Client Example

The following questions and answers have been provided to help you understand the main features of the Workplace Pension Scheme. For the purpose of these question and answers, we will assume you are classed as an eligible jobholder.
[acc_item title=”What is a Workplace Pension Scheme?”]The Workplace Pension Scheme is a Group Personal Pension Contract with Aviva. A Group Personal Pension Scheme is a tax efficient way of saving for retirement. Under the plan you will have your own Personal Pension policy that will be set up in your name and will belong to you. The Plan will have its own unique number and will always belong to you and not the .[/acc_item]
[acc_item title=”How much will the pay into my pension plan?”]The Personal Pension Scheme has been set up with an Employer Pension Contribution of 5%, with employees making a contribution of 3%. This means we are already meeting the minimum contribution levels with the government state must be in place by October 2018. The government minimum guidelines are that Employers must contribute 3% with employees making 5%. By making a higher contribution of 5%; we have reduced the costs for our employees.
In the example below we have shown what the actual contributions would be based on this percentages, using a salary of £20,000.

5% company contribution £1,000.00 per annum
3% personal contribution £480.00 per annum
Plus Tax relief @ 20% £120.00 per annum (£600 personal contribution in total including tax relief)
TOTAL Contribution (8%) £1600 per annum

On the example provided, the total cost to the employee is £480.00 per annum (£40.00 net per month), to achieve a total annual contribution of £1600 including tax relief.
Both employer and individual contributions will automatically be adjusted in line with salary changes.[/acc_item]
[acc_item title=”How much should I be contributing to a pension in order to get a good retirement income?”]This is dependent on your personal circumstances, and what you can sensibly afford. The more you pay in, the greater the potential for higher retirement benefits.
As a rough guide, in order to achieve half your income at retirement age, the total contributions into your pension plan should be:

  • Starting at age 20 = Total contribution of 10% of earnings
  • Starting at age 30 = Total contribution of 16% of earnings
  • Starting at age 40 = Total contribution of 27% of earnings


Source: the Money Advice Service brochure ?Make The Most of Your Money? 2012, please note that these figures will be dependent on factors such as investment returns.

As you can see, delaying the commencement of your pension savings will mean that you will need to contribute a higher amount in later years to achieve the same result.
You may find the Aviva Retirement Planner useful in helping you plan for your retirement age:
Please speak to if you would like to make an additional individual personal contribution.[/acc_item]
[acc_item title=”Do I need to provide my consent before my employer will auto-enrol me into their workplace pension scheme?”]No. If you meet the automatic enrolment criteria of an eligible jobholder you will be automatically enrolled.[/acc_item]
[acc_item title=”I have seen the word ?Postponement? mentioned, what does this mean?”]The have set up our Employer Workplace Pension Scheme with a 3 month ?postponement? period. This means that we would have 3 months from the point that you become an ?eligible jobholder? enrol you into the pension scheme. All employees will be issued with a Postponement Notice. [/acc_item]
[acc_item title=”Once I have been auto-enrolled, can I choose to then leave the scheme?”]The will automatically enrol you if you are an eligible jobholder. Once you have been enrolled you will be given the opportunity to ?opt out?. The details of how to ?opt out? will be detailed in the initial communications which you will receive when you are automatically enrolled. If you choose to activate your ?opt out? notice, then you will receive a full refund of any contributions deducted from your salary.
If you decide that you no longer want to be part of the pension scheme after the ?opt out? period has passed, then you will not be able to get your payments refunded ? and any contributions invested will remain invested until you take your pension benefits (usually at retirement).[/acc_item]
[acc_item title=”I have told my employer that I do NOT want to be auto enrolled into the pension scheme, can my Employer action my instruction to opt out before I am auto-enrolled into the pension scheme?”]Under the new Government regulations, the cannot provide an employee with the opt-out paperwork. The instructions on how to opt out will be issued when you are automatically enrolled.[/acc_item]
[acc_item title=”Will the first pension deduction be taken from my wages, even if I want to opt-out?”]Yes. Government rules state that you cannot opt-out until you have been enrolled. If you opt out within the prescribed timescale and via the correct process, all monies paid by yourself will be refunded under Government legislation, we are legally obliged to comply with these regulations.
Under the current legislation, The will have to automatically re-enrol eligible jobholders who have chosen to ?opt out? of the pension scheme on a triennial basis. This means that approximately 3 years from the staging date, we will re-enrol all eligible job holders, even if they have previously opted out of The Workplace Pension Scheme. You will then receive a further notification to advise that you have been auto enrolled into The Workplace Pension Scheme, and you can choose to opt out again. This will continue to happen approximately every 3 years.[/acc_item]
[acc_item title=”I am NOT classed as an ?eligible jobholder? can I still join the pension scheme?”]Yes. The will support all employees who would like to save for their retirement. Please complete the ?opt in? pension form if you would like to join The Workplace Pension Scheme.[/acc_item]
[acc_item title=”I am contributing to another pension plan with a different provider, can I continue these contributions, and also take up the benefits offered by The ?”]Yes. However, the most you can save into a pension plan each tax year is the greater of £3600.00 per annum or 100% of your UK earnings. The maximum you can contribute in order for tax relief to be gained on any pension contribution for 2015/2016 is £40,000 per annum. This can be spread across any number of pension plans.
In addition to this, please note that investors who withdraw tax free cash from their defined contribution pension after April 2015 and seek to re-invest it in a pension, will be subject to a revised annual allowance contribution limit of £10,000.[/acc_item]
[acc_item title=”What if I want to pay more than the annual pension contribution limits?”]It is possible that if you have unused relief from other tax periods that you may be able to pay a contribution higher than £40,000. Please do not exceed this annual limit without taking Independent Financial Advice. The calculation for using unused relief is complex, and depends on not just the tax year contributions limits, but also the input period for your specific pension plans. Our appointed advisers for the scheme will be happy to help you in this area, and their details are at the end of this document.[/acc_item]
[acc_item title=”I am a higher rate tax payer, can I claim additional tax relief?”]If you are a higher rate tax payer, then you can claim additional tax relief on your pension contributions. Please see the following link for full details on how to do this.[/acc_item]
[acc_item title=”Where will my contributions be invested?”]When you join the pension your contributions will be invested in scheme default fund. The default fund for The Workplace Pension Scheme is the ?Aviva Mixed Investment Lifestyle Approach?. The aim of this investment is to grow your money throughout your working life. As you approach retirement it will gradually reduce your exposure to risk. Full details of the default fund can be found on the Aviva website.
Please remember that with any unit-linked investment, the value of your plan could go down as well as up depending on investment performance (and currency exchange rates where a fund invests overseas). The value of your plan may fall below the amount you have paid in. Past investment performance cannot be used as a guide to future investment performance.
If you feel that this fund choice is not in line with your attitude to investment risk, then you are free to make a different fund choice.
Fund range/performance literature is available online to enable you to carefully consider the choices available. Please be aware that some of the external funds will have higher annual management charges. Please find below the link to all the funds available to you under your pension scheme.[/acc_item]
[acc_item title=”What charges will be applied to my pension plan?”]The Annual Management Charge (AMC) for the Aviva Default Fund is 0.75%. If you opt for an alternative fund, the annual management charge may be different. Full details of the charges and the funds available are noted on Aviva?s website. Please always check the additional fund expense charges quoted so that you are clear of the total annual fund charge being applied to alternative funds.[/acc_item]
[acc_item title=”How will I know how my plan is performing?”]Each year Aviva will send you a statement. This will provide details of the contributions that have been paid into your fund and your total fund value. You will also receive instructions within your welcome pack showing you how to register for online access.
You can access the following features via the Aviva website:

  • View Contribution History
  • Pension Valuations
  • Projection Statements
  • Fund Switching / Risk Analysis
  • ?What if? calculators to show how increasing your contributions can improve your retirement benefits
  • Amending personal details (address changes etc)

[acc_item title=”What happens if I die?”]If you were to die before your chosen retirement date, Aviva will pay out the full value of your pension fund as a lump sum. This payment will be tax free. It is important that Aviva has details of who you wish to receive any death benefits from your plan. Please click on the following link to obtain the Aviva Nomination Form.
This form cannot be submitted electronically. You will need to print off the form, complete and sign, and return to Aviva by post. If your circumstances change you should complete a new form. Aviva Trustees will have the discretion as to whom death benefits will be payable.[/acc_item]
[acc_item title=”What happens if I die? continued?”]
Upon your death, they will gather as much relevant information as possible, such as a copy of your Will or the Grant of Probate, before making the death benefit payment. If you wish to nominate a beneficiary or beneficiaries under the age of 18, you should ensure that there is provision for a Trust under the terms of your Will.
If you die after you have taken your retirement benefits, the death benefits will depend on the retirement option you have chosen.[/acc_item]
[acc_item title=”What happens if I leave the employment in the future?”]There are a number of options open to you, depending on your employment status after leaving the company:

  • Carry on contributing to your Personal Pension plan.
  • Stop contributing and leave the policy ?Paid Up?. You can at a later date start contributing again or leave the policy invested until you want to retire.
  • Transfer your policy to an alternative pension policy or scheme.

