At Retirement - your benefits
How do you work out my pension?
When you retire from active service at pension age, you will receive an annual pension and a one-off lump sum. The amount of these benefits will depend on your pensionable final earnings and length of reckonable service.
You earn a pension of 1/80 of your pensionable final earnings for each year of reckonable service in the CNPP.
What is ‘pensionable final earnings’?
Your pensionable final earnings will be your pensionable earnings in whichever 365 day period in the last 3 years of reckonable service gives the highest figure. If you have less than 3 years’ service, your pensionable final earnings will be calculated over the period of service you have completed.
What is ‘reckonable service’?
If you work full time, all the years and days you are a member of the CNPP count as reckonable service, including any service credits from transfers in or added years. If you continue working past your pension age, you can continue building up reckonable service whilst you continue paying contributions.
The maximum number of years that can count towards your pension is 40 (or up to 45 if you work past your pension age). After 40 years of reckonable service your member contributions will be at the family benefits contribution rate of 1.5% of pensionable earnings. Full member contributions of 5% of pensionable earnings will begin again if you work past your pension age.
Example 1
Mohammed leaves the CNPP after 20 years’ reckonable service.
Mohammed’s pensionable final earnings are £18,000 a year.
Mohammed’s CNPP pension
(1/80 x £18,000 x 20 years) = £4,500 a year
Do I get a tax-free lump sum?
You will earn a lump sum of 3/80 of your pensionable final earnings for each year of reckonable service in the CNPP. Your lump sum will be payable free of tax.
Can I exchange my benefits?
You may choose to give up part of your pension (up to one-third subject to legislative constraints) or part of your lump sum on retirement in return for an increase in your dependants’ pension. You may also choose to give up part of your lump sum at retirement in return for an increase in your pension. These benefits are the same as you enjoyed as a member of the CPS.
When can I draw my pension?
Your pension benefits from the CNPP will generally come into payment when you reach your pension age although you may retire early if you are prevented from working by ill-health or by your personal circumstances. Your pension age will be the same as you had in the CPS.
Example 2
Tom retires after 30 years’ service.
Tom’s pensionable final earnings are £20,000.
Tom’s pension
£7,500 a year (1/80 x £20,000 x 30 years)
Tom’s lump sum
£22,500 on retirement (3/80 x £20,000 x 30 years)
Can I carry on working after my pension age?
If you carry on in employment after your pension age you will accrue further pension but will be required to pay contributions whilst you remain in service.
How do you pay my pension?
We will pay your pension into your bank account every month. We will deduct income tax in line with instructions from HM Revenue & Customs.
Will you increase my pension?
We will increase your pension every April in line with the rise in the Retail Prices Index (RPI). Part of the pension increase relating to any benefits earned prior to 6 April 1997 may be paid by the Government as part of your State pension benefits, rather than from the CNPP. (The same as in the CPS).
What happens to my AVCs at retirement?
Your AVC fund can be used to provide 25% tax free cash and to buy extra pension. You must secure this pension by purchasing an annuity contract with an insurance company.
What happens to my Shift Pay Pension Plan (SPPP) at retirement?
Your accumulated fund can be used to provide some tax free cash and to buy extra pension. You must secure this pension by purchasing an annuity contract with an insurance company.
In Benefits when you retire
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