Combined Pension Forecasting (CPF) is a Government scheme launched in October 2001.
Why are Combined Pensions Forecasts important?
People are living longer, which means they can enjoy more time in retirement, but will need to plan and save for their later years. The Government estimates that around seven million people are not saving enough to meet their retirement aspirations. The Government is making changes to the pension system. Changes being introduced from April 2010 mean that the State Pension will be more generous, especially for women and carers, and more people will qualify. Whilst the State Pension will be a foundation for retirement, most people will want to top it up with their own savings. To encourage more people to save in a private pension, the Government is planning to introduce workplace pension reforms from 2012. As an important first step, a Combined Pension Forecast (CPF) will provide information to people around their retirement savings. For more information regarding pension reform you can visit www.direct.gov.uk
What is Combined Pension Forecasting?
CPFs give an individual the details of both their personal/occupational pension and their State Pension forecast together. These pensions provide two vital components of a person's likely income in retirement.
The State Pension forecast information is provided by the Department for Work and Pensions (DWP). It is sent out, along with their annual benefit statement, by the employer, pension provider or third-party administrator (TPA).
Receiving private and State Pension information together in one statement every year may help with an individual's financial planning. It can help improve their understanding of State Pension provision, and means that individuals can review their retirement provision every year and consider whether their current provision is adequate to meet their needs and expectations in retirement.
CPFs are viewed by many employers as a useful employee benefit and, by the overwhelming majority of recipients, as a valued service.
What does it look like?
The State Pension component of a CPF is included with the individual's annual benefit statement. It tells the recipient the age at which they can get their State Pension, along with:
• an estimate of the State Pension they may get at State Pension age (SPA), based on their National Insurance contributions record so far
• an estimate of the State Pension they may get when they reach SPA, based on assumptions about their future National Insurance contributions.
In addition, explanatory notes answer some common questions and provide contact details should the recipient have any unanswered questions about the State Pension element of the forecast.
How much does it cost?
The State Pension information sent to employers is free of charge. DWP also provide free technical assistance, standard documentation and IT packages to support the process.
What are the benefits?
Issuing CPFs can send a clear signal that the employer cares for its staff, and is helping them by providing them with key information that can benefit them in their retirement.
Some employers issue CPFs to non-scheme members, showing their occupational pension as ‘nil' alongside their State Pension forecast. Such forecasts are often accompanied by an invitation to join the company pension scheme and usually generate interest.
The CPF team provide a personal link between businesses and DWP, meeting with potential users where appropriate, explaining the process and the advantages for the company. Once a company has decided to take part in CPF and an activity plan has been completed and agreed, the CPF team work closely with the company providing end to end technical support at all stages of the process. This includes supplying all required wording when communicating information about CPFs, an agreed timetable for interaction with the company, and guides and products to facilitate the technical requirements.
How to get involved?
CPF Customer Account Managers are available to provide face to face presentations to employers, pension providers and TPAs about this free service and its benefits. These presentations provide pension managers, finance, human resources and IT directors of the company the opportunity to discuss any issues they may have about the process.
For More Information Please Contact:
Pat Drew or Kath Watson
Combined Pension Forecasting Customer Account Managers
Room TB201
Tyneview Park
Newcastle upon Tyne
NE98 1BA
Contact: 0870 010 1684
Fax: 0191 218 2784
Email: [email protected]
