sacrifice considerations
Not necessarily suitable for everyone:
low salaries
close to threshold for state benefits
can impact on student loans
could reduce statutory maternity/paternity pay (SMP/SPP)
May increase working tax credits
Previously an individual’s entitlement to a state second pension could have been slightly reduced – now the new flat rate pension is introduced, this is unlikely to have much impact

16. £1.03million* £40,000* £4,000* Know the limits
There are limits on how much an individual can save into their pension during each tax year, and in their lifetime without having to pay tax.
£1.03million*
£40,000*
£4,000*
is the total amount an individual can take from all pensions without facing a tax charge
This is called the Lifetime Allowance
is the most an individual can save into their pension in an year and still get tax relief
This is called the Annual Allowance
is the lower limit Annual Allowance for anyone who has ‘flexibly’ accessed their pension savings on or after 6 April 2015
This is called the Money Purchase Annual Allowance
*2018/19 tax year

17. University of Salford Pension Plan - Projected benefits
Basis 1: Employee 0%/University 9%
Basis 2: Employee 2%/University 11%
Age 25
Age 35
Age 45
Basis 1
Basis 2
Average salary
£15,000
Projected fund at 65*
£89,800
£129,700
£58,700
£84,800
£34,300
£49,500
Projected pension (male) at 65**
£3,600
£5,190
£2,350
£3,400
£1,370
£1,980
* All figures rounded to the closest £100, and provided in today’s terms
** All figures rounded to the closest £10, and provided in today’s terms
Assumptions for fund projections:
Assumptions for projected pension:
Salary increase/inflation: 2.5% p.a.
Rule of thumb - 4% conversion rate.
Net investment return: 5% p.a.
Existing DC funds: nil

18. The default investment strategy
Aviva’s My Future Lifestyle Profile
Aviva’s My Future Lifetime strategy will gradually move your pension savings from the My Future Growth Fund to the My Future Consolidation Fund as you approach your target retirement age.

19. The default investment strategy – more detail
My Future Growth Fund
This Fund is invested in a combination of equities, UK government bonds and UK investment-grade corporate bonds.
The expected split is around 70% equities and 30% bonds although the asset allocation can vary over time.
My Future Consolidation Fund
This Fund is also invested in a combination of equities and bonds, but the allocation is typically closer to 20%-30% global equities and 70%-80% bonds (UK government bonds and corporate bonds).
What are the charges?
The charge of the default fund is 0.75%. This means if your plan was worth £1,000 it would equal an annual charge of £7.50.
If you invest outside of the default, you may pay a different charge to the one above. Further details will be available from Aviva.

20. Additional features
The University is intending to provide the following features within, or to complement, the UofSPP:
Governance
Through establishing a Pensions Governance Committee (PGC)
Group Life Assurance
A multiple of salary will be provided in the event of death
This is in addition to a return of the member’s fund in the UofSPP
Pensions Quality Mark
Independently verified

21. What are your options No action required Remain in GMPF
Review your options
Currently a member of GMPF
Remain in GMPF
No action required
Move to UofSPP
Complete form in information packs*
Not currently a member of GMPF
Join GMPF
Join UofSPP
Key: UoSPP = University of Salford Pension Plan
* Later this month, you will receive an information pack providing more information regarding the options available to you. This pack will also include a form to return to Payroll if you wish to re-join GMPF, or join the UofSPP.

22. Where to get more information

23. Additional information – February 2019
Later this month, you will be provided with a pack of information containing:
A letter from the University of Salford outlining more details of the UofSPP, and the options available to you
A summary document outlining the key features of Greater Manchester Pension Fund (GMPF) and the UofSPP
A form to complete, either to join GMPF, or to join the UofSPP

24. Additional information – UofSPP
From April 2019, employees who join the UofSPP will have access to the following:
Aviva’s website and ‘MyAviva’
Information and tools
Change contact details
View your fund value, and other pension plan details
Change you investment choices
Barnett Waddingham’s member helpline – for information only

25. Online www.pensionwise.gov.uk Free impartial guidance (from age 50)
Information on financial issues
Information about pensions
Find a financial adviser
N.B. Pension Wise, MAS and TPAS have recently merged to form the Single Finance Guidance Body (SFGB) although their individual websites continue to be in use for the time being.

26. MyAviva

27. MyAviva
You can find lots of useful information about your plan by using Aviva’s online service, MyAviva: