FAQs - DB Section - Cummins UK Pension Plan
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FAQs (DB Section)

There’s lots to know about pensions, and the chances are your question will be answered here. If not, please get in touch.

ABOUT PENSIONS IN GENERAL
What is a pension?

A pension is a tax-efficient way of saving money that you can use to live on when you retire. In a workplace pension like the Plan, both you and your employer pay contributions.

What are the different types of pension?

There are several different kinds of pension. Workplace pension plans are set up by employers to help their employees save for retirement. Both you and your employer pay into this type of pension. With workplace pensions, you can get defined contribution (DC) plans and defined benefit (DB) plans. The Cummins UK Pension Plan has a DC Section, which is open to new employees, and a DB Section, which is closed to new employees. 

You can also have a personal pension, which you pay into, but your employer doesn’t.

Will I get a State pension?

Your entitlement to a State pension depends on how many qualifying years of National Insurance (NI) contributions you have. To get any State pension at all, you must have a minimum of 10 qualifying years. To get the full State pension, you’ll need 35 qualifying years. If you’ve got between 10 and 35 qualifying years, you’ll get a proportionate amount of State pension. You can find out what your State pension entitlement is using the government website to check your State pension.

ABOUT THE DB SECTION
How does the DB Section work?

The DB Section pays pensions to members based on their salary and length of service in the Plan.

Who should I contact if I’ve got a question about my pension?

Contact Isio, the Plan administrator.

Who runs the Cummins UK Pension Plan?

The Plan is looked after by a trustee company called Cummins UK Pension Plan Trustee Limited. There is a board of directors who are responsible for making sure the Plan is run in line with pensions legislation and the Plan rules. Some of the directors are selected by Cummins and some have been nominated by the Plan’s members.

How can I make a complaint?

We work hard to make sure that you don’t have any reason to complain about the Plan, but if you do have a complaint, please contact Isio in the first instance. 

If Isio can’t resolve your issue, the Trustee has a formal process that you can use called the Internal Dispute Resolution Procedure (IDRP). Isio will send you the information you need for this.

How do I report the death of a pensioner?

In the sad event that you need to tell us about the death of one of our pensioners, please contact Isio, the Plan administrator, who will guide you through what we need to know and send you any paperwork that needs to be completed.

SAVING MORE
Can I pay additional voluntary contributions (AVCs)?

Yes, you can pay AVCs to help you increase your retirement benefits. They can contribute to a lump sum at retirement, be added to your annual pension, or you can take them separately in the way that suits you. The Company doesn’t match your AVCs.

Do I get tax relief on AVCs?

Yes, AVC payments are eligible for tax relief.

Are there any limits on how much I can save?

No, there are no limits on the amount you can save into a pension, but the government does limit how much tax-free money you can save each year with the annual allowance, currently £60,000 for most people. Your take-home pay must not fall below the national living wage.

What is the annual allowance?

The government limits how much tax-free money can be saved into a pension each year. It is currently £60,000. You can save more than this into your pension in a year, if you wish, but any contributions above this amount won’t get tax relief. 

If you earn more than £200,000 in a year and have an adjusted income over £260,000, your annual allowance might be reduced and could be as low as £10,000. 

If you’ve already accessed some pension savings flexibly but are continuing to save into a pension, your annual allowance will be reduced to £10,000.

What is the lifetime allowance?

This was a limit that the government imposed on the total pension savings you could build up over your lifetime before having to pay a tax charge. From April 2023, the tax charge is 0% and from April 2024, the lifetime allowance is no longer in place. If you previously had a lifetime allowance protection, this may protect the tax-free lump sum amount that you can take at retirement.

Can I change how much I pay as AVCs?

Yes, you can change this at any time by logging in to your account via Manage my pension. If you request your changes before the 15th of the month, these will be put in place in your next pay. (Please note the timings are different in December, when the payroll is run earlier.)

How are my AVCs invested?

You can choose the Plan’s lifestyle investment strategy if you prefer not to be involved in day-to-day investment decisions. This is the option that most members currently use. 

Alternatively, if you don’t think the lifestyle strategy is appropriate for your circumstances and you prefer to manage your AVC fund more actively yourself, you can choose to invest in one or more of the 12 self-select funds that have been made available by the Trustee.

Can I use the lifestyle option as well as a self-select fund?

No, you can’t invest in both at the same time. If you choose lifestyle, 100% of your AVC fund must be invested in this way.

Can I change my AVC investment choices?

Yes, you can make changes to the way your AVC fund is invested at any time, by logging in to your account via Manage my pension.

What’s my target retirement age?

This is the age that you choose to take your AVC savings. It can be any age from 55, although the government is raising the minimum pension age to 57 in April 2028. 

It’s important to tell us your target retirement age so that the gradual de-risking of your AVC fund matches when you want to retire. If you don’t choose a target retirement age, we’ll assume you intend to retire at 65.

RETIREMENT
Can I claim my pension and continue to work?

Yes, as long as you’re over 55 (or age 57 from April 2028).

When can I retire?

Your normal retirement age in the DB Section is age 65.

Can I retire early?

Yes, you can retire any time from age 55 (or age 57 from April 2028). Your pension will be reduced if you take it early because it will be paid to you over a longer period of time.

Can I retire later?

Yes, if you want to work beyond your normal retirement age, your pension will be increased because it will be paid to you over a shorter period of time. You’ll continue to have life assurance cover until you reach age 70 (or when you retire, if earlier).

How will winding down to retirement affect my pension?

Your pension benefits won’t be affected if you decide to wind down to retirement. You’ll need to speak to your local line HR department about reducing your working hours as there are certain criteria for this.

What if I’m ill?

If you have to retire early because of ill health, you may be able to draw your pension early, at the Trustee’s discretion.

Will my pension increase in value?

Yes, your pension in payment is reviewed each year in line with inflation and the Plan rules.