Pension statements 2018
Your 2018 pension statement has now been posted.
Your 2018 pension statement has now been posted to you at your home address. This pension statement refers to your current period of service. If you have any previous periods of service, please contact Nestlé Pensions for an up-to-date valuation.
One of the main messages in this year’s statement is that you need to have an idea of how much you’ll need to live on when you retire (known as your target retirement income), so that when you look at the figures shown in your statement, you’ll know whether you’re likely to have enough.
To build up an idea of your spending in retirement, it’s probably best to start by thinking about your spending now, and then thinking about how that might change in the future. For example, you might want to go on more holidays when you stop working, but your housing costs may have gone down by then. There are tools available online to help you set your target retirement income, such as this one: www.fidelity.co.uk/retirement/retirement-calculator
Know your target retirement age from your normal pension age
The figures in your pension statement this year have been calculated using the age you’ve told us you want to retire. This is known as your target retirement age (TRA). You will only have chosen a TRA if you have DC Start or DC Core benefits. If you haven’t chosen a TRA, we’ve used your normal pension age (NPA). You can change your TRA once a quarter by completing an Investment Choices Form.
For the benefits you’ve built up since 1 August 2017, your NPA is the same as your state pension age – you can see what this is in the ‘information about you’ section near the back of your statement. You can take these benefits from age 55 onwards (with Nestlé’s consent), but any benefits that you have built up in DB Core or DB CorePlus will be reduced because we are paying them early (and are likely to be paying them for longer).
If you joined the Fund before 1 August 2017
If you were a member of the Fund before 1 August 2017, you will have a different NPA for the benefits you built up then. This will normally be age 65, but for some members this is age 60. This means that you can take the benefits you built up before 1 August 2017 from that earlier age without them being reduced due to early payment.
Throughout your printed statement you’ll find this icon showing where you can find more information here on the website. You can find this information below.
Taking tax-free cash - use the modeller
You can currently take up to 25% of the value of your benefits as a tax-free cash sum when you retire. To find out how much tax-free cash you could take and how this would affect your yearly pension, use the modeller.
Notes about your figures
The figures in your statement are based on certain assumptions about you and about the future. For more information, read the detailed Notes and assumptions.
Pensionable earnings cap
If you’re in DB Core or DB CorePlus, you only build up a defined benefit (DB) pension based on your pensionable earnings up to the pensionable earnings cap (which is £45,900 for the 2018/19 tax year).
This means that once your earnings during the scheme year (1 April to 31 March) go above the cap, you’ll start to build up benefits in DC Core, which is a defined contribution (DC) scheme. In DC Core, both you and Nestlé pay into an account in your name, which is invested to help you to grow a pot of money for your retirement.
You may not be affected by the cap at the moment, but you may find that you have an estimated DC pension figure in your pension statement. This is because we’ve assumed that your salary will grow faster than the pensionable earnings cap in the future. If this happens in practice, you’ll go over the cap at some point during your working life.
Review your benefits
If you’ve built up pension in the DB sections of the Fund, you may notice that your pension at your TRA is lower than your pension at 31 March 2018.
This could be for one of two reasons:
If your TRA is lower than your NPA, an early retirement factor has been applied to your pension at TRA. If you have chosen a very ‘early’ TRA, a large early retirement reduction will have been applied.
If your TRA is the same as your NPA, your projected DB pension is lower than your pension at 31 March 2018 due to the way in which the pension is forecasted and then discounted back to put it into today’s money (that is, to allow for inflation).
As the rate of inflation used to discount back to today’s money is higher than the inflation measures used in the projections, in some circumstances, this can lead to a projected pension figure being lower than the pension figure at 31 March 2018.
If you’re divorced and you have a divorce debit from a pension sharing order, the figures in your statement take this into account. If your divorce has impacted the value of your defined contribution account, this has been reflected in the ‘Total value of your defined contribution account’ shown.
As well as your pension benefits, membership of the Fund also provides protection for your loved ones. To make sure the Trustee knows who you’d like to receive benefits if you die, make sure your Nomination Form is up to date. If you have a nominated dependant instead of a spouse or civil partner, you can read more about dependants’ pensions under Death benefits.
The benefits you can build up in the Fund without having to pay additional tax are restricted by the Annual Allowance and the Lifetime Allowance.
The Annual Allowance (AA) is the maximum amount your pension benefits (from all pension arrangements excluding State Pension) can increase each year without you having to pay a tax charge.
For most people, the AA is £40,000, but for high earners it could be between £10,000 and £40,000 (known as the Tapered Annual Allowance).
If you have been informed that you are subject to a Money Purchase Annual Allowance (MPAA) because you have taken benefits flexibly from a DC pension scheme since 6 April 2015, this separate MPAA still applies. The MPAA is currently £4,000 from the 2017/18 tax year.
