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.
Prior to April 2016 the Scheme was contracted-out of the State Second Pension (S2P) and you would have paid lower National Insurance (NI) contributions. However, following changes introduced by the government, the Scheme is now contracted in and you will therefore be paying full NI contributions.
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 £273.00 - £54.60 = £218.40 per month or £63.00 - £12.60 = £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 your personal Annual Allowance (AA). The standard AA for 2023/24 is £60,000 but depending on your taxable income, this may be tapered down to a minimum of £10,000. Please click here to see the Taxation section for more information on how to calculate your personal AA. For more information on Additional Voluntary Contributions (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.
What do reduced accrual members pay?
Reduced accrual members pay 7.5% of their Contributory Salary. In exchange for the lower contribution, they accrue benefits at 1/82nd of their Pensionable Salary.