DIRECTOR – SPECIAL PROJECTS
UCL FINANCE AND BUSINESS AFFAIRS
Letter to active members of the Royal Free Hospital School of Medicine Pension and
Assurance Scheme
29 March 2012
Dear
Important information about your pension benefits
This letter and enclosed Guide is about the proposed transfer of the benefits of members of
The Royal Free Hospital School of Medicine Pension and Assurance Scheme (the Scheme)
into The Superannuation Arrangements of the University of London (SAUL). As an active
member of the Scheme, it is important that you read it carefully. You have the next 60 days
to ask questions and make comments for University College London (UCL) to consider. The
issue of this letter and Guide is the start of a formal consultation about your future service
benefits – the process will run from 29 March 2012 until 28 May 2012.
The proposals in brief
The broad aims of the proposed transfer of Scheme benefits into SAUL are:
1. To maintain the value of past service benefits that Scheme members have built up to
date.
2. To continue to provide a good pension scheme for active Scheme members which is
administered to a high standard but at a reasonable cost.
3. To provide a long-term, sustainable pensions solution for employees and UCL.
With these three aims in mind, it is proposed that:
1. From 30 June 2012, you will no longer earn future service pension benefits via the
Scheme. Instead, you will become a member of SAUL for the purposes of your future
pension provision, with the administration of your future service benefits operating
through SAUL.
2. The benefits that you will earn as a member of SAUL will be calculated in accordance
with the SAUL scheme rules. As with your existing Scheme, your pension will
continue to be linked to your ‘final salary’, and you will continue to enjoy valuable
benefits provided for your family/dependants in the event of your death.
3. The benefits that you have already earned in the Scheme will be ‘converted’ so that
they can be administered on the SAUL benefit basis. Due to the differences in the
benefit structures of the Scheme and SAUL, the amount of pensionable service, as
calculated by the Scheme actuary, that you will be credited with in SAUL will differ
from the pensionable service you have built-up in the Scheme. The value of your
overall benefits however will be equivalent, on the basis of reasonably prudent
assumptions for the future.
Jack Foster Director – Special Projects
University College London Gower Street London WC1E 6BT
Tel: +44 (0)20 7679 8223 Fax: +44 (0)20 7916 2445
Email: j.foster@ucl.ac.uk Webpage: www.ucl.ac.uk/finance/
4. Your benefits will be transferred into SAUL on the basis of a bulk transfer (as will the
benefits for all other members of the Scheme, including deferred members and
pensioners). This means that the value of your pensionable benefits in the Scheme
will be transferred to SAUL, and SAUL will assume the obligations attaching to all
pensionable service, both prior to the transfer as well as after the transfer.
Background to the proposed changes
You are currently a member of the Scheme which is a relatively small ‘defined benefit’
scheme administered by Pitmans Trustees Limited (a professional trustee). As pension
schemes have become increasingly expensive to run, UCL has had to consider whether your
benefits can be provided in a more cost efficient way in a larger pension scheme.
As a member of the Scheme, you currently build up benefits on a ‘final salary’ basis, i.e. your
benefits are linked to the number of years you contribute to the Scheme and to your salary in
the years leading up to the date you leave the Scheme or retire.
As you may already know, the financial management of defined benefit pension schemes is
very challenging, and the unpredictability and cost of funding these schemes has increased
dramatically over recent years. In addition, the amount of legislation that affects defined
benefit pension schemes continues to grow and has made the governance of the Scheme,
given its relatively small size, more costly and onerous.
The Scheme was closed to new members from August 1998 and now has only 22 members
who are still employed by UCL. UCL has spent a considerable amount of time reviewing the
options for the future of the Scheme, with a view to better managing cost. A bulk transfer of
the assets and liabilities of the Scheme to SAUL is the preferred way forward as this enables
you to continue to enjoy and build up final salary pension benefits whilst keeping the cost
more affordable and manageable for UCL. UCL already participates in SAUL to provide
pension benefits for a large number of other employees and can see benefits for both
members and UCL from the efficiencies and economies that consolidating these
arrangements would bring.
SAUL is an occupational pension scheme, as is the Scheme, and provides benefits to the
employees of over 50 colleges and institutions that have links with higher education including
most of the colleges of the University of London, Imperial College and the University of Kent.
SAUL is a large, well-established pension scheme, and as at 31 March 2010 had assets of
£1,400 million and almost 30,000 members.
SAUL is rigorously managed with a robust administrative infrastructure and governance
processes in place, and has won many pension industry awards for its administration,
governance and investment strategy.
By proposing a transfer of the Scheme’s members into SAUL and offering you future
pension provision in SAUL, UCL aims to extend the operational benefits that SAUL, as a
large pension scheme, offers to Scheme members, and to reduce management costs.
What happens next?
Our aim is to consult on the closure of the Scheme to future build-up of pension benefits and
for future pension benefits to be provided through SAUL. All affected employees will have
their questions and comments considered.
Jack Foster Director – Special Projects
University College London Gower Street London WC1E 6BT
Tel: +44 (0)20 7679 8223 Fax: +44 (0)20 7916 2445
Email: j.foster@ucl.ac.uk Webpage: www.ucl.ac.uk/finance/
More information on the proposed merger is set out in the enclosed Guide which you are
asked to read carefully. Topics covered include:
Full details of the proposed transfer.
The impact on members.
Questions and answers.
We will shortly be holding presentations to explain the proposals in detail and to give you the
opportunity of asking questions and making comments.
Our timetable for action is in the enclosed Guide. As you will see, UCL is planning a
programme of communication and consultation over the next 60 days. This will give you
plenty of opportunities to raise any questions you may have. If you wish to make you views
and comments known, or raise specific queries, then this can be done by communicating
directly with Fenella Needham, UCL Pensions Manager, London WC1E 6BT (e-mail:
f.needham@ucl.ac.uk).
The recognised trades unions (UCU, Unison and Unite) have also been informed of UCL’s
proposals, and we will continue to involve them throughout the 60 day consultation period.
They have agreed to act as a channel for your views, comments and queries, if you so wish full details about how to communicate with them are given in the enclosed Guide.
At the conclusion of the consultation UCL will decide whether to proceed with the transfer to
SAUL. An important consideration for UCL will be its discussions with SAUL and the cost to
UCL relating to the proposed transfer of benefits, and in particular the size of any lump sum
payment required to increase the value of assets in the Scheme, to match the funding level
in SAUL.
Discussions with the Scheme Trustee
UCL has carefully considered a range of options as part of its review of the future of the
Scheme, and has discussed its proposals with the Scheme Trustee. The Trustee has taken
independent professional advice on UCL’s proposal and the way in which it has been
communicated to you in order to ensure that you are fully aware of the rationale for transfer
of your benefits in the Scheme to SAUL.
A sustainable future
On the assumption that the cost of transfer into SAUL will be acceptable to UCL, we believe
that the proposal we are making is the best way forward. In a difficult economic environment,
it ensures you will have the opportunity to stay a member of a good, well-run pension
scheme, continuing to earn a final salary defined benefit pension. Over the coming weeks,
as we answer your questions and provide you with information, we hope you will understand
the reasoning behind proposing this merger and the provision of future service pension
benefits through SAUL.
Yours sincerely
Jack Foster
Director – Special Projects
Jack Foster Director – Special Projects
University College London Gower Street London WC1E 6BT
Tel: +44 (0)20 7679 8223 Fax: +44 (0)20 7916 2445
Email: j.foster@ucl.ac.uk Webpage: www.ucl.ac.uk/finance/