News and FAQs
Q How does the Retirement Balance Plan work and is it a final salary scheme?
Q If I have a personal pension, will the company pay into it instead of the Retirement Balance Plan?
Q Can anyone at the company provide me with financial advice on my pension options?
Q What constitutes pensionable pay?
Q Can I pay additional contributions to boost my pension?
Q What is the maximum I can pay in pension contributions to the Company’s Scheme?
Q I’m a member of one of the former ESPS Groups and my benefit statement shows that my pension would be reduced if I had left at the date of the statement. Why is this?
Q How does the Retirement Balance Plan work and is it a final salary scheme?
A The Retirement Balance Plan is a way of saving for your retirement with help from the company. You choose a benefit level from between 20% to 40% of your pensionable salary which is allocated to your retirement balance account. Your contribution varies with your age and the company pays the balance of the cost of providing the benefit. Each year you have the chance to change your benefit level either up or down. When you come to retire, under current legislation, you can take up to a quarter of your fund as tax free cash and the rest has to be used to buy a pension. You can find more information about the Retirement Balance Plan in the explanatory booklet. Follow the link to the Reference material page opposite to view the booklet.
The Retirement Balance Plan is not a final salary scheme. Under final salary arrangements the benefits payable are calculated by reference to a member’s period of pensionable service and pensionable salary at retirement or earlier date of leaving.
Q Why have I been offered membership of the E.ON UK Retirement Balance Plan rather than the Powergen Benefit category of the E.ON UK Group of the Electricity Supply Pension Scheme?
A The company closed all its pension schemes to new entrants on 31 March 2005 when it merged the three Groups of the Electricity Supply Pension Scheme (Eastern, EME and Powergen) and introduced a new arrangement, the E.ON UK Retirement Balance Plan. However if you are a Protected Person (which basically means that you were an employee at the time of privatisation at 30 March 1990) and haven’t broken your protected status then you will be eligible to join one of the final salary categories, depending on your circumstances.
Q If I have a personal pension, will the company pay into it instead of the Retirement Balance Plan?
A No. The company does not contribute to individual employee’s personal pensions if they decide not to join the company pension scheme.
Q Can anyone at the company provide me with financial advice on my pension options?
A No. No-one at E.ON is authorised to give financial advice so you would need to contact an authorised financial adviser. IFA Promotions will be able to give a list of advisers in your area. You can telephone them on 0800 085 3250 or visit their website using the link opposite.
Q What constitutes pensionable pay?
A Pensionable pay is your basic salary plus any permanent additions that have been agreed as pensionable. Temporary elements such as overtime are not pensionable.
Q What is maintained pay?
A This is an option available in the Eastern, EME, Midlands and Powergen categories to members whose pensionable pay has reduced due to certain reasons such as coming off shift pay. The maintained pay option allows the member to continue contributing and having his pension based on his pensionable salary before the reduction. If the member’s actual salary overtakes his maintained salary then the option falls away.
Q Can I pay additional contributions to boost my pension?
A Yes, there are various ways depending on which category you a member of. If you are in the Eastern, EME, Midlands or Powergen categories you may be able to buy added years or pay additional voluntary contributions (AVCs) to a variety of providers. If you are a member of the EME PP or MEPS categories you may pay AVCs. If you are a member of the Retirement Balance Plan you can buy extra benefit levels. Please contact EPAL for more information. There is a link to their website opposite.
Q What is the maximum I can pay in pension contributions to the Company’s Scheme?
A You can pay contributions of up to 100% of your salary less an allowance for statutory and any voluntary deductions in pension contributions.
Q I’m a member of one of the former ESPS Groups and my benefit statement shows that my pension would be reduced if I had left at the date of the statement. Why is this?
A If you were a member of one of the former ESPS Groups (Eastern, EME, Midlands or Powergen) at 1 April 1988 then the benefit statement shows the pension you would be entitled to if you left without company consent. On 17 May 1990 there was a ruling in the European Court of Justice in respect of a case brought under sex discrimination legislation (known as the Barber ruling). The ESPS had equalised normal retirement ages (NRA) at 63 for men and women from 1 April 1988 but existing members retained their original NRA of 65 for men and 60 for women. The effect of the ruling was to reduce the NRA for men to 60 from the date of the ruling but not for past service. Rather than split the pension and pay part at 60 and part at 63, the pension earned in respect of pensionable service up to 17 May 1990 is reduced to make it payable from 60. If you retire early with company consent or leave on severance then the full pension is paid with no reduction.
Leaving the Company
Q If I leave the Company on severance can I have an immediate pension?
A That depends on which category of the E.ON UK Group you are a member of. If you’re a member of one of the former Electricity Supply Pension Scheme Groups (Eastern, EME, Powergen and Midlands) and you joined that Scheme before July 2003, if you leave the company on severance you will be entitled to a pension from age 50. If you are over 50 when you leave then the pension and lump sum will be payable immediately. If you are under 50 then your pension and lump sum will be payable when you reach 50. If you are a member of one of the other benefit categories of the E.ON UK Group or joined E.ON on a TUPE transfer other conditions may apply. You should contact your HR advisor or Pensions Policy for further information.
Q What is Rule 29?
