Introduction
Every year you are sent in the post or by secure email an annual benefit statement, which is an illustration of the pension you might receive from the Scheme as if you were aged 65 at the time of the statement.
Your 65th birthday is the Normal Retirement Date for you under the Scheme Rules.
The statements show you your possible benefits on 1st April every year. They are intended to help you with your retirement planning by showing an annually updated illustration of your possible benefits at retirement.
If you don’t receive a statement, you want a copy or you would like a quotation for retirement please contact us.
In all cases the statement will show an estimate of how much your Money Purchase Pension would be. If you are eligible to receive the Final Salary Pension the statement also shows you how much this would be.
To find out more about the Final Salary Pension and the Money Purchase pension click here.
Every effort is made to ensure that the information in the statements is correct. The benefits you will be paid will always be calculated in accordance with the Scheme Rules and relevant legislation. All amounts on the statements are not guaranteed and do not represent the actual benefits you might receive when you retire. They are for illustration and retirement planning only. An accurate quotation of your benefits can only be provided in the month of your retirement.
Section 1 - Which Pension is More Likely
The first section of the statement shows you which pension you would have been paid as if you were 65 at the statement date.
If you are eligible to receive both the Final Salary Pension and the Money Purchase Pension it shows you which one was higher in your case.
We cannot know with certainty which pension you will be paid until the month of your retirement.
It is possible that in different years either pension may be higher than the other, so each year the layout of your statement could change.
Section 2 - How Much Pension
This layout of this section depends upon which pension you would have been paid at the statement date.
If the Final Salary Pension is Higher
The first bubble in this section shows you how much your Final Salary Pension was calculated to be when you left the Scheme, which is based on your pensionable salary and your service in the Scheme. This number never changes.
The second bubble shows you how much your Final Salary Pension has increased to since you left the Scheme. We are obliged by legislation to increase your Final Salary Pension each year while it remains unpaid, but we cannot know in advance how much each year's increase is. We are told this by the UK government each year. Historically this number has tended to go up every year.
For more information about the calculation of the Final Salary Pension click here.
The statement also shows you how much the Money Purchase Pension was at the statement date.
If the Money Purchase Pension is Higher
The fist bubble in this section shows you how much you have in your Money Purchase Account invested with Prudential. This number changes every year.
The second bubble shows you how much your Money Purchase Pension would have been based on the money in your Money Purchase Account. The Scheme Actuary tells us how to calculate this amount. This number changes every year.
For more information about the calculation of the Money Purchase Pension click here.
If you are eligible to receive it, the statement also shows you how much the Final Salary Pension was at the statement date.
The Effect of Inflation
Whichever pension would have applied at the statement date, we build assumptions into our calculations that attempt to allow for the effect of inflation between the statement date and your Normal Retirement Date.
Inflation is the name given to the tendency for the prices of goods and services to go up over time. It means that each £1 in your pocket is expected to buy less with the passing of each year.
Age of Retirement
All of the pension figures are calculated using a retirement age of 65, which is the Normal Retirement Age in the Scheme Rules.
It is important to realise that if you take your pension before or after your 65th birthday, it will be reduced for early payment or increased for late payment respectively.
Dependant Benefits
If you die before you retire, benefits may be paid to members of your family and/or other beneficiaries that you had nominated. All benefits are paid at the discretion of the Trustees of the Scheme.
If you are married or in a civil partnership, benefits are payable to your surviving spouse / partner.
Whether you have a spouse / partner or not, you may nominate beneficiaries.
If you have eligible children, benefits are payable while they remain children.
For more information about benefits payable to your dependants click here.
Pension Increases
The Scheme allows for your pension to be increased every year once it is in payment, to help protect it against the effect of inflation.
The increase rate depends upon when you were in pensionable service. The rate applied each year is a fixed 5% or based on RPI, or a mixture of both.
For more information about pension increases click here.
Section 3 - Additional Voluntary Contributions
If you:
- made AVCs to Prudential,
- received a transfer-in from another pension arrangement that you invested with Prudential,
- or were paid a pension augmentation by the Employer that you invested with Prudential,
your statement will also show the current value of these funds and what this might buy in terms of additional Scheme pension.
The money paid in this way has been added to a separate AVC Account that is invested with Prudential and is given bonuses in exactly the same way as your Money Purchase Account.
You are not obliged to buy additional pension with your AVCs, you can use them to provide some or all of your lump sum at retirement instead, or a mix of both.
If you made AVCs to Clerical Medical, Utmost Life (Equitable Life as was) or Legal & General, these were transferred to the Aviva Master Trust in March 2024 and you can find out the value derived from these AVCs on the Aviva website.
These Aviva Master Trust funds are available to transfer back to buy Scheme benefits when you retire, but they no longer form part of your Scheme benefit statement.
Section 4 - Your Statutory Money Purchase Illustration (SMPI)
This will be section 3 if you have no Prudential AVC Account.
Because of the Money Purchase Underpin to your pension, we are obliged by legislation to provide you with a Statutory Money Purchase Illustration.
The SMPI is calculated for us by Prudential to comply with the legislation, but it does not generally give you a good indication of your benefits payable in the Scheme.
For more information about your SMPI click here.