It's important to understand your pension is a long-term investment so its value can go down as well as up and you could get back less than was paid in.
Laws and tax rules may change in the future. Your own circumstances and where you live in the UK have an impact on tax treatment.
Your employer is offering you the opportunity to join Centrica’s Additional DC Retirement Savings - a Trust Based Pension plan provided by Standard Life Assurance Limited.
It's important you make an informed decision so you should read the key documents at the bottom of this page.
And you can find answers to common questions in our FAQs
How joining this plan will work
Choosing to join the DC top up arrangements
You are already contributing to your main DB pension scheme and additional DC retirement savings helps you build up additional DC benefits that can be accessed when it's time to retire. Depending on your main DB pension scheme you are eligible to join one of the following Centrica savings plans:
- If you are currently an active member of the Centrica Retirement Income Section (CRIS) of the Centrica Pension Scheme you are eligible to join the Centrica Savings Plan
- If you are currently an active member of the Centrica Engineers Pension Scheme Final Salary section or the Centrica Engineers Retirement Income Section (CERIS) you are eligible to join the Centrica Engineers Savings Plan
- If you are currently an active member of the Centrica Pension Plan you are eligible to join the Centrica Pension Plan Savings Section
This type of pension plan aims to help you increase the amount of money you’ll have at retirement by letting you pay in more now, on top of your employer’s main workplace pension scheme.
This plan may not be suitable for all employees, particularly where small amounts of pension savings might affect entitlement to means tested State benefits.
What you need to do
Make sure it's right for you
Paying into a company pension can be a great way to save for the future - especially since you get tax benefit on your contributions. But you may decide it's not right for you and you don’t have to join if you don’t want to.
Decide how much to pay in
It's up to you how much you pay in as long as you meet the minimum amount set by your employer. If you want to make any changes to your contributions, through MyPension .
Contribution options for this plan
You can make regular monthly contributions, matched by Centrica as outlined below.
You can also make regular and single Additional Voluntary Contributions (AVCs) - however these are not matched by Centrica.
It's important to note that you already make contributions into your existing Centrica Pension. Any contributions you decide to make here are in addition to your existing contributions.
DC Top-up section
You are eligible to join the DC top-up arrangement if you have been impacted by the Pensionable Salary cap (this may be the Pensionable Earnings cap or Pensionable Pay cap depending on your main Centrica pension scheme).
If you are unsure if you are eligible to join the DC top-up arrangement, please visit MyPension and check the 'My Contributions' tile on the homepage.
How much could you pay?
If you are eligible to join the DC top-up arrangement you are able to choose what percentage of your top-up salary (this is your base salary above the Pensionable Salary cap) you wish to contribute each month, up to a maximum of 5%. Centrica will double match your contribution up to a maximum of 10%.
You can elect to join the DC top-up arrangement via MyPension
|Choice of SMART Pay reduction (as % of your Top-up salary)||What Centrica add (as % of your Top-up salary)||Total into the plan (as % of your Top-up Salary)|
Additional Voluntary Contributions (AVCs)
You also have the option to pay either regular monthly or single lump sum AVCs via MyPension , which is a great way to give your retirement savings a boost. Centrica do not match any AVCs.
How much should you pay?
There's always a balance between what you will need to have when you retire and how much you need right now.
What you should ask yourself is:
- How much do I contribute into my other pension plans or arrangements?
- Can I commit to regular amounts or lump sum contributions into this Plan?
- How much tax can I save on my contributions?
What are regular amounts?
You can elect to make regular monthly contribution towards your additional DC retirement savings and these would be a percentage of your base salary - which you can choose online via MyPension .
What are lump sum contributions?
You can also elect to make a single one-off lump sum contribution towards your additional DC retirement savings via MyPension .
How contributions are made
Contributions into your pension plan will be made by SMART Pay. This means contributions will be taken from your salary before tax and National Insurance (NI) are calculated. You and your employer will pay less NI and you won't need to reclaim any tax relief from the government manually. It's important to remember that SMART Pay isn't right for everyone. It's a change to your terms of employment and could affect your entitlement to state benefits or your ability to borrow.
You might be able to change the way you make contributions into your pension plan - there is a guide available on MyPension under the ‘Good to know’ section with more information and details of how to opt out of SMART Pay if you wish to.
There's a limit to the amount that can be paid into your pension plans each tax year without paying a tax charge - for most people this is normally 100% of your earnings, capped at £60,000. But in some circumstances it could be lower.
There's also a lifetime allowance on the total value of your UK pensions. It's not a limit though - you can save more if you want to. It is just that any excess over your lifetime allowance will be taxed as earned income under PAYE rules when it comes into payment. At the moment, the lifetime allowance is £1,073,100.
These allowances aren't an issue for most people, but it's a good idea to check. For more information download our Guide to tax relief, limits and your pension (PDF 359KB).
There is also a Pension Tax guide provided by Centrica on the 'Good to Know' section of MyPension .
Any payments you make to other registered Defined Contribution pension arrangements (including employer contributions) and any other increases in the amounts attributable to you under registered Defined Benefit pension arrangements that you're an active member of will be included in this amount.
It's your choice whether you join this pension plan or not. So there's no need to opt out, because you won't become a member unless you apply. If you decide not to start now, you can ask to start in the future. Just select the pension benefit on MyPension .
You can change your mind after you join the plan by stopping your contributions, but you won't get any previous contributions refunded.
Investment choices and charges
These documents will help you understand how this plan works, so you can decide if it's right for you. It's a good idea to keep or save a copy of each one.