Accrual rate

The rate at which your defined benefit pension builds up.

Active member

A person who is currently employed by Nestlé and is building up benefits in one of the sections of the Fund.

Additional voluntary contributions (AVCS)

Contributions that you can make on top of your main contributions to provide additional benefits at retirement. These are not matched by Nestlé.

Annual allowance (AA)

This is the maximum amount that the value of your pension benefits from all sources (excluding the state pension) can increase in any one tax year without incurring a tax charge. The annual allowance for the 2024/2025 tax year is £60,000. A lower limit of £10,000 may apply if you access your benefits flexibly – this is known as the money purchase annual allowance (see below). The annual allowance is also reduced if you have an ‘adjusted income’ above £260,000 a year because of a tapered annual allowance (see below). The annual allowance will be reduced for anyone with an ‘adjusted income’ above £150,000 a year because of a tapered annual allowance (see below). If you exceed the annual allowance in any tax year, you will need to declare the excess to HM Revenue and Customs and pay the charge as part of your annual income tax return.

Automatic enrolment

A law which requires all UK employers to enrol anyone who works for them (who also meet certain criteria that look at your age and your earnings) into a workplace pension scheme, which meets certain standards, if they are not already in one.

Career average revalued earnings (CARE)

This is a type of defined benefit scheme where benefits at retirement are based on the average of your earnings while you’re a member of the scheme, and then increased to provide some inflation proofing.

Consumer prices index (CPI)

The index of consumer prices is one of the ways that inflation is measured by the government’s Office for National Statistics. This index uses a basket of retail goods and services to measure how much certain things that a household may spend money on are, so that it can give a sense of the cost of living at the time. However it does not include housing costs such as council tax, buildings insurance or the interest payments on your mortgage.

Deferred member

A person who is no longer employed by Nestlé and/or is no longer building up benefits in any of the sections of the Fund and has not yet started taking their pension.

Defined benefit (DB)

A pension arrangement where the benefits at retirement are based on a calculation, which is linked to a member’s pay and length of pensionable service. Final salary and CARE are different types of defined benefit arrangements. DB Core and DB CorePlus are defined benefit arrangements.

Defined contribution (DC)

A pension arrangement (sometimes referred to as a money-purchase arrangement) where contributions are made to an individual account. These contributions are then invested. The benefits paid when a member retires depend on several different factors, including how much money goes into the account and how investments perform.

Dependant

Any person who is financially dependent on you, or a relationship where you both rely on each other financially at the time of your death. It also includes a person who is dependent on you because they are physically or mentally impaired. Please make sure you complete a Nomination Form so that the Trustees can consider your dependants properly when you die.

Final salary

A pension arrangement where the benefits at retirement are linked to a member’s final pensionable earnings and length of pensionable service.

The Fund

Nestlé UK Pension Fund.

Lifetime allowance (LTA)

When you retire, the value of your Fund benefits, plus any other benefits you may have built up (excluding state pension), will be measured against the lifetime allowance. The LTA for 2024/2025 is £1,073,100.

Previously, if the value of your benefits exceeded the LTA when you accessed them, you paid an LTA charge. In the 2023 Spring Budget, this charge was abolished, with a view to removing the LTA itself in the 2024/2025 tax year. For now, your benefits will still need to be measured against the LTA when you access them, though, because the amount of tax-free cash you can take currently remains limited to a maximum of 25% of the 2024/2025 LTA – or £268,275.

Money purchase annual allowance (MPAA)

The money purchase annual allowance (MPAA) is the reduced amount of money you can pay to a defined contribution arrangement like DC Start or DC Core before you have to pay tax on your contributions if you:

• started to take benefits from a defined contribution pension arrangement on or after 6 April 2015; and
• accessed your savings from that arrangement ‘flexibly’ under the ‘Freedom and Choice’ options that were introduced on 6 April 2015; or
• are withdrawing income directly from your retirement savings within that arrangement to provide a regular income (‘flexi-access drawdown’).

The money purchase annual allowance is currently £10,000 for the 2023/2024 tax year. This limit includes any contributions that your employer might make if the above applies. If you exceed the £10,000 limit in any tax year, HMRC will recover any tax relief that was given at source. The money purchase annual allowance will not apply to you if you used some or all of your savings to buy an annuity to provide a regular income, or if you haven’t accessed your benefits at all yet.

