Two packages to consider
The Review Group has considered how the different options for savings might be combined to produce the necessary 4% savings. This has led us to propose two benefit packages which we believe are sustainable and affordable whilst remaining well-suited to members’ needs. These packages are set out below for your consideration, and we shall write again to ask for your views later in the consultation period.
There are two packages – A and B. Within each package, there are two or three optional cost plans with different contribution rates that allow you to choose how fast to save for your pension. In each case, how these rates would affect the weekly cost to you of saving for your pension is shown: in particular, both packages include a ‘standard cost plan’ where the members’ contributions are only very slightly above what you pay at present.
Both packages maintain the link to RPI up to a cap for inflation of 8% per annum. Either package could be combined with provision for flexible retirement.
In both packages, the standard cost plan builds your pension slower than at present. The accrual rate in OSPS is now 1/80: in the standard cost plan of Package A, the accrual rate is 1/85; and in Package B, it is 1/90.
Package A is the more flexible of the two packages. For similar rates of contribution you can build up your pension faster in Package A than in Package B. Package A also includes an option that produces a worthwhile pension for a contribution rate that costs less than OSPS at present. This is possible because of the lower insurance benefits offered by Package A.
Both packages offer the option of different cost plans, depending on how much you wish to pay and how quickly you want to build up your pension. Members will have the opportunity to reconsider on an annual basis what contribution rate they pay and then change their cost plan if they wish.
We have to decide which of Package A or Package B we wish to implement. It is not possible to run the two packages side by side and allow people to switch back and forth between them.
|Asking you to make a choice for either Package A or Package B will be the main aim of the questionnaire which we shall send round in May. We shall NOT ask at that stage for you to choose between the different cost plans within the packages.|