The basics

New joiners

Welcome to the Plan (that’s short for the Cummins UK Pension Plan).

Taking the time to understand how the Plan works and how you can make the most of it is the first step in powering your path to retirement.

We know pensions can seem complicated so we’ve tried to keep things simple.

What is a pension?

A pension is a savings scheme for when you stop working.

Most people will get the State Pension, but if you want to retire earlier or make the most of your time when you’re not working, you might need some extra savings of your own as they may need to last for 20 years or longer.

Here are some great things about saving into a workplace pension:

• Your employer pays into it too.
• You don’t pay tax on your pension contributions.
• If you pay through salary sacrifice, you don’t pay National Insurance on your contributions either.
• Your money is invested to help it grow.
• You have choices about how you take your money, including a cash lump sum.

How does the Plan work?

• Both you and Cummins pay into your pension fund each month – this is your personal account in the Plan.
• You choose how your pension fund is invested to help it grow.
• When you retire, you can take some of your pension fund as a cash lump sum, and use the rest to power your retirement in a way that suits you.

How much does the Plan cost?

You will automatically be enrolled into the Plan from the date you join Cummins.

You are automatically enrolled at 7% of your pensionable pay, which means Cummins will pay the maximum employer contribution of 9% of your pensionable pay.

However, you can choose how much you save from a minimum of 3% of your pensionable pay.

This is how it works

You can change how much you save at any time by logging in to My Pension Tracker. Remember, Cummins’ contributions will also change, unless your change is to your additional voluntary contributions – see Saving more than 7%.

Your contributions are taken out of your pay before tax is calculated, so if you’re a basic rate taxpayer, every £1 that you pay towards your pension only costs you 80p. See Tax for more details.

How much to save?

This will depend on all sorts of things, like:

• your age,
• how much you’ve already got saved elsewhere,
• whether you’re saving for something else like your first home
• how much you can afford.

Most people want to get as much help as possible from the contributions that Cummins pays and sticking with the 7% is the way to do this.

Dependent on investment returns, the more you can afford to pay in, the larger your pension fund should be when you stop working.

The value of pension fund may go down as well as up and cannot be guaranteed. You may receive back less than your original investment.

Saving more than 7%

If you want to save more than 7% of your pensionable pay, you can pay extra contributions called additional voluntary contributions (AVCs). These are paid into the same pension fund as your regular contributions.

You can pay AVCs either as one-off payments or as regular contributions. Unlike basic and saver contributions, you don’t receive extra contributions from Cummins for paying AVCs.

Opting out

You don’t have to be a member of the Plan but if you opt out, you’ll be giving up valuable benefits:

• Pension contributions of up to 9% of your pensionable pay from Cummins
• Tax-free pension contributions, meaning saving costs you less
• Life assurance cover of five times your annual salary (as a non-member you’d only be covered for one year’s salary).

When you join the Plan, you have 30 days from receiving your joining notification to opt out and get a refund of any contributions you’ve paid.

If you opt out after 30 days, you’ll stop paying contributions, but any contributions you’ve already paid won’t be refunded. They’ll stay invested in the Plan until you either transfer them to another pension arrangement or retire.

Rejoining

If you’ve opted out and want to rejoin, you can do this by logging into your account.