Frequently Asked Questions

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Pensioners

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Taxation

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If the total amount of contributions paid in a year are more than the Annual Allowance, then a tax charge (Annual Allowance Charge) has to be paid on the excess contributions over the Annual Allowance.

If you pay pension contributions outside of the Scheme, then any additional tax due (effectively removing the tax relief received on the excess contributions) will need to be dealt with as part of your self-assessment tax return.

If your overall pension benefits are more than the Lifetime Allowance, a tax charge (the Lifetime Allowance Charge) has to be paid on the excess benefits.

If your pension benefits are over 90% of the LTA, then you can opt out of future pension savings altogether (for example, to apply to HMRC for ‘fixed’ protection). Instead of pension benefits you will receive a taxable salary supplement from the Company which will depend on which section of the Scheme you are a member of. In addition, your death in service benefits will continue to be calculated as if you had remained a member of the Scheme.

If your pension benefits are less than 90% of the LTA, then you can opt out as above only if you are able to supply a copy of formal advice from a qualified Financial Adviser recommending this, a copy of your application for protection, and confirmation of protection once it has been granted.

The value of benefits from the DC Section, Personal Pensions and Additional Voluntary Contributions for Annual Allowance purposes is the total amount of contributions that have been paid in over the period by yourself and the Company.

If you are also a contributing member of a DB pension scheme outside of this employment please refer to that scheme regarding how your benefits are calculated.

The value of benefits from the DC Section, Personal Pensions and Additional Voluntary Contributions for Lifetime Allowance purposes is simply the current fund value of the funds used to secure the benefits on retirement.

Transferring Out

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A transfer out is the payment of a sum of money from one pension scheme to another. Once the payment is made, you and your family no longer hold benefits in the original (transferring) scheme and the new (receiving) scheme takes over the responsibility for providing those benefits.

There are a number of things that we check for before making the payment:

  • We must receive all our requirements before we can make the payment
  • You must be a deferred member of the Scheme, if you are still active and making contributions then you will need to opt out and wait for this to be processed before we can make the payment
  • We can only make the payment to an approved pension arrangement - we do a number of checks on the receiving arrangement to make sure that they are approved and are not being used as a scam or liberation scheme. If we are unable to establish the status of the scheme, we will write to both you and the scheme administrators to obtain more information

No, the value that we have quoted is your current fund value, which is simply the units that you hold multiplied by the current unit price. When your account is closed, the value that is eventually paid will depend on the unit price at that time.

It is the responsibility of your new scheme to tell you what benefits you will be provided with once you transfer. Even if you are transferring to another Defined Contribution arrangement, the benefits may be different. It is important that you understand what will change and what impact that may have on the benefits payable both at retirement and in the event of your death.