Contributions

How will I pay?

The table below summarises the various contribution rates:

MEMBER CONTRIBUTION RATE

EMPLOYER CONTRIBUTION RATE

3% (Minimum rate)

8%

4%

9.5%

5%

11%

6%

12.5%

7% or over

13.5%

You will pay contributions of at least 3% of your Pensionable pay. However, you can choose to pay more than this if you wish: up to 100% of your Pensionable pay.  There will, however, be a tax charge on payments which exceed the Annual Allowance set by the Government.

Please note that the level of your contributions can be a key factor in determining the overall size of your pension fund at retirement.  You may need to make higher contributions to meet your retirement income needs.

You will be automatically enrolled into the Plan unless you confirm that you do not wish to become a member, by contacting the DC Plan administrator (tel: 01733 353 414; email: my.pension@aegon.co.uk) who will provide you with details about how you can opt out of the Plan.

You will have 14 days to complete an application form advising the Trustee and your employer of the level of contributions you want to pay and where these contributions are to be invested.  If you do not return the form, it will be assumed that you have chosen to pay contributions of 3% of your Pensionable pay. These contributions will be invested in the Plan default fund chosen by the Trustee.

If you would like to increase the level of contributions you pay to the Plan, you can do so by providing one month's written notice.  Please contact the DC Plan administrator (tel: 01733 353 414; email: my.pension@aegon.co.uk) for further details.

What earnings are pensionable?

All permanent items of pay and responsibility allowances together with your Pensionable shift pay (if you receive it) are pensionable. 

If you are on reduced pay during maternity leave (and in certain other circumstances), your employer will make contributions based on the pay that you would have expected to have received if you had not been off work. In most cases, you will make your contributions based on your reduced pay.

What if I work part time?

If you work part time, you and your employer will pay contributions based on your part-time Pensionable pay.

How much will my employer pay?

Your employer will make a contribution of at least 8% of your Pensionable pay into the fund.  However, the more contributions you pay, the more contributions your employer will pay. If you choose to pay more than the minimum rate of 3%, the employer contribution will also be higher. You may pay at any rate above 3% (whole numbers only).  The maximum total employer contribution will be 13.5% of your Pensionable pay. See the table above for details of the matching rates.

Salary sacrifice (where applicable)

Some employers may offer a salary sacrifice arrangement for your contributions to the CNPP.  Please contact your employer for more information.

What if I have periods off work?

You usually only pay contributions if you are actually working. The main exception to this is certain periods of statutory paid maternity leave and if you are on long-term sick leave.  For other types of leave such as paternity or adoption leave, please contact your employer for further details.

If you are off work on long-term paid sick leave, you and your employer will continue to pay contributions during your absence.

Do I get tax relief?

Yes, you pay your contributions out of your gross pay (before income tax is taken out) so the cost to you is reduced.

Example: Dave earns £18,000 a year (£1,500 a month) and has chosen to pay the minimum contribution rate of 3% Pensionable pay. 

Dave’s contributions to the Plan are £45 a month (3% of £1,500) but the net cost to Dave each month will only be £36 as he will get tax relief on these contributions. Dave pays tax at the basic (lower) rate so he will get tax relief at 20%.

Jasmin earns £60,000 a year (£5,000 a month) and has chosen to pay a higher contribution rate of 5% Pensionable pay. 

Jasmin’s contributions to the Plan are £250 a month (5% of £5,000) but the net cost to Jasmin each month will only be £150 as she will get tax relief on these contributions. Jasmin pays tax at the higher rate so she will get tax relief at 40%.

What about National Insurance?

The New Joiner Benefit Structure has been contracted-in to the State Second Pension (S2P).  From 6 April 2016 the current basic state pension and S2P will be abolished and replaced by a Single Tier State Pension. You and your employer will continue to pay the full rate of  National Insurance contributions.  For more information on the Single Tier State Pension click here.  In addition to your Plan pension you will also receive your entitlement to state pension when you reach State Pension Age. The state pension age for men and women is expected to gradually increase to age 66 and to subsequently further increase to age 68. Further information about state pension age, including a calculator to determine your state pension age is available at gov.uk.

Can I change the level of my contributions?

You may change your contribution rate at any time during the year. However, if you do so more than once in any period of 12 months, the Trustee may deduct the associated costs from your Investment account. If you do wish to make a change, please give at least one month’s notice to your employer.

Where are the contributions invested?

The contributions made by you and your employer will be invested in funds of your choice from a prescribed range and held in your Investment account. If you do not make a decision on the investment of your contributions then they will be invested in the Plan default fund chosen by the Trustee.  The investment guide can be accessed by clicking on the related document below.  To obtain further details on the range of self-select funds and BlackRock LifePath options please refer to the investment guide below.  For information such as fund factsheets please contact the Plan administrator (tel: 01733 353 414; email: my.pension@aegon.co.uk) or click here for the links to the fund factsheets.