I’m a member of BAMPS
BAMPS is the Money Purchase Section of NAPS, which closed to future contributions on 1 October 2012. The contributions made by members and BA up to 30 September 2012 were invested and continue to grow with interest. At retirement you decide the type of pension to buy with the money invested in your individual BAMPS retirement account or you can take your 'pot' as a cash lump sum.
At a glance
|What you get at retirement||
A tax-free lump sum and/or a pension bought with the value of your individual retirement account
The government's defined contributions (DC) flexibility rules allow BAMPS members to draw their whole BAMPS Account as an Uncrystallised Funds Pension Lump Sum (UFPLS). Members can elect to receive up to 100% of their fund as a cash sum, 25% of it being tax free.
|Your choices before retirement||Your choice to let your account grow with returns or transfer to a new scheme|
How the fund is invested
BAMPS has an investment objective (which is identical to the Equity Biased Fund AVC fund) to produce returns consisting of two parts – a Guarantee Component and the Bonus Component.
Guarantee Component – From 1 April 2016, this rate is based on the return during each calendar month on the Sterling Overnight Index Average (SONIA) (or any other index which from time to time the Management Trustees consider is appropriate having taken suitable advice).
Bonus Component – From April 2019, this rate is usually announced monthly, in arrears (the rate for each month is worked out on the last day of that month).
The calculation of the Bonus Component is based on an independent range of investments with the aim of providing returns from a mixture of different assets, with the largest investments related to stock markets. The returns therefore rise and fall in line with the performance of the stock markets. The returns are smoothed over time so that some of the investment returns in years of good performance are kept in reserve to cover years when returns may not be so good. This makes sure that the return in BAMPS can never be negative but it is possible for the Bonus Component to be zero. The Bonus Component contains an allowance for the cost of making sure that the overall BAMPS return is no lower than the return achieved by the Guarantee Component. The cost of providing this guarantee is currently 2.3% a year, which is deducted from the Bonus Component rate.
How interest is credited
Money that is invested in BAMPS for the whole of a calendar month will be credited with interest for the month at a rate comprising the Guarantee Component declared for that month plus one-twelfth of the Bonus Component declared for the Scheme Year in which that month falls.
Money withdrawn from a BAMPS Account at the end of a calendar month will be credited with interest based on the Guarantee Component and Bonus Component declared for the previous month.
Money withdrawn from a BAMPS Account part-way through a calendar month will be credited with interest based on the Guarantee Component only, declared for the previous month, pro-rated according to the number of days in the month during which the money was invested.
I have a deferred BAMPS account – what are my options?
Your BAMPS account will continue to grow with investment returns until you decide to draw it.
Alternatively, at any time before you draw your BAMPS account, you can exchange it for a deferred pension in the final salary section of NAPS or you can transfer it to another pension arrangement which has been approved by HM Revenue & Customs.
At Normal Retirement Age
The amount of money you and BA have saved to your individual retirement account, plus investment returns, is used to buy a pension or you can take 25% of your fund as a tax-free cash lump sum and using the remaining balance to buy a pension or you can draw your whole BAMPS Account as an Uncrystallised Funds Pension Lump Sum (UFPLS), receiving up to 100% of your fund as a cash sum, 25% of it being tax free and the remaining 75% taxed at your marginal rate of tax.
If you choose to buy a pension from NAPS, it will normally increase each year in line with the government's Pensions Increase (Review) Orders, up to a maximum of 5% a year. If you choose to buy a pension from an insurance company or other pension provider your pension will increase at the rate agreed at the time.
New government rules, introduced in April 2015, mean that you can also access your BAMPS benefits flexibly using external arrangements known as ‘income drawdown’ facilities and you can transfer your BAMPS account to an external provider (at any time before drawing your BAMPS benefits) in order to take advantage of this facility. You must have sufficient unused Lifetime Allowance (LTA) available.
If you choose to retire early
You can draw your BAMPS account at any time after age 55. Under BAMPS, you can take 25% of your fund as a tax-free cash lump sum and use the remaining balance to buy a pension from NAPS or an insurance company using the money that has built up in your individual retirement account to this earlier retirement date. Or you can draw your whole BAMPS Account as an Uncrystallised Funds Pension Lump Sum (UFPLS), receiving up to 100% of your fund as a cash sum, 25% of it being tax free and the remaining 75% taxed at your marginal rate of tax.
Alternatively, you can transfer your BAMPS account to a different pension provider to take advantage of the government’s flexible access rules, as set out above.
What your family gets
If you are a deferred BAMPS member when you die, your spouse or partner will receive a lump sum equal to the amount of your individual BAMPS retirement account.
The lump sum doesn't have to be paid to your spouse or partner. By completing a Notice of Wish form, you can ask the Trustee to consider, at its discretion, another person or cause of your choice.
If you die in retirement, your spouse or partner will receive any death benefits you arranged when you retired.
How your pension is paid
If you choose to buy a pension from NAPS we will pay it to you monthly, in arrears. You can choose to have your pension purchased from an insurance company instead of NAPS. In this case, payment arrangements will depend on the insurance company, but tax will be deducted via PAYE.