A Rule 29 applies to the Eastern, EME, Midlands and Powergen categories of the E.ON UK Group. Rule 29 is a rule whereby if you have more than nine years pensionable service your service is rounded up to the next whole year and your pension benefits are calculated using the higher figure. A deduction is made from your pension when it comes into payment equal to the contributions you would have had to pay for the extra period of service. e.g. if your pensionable service is 19 years 30 days, it will be rounded up to 20 years and you will be required to pay the contributions for the extra 335 days pensionable service.
Q Can I pay the Rule 29 deductions in a lump sum?
A No, under Rule 29 your benefits are reduced by the equivalent of the contributions you would have paid and this reduction is made to your pension when it comes into payment. This enables you to get tax relief on the deduction.
Q Will pension deductions be taken out of my payment in lieu of notice?
A No. Pension contributions are only taken from pensionable earnings and pay in lieu of notice is not pensionable.
Q Is the deferred pension increased in value each year until I retire?
A Yes, deferred benefits (pension and lump sum) are increased each April by the change in the Retail Prices Index over the twelve months to the previous September. This is the same basis as that used for pensions in payment. If the change in the RPI is greater than 5% then the Company can limit the increase to an amount less than RPI but not less than 5%.
Q Can I take more of my pension benefits as cash since the changes to pensions taxation introduced in April 2006?
A Yes, since 6 April 2006 you can take up to a quarter of the value of your total pension pot as tax free cash and in most cases this will produce a larger cash sum than the standard calculation. EPAL will provide you with details as part of your retirement quote.
Q How will my pension be paid to me and when?
A Your pension will be paid direct to your bank on 24th of the month, in the same way as your salary.
Q Can I have a larger annual pension with no lump sum?
A At retirement you will be given the option to convert all or part of the lump sum into an additional pension for yourself. You will also be able to convert some of your own pension into an additional pension for your spouse on your death or for a named dependant.
Q Can I pay any of my severance money into the Pension Scheme?
A Yes, if you are a member of the Eastern, EME, Midlands and Powergen categories. You can come to an arrangement with the company whereby the company agrees to pay part or all of any severance in excess of £30,000 into the Pension Scheme to purchase extra pension rights. EPAL will provide details if appropriate. This arrangement is based on current practice by the HMRC and may change in the future.
Q Can I transfer my pension to a new employer’s pension scheme or personal pension?
A Yes, you can transfer your pension to another occupational pension scheme or to a personal pension. You have the option to take a transfer until one year before your Normal Retirement Age. You don’t have to make the decision as soon as you leave.
Q Can I cash in my pension?
A If you have less than two years pensionable service then you can have a refund of your own contributions. If you have more than two years pensionable service then you can either leave your pension benefits in the E.ON UK Group of ESPS until you retire or transfer them to another registered pension arrangement i.e. a new employer’s pension scheme or a personal pension.
If you have more than three months’ pensionable service and less than two years’ pensionable service, then instead of the refund described above, you can opt for a transfer value to be paid to another registered pension arrangement if you wish.
Q Can I keep the life assurance cover going when I leave E.ON?
A No. The life cover is part of the pension scheme package and ceases when you leave the scheme.
Q Can I rejoin the scheme if I leave and then later re-employed by E.ON?
A Normally you would be eligible to join the E.ON UK Retirement Balance Plan although special conditions might apply if you are a Protected Person or join following a TUPE transfer.
Pensioners
Q Will my pension stop if I get another job?
A No, your pension is payable because you have retired from E.ON UK. You can be employed elsewhere and join another pension scheme without affecting your entitlement under the E.ON UK Scheme.
Q Can my pension be paid abroad and what would the tax position be?
A Pensions can be paid to you if you move abroad. However payment can only be made into a bank account either in the UK or overseas provided that an electronic transfer can be accepted. The amount of pension will vary depending on the rate of exchange at the date of payment. The tax position will depend on your individual circumstances and where you are moving to. You should contact your local tax office for information.
Q Are pension increases applied to my full pension?
A The way in which pension increases are applied depends on whether or not you are over State Pension Age (currently 60 for a woman and 65 for a man). This is because the Electricity Supply Pension Scheme was contracted out of the State Earnings-Related Pension Scheme (SERPS) and both you and the Company paid less in National Insurance Contributions. In return, the Scheme had to guarantee that the pension you would receive would not be less than the additional pension you would have earned in SERPS. This part of your pension is called the Guaranteed Minimum Pension, or GMP. Before State Pension Age, the increases are applied to the whole of your pension, including the GMP element. After State Pension Age the GMP element is increased by the state and included with your state pension and, as a consequence, the GMP element is excluded from the pension increase applied by the Scheme. As a further complication, the rules were changed from April 1988 so that the Scheme is responsible for the first 3% of the increase on the GMP accrued from that date, with the state responsible for the remainder.
Q Who do I contact if I think my tax code is wrong?
A You will need to contact the tax office. EPAL have to use the tax code provided to them by HM Revenue and Customs.
Q I’ve lost contact with a former colleague. Can you give me his address?
A No. We don’t give out personal information about pensioners or members of the Scheme. However, we will forward a letter for you.
Q I want to continue receiving monthly pay advice slips.
A The Trustees took the decision to stop sending monthly pay advices unless your pension changes by £1 or more. All pensioners were sent a letter about the change. Pension pay dates for the next few months can be found on the calendar page see the link above.
