What you pay

Depending on your Pensionable Salary you either pay:

  • 7% if you earn below £46,425* (2011/12 tax year); or
  • 8.5% if you earn above £46,425*(2011/12 tax year).

These payments are known as your pension contributions and are deducted from your pay automatically. You get full tax relief on your contributions (under current law) provided your pension savings do not exceed the Annual Allowance.

For example, if your salary is taxed at the basic rate of 20%, each £1 you pay into the Scheme costs you 80p. In comparison, if your salary is taxed at 40%, each £1 you pay into the Scheme costs you 60p, and if taxed at 50% each £1 paid into the Scheme costs you 50p.

You will stop paying contributions to the Scheme if you leave the Company or when you retire, whichever is the earlier.

If you have elected to continue paying at 6% of Pensionable Salary, you will build up pension at a lower rate of 1/90th of pay for each year of Pensionable Service and 3/90ths for lump sum from the date you elected to pay 6%.

You will also pay National Insurance (NI) contributions. These are explained under NI Contributions.

 

* £46,425 is the CET or Contribution Earnings Threshold for the tax year 2011/12 and is reviewed annually. Your Pensionable Salary will be compared to the CET at 1 January each year and you will pay the applicable contribution rate from your next pay review date.

The higher contributions for those with earnings above the CET reflect the higher tax relief that higher earners receive on their pension contributions.

You can find out more about Contributions and Tax relief by clicking on the menus on the left.

Frequent questions

Please click on the appropriate section: