The Pearson Pension Plan

The total taxable income you have received from any source in the current tax year (including any benefits in kind) plus the value you have added to your pension savings in the current tax year.

This is the maximum amount of tax-free pension savings that you can build up over a year. The standard Annual Allowance for the tax year 2024/25 is £60,000 and the minimum Tapered Annual Allowance is £10,000.

For additional information on Annual Allowance, we recommend looking at Money Helper’s annual allowance for pension savings page - This link opens in a new browser window

The amount of tax you will need to pay to HMRC if you exceed your Annual Allowance. The charge is calculated as a percentage of the excess amount over £60,000.

At retirement you have a choice about how to use your pension pot and one of your options is to purchase an annuity. An annuity is a product from an insurance company that will provide you with a regular guaranteed income in retirement. You can buy an annuity with some, or all of your pension pot and it will pay you an income either for life or for an agreed number of years.

The insurance company will provide you with several choices about your annuity, such as how it increases and what benefits will be paid if you die. It is important that you understand your options as it is not possible to change them once the annuity is in payment.

Age UK – Annuities explained – what are annuities? | Age UK - This link opens in a new browser window

Money Helper – Guaranteed retirement income (annuities) explained | MoneyHelper - This link opens in a new browser window

The AE Section is used to meet the statutory auto enrolment requirements. Membership is available to full and part-time UK employees of Pearson aged 16 or over and under age 74. If you are aged 22 or over, earning over £10,000 a year and under State Pension Age, you will automatically become a member of the AE Section, unless you request to join and take advantage of the additional benefits in the Money Purchase 2003 Section.

The process of using any unused Annual Allowance in one or more of the previous three tax years to offset your Annual Allowance charge in the current tax year.

If you request a transfer quotation, we will provide you with a calculated value of your pot that would be available to transfer to another pension arrangement. Please note that this value is subject to change, unless we confirm that it is guaranteed in the transfer quotation.

If you would like to request a transfer quotation you can do that by filling in this form.

This is the point at which a pension becomes payable.

This is where your retirement income is based solely on your earnings and the length of time you have been a member of the Plan. The Trustee decides the investment policy for the Plan, not the individual member. The amount of pension you receive is based on your final pensionable salary. Please note the DB sections of the Plan were closed to new members in 2006.

A pot of money based on contributions from you and Pearson. In the Plan, the DC sections are known as the Money Purchase 2003 (MP03) Section or the Auto Enrolment (AE) Section.

At retirement you have a choice about how to use your pension pot, one of your options is to transfer your pension pot into a flexible drawdown scheme. This allows you to have your pension fund invested in a way that means you can draw an income (or ad hoc cash amounts), which can be varied in terms of both frequency and amount to suit your personal circumstances. The fund remains yours unlike an annuity where you give an insurance company your pension pot and they guarantee you an income for life.

If you are considering transferring your benefit to a flexible drawdown scheme, we would recommend reading through Money Helper’s drawdown guide to get more of an understanding if it is the right option for you – Pension drawdown: what is flexible retirement income? | MoneyHelper - This link opens in a new browser window

A form that you should fill out to nominate who you would like to receive any lump sum benefit payable in the event of your death. The Trustee will decide who the monies should be paid to, but will be guided by your completed Expression of wish form. You can find the Expression of wish form here.

Most annuities pay a guaranteed income for life, but this is not the same as a guaranteed annuity rate (GAR). A guaranteed annuity rate is something that a number of older pension policies had. They offered to pay a ‘guaranteed’ rate (namely they guaranteed the level of the interest rate). At the time these pensions were sold, the rate wasn’t spectacular at all, but because annuity rates have fallen over many years, these are now much higher than you would generally get on the open annuity market.

From April 2015, everyone over 55 has been entitled to free guidance and information about their defined contribution options from PensionWise (https://www.pensionwise.gov.uk - This link opens in a new browser window) or on 0800 136 3944. It’s not the same as financial advice (in that they won’t recommend a specific product for you), but it’s a good starting point.

