Paying 5%?

If you contribute to the Plan at the standard rate of 5%, the amount of money that gets paid into your pension account will go up by at least 2% of your pensionable earnings.

Our example employee is aged under 40, earns £20,000 a year and pays 5% of pensionable earnings. So the employee pays £1,000 a year.

Before April 2008 the Company pays 5% of £20,000, which is £1,000, into their Lifestyle Account.

Following the improvements, the Company contributions will increase to 8%, meaning that the Company will pay £1,600 into their Lifestyle Account.

So the improvements mean an increase in Company contributions of £600, so that total pension contributions rise from £2,000 to £2,600 a year.

Don’t forget that you get even more by paying Additional Voluntary Contributions (AVCs).

If our example employee pays an additional 2% of pensionable earnings, the Company will also pay an additional 1%, giving a total contribution (including standard contributions) of £3,200.

Here's how:

The employee would pay 5% ordinary contributions plus 2% AVCs, which would be 7% x £20,000 = £1,400, but after tax relief the annual cost would be £938.

The Company would pay 8% ordinary contributions plus 1% AVCs which would be 9% x £20,000 = £1,800.

Take a look at the pension calculator to see how you could benefit.

You can start to pay AVCs or ECs by filling in the Contributions Form (sent by post with your information pack - contact the Pensions Department if you need another copy).