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50/50 Section


If a member opts into the 50/50 section why must employers still pay full contributions?

While someone is in the 50/50 section they pay half the contributions and receive half the accrual rate (1/98th instead of 1/49th), however they continue to have a full right to all ancillary benefits such as life cover, ill-health retirement etc.   The ‘overpayment’ by employers will be accounted for at the next valuation.  It remains to be seen whether or not the 50/50 provision will ultimately reduce employer costs and it will depend on the makeup of people who opt for 50/50.  If the majority of those electing are existing members then employers may see a reduction in their liabilities.  If the majority are those who would have previously opted out then the employer will have increased contributions and long-term liabilities.

As the 50/50 section option is meant to be short term are there any guidelines and/or rules as to how long an individual can be in this section?

Members in the 50/50 section must automatically be moved back into the main section at regular intervals including the employer’s automatic re-enrolment date and if they go on to no pay as a result of sickness or injury.  However, the member may choose to opt back into the 50/50 section again if they wish.

Has managing changes from main to 50/50 sections and vice versa been an issue so far in England?

We are not aware of any issues to date.

Are there any other scenarios where an employee would move out of the 50/50 section as a result of going onto no pay that have not been covered?

The only time an employee is moved out of the 50/50 section by the employer is when they go on to no pay as a result of sickness or injury and providing they are on no pay at the start of the pay period.