About Your Benefits

The level of benefits the Scheme can pay depends on four factors which will vary between individual members. These are:

· the length of your MPS service;

· the reason for your termination of employment,

· the date you left the Scheme, and

· the contributions you paid to the Scheme.

The following paragraphs give a general description of how pensions at retirement are worked out. For more specific information on the calculation of individual benefits, you can contact the Administration Office.

The Pension Calculation – Guaranteed Benefits

Scheme benefits are made up of a number of elements. Part of the pension is guaranteed, and the remainder is paid in the form of bonuses.

The amount of pension is calculated by reference to the four factors above, but will always be a fixed rate pension amount, paid four weekly, quarterly or annually.

Benefits earned for contributions paid to the Scheme before 7 April 1975

Contributions were made on a ‘flat rate’ basis. Members paid fixed amounts of pension contributions, which were not related to their earnings. The level of contribution up to April 1975 was never more than 20p a week. The pension earned for membership between 1952 and 7 April 1975 would never be more than £2.00 per week.

Benefits earned for contributions after 6 April 1975

If you left service after 7 April 1975, pension payable at the Scheme’s pensionable age is based on your pensionable earnings, contributing service
and the accrual rate, all of which are explained further below.

Pensionable earnings are normally an average of the highest three consecutive full tax years’ earnings (revalued in line with inflation) out of the last thirteen years of Scheme service since 6 April 1975.

Contributing Service, which is your total Scheme service after 6 April 1975, plus any service transferred into the Scheme from another pension scheme, and any additional service credit due following the 1992 and 1994 valuations of the Scheme. Any period of strike absence when Scheme contributions were not repaid does not count as Contributing Service and is not included in the pension calculation.

Accrual Rate, which is the rate at which the pension earned after 6 April 1975 built up. The accrual rate used in the benefit calculation depends on the date you left the Scheme, as shown below:

Date of leaving the Scheme:	Accrual rate is:
7 April 1975 – 31 March 1990	1/90^th
1 April 1990 – 29 February 1992	1/80^th
From 1 March 1992	1/60^th

For example, if you:

left after 1 March 1992;
had 17 years of Scheme membership; and based on the calculation explained above, had pensionable earnings of £20,000;
then your pension entitlement would be calculated as follows:

£20,000 x 17 = a pension of £5,667 per year, or a
60 weekly pension of £108.98

Depending on the date they left and the reason for leaving, some members receive:

a make-up to a minimum rate – generally, where a member took age or incapacity retirement or redundancy retirement over a certain age;

a value for money addition, which ensures that the benefits due to members who left before normal pensionable age represented fair return for their contributions. At retirement, actual earned benefits, plus any increases added to the pension before it becomes due for payment, are compared with the level of the value for money pension. If the earned pension does not, in the opinion of the Trustees, provide value for money for the contributions paid, the higher of the two is payable;

an award of additional contributing service , for members made redundant between 11 March 1981 and 29 March 1987, and who were aged between 50 and 59 at the date of redundancy.

Any additions that are due are automatically added to pensions and do not have to be claimed separately.

The pension calculation – Bonuses

The remaining part of the pension is paid in the form of bonuses, which arise from surpluses from past valuations. Bonuses are additional pension amounts which are paid with the Guaranteed Benefits. Bonuses awarded from previous valuations cannot be guaranteed and in some circumstances, explained more fully in the section Benefits on Retirement, they might reduce.

The Guarantee arrangements protect your benefits, ensuring that there is no reduction in total benefits in cash terms even during a prolonged valuation deficit period, when pensions stand still.

The Guarantee arrangements are explained in more detail in the section About Your Scheme.