Pensions
Are you saving enough to afford the lifestyle you want when you retire? We all know that planning for our future financial security is important and whatever your age, it’s never too soon to start. Thinking about what you could afford to live on in retirement and where that income will come from will help you make your choices now.
Through my Aviva pension, you can build valuable benefits for the future and provide some protection for both you and your family.
Did you know that pension contributions, up to a certain limit, are currently tax free? This means if you are a basic rate taxpayer, a contribution of £100 actually only costs £80, or £60 for higher rate tax payers*.
*Based on 2010 tax rates. Please note special conditions may apply if you pay tax at the new additional rate (50% for 2010).
At a glance
What is it?
my Aviva pension helps you to build valuable benefits for when you retire and provides long-term financial security for your dependants.
It's up to you to build your benefits at a level that suits you and you can make your choices via my Aviva flex.
Money purchase
If you are a member of the money purchase section of either the Aviva or RAC Schemes you can choose your contribution level.
The money purchase section
It’s an obvious thought but, the more you save now, the greater your retirement income should be. And the Scheme helps you tailor your financial planning to suit you. Through my Aviva flex you can select the level of contributions that you want to pay into your pension account.
|
|
Roll over the photographs to see some examples of the difference this could make |
How much could you be saving?
Everyone’s financial goals and circumstances are different. As a general idea of how much should be going into your pension account, if you joined the Scheme as a 30 year old, had no other pension savings and wanted to retire at age 60, contributions of around 22% of your pensionable salary into your pension account until you retire could give you a pension of about 41% of your pensionable salary.*
You don’t need to save this all on your own, because, as a Scheme member, we are helping you with your contributions. For example, if you choose the member contribution rate of 8% this would attract a 14% Company contribution, making a total of 22%.
You also receive tax relief on contributions and if you participate in Salary Exchange you may save money, meaning it costs you even less.
Another way of thinking about this is, if you earn £30,000, and choose the 8% member contribution of £200, together with the 14% Company contribution of £350, a total of £550 would be going into your pension account each month. However because of income tax and National Insurance savings through Salary Exchange of £62, this would mean your pay is only reduced by £138 a month.
*These figures are an illustration only. They are based on a number of assumptions which may or may not happen. They are the same assumptions used to provide you with the Statutory Money Purchase Illustration shown on your most recent annual benefit statement.
How it works
You choose the percentage of pensionable salary that you’d like to pay into your pension account. The minimum contribution from 1 April 2010 is 2% of your pensionable salary. Additional contributions are show in the table:
Remember although our maximum company contribution of 14% is based on an 8% member contribution, you can choose to contribute more than 8%. You can make contributions in 0.5% increases from 2%.
Click here, to choose your contribution rate
- Details of monthly charges for each benefit are available when you log in.
- For general questions about this benefit, you can call the my Aviva flex helpline on 0800 917 2310.
Saves on Tax?
Saves on NI?*
*If you participate in Salary Exchange.
On 14 October 2010 the UK Government announced fundamental changes which impacts how employees are taxed on the accrual of pension benefits in registered pension schemes.
The Annual allowance (the maximum amount of tax exempt savings that can be built up in one tax year) will be reduced from £255,000 to £50,000 from April 2011 (this is now referred to as the Reduced Annual Allowance or RAA). This will be based on both member and company contributions and for money purchase pension schemes it is believed this will include the value of the cost of death in service benefits. This will be frozen until at least 2015/16. It may be possible to carry-forward unutilised RAA from the previous 3 tax years.
Any excess of pension benefit accrual over the RAA in any year will be taxed at the scheme member’s marginal rate of income tax. The tax will be collected via the self-assessment process.
If you think this might apply to you and you haven't received the information guidelines, please contact Ask HR requesting further information.
Key points to consider
- The minimum contribution rate is 2% of your pensionable salary.
- Pension contributions will be paid through Salary Exchange unless you have been automatically excluded or have chosen not to participate.
- You can select and review your contribution rate in June every year, effective from the following 1 July. You can also change your contribution rate during the benefit year.
- For existing participants, if you don’t change your selection in June, your contribution rate will simply continue as before.
- If you choose to reduce your contribution rate, our contribution may also reduce (See table in How it works) and the value of your pension account will be affected.
- If you are unsure about any aspect of your finances and planning for retirement, including how much to save and where to invest, you should speak to an independent financial adviser (IFA).
See your member booklet on Pulse for more information about your benefits and how the Scheme works.
What happens next
If you change your contribution rate you will see the effect on your pay in the following month.
Aviva Staff Pension Scheme (the Scheme) - final salary section
As a final salary section member, you can tailor your financial planning to suit you. Through my Aviva flex you can choose from two contribution options and whether to change these choices each year.
You receive tax relief on your contributions and if you participate in Salary Exchange you may save money, meaning that the actual cost to you is reduced.
|
|
Roll over the photographs to see some examples of the difference this could make |
How it works
As the final salary section benefits provided by the Scheme are based on a set formula, you can work out with a large amount of certainty how much pension you will have when you come to retire.
You choose your level of contribution from two possible options. The level of contribution you choose determines the rate at which you build up your future benefits (the accrual rate):
Option 1
You can build up your future benefits at 1/60th of your final pensionable salary by choosing to contribute at a level of to 7.5%.
Option 2
You can build up your future benefits at 1/80th of your final pensionable salary by choosing to contribute at a level of 6% of your pensionable salary.
Note: If you choose Option 2, not only will you be building your pension at a lower rate, Your death benefits and ill-health benefits, which are influenced by your accrual rate, will also be lower.
Click here, to see your member booklet on Pulse
You can also choose to leave the final salary section and join the money purchase section of the Scheme. However this section works very differently to the final salary section so you should consider this very carefully. You will not be allowed to rejoin the final salary section if you choose to leave.
Click here, to choose your contribution rate
- Details of monthly charges for each benefit are available when you log in.
- For general questions about this benefit, you can call the my Aviva flex helpline on 0800 917 2310.
Saves on Tax?
Saves on NI?*
*If you participate in Salary Exchange.
Key points to consider
- If you do not make a selection, you will continue to build up your future benefits at 1/60th of your final pensionable salary and will contribute 7.5% of your pensionable salary.
- Your regular contributions will be paid through Salary Exchange unless you have been automatically excluded or have chosen not to participate. Click here to find out more about Salary Exchange.
- You can change your contribution level in June every year, effective from the following 1 July. If you do not make a selection, you will continue at your current level.
- Whichever contribution option you choose must remain the same for at least 12 months.
- If you are unsure about any aspect of your finances and planning for retirement, including how much to save and where to invest, you should speak to an independent financial adviser (IFA).
See your member booklet on Pulse for more information on how the Scheme works and your benefits.
FAQs
You can view all of the FAQs relating to my Aviva flex at Ask HR