You will be required to pay 6.5% of Pensionable Earnings . The Company's ordinary contribution rate is 11.5% of Pensionable Earnings. Your Pensionable Earnings for service up to 31 March 2012, are generally your gross pay less a Scheme offset of £4,048 for the Scheme Year 2015/16. Pensionable Earnings for service after 1 April 2012 are subject to a cap of £100,000.
Generally, contributions are automatically deducted from your earnings and tax relief is granted under PAYE. (Tax relief is granted on contributions paid subject to the Annual Allowance (AA) limit).
Pensionable Earnings growth will be subject to a cap of 1.75% per annum. Pensionable Earnings which, but for the application of the cap on Pensionable Earnings growth, would have been pensionable under the Standard Section will qualify for contributions to the DC Section at the rates applicable to that Section (currently 10% from the employer and 6% from the employee)
- Members can opt for their contributions to be met through salary sacrifice; this is called "SMART Pension". If you choose to take part in SMART Pension, your basic salary would be reduced, currently by 6.5%, and the Company would pay an equivalent amount as an employer contribution to the Scheme on your behalf. Because your basic salary is lower, you will usually pay lower National Insurance contibutions.
- The income tax you pay will be unaffected by SMART Pension. This is because income tax is always applied to earnings after any pension contributions have been deducted. For some members (e.g. those on low pay receiving State benefits) SMART Pension may be disadvantageous. If you want to know more about SMART Pension, you should contact your HR representative.
The Standard Section is contracted out of the State Second Pension Scheme (S2P); as a member you will pay a lower rate of national insurance contributions.
Contributions are payable until you leave or retire from the Scheme or, if on or after reaching age 65, you elect to become a Postponed Pensioner.
The Trustee and the Principal Company agree the contributions necessary to cover the expected cost of benefits payable under the Scheme Rules, after allowing for members’ contributions.
"Top-Up Contributions" (TUCs) are available to those employee members who wish to "top up" their Standard Section benefits by way of Additional Voluntary Contributions (AVCs) on a defined contribution basis (DC). Please click here for more information.
Please note, TUCs are not payable under the SMART Pension arrangements described above.
AVC contracts to purchase additional years of pensionable service in the Standard Section are not affected by the introduction of TUCs; new AVC contracts of this kind are not available.