Welplan Pensions is a Defined Contribution (sometimes known as ‘money purchase’) pension scheme. The money paid in by you and your employer is put into investments by Welplan. The amount you get when you come to take your pension pot depends on how much was paid in and how well the investments have done.
If you are not sure about some of the terms used in the statement you have received, please check the list below for a more detailed explanation. If you still have questions you are welcome to can contact our team here.
Terms are listed in the order in which they appear on your statement.
Your status relates to whether or not we are receiving contributions to your pension pot on a regular basis:
‘Active’ - receiving contributions
‘Deferred’ - not receiving contributions
Your status is based on the information provided by your employer. If your status has changed, please advise us by email providing your name, national insurance number and the date you left the relevant employment. We will amend our records accordingly.
Target Retirement Date (TRD)
Your TRD is used to help calculate the estimated value of your pension savings when you come to retire. Your TRD is set to your state pension age, unless you let us know otherwise. You may change your target retirement date by completing and returning the Investment Options Form (Option 1).
Your state pension age is the earliest age you can start receiving your State Pension. Your State Pension age is worked out based on your gender and date of birth. You can find out more or check your state pension age on the Government’s website.
Members have a choice of four investment options: Cash Lifestyle, Annuity Lifestyle, Drawdown Lifestyle and Freestyle. Your current choice is shown beside ‘Investment Strategy’.
All members of Welplan Pensions are initially enrolled into the default Cash Lifestyle. You can change your investment option at any time.
These are the earnings upon which your pension contributions are based. Your pensionable earnings are calculated based on the pensionable pay provided by your employer, multiplied by the payment frequency (e.g. pensionable pay x 12, if monthly paid). Your employer provides the pensionable pay figure and you should contact them for the definition of your pensionable earnings as this will vary from company to company.
Contributions are the payments that are received by the scheme, to be added to your pension pot.
As an active member of the scheme, each time you receive your wage or salary, a deduction is made that will go towards your pension pot. This contribution is taken before tax is deducted, through a ‘net pay’ arrangement.
Your current contribution rate shows the percentage of your pensionable earnings that is deducted for your pension. Please note that If you pay Additional Voluntary Contributions, that percentage is not included in this figure. However, the information below will show the value of the AVCs that have been received.
Please note that your employer is not obliged to increase their contributions when you increase yours.
Your employer’s current contribution rate shows the percentage of your pensionable earnings that is currently being paid into your pension pot by your employer. As Welplan Pensions is an Occupational Pension Scheme, we must receive an employer contribution for you to remain an active member of the scheme.
These are funds that you have transferred into your Welplan pension pot from other providers. You can find out more about making transfers in by contacting Welplan direct.
Additional voluntary contributions
On top of your compulsory pension contributions, you may wish to make additional contributions to your pension pot. You can do that at any time and these are known as Additional Voluntary Contributions or AVCs, these deductions are also taken before tax is deducted.
AVCs do not have to be fixed; they can vary from time to time and you may make one-off payments as long as you are an active member of the scheme and the payment comes via your employer’s payroll. You can find more information in our Guide to AVCs.
This is the total of your contributions received and invested by Welplan up to the date of your statement.
This is the total of your employer’s contributions received and invested by Welplan up to the date of your statement.
Annual Allowance (AA)
The annual allowance is a limit on the amount that can be contributed to your pension each year, while still receiving tax relief. It is currently capped at £40,000. The allowance includes both your own contribution and any other contribution paid on your behalf, such as an employer or a third party.
If you are likely to exceed your annual allowance, you may be able to bring forward any unused annual allowances from the previous three tax years, to either reduce your annual allowance charge to a lower amount or reduce the annual allowance charge completely.
If you have taken some of your benefits since 6 April 2015, as an ‘Uncrystallised Funds Pension Lump Sum’ (UFPLS), you will have a reduced money purchase annual allowance (MPAA) of £4,000 for the 2019/2020 tax year. This regulation was introduced retrospectively in Autumn 2017. You cannot use annual allowance carry forward if you have accessed your pension.
If you exceed the annual allowance in a year, you will not receive tax relief on any contributions you pay that exceed the limit and you will be faced with an annual allowance charge. For more details, please visit The Pensions Advisory Service's website.
Please contact Welplan if you would like us to provide your pension input amount for the year. If you think that you may be getting close to your annual allowance, or may have exceeded it, you may wish to consider taking advice from an independent financial adviser.
