Understanding your retirement benefits
Our Scheme is a defined benefit pension scheme - it means the amount you’re paid when you retire is calculated using your final pensionable salary and pensionable service.
This section goes into a bit more detail about the calculation, yours and the Company’s contributions and tax limits you should be aware of.
How much will I get paid when I retire?
Your normal annual pension will be:
1/80 x pensionable service x final pensionable salary
And your normal additional cash lump sum will be:
3 x your annual pension
It will usually start being paid when you reach normal pension age, but you do have various options about how and when to take your benefits – see our Retirement planning section.
Just like salary, a pension is paid directly to your bank account in monthly instalments on or around the first working day after the 21st of each month. Once you're receiving your pension you can view your monthly payslips by logging into your OneView account.
Remember — you can’t usually access your retirement benefits in the Group until you reach the normal minimum pension age (currently 55 but increasing to 57 in April 2028).
Example
You retire at your normal pension age of 63, with a final pensionable salary of £40,000 after completing 30 years of pensionable service.
Pension = 1/80 x 30 x £40,000 = £15,000 a year
plus
Cash sum = 3 x £15,000 = £45,000
Note: these amounts may be subject to certain limits on the maximum amounts that can be built up.
Will my pension increase?
Your pension increases each year to help it keep pace with rising prices.
Pension above the Guaranteed Minimum Pension (GMP) increases on 1 April each year with the Retail Prices Index (RPI) over the 12 months to the previous 30 September.
The Company may decide to limit this increase to 5% in any given year if the RPI is more than 5%.
GMP built up from 6 April 1988 - increases each year with the Consumer Price Index (CPI) up to 3% a year.
Pension increase exchange At retirement, you may have the choice to exchange part of your pension that increases in retirement for a higher pension that doesn’t increase. This part of your pension is called your ‘Exchangeable Pension’.
Your Exchangeable Pension is the amount of pension above the GMP built up before 6 April 1997. Full details of this option will be provided in your retirement pack as you approach normal pension age.
How much do I pay into the Group now?
You pay a contribution percentage (currently 5.5% of your pensionable salary) into the Group.
The Company pays the remaining cost of your benefits as well as the running costs of the Group. This amount is worked out by the Group actuary at least every three years.
Are there tax advantages?
Your normal pension contributions will receive tax relief at the highest rate you pay.
Also, your contributions will usually be paid by salary sacrifice. This is an arrangement where you agree to reduce your salary by an amount equal to the contribution you’re making, and this is paid into the Group by the Company on your behalf. This means that you (and the Company) pay less National Insurance, which increases your take home pay.
Go to Moneyhelper and search ‘salary sacrifice’ for more information. Note that the Government announced changes to salary sacrifice for pensions in the Autumn Budget 2025 - the Company will provide more details about this change nearer the time.
Can I pay more?
You can pay up to a further 9.5% of your earnings each year to buy ‘Added Years’ of pensionable service if the Trustee agrees (up to a maximum of 40 years). Please contact Aptia if you want to find out more about this option.
You also have the option to pay extra contributions into the Iberdrola Group (UK) Stakeholder Pension Plan. This is a defined contribution (DC) arrangement with Fidelity and the retirement options will be different from those available in the Group.
Please contact People Services (by using the 'Contact Us' button on the People Portal when logged onto your ScottishPower device) if you want to find out more about this option.
Transfer retirement benefits from another scheme
You can transfer retirement benefits from another pension scheme if the Trustee agrees. If you choose to do this, you’ll be awarded ‘Added Years’ of pensionable service in the Group.
Contact Aptia if you’re interested in this option, and they’ll let you know what information you need to provide. It’s important that you take independent financial advice before transferring any retirement benefits.
Paying into the Group
Any contributions you pay into your pension will receive tax relief.
However, the Government places a limit on the amount that can be saved or built up in pensions each year (across all registered pension schemes) without having to pay a tax charge. This is called the ‘Annual Allowance’ - it's currently £60,000 for most people but could be lower if you have taken certain flexible benefits from a defined contribution pension scheme or are a high earner (e.g. if your annual income plus pension scheme contributions exceeds £260,000 a year).
You should bear this in mind before deciding to buy ‘Added Years’ or pay extra contributions into the Iberdrola Group (UK) Stakeholder Pension Plan. If you go over the Annual Allowance in the Group in any given year, we’ll send you a Pension Savings Statement which explains in detail what you need to do.
Taking benefits from the Group
There are limits on the amount of tax-free cash you can take at retirement and the amount of tax-free lump sum death benefits your dependants can receive.
Go to Contact Aptia Pensions and click on ‘Me’ then ‘Retirement’ to watch a video explaining the April 2024 changes to the tax limits.
You can also go to www.moneyhelper.org.uk and search ‘pensions tax allowances’ if you want more detail.