Contributions

Contribution structure

Your pension contributions and those made by the Company are paid into a Trust Fund, which is quite separate from the Company’s assets. The Trust Fund is invested by independent managers appointed by the Trustee.

Members (other than 'reduced accrual' members) pay 10.5% of Contributory Salary. Your contributions are deducted from your earnings before income tax is assessed, which means that you receive full tax relief on your contributions.

Contributory Salary means basic annualised remuneration and all or part of any shift premium paid as a separate item in addition to basic annualised remuneration.

As the Scheme is contracted out of the State Second Pension (S2P), your National Insurance (NI) contributions will be reduced because you will not earn any pension from S2P whilst a member of the ABF Pension Scheme. Women paying reduced-rate NI contributions are already excluded from S2P so there will be no further reduction in NI.

Example:

Your Contributory Salary is £31,200 per year or £2,600 per month or £600 per week.

Your contribution is 10.5% of Contributory Salary - i.e. £273.00 per month or £63.00 per week. If you are a basic rate taxpayer, the contributions attract tax relief at 20% so the net cost to you is actually £218.40 per month or £50.40 per week.

Company contributions

The Company pays the balance of the cost needed to provide the benefits under the Scheme, which is calculated by the Scheme’s independent Actuary.

Can I pay more?

Tax relief is granted on all pension contributions up to the Annual Allowance (AA) (£40,000 for the Scheme year 2021/22). Your most recent Annual Benefit Statement will give you an indication of your scope to pay AVCs; please refer to the section entitled "My Tax Allowances!" and "unused AA". The Trustee has made arrangements which enable you to pay Additional Voluntary Contributions (AVCs), providing additional funds for retirement in a tax-efficient way. For more information on AVCs please click here.

Can I pay contributions to other schemes?

Yes. You can contribute to a personal pension and/or Stakeholder pension whilst you are a contributing member of the ABF Pension Scheme, although Company contributions will only be made to the ABF Scheme. You will need to check your total Annual Allowance usage as your Annual Benefit Statement will only provide details for your ABF pension.