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Benefits

What benefits does nuvos provide?

  • Pension for you at pension age – age 65
  • The option of a tax-free lump sum when you take your pension
  • Death in service lump sum – ‘Life assurance’
  • Pension benefits for your dependants after you die

How does my pension build up?

You earn 2.3% of your pensionable earnings towards your pension each year you are in nuvos. Generally, only permanent items of pay are pensionable. This will include any allowances (whether cash or not) notified to you as pensionable but will exclude payments such as overtime. Bonus payments are not normally pensionable.
For example
Bernie joins the Civil Service in September 2007 and has pensionable earnings of £10,000 in the six-month period to 31 March 2008. At 31 March 2008, Bernie will have earned a pension of £230 a year (£10,000 x 2.3%). If the increase in RPI was then 2.6% Bernie’s pension would increase to £236 a year (£230 x 1.026).

Suppose Bernie earns £22,000 in the year to 31 March 2009. This would earn her a further pension of £506 a year, bringing her total pension earned to £742 a year. If the increase in RPI was then 2.4%, Bernie’s pension would increase to £760 a year (£742 x 1.024).

Bernie’s pension will carry on increasing like this while she remains in service. When she leaves, her pension will continue to increase with inflation (RPI) every April. Bernie’s pension will come into payment when she reaches age 65.

Any limits?

As a general rule, you need to be in nuvos for 2 years to build up rights to a pension.
The maximum pension that nuvos will provide is 75% of your pensionable earnings.

Do I get a tax-free lump sum?

When you retire and draw your pension you can opt to give up part of your pension for a lump sum which will usually be tax-free. Each £12 of lump sum that you choose to take will reduce your pension by £1. The maximum lump sum you can take is calculated as your pension multiplied by 30 and divided by 7 (but this may be less if you are subject to the Lifetime Allowance).
For example
Greg has built up a pension of £14,000 a year. The maximum lump sum that Greg can take is £60,000. If Greg chooses to take the maximum lump sum then his pension will be reduced by £5,000 to £9,000 a year.

When can I draw my pension?

nuvos has a pension age of 65; this is the earliest that you can usually leave and take your pension in full. You can opt to leave and take your pension at any age from 55 but it will be reduced for early payment.

Can I carry on working after I draw my pension?

You cannot normally draw your pension and carry on working unless you meet the conditions for “flexible retirement”. Flexible retirement is possible only when your employer agrees to change your job (by reducing your hours or job weight) so that your earnings reduce by at least 20%.

Will you increase my pension?

We will increase your pension every year in line with the rise in the Retail Price Index (RPI) while you are still working and also after you retire and draw your pension.

What about State benefits?

You will receive a basic State pension based on your National Insurance contributions. However, as nuvos is “contracted out” you will not receive the State Second Pension (S2P) as well for the time you are in nuvos, but you may be eligible for a top up payment.

Can I pay more for a bigger pension?

You have a range of options:
  • You can pay extra contributions every month to buy added pension, and/or you can make one lump sum contribution a year.
  • You can pay additional voluntary contributions (AVCs) to Scottish Widows or Standard Life who are our AVC providers. The AVC provider will invest your contributions in the fund of your choice. When you retire, the AVC fund will buy you an additional pension and you can take up to 25% of your fund in cash, tax free subject to the Lifetime Allowance.
  • You can contribute to a stakeholder pension. You can choose our designated provider, Standard Life, or any other provider. Stakeholder pensions work in a similar way to AVCs, but you get your tax relief in a different way.
  • You may wish to save in other ways, for instance through an Individual Saving Account (ISA).
For more information, see boosting your pension.

Can I make changes to my pension arrangements?

As long as you joined after 30 July 2007, you will have one opportunity to switch from nuvos to a partnership pension account, which is a money purchase pension with an employer contribution. You will also have one opportunity to switch back from a partnership pension account to nuvos. We only allow you to switch on 1 April and 1 October each year and you must give us three months‘ notice in writing.