Full details of your options would be provided by Aviva when they are notified of your last contribution.[/acc_item]
[acc_item title=”What happens when I retire or wish to take the benefits from my plan?”]Under current legislation you may take your benefits at any time after age 55, regardless of whether you continue to work or not. When you are close to your selected retirement date the pension provider will provide you with a fund statement and a list of your pension options.
When you decide to take your retirement benefits there are a number of decisions which you will be faced with. Under the current legislation, individuals can opt to take up to 25% of their pension plan value as a tax free cash sum and the remainder of the plan value can then be used to take as a retirement income which is taxable.
The new Pension Freedom reforms which take effect in April 2015 will offer greater flexibility to individuals and the way in which they take their retirement income. Individuals will now have three options:
1) Take the whole fund as cash.
2) Take smaller lump sums when required.
3) Take a regular income. This can be achieved by:
? Income Drawdown: Money is drawn directly from the pension fund, and the remainder of the fund stays invested.
? Purchasing an Annuity which provides a regular income. (Annuities can be set up with a fixed income for life, for a fixed term, or with an investment element). You can also receive enhancements if you are a smoker/high blood pressure/high cholesterol and also if you are regularly taking any medication or receiving treatment for any ongoing medical condition. Anyone looking to set up an annuity should always complete a medical questionnaire to ensure they receive the best possible terms.

Any pension withdrawals in excess of the tax-free amount will be taxed as income at your marginal rate. Initially the HMRC may apply an emergency tax code to withdrawals, which could result in you being taxed at a higher rate that you anticipated.

For basic-rate taxpayers (paying tax at a rate of 20%), income drawn from your pension will be added to other income you receive, and this might result in you falling into a higher income tax bracket (paying at a rate of 40% or higher). Remember that HMRC will include your state pension and all other sources of income in the calculation.[/acc_item]
[acc_item title=”What happens when I retire or wish to take the benefits from my plan continued?”]These radical changes are the biggest fundamental change to how people access their pensions in
nearly a century, and we recommend that individuals seek financial advice or guidance to ensure that they make the right decision to meet their own attitude to investment risk and personal circumstances. If you are looking to release funds from your pension plan, then our advisers have recommended that you begin planning up to 6 months in advance. Please see some helpful links:
[acc_item title=”What is the Lifetime Allowance?”]The Lifetime Allowance is the overall total maximum benefit limit applied to all your pension arrangements (including some Death in Service benefits, if applicable). The Lifetime allowance is £1.25 million (2015/2016).
Provided you do not exceed this limit when your benefits are due to be paid then no additional tax charge will apply. If your total pension funds are likely to be close to the current Lifetime Allowance, then we recommend that you speak to a Financial Adviser.
When your benefits become due, your pension provider will advise what percentage of the Lifetime Allowance is being applied to your fund helping you avoid exceeding this limit.[/acc_item]
[acc_item title=”Do I qualify for a Basic State Pension?”]If entitled and dependent on your Qualifying Years, you will receive the basic state pension when you reach state pension age. State Pension Age is gradually increasing from 65 to 68 and is dependent on your date of birth. [/acc_item]
[acc_item title=”What are Qualifying years?”]In order to qualify for a full basic state pension you must have built up enough qualifying years through payment of national insurance contributions during your working life. Currently this is 30 years.
The full basic state pension is £115.95 per week (2015/2016 tax year) for a single person.
In addition to the basic state pension you may be eligible for Pensions Credit. This means tested benefit aims to provide a ?top-up allowance? for those living in the UK to ensure they are in receipt of a minimum level of income. It is payable from State Pension Age and is made up of two parts known as the guarantee credit and the savings credit. Please see the Government website for further details.
The State Second Pension (S2P) is an additional pension based on how much you earned, and the amount of National Insurance contribution you have paid during your working life. It is payable along with your basic state pension each week.

State Pensions are changing

The government has proposed the following changes to state pensions from 2016:

  • Increase basic state pension
  • Removing the top-up element above the basic state pension
  • Increase ?qualifying years? requirement from 30 to 35.

More information can be found at You are also able to complete an online request for a State Pension Forecast using the following link:
Please note future Governments can change state pensions and benefits at any time.[/acc_item]