Your contribution rate depends on how
much you are paid but it will be between 5.5% and 7.5% of your pensionable pay.
The rate you pay depends on which pay band you fall into. If you work
part-time, your rate will be based on the whole-time pay rate for your job,
although you will only pay contributions on the pay you actually earn.
Here are the pay bands that apply from 1
April 2009 – they will increase in line with inflation from 1st April 2010 and
every April afterwards.
|
If your
Whole-Time Pay Rate is: |
You pay a
contribution rate of: |
|
Up to £12,600 |
5.5% |
|
£12,601 to
£14,700 |
5.8% |
|
£14,701 to
£18,900 |
5.9% |
|
£18,901 to
£31,500 |
6.5% |
|
£31,501 to
£42,000 |
6.8% |
|
£42,001 to
£78,700 |
7.2% |
|
More than
£78,700 |
7.5% |
As a member of the Scheme, your contributions will attract tax relief at the
time they are deducted from your pay and you will be contracted out of the
State Second Pension Scheme (S2P). Whilst you are a member of the Scheme you
will, prior to State Pension Age, pay reduced National Insurance contributions.
They’ll pay 6.5% on their pay. That gives
monthly contributions of approximately £119.
If they were working half-time, they’d still
pay the same contribution rate of 6.5%.
That’s because the whole-time rate for
their job is still £22,000, but their contribution would be based on their
part-time earnings, so they’d pay approximately £60 per month in contributions.
Your employer pays the balance of the
cost of providing your benefits in the Scheme.
Every three years an independent review
is undertaken to calculate how much your employer should contribute to the
Scheme. The Government is considering how future increases or decreases in
scheme costs can be shared between members and employers. There will be a
separate consultation on the cost sharing principles and these principles are
planned to be put in place by April 2010.
You can pay extra to increase your retirement benefits. You can do this either by paying additional contributions (known as ARCs) to buy extra scheme pension, by making payments to the scheme’s Additional Voluntary Contributions (AVC) arrangement, or by making payments to a personal pension, stakeholder pension or Free-standing AVC scheme of your own choice. Click here to view the Increasing your Benefits section or click here to download the 'Increasing Your Retirement Benefits' guide.