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Topping up your pension

Did you start saving late in your career? person who started saving late Did you start saving late in your career?
Did you have some time off work to raise a family? person with child Did you have some time off work to raise a family?
Would you like to save more, now you can afford to? person wanting to save more Would you like to save more, now you can afford to?
Are you close to retirement and want to save as much as you can while you are still working? person approaching a retirement target Are you close to retirement and want to save as much as you can while you are still working?

There are many reasons why you might want to top up your pension. For example, you might be getting close to retirement or you might have had a few years off work to raise family and want to make up for the time when you weren’t saving into a pension.

It's good to have an idea of how much money you’ll need to live on when you retire. For example, you might spend more on holidays than you do now, but your housing costs might be less. There are tools available online to help you build up a picture of your spending in retirement, such as this one at www.fidelity.co.uk/retirement/retirement-calculator.

When you’ve got an idea of how much income you’ll need, you can use the modeller, or look at your pension statement, to find out if you’re going to have enough. If you don’t think you’ll have enough, you could consider changing how your pension builds up or topping up your pension by making additional voluntary contributions (also known as AVCs).

DC Start

As a DC Start member, you can increase your retirement savings by moving to DC Core. In DC Core, you can increase your contributions to between 5% and 8% and Nestlé will pay 1.5 times your contribution into your account (or twice your contribution until July 2022 if you were eligible for transitional payments on 31 July 2017).

To move to DC Core, simply fill out a DC Core Option Form.

DC Core

If you’re not already paying the maximum DC Core contributions of 8% of your pensionable earnings, the easiest way to top up your pension is to increase your contributions.

Nestlé pays 1.5 times your DC Core contributions up to 12% (or twice your contribution until July 2022 if you were eligible for transitional payments at 31 July 2017). Look at the table below to see how increasing your contributions can give a big boost to the payments going into your account.

To find out how to change section, go to Changing how your pension builds up.

You contribute
Nestlé contributes
5%
7.5%
6%
9%
7%
10.5%
8%
12%

Additional voluntary contributions (AVCs)

AVCs are additional contributions that you can make to build up extra income for your retirement.

DC Core

If you’re already paying the maximum DC Core contribution of 8% of your pensionable earnings, you can top up your pension by paying AVCs. You pay AVCs into DC Core and they build up in the same way as DC Core benefits, although Nestlé does not contribute to these savings.

DB Core

In DB Core, you can top up your pension either by moving to DB CorePlus (if you’re eligible) or by paying AVCs. To find out if you’re eligible for DB CorePlus, log in to use the modeller. The modeller will show you if DB CorePlus is an option for you. If it is, you can move to DB CorePlus once a year in April. See Changing how your pension builds up for more information.

DB CorePlus

In DB CorePlus, you can top up your pension by paying AVCs.

What are the advantages of paying AVCs?

  • You're in control – you can pay as much as you choose at a rate that’s right for you.
  • Tax relief – in most circumstances, you don’t pay tax on your AVCs. This includes the income you use to make AVCs and returns on investments. You can also get further tax savings by making contributions through salary sacrifice. To find out more about tax savings, see Pensions and tax.
  • Boost your pension – you can put your AVCs towards your tax-free cash or convert them into an income when you stop working. If you have built up some defined benefit (DB) pension, taking your AVCs as tax-free cash means you don’t have to give up as much of your annual pension. To find out more about how you can take your benefits, see Approaching retirement.

You pay AVCs into DC Core and they build up in the same way as DC Core benefits, although Nestlé does not contribute to these savings. See How your pension builds up for a reminder of how DC Core works.

Use the modeller to see the effect that paying AVCs could have on your pension at retirement, and also how much they could cost you after tax and National Insurance savings.

How to pay AVCs

  1. Decide how much you want to pay.
  2. Decide how you’d like to invest your AVCs.
  3. Start paying, or change your level of AVCs, by filling in and returning an Additional Voluntary Contributions (AVCs) Form.
  4. Review your investments regularly. You can change them once every three months by filling in and returning an Active Member Investment Choices Form.
  5. If you want to stop paying AVCs, fill in and return an Additional Voluntary Contributions (AVCs) Cessation of Payment Form.

You can only make AVCs directly from your Nestlé pay. We do not accept payments from other sources of income.

Transfers in

If you have built up savings in a previous scheme, you may be able to transfer them into the Fund.

As a DB Core, DB CorePlus or DC Core member, you can transfer benefits into DC Core. You can then choose how it is invested.

As a DC Start member, any pension that you transfer in will go into DC Start and must be invested in the Lifetime Pathway.

Transferring your pension benefits is an important decision – if you’re thinking about doing it, you should consider your options carefully, and we suggest that you take financial advice before making a transfer into or out of the Fund.