Contributions to the Scheme
This section deals with the contributions of Associates to the Scheme.
How much will membership of the Scheme cost?
Members of the Scheme are required to pay contributions at the rate of 10 per cent of their
Pensionable Salary.
It is worth noting, however, that the actual cost of Scheme membership is reduced by the following factors:
- tax relief is applied automatically to your contributions at your highest rate of tax; and
- because the Scheme is contracted out of the State Earnings Related Pension Scheme you will pay a reduced rate of National Insurance contributions whilst you are a member of the Scheme.
How much does the Group pay?
Contributions from members alone would not be enough to pay for all the benefits the Scheme provides.
The Group meets the balance of the cost of the benefits. It also meets all of the Scheme’s administration and management costs. The amount the Group pays is regularly assessed by a qualified actuary appointed by the Trustees. Whilst the level of the Group’s contribution may vary from time to time, the Group expects, in the long-run, to pay substantially more than the members.
Can I make additional contributions?
You may pay AVCs to increase your benefits under the Scheme. Current tax rules would enable you to contribute all of your earnings into the Scheme. Normally you would receive tax relief on such contributions, as long as you do not exceed the annual allowance. You can find more information on the Annual Allowance
here.
The main features of the Scheme’s AVC facility are:
- AVCs are deducted from pay before income tax, so that you benefit from tax relief at your highest rate of tax
- AVCs are invested separately from the Scheme’s main assets in individual accounts
- there is a range of investment options
- investment returns under the AVC facility are broadly free of tax
- you choose when to start paying AVCs and you can increase, reduce or stop payments any time, subject to certain limits
- your accumulated AVCs would be used to provide extra benefits when you retire.
Click
here for further information on AVCs
