Your benefits explained

As a Scheme member, you’re entitled to the following benefits:

• a retirement pension for life
• a tax-free cash sum in exchange for part of your pension (and therefore a smaller retirement pension for life)
• a pension if you have to retire through illness
• benefits for the people you love if you die while still working for Santander
• benefits for the people you love if you die in retirement, or before taking your pension, and
• for members in some sections, the chance to retire early or late.

How your pension builds up

You build up pension based on:

• a percentage of your Final Pensionable Salary (your salary near the date you retire or stop paying into the Scheme)
• for each year you’re an active member paying into the Scheme.

To build up your benefits, you pay a percentage of your Basic Annual Salary while you’re working for Santander. This is your basic salary each year, plus any other payments Santander UK plc decides should be included.

If you stop paying into the Scheme before you retire, your pension will be worked out at the date you stopped paying in. This is known as a ‘deferred’ pension (and you’ll therefore be referred to as a ‘deferred member’). Your deferred pension will increase each year, to help it keep pace with inflation, until you retire and take your benefits. How much it increases depends on which section you’re in.

Check your member guide to find out:

• the rate your pension builds up at
• how much you pay
• the definitions of Final Pensionable Salary and Basic Annual Salary, and
• how deferred pensions increase each year.

Boosting your benefits

If you are still working for Santander and you want to boost your pension benefits, you can pay extra contributions. These are known as additional voluntary contributions (AVCs).

You can pay AVCs to LifeSight, Santander UK plc’s defined contribution (DC) scheme. If you’re a current Santander employee, you can find out more about LifeSight, including how to pay AVCs on One HR under the Rewarding you section.

You can also contact the LifeSight Administrators for this information.

Opting out of the Scheme

You don’t have to carry on paying into the Scheme while you’re working for Santander. You can opt out, and stop paying in, at any time. If you opt out, you’ll become a deferred member and your deferred pension will be calculated from the date you stopped paying in.

However, you should think very carefully before doing this. Once opted out, you won’t build up any more benefits in the Scheme and, if you change your mind, you won’t be able to rejoin the Scheme in future. You’ll join LifeSight instead. If you’re a current Santander employee, you can find out more about LifeSight on One HR under the Rewarding you section.

If you’re still working for Santander and decide to opt out, you might be enrolled into LifeSight in the future, due to auto-enrolment legislation. This means that employers are legally required to put eligible employees into a pension. Every three years schemes must therefore check for employees who are not in a pension and automatically enrol them if they qualify. If this happens to you and you still don’t want to save into a pension, you can opt out again.

Transferring your benefits out of the Scheme

Moving your benefits to another pension scheme is a serious step. It involves converting your Scheme benefits into cash (known as a Cash Equivalent Transfer Value) and paying them into a defined contribution (DC) pension scheme.

This completely changes your benefits as you’ll no longer be entitled to a pension for life that increases to reflect inflation. You will also lose your entitlement to a pension for your dependants if you die before them. You may however have more choices around how to take your retirement income.

If you do decide you want to transfer your benefits out, we recommend you take independent financial advice. In fact, if your transfer value is £30,000 or more, you’re legally required to take financial advice from an independent financial adviser who is:

• authorised by the Financial Conduct Authority (FCA), and
• qualified to give advice on pension transfers.

As pension transfers are a prime target for scammers, the Scheme Trustees also have the power to query or even block transfers that look as if they might involve fraud. This means they may ask you for more information about the pension scheme you want to transfer to. They may also ask you to have a pension guidance appointment with MoneyHelper and you’ll need to be able to prove you’ve done this.

Requesting a transfer quote

You can use Benpal to get an informal, on-the-spot estimate of the current cash equivalent transfer value of your Scheme benefits.

To get a formal quote, please get in touch with the Scheme Administrators. You can ask for a formal quotation at no cost, twice in any 12-month period.

When you die

Your loved ones may be entitled to benefits from the Scheme if you die before them.

If you die before you retire

A cash lump sum will be paid at the Trustees’ discretion. The amount paid out depends on:

• whether you were still paying into the Scheme when you died, and
• which section of the Scheme you were in.

The Scheme will also pay a pension to your spouse or civil partner and children’s pensions may be available. The amounts payable depend on which section of the Scheme you’re in.

If you die after you retire

If you die within five years of retiring, the Scheme will pay the rest of your first five years’ pension payments as a cash lump sum. This won’t include any allowance for future pension increases.

In most cases, the Scheme will also pay a pension to your spouse or civil partner and children’s pensions may be available. The amounts payable depend on which section of the Scheme you’re in.

Benefits payable after your death

The Trustees sometimes have discretion over who receives benefits payable after your death. The Trustees will look into who the most appropriate person(s) are. If you’ve told us in advance this speeds up the process and can mean any money due is paid out quickly.