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AVCs, Added Pension & Added Years

You have a range of options to increase the level of benefits paid to you from the Plan.

Additional Voluntary Contributions (AVCs)

You can pay Additional Voluntary Contributions (AVCs) every month to purchase additional benefits on a ‘money purchase’ basis. The amount of your AVC fund at retirement will depend on several factors, including:

  1. The amount of contributions paid.
  2. The investment returns.
  3. Any charges (such as investment charges, administration charges, management charges, transaction costs (as a result of buying or selling investments), or costs associated with the provision of death benefits or converting your fund into an annuity). If you choose to transfer your AVCs out of the Plan, there may be costs of that transfer which will affect the AVC fund value in your receiving scheme.
  4. The age at which you access your benefits.
  5. The level and type of pension you choose.

You can also make one off payments. You may increase, decrease or stop additional voluntary contributions at any time by providing one month’s notice to the Plan Administrator.

A range of investment funds are available. You can choose which fund or funds you want to invest your AVCs in. The AVC Investment Guide and more detailed information on all the funds available can be obtained in the Document Library.

You have an option to choose LifePath funds which have been designed to manage some of the risks for you as you approach retirement, by matching the asset allocation of your pension assets to your likely investment objectives at different stages of your working life based on a planned retirement age that you can select.  

The changes will happen automatically, during your early career (from 35+ years from retirement), you would be invested in growth assets such as equities which have been shown to provide higher growth than other types of investments, but are more volatile and can go up and down in value suddenly. When you enter your mid-career phase (between 35 and 10 years from retirement), the funds will gradually reduce its investments in growth assets and introduce a mix of less volatile assets, such as bonds and gilts. This aims to protect your account from the ups and downs associated with growth assets. Then, when you get to within 10 years of your retirement date, you will start to switch into a final investment mix, which will focus on less volatile assets, targeting a retirement pathway depending on the lifestyle pathway you select.

The disadvantage of lifestyle switching is that it targets your chosen retirement date, if you access your pension savings before or after that date your funds may not be switched at the right time. This could result in you investing in lower risk funds too early or higher risk funds for too long. It’s therefore important to check and select an appropriate retirement date on Aegon’s TargetPlan Portal which can be accessed here www.cnpp.org.uk/login.

When you retire, you can use your accumulated AVC fund to provide additional benefits at retirement through the purchase of an annuity and you may also be able to use some of your accumulated AVC fund to provide a Lump Sum (note that if you transfer out of the Plan to access a particular type of lump sum called an “uncrystallised funds pension lump sum” there may be a requirement to take independent advice).

Please note that when your main benefits come into payment (i.e. your Final Salary Pension and CARE pension) your AVC fund must be put into payment, you cannot take your main benefits and leave your AVC fund to be put into payment at a later date.

Once you leave active membership (and before your AVCs have been put into payment), you can transfer your AVC fund to another pension scheme or arrangement, including to a scheme that offers flexible benefits, independently of your main Plan benefits. Please note that generally, if you have a SPPP fund you can transfer both your SPPP fund and your AVC fund together, but you aren’t entitled to transfer just your SPPP fund. You can transfer only your AVCs fund when you retire or earlier.

Added Pension and Added Years

From 1 April 2024 and subject to the consent of the NDA, you have the option of purchasing (subject to a maxima) a set amount of additional annual pension (called Added Pension) each year. Under the current policy, Added Pension can be purchased by regular monthly contributions over a 12-month period via payroll. If you wish to take out Added Pension contracts, you can only do so each April for the following 12 months by accessing the Added Pension calculator on the CNPP website, which will be available each year shortly before April.

You can choose if your Added Pension should include a Dependant’s pension. The additional Dependant’s pension will be 37.5% of your pension including the Added Pension amount but without taking account of any enhancement for retirement on ill health etc.

Your Added Pension will be payable alongside the rest of your pension from your Pension Age and will increase before and after your retirement in line with CPI. If you are within 12 months of Pension Age or over your Pension Age, the Added Pension is assumed to become payable in exactly 12 months time. If you leave active service or retire during the year, then your contributions will stop and your Added Pension will be reduced proportionately.

Note: Added Pension benefits are provided subject to terms set by the NDA and so may change in the future.

Certain members were eligible to continue Added Years contracts prior to 1 April 2024 and these will remain in place until the end of the contract, but no new Added Years contracts will be permitted from 1 April 2024.

AVC and Added Pension Limits

Note that limits on the contributions you make and the benefits which can be provided apply in certain circumstances. Broadly for most members the total you can pay towards Added Pension each tax year cannot exceed the difference between 15% of your remuneration and the total of all your other contributions. Your total contributions you make to all pension arrangements on which you can receive tax relief cannot be greater than 100% of your relevant UK earnings. There will be a tax charge on payments whether as AVCs or to provide your other benefits which exceed the Annual Allowance.

If you need to know the increase in the value of your Plan benefits for any tax year, or are interested in making AVCs, please contact the Plan Administrator on 0333 207 6523 or email CombinedNuclearPensionPlan@equiniti.com.

When deciding whether to buy Added Pension or make AVCs, you should consider taking independent financial advice.