Your unit holdings
These are the units purchased per fund, prior to 6 April 2019 (column on the left) and the number of units purchased per fund since 6 April 2019 (column on the right). Details of the various funds and their past performance can be found on our Fund Fact Sheets.
When money is sent to Welplan pensions it is used to purchase units and the price of each unit determines the total value of your pension pot. The value of units vary on a day-to-day basis and the final value of your pot will depend upon the price of your units when we sell them.
The Trustees of Welplan Pensions regularly review the funds the scheme has on offer and there are currently 14 funds available to members. These are detailed in our Investment Options Guide.
The Lifetime Allowance
The lifetime allowance is the maximum amount of tax relieved pension savings you can build up over your lifetime. It is set by government and reviewed regularly. For 2019/2020 the Lifetime Allowance (LTA) is £1.055 million (the 2020/2021 allowance has not yet been set). While most people are not affected by the lifetime allowance, if the value of your pension benefits is approaching, or above, the lifetime allowance, you should speak to an independent financial adviser as you may need to take action. From April 2018, the lifetime allowance has been indexed year on year in line with the Consumer Price Index.
The Consumer Price Index is (CPI) is the official measure of inflation of consumer prices of the United Kingdom and is based on a basket of goods and of services, chosen to reflect society's current buying habits.
The value of your pension pot
This is the total value of your pension fund, based on the contributions Welplan Pensions have received and invested at the date of your statement. It will not include any contributions we have received but have not yet been invested.
Estimated value of your fund at your Target Retirement Date
This figure shows the estimated projected value of your pension pot at your Target Retirement Date (TRD), in today’s terms. It assumes your current membership status remains unchanged.
This fund might buy you an annual pension of….
This figure shows the amount of pension that might be payable when you reach your Target Retirement Date in today’s prices. It uses the estimated value of your fund at your Target Retirement Date and assumes the purchase of an annuity.
An annuity is a secure, regular income, which you purchase from an insurance company using your pension fund when you choose to retire.
Various assumptions are used to calculate this figure, these can be found here.
If you are within 2 years or if you are beyond your target retirement date, you will not be given an Estimated value of your fund or annual pension at your target Retirement Date.
Retail Prices Index (RPI)
The Retails Price Index (RPI) was introduced in the U.K. in 1947, and tracks changes (inflation) in the cost of a fixed basket of goods over time. The RPI is used by the government as a base for various comparisons, such as the amounts payable on index-linked securities including index-linked gilts, and social housing rent increases.
An annuity is a secure, regular income, which you purchase from an insurance company using your pension fund when you choose to retire. Rates are based on a number of factors including life expectancy, health, interest rates and gilt yields as well as the Annuity Options you choose.
SMPI, Single Life – This option assumes that: you will retire on your Target Retirement Date (TRD); you will use your entire pension pot to purchase a pension at retirement; the pension you choose will increase each year in line with the Retail Prices Index, the annuity rates at your TRD will be similar to the statutory annuity rates in force today. This also includes a post-retirement net interest rate of -1.4% per annum. Under this assumption payments will cease on your death.
SMPI, 50% - This option assumes that: you will retire on your Target Retirement Date (TRD); you will use your entire pension pot to purchase a pension at retirement; the pension you choose will increase each year in line with the Retail Prices Index; you have a spouse or civil partner who is three years younger than you if you are a man or three years older than you if you are a woman; the annuity rates at your TRD will be similar to the statutory annuity rates in force today. This also includes a post-retirement net interest rate of -1.4% per annum. Under this assumption, following your death, a pension will be paid to your spouse/civil partner equivalent to 50% of the pension you were receiving.
What can you do with your pension pot?
You are not able take benefits, with the exception of serious ill health, until you reach at least age 55. This age is set by government. It may not be in your interests to take benefits so early and consideration should be given to how long you expect to be retired, and how much income you might need.
If you would like information on accessing or transferring your pension, please email us.
Please provide your name, address and National Insurance number along with your request.
We aim to issue the relevant information in 14-21 working days. Please be aware that volumes of work around this time can be higher than at other times due to the provision of annual statement to our members, so your request may take a little longer than this to process.
The information contained in your statement is not financial advice and must not be used as the only basis on which you make a decision regarding your pension arrangements or any other financial commitment. Before you make any decisions, we strongly recommended that you seek independent financial advice. You can find an independent financial advisor (IFA) in your local area by visiting www.unbiased.co.uk.