Nestlé

Nestlé UK Ltd and all other Nestlé Group companies participating in the Fund.

Normal pension age (NPA)

For benefits built up from 1 August 2017 onwards, your normal pension age is your state pension age unless your contract states otherwise.

For benefits built up to 31 July 2017, your normal pension age is age 65, unless your contract states otherwise.

For benefits built up before 1 August 2010, your state pension age might be different. Please contact us to get the most accurate explanation of your benefits as details can vary from member to member.

Normal pension date

The date you can take your state pension (for benefits built up from 1 August 2017) or age 65 for pension built up to 31 July 2017, unless your contract states otherwise.

Pay

This has a specific definition within the Fund’s Trust Deed and Rules, but in practice, by ‘pay’ we normally mean your pensionable earnings.

Pensionable earnings

The earnings used to calculate your contributions to all sections of the Fund as well as how pension builds up in DB Core and DB CorePlus (see also pensionable earnings cap). From 1 August 2013 this is your base pay plus any work-pattern based elements of pay such as overtime or shift allowance, as well as the following allowances:

• pay from the sale of annual holiday entitlement,
• any holiday pay you built up while you were working for the Company,
• graduate location allowance, and
• car trade-down allowance.

Bonuses and all other cash allowances are not normally included.

Pensionable earnings cap

The pensionable earnings cap means that if you are building up pension in DB Core or DB CorePlus and you earn more than the cap in any fund year, the contributions you and Nestlé pay on your pensionable earnings above this amount are used to build up pension in DC Core.

The cap applies to your pensionable earnings each year from 1 April to the following 31 March. At the start of each fund year, you can build up pension in DB Core or DB CorePlus until your pensionable earnings go above the pensionable earnings cap. At this point you start to build up savings in DC Core. Then at the next 1 April, you start building up pension in DB Core or DB CorePlus again until your pensionable earnings reach the pensionable earnings cap again.

From 1 April 2024, the pensionable earnings cap is £50,634.

To take account of inflation, the pensionable earnings cap will be increased each fund year by the rise in consumer prices index (CPI) up to a maximum of 2%.

Please note – this pensionable earnings cap only applies to any benefits that you built up after 1 August 2017.

Pensionable service

The number of complete years and days of continuous membership of the Fund.

Qualifying scheme

A pension scheme which meets the government’s standards for automatic enrolment (see above).

Retail prices index (RPI)

The index of retail prices is one of the ways that inflation is measured by the government’s Office for National Statistics. This index uses a basket of retail goods and services to measure how much certain things that a household may spend money on are, so that it can give a sense of the cost of living at the time. And unlike the consumer prices index it includes housing costs such as council tax and mortgage interest payments.

Salary sacrifice

Salary sacrifice is an arrangement between you and Nestlé where you agree to a reduction in your salary and in return Nestlé makes contributions to your pension on your behalf. The reduction to your salary means you pay less National Insurance, so you save money.

State pension age (SPA)

The age when you can start to take your state pension. If you’re unsure when this might be, you can check your state pension age at www.gov.uk/state-pension-age.

Tapered annual allowance

The tapered annual allowance came into force on 6 April 2016. It works by reducing your annual allowance by £1 for every £2 that your income (including anything that you pay into your pension) in that tax year exceeds £150,000. The maximum amount that your annual allowance can be reduced by is £10,000.

Target retirement age (TRA)

This is the age that you have told us you are intending to retire if you have benefits in DC Core (including DC Core AVCs) and you are investing in the Lifetime Pathway option. If you don’t choose a TRA, your TRA will be set as your state pension age when you join.

Terminal salary

If you were a member of the former Purina UK Pension Plan, your terminal salary is the total of your highest basic annual salary or wages in any five years before 31 July 2010 plus the annual average of your bonuses, overtime and other fluctuating payments specifically recognised by Nestlé Purina Petcare (UK) Limited as being included in your Purina pensionable earnings in the three consecutive tax years before 31 July 2010.

Uncrystalised funds pension lump sum (UFPLS)

Uncrystallised funds pension lump sum (UFPLS) is another way of taking pension benefits, If you are a member of a defined contributions scheme (such as DC Start or DC Core) without going into drawdown or taking an annuity. It can be used to take your fund in one go. You can take 25% tax free, but you will need to pay tax on the remaining 75%.