Pensions and Lump Sum 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 Plan. See the next sections to find out how we calculate Pensionable final earnings and Reckonable service.
John leaves the Plan after 20 years’ Reckonable service. John’s Pensionable final earnings are £22,000 a year.
John’s Plan pension = (1/80 x £22,000 x 20 years) = £5,500 a year
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 Plan count as Reckonable service, including any added years additionally purchased. 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 for your pension is 45. Family Benefit contributions of 1.5% of pensionable earnings will continue if you work past 45 years accrual. Full member contributions of 5% of Pensionable earnings will continue if you work past your Pension age.
Do I get a tax-free lump sum?
You earn a lump sum of 3/80 of your Pensionable final earnings for each year of Reckonable service in the Plan. Your lump sum will be payable free of tax.
John retires after 20 years’ service. John’s Pensionable final earnings are £22,000.
John’s pension = £5,500 a year
(1/80 x £22,000 x 20 years)
John’s lump sum = £16,500 on retirement
(3/80 x £22,000 x 20 years)
Exchanging your 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 Dependant’s pension. You may also choose to give up part of your lump sum at retirement in return for an increase in your pension. You can also choose to take a higher cash lump sum broadly equivalent to 25% of the total value of your final salary benefits in the Plan. This higher cash sum is obtained by giving up some of your final salary pension. For more details about these options contact the Plan administrator (Tel: 0333 207 6523; Email: CombinedNuclearPensionPlan@equiniti.com).
What if I work part time?
If you work part time, we will work out your pension by using a full-time equivalent rate for your Pensionable final earnings and by counting your Reckonable service on the basis of the time you actually work. This treats part-time and full-time periods of service consistently. In particular, you are not disadvantaged if you move to part-time working in the run-up to your retirement.
Jenny works full time for 25 years and then works part time (18 hours a week instead of the full-time 36 hours) for the next 10 years. When Jenny retires, her actual Pensionable final earnings are £10,000.
Jenny’s Full time equivalent Pensionable final earnings = £10,000 x 36/18 = £20,000
Jenny’s Reckonable service = 25 + (10 x 18/36) = 30 years
Jenny’s pension = (1/80 x £20,000 x 30 years) = £7,500 a year
Jenny will also receive a lump sum of £22,500 (3/80 x £20,000 x 30 years).
What if I have periods off work?
You can usually only pay contributions and build up Reckonable service if you are actually working. The main exception to this is certain periods of statutory paid maternity leave which count as Reckonable service. For other types of leave such as paternity or adoption leave, please contact the Plan administrator (Tel: 0333 207 6523; Email: CombinedNuclearPensionPlan@equiniti.com). If you are off work on long term paid sick leave, you will continue to build up Reckonable service if you are paying member contributions during your absence.
Can I pay more for a bigger pension?
There are facilities to provide you with benefits in excess of the basic level of benefits paid to you from the Plan.
- You can pay Additional Voluntary Contributions (‘AVCs’) every month. Transferring members may also be able to purchase added years of Reckonable service. These options are explained in more detail in Added Years and Additional Voluntary Contributions.
- If you are in receipt of Pensionable Shift Pay, then you will contribute to the Shift Pay Pension Plan (‘SPPP’) at a certain percentage of your Pensionable Shift Pay. Your employer will also contribute to the SPPP. The SPPP is explained in more detail in Section 8. Members, who were employed before 1991 and elected to have their shift pay pensioned through the CPS, will continue to have their shift pay pensioned through the Plan.
Can I transfer in benefits from other pension schemes?
Unless otherwise advised, the Trustee is not accepting transfers to the Plan.