Most members will be unaffected by the AA, but if you require further information please contact Nestlé Pensions.
The Lifetime Allowance (LTA) is the maximum value of pension benefits from all pension arrangements (excluding State Pension) you can build up during your lifetime without incurring a tax charge. The LTA is £1.03 million for the 2018/19 tax year.
Will your pension be enough?
Your statement shows how much pension you could build up by the time you retire. But do you know how much money you’ll need to live on when you stop working? You might spend more on holidays than you do now, but your housing costs might be less.
There are tools available online to help you build up a picture of your spending in retirement, such as this one at www.fidelity.co.uk/retirement/retirement-calculator.
When you’ve got an idea of your target income, you can compare it with the estimated figures in your statement and if you’re not going to have enough, use the modeller to see what you could do to increase your benefits at retirement.
Your current choices
If you’re thinking of making a change to how your benefits build up in the Fund, you can use the modeller to see the effect that making a change could have on your pension at retirement and the cost to you.
You can find all the forms you need to make changes under Forms.
Value of your DC account
If you have a DC account you’ll find details in your statement of how your DC account has changed between 1 April 2017 and 31 March 2018.
In the table we show:
- Company contributions: These are the contributions that Nestlé has paid into your account during the year. These will be 1.5 times your DC Core contributions (or double if you are eligible for the transitional payments).
- Your contributions: These are the contributions you have made to your account during the year. These will be made up of any DC Core contributions you have made, and additional voluntary contributions.
Remember, if you make contributions to DC Core through ‘salary sacrifice’, you don’t actually make contributions. Instead, Nestlé pays contributions on your behalf and you agree that your pay is reduced by the same amount. In this way, you and Nestlé make savings on the National Insurance that would have been payable if you had made the contributions yourself. Although these contributions are classed as employer contributions, we show them in the table as ‘Your contributions’.
Transfers in: This is money that you have transferred to the Fund from a previous arrangement with another employer or from a previous AVC arrangement.
Change in value of investments: This shows how much your chosen funds have gone up or down in value during the year. You can find more information about the fund performance on the fund factsheets produced each quarter.
Value at 31 March 2018: This is the total value of your DC account at 31 March 2018, including any AVCs or transfers in you may have made. You can see an up-to-date value of your DC account by logging onto the modeller.
Your DC account investments
You can see your current DC investments by logging onto the modeller. In summary though:
In DC Start you are automatically invested in the Fund’s Lifetime Pathway option. This option moves your pension savings account towards lower-risk funds as you approach retirement, to reduce the chance of losses to your account as you get older.
In DC Core you can choose between the Lifetime Pathway fund or nine self-select funds.See Your choices for more information about the investment choices you have.
Nestlé pays all administration costs relating to your DC account, so you only pay charges relating to your investments. We apply the charges yearly via an adjustment to the unit price in each fund. To see the current charges, see Your choices.
It is important that you regularly review the suitability of your investment choices. You can find more information about the different fund choices under Investment performance. You can change your investment choices once a quarter by completing an Active Member Investment Choices Form
Your DC benefits
You can find more information about the assumptions used to calculate your estimated DC benefits in the Notes and assumptions.
This section of your statement shows the information about you that we’ve used to calculate your figures.
We’ve shown your figures at your target retirement age (TRA). This is the age you’ve told us you want to retire. If you haven’t specified a TRA, your TRA is your normal pension age.
Your normal pension age is the same as your state pension age (which is when you can start to receive your state pension). If you built up benefits before 1 August 2017, you may have a different normal pension age for those benefits. You can find out more about your normal pension age under Taking your benefits.
If you want to explore retiring at a different age, you can use the modeller.
About your statement
While every care has been taken to provide up-to-date and accurate information in your statement, we cannot guarantee that inaccuracies will not occur. Nestle UK Limited and the Trustees will not be held responsible for any loss, damage or inconvenience caused as a result of any inaccuracy, error or omission. If there is any conflict between the information in this statement and the Trust Deed and Rules of the Nestle UK Pension Fund, the Trust Deed and Rules (as amended from time to time) take precedence.
Although every effort is made to ensure information is up to date at the time of writing, subsequent changes to the Fund’s documentation and/or applicable legislation may subsequently affect its correctness or completeness.
This document is not intended to provide a definitive description of any benefits payable from the Fund or a comprehensive statement of the law on any issue. Nothing in this document confers any legal entitlement to benefits.
Nothing in this document constitutes financial advice and you should not rely on information in this document in making any decisions about your benefits or Fund membership. We recommend that you consider taking independent financial advicebefore making any such decisions.
This document contains references to the Trustees. These are the Directors of the Nestlé UK Pension Trust Ltd.