The Lump Sum and Death Benefit Allowance (LSDBA) limits the total amount of tax-free lump sums paid to or in respect of an individual across all pension arrangements. The standard LSDBA has been set at £1,073,100 (although a higher LSDBA amount may apply where members have a relevant tax protection) and the following lump sums payable form the Plan are tested against the LSDBA:

• Pension commencement lump sums (tax-free lump sum)
• Uncrystallised funds lump sum death benefits.
• Serious ill-health lump sums
• Defined benefit lump sum death benefits

The following lump sums payable from the Plan are not tested against the LSDBA:

• A small lump sum
• A trivial commutation lump sum
• A trivial commutation lump sum death benefit.

The MPAA applies if you have previously flexibly accessed pension benefits in a defined contribution arrangement. It is the maximum amount of tax-free savings that you can build up over the tax year.

The MPAA for the tax year 2024/25 is £10,000. If you pay contributions over this amount, you will need to pay the Annual Allowance tax charge and you will not be able to use any carry forward from previous years.

If you are affected by the MPAA, please tell the pensions team so we will send you a pension savings statement each year.

In the event of your death, a pension may be payable from the Plan. Complete this form and it will be reviewed by the Trustee. Please note, by default a pension is usually paid to a spouse or civil partner. However, the Trustee will consider anyone who might have been financially dependent on you too. This will include children up to the age of 18. Please note the Trustee is not legally bound by this form. You can find the Nominated dependant form here – Please note that this is only applicable to DB and the MP03 sections.

In the unfortunate event of your death there may be pension benefits payable to your dependants. There are two documents that may be applicable to you, the Expression of wish and Nominated dependant forms.

From 6 April 2024, amounts transferred to a Qualifying Recognised Overseas Pension Scheme (QROPS) are tested against the overseas transfer allowance (OTA). The OTA is set at the same level as the individual’s LSDBA.

Where individuals have crystallised pension benefits prior to 6 April 2024 (including as a result of a transfer to a QROPS), their available OTA is reduced by an amount equal to 100% of the value of their LTA used as at 6 April 2024.

Either the increase in the value of your defined benefit pension savings or the total contributions paid by you, or on your behalf, into a defined contribution arrangement. You can find this for the Plan on your pension savings statement.

The tax year the growth in your Plan pension is measured.

A statement issued by 6 October each year to members who may have an Annual Allowance tax charge. If you do not receive a statement, you can request one from the team.

Salary exchange is an agreement with Pearson to reduce your salary by the amount you wish to pay into your pension pot, in exchange for an equal pension contribution from Pearson. Pearson then makes this contribution on your behalf, as well as the employer contribution, into your pension pot.

A facility where your Annual Allowance charge is paid by the Trustee and in exchange you give up some of the benefits you have built up within the Plan.

The State Pension is separate from a benefit that you would build up via contributions with your employer. Most people will be able to claim a State Pension, however this is dependent on their National Insurance record.

The best place to find information on the State Pension is through the government’s dedicated page here – Gov.uk – Your State Pension explained.

The age at which you’re entitled to claim your State Pension. You don’t have to take your State Pension when you reach this age. From December 2018, the State Pension age started rising for both men and women and will continue to do so, reaching 66 in October 2020 and 67 between 2026 and 2028. Check your personal retirement age here https://www.gov.uk/state-pension-age - This link opens in a new browser window

Your State Pension age is nothing to do with your retirement age (when you choose to retire) which may be earlier or later than this.

You can currently take up to 25% of the value of your pension benefits as a tax-free lump sum. If you are considering retiring, please contact the pensions team and request a retirement quote. This will include an estimate of what your tax-free cash lump sum might be. You can request a retirement quote by filling in this form.

Your pension contributions are taken out of your salary before tax, which means you pay no tax on them. Your tax relief is worked out automatically by payroll, so you don’t need to do anything.

The total amount you have received from any source in the current tax year which is liable to income tax (including any benefits in kind).