Pension contribution and allowances

rugbyleaguesmate

Hi there

A little bit of guidance please?

My role is weekend operations manager working Friday Saturday Sunday 12 1/3 hour shifts. I am salaried but I also receive a disturbance allowance to compensate for my working pattern.

I believe my disturbance allowance should contribute to to my final salary pension scheme so I checked (after attending a presentation which stated shift allowances should go into pensions at the same rate as salary).

I found out that currently my pension contributions are only being made from my salary, not my allowance so I have raised this with my company who are now investigating and I am expecting a call from our pensions department soon.

Has anyone been through this discussion before? in my mind I am convinced that shift pay should contribute to my pension but I'm nervous they may say I'm not entitled and if they do how do I challenge because its a significant amount of money affected.

thanks in anticipation of your advice.

ColdIron

Could you not just increase your salary contribution? It might be a more straightforward and pragmatic solution rather than chasing the source of every pound

rugbyleaguesmate

Thank you I'm at the top level I am allowed for contribution.

On top of this I can put in AVC's but my company I don't think make any contribution with these?

Linton

In pension schemes there is often a distinction made between pensionable and non-pensionable pay. Whether shift allowance is pensionable should be clearly and legally defined somewhere, what you or the pensions department think about the situation is or should be irrelevent. Perhaps its in the scheme rules or your contract of employment.

rugbyleaguesmate

Linton wrote: »

In pension schemes there is often a distinction made between pensionable and non-pensionable pay. Whether shift allowance is pensionable should be clearly and legally defined somewhere, what you or the pensions department think about the situation is or should be irrelevent. Perhaps its in the scheme rules or your contract of employment.

Thank you the experts are now checking, and I should hear tomorrow

rugbyleaguesmate

Hi all a bit of an update on this. My company have agreed that my shift allowance should be included in my pension and have altered my salary arrangements to make it correct going forward.

I have now got a £10k shortfall into my pension pot from what should have been contributed over the last 12months. My company have asked me to pay £2.7K towards the 10K and then they will top up my pension with the missing 10k contribution.

Question my contribution of £2.7k if I add my tax an ni contributions turns into nearly £4.4k which I think is too high a % for a 10k contribution should I be contributing £2.7k minus tax (40%)?

Hope this is understandable......and could you tell me are pension contributions pre tax?

ffacoffipawb

rugbyleaguesmate wrote: »

Hi all a bit of an update on this. My company have agreed that my shift allowance should be included in my pension and have altered my salary arrangements to make it correct going forward.

I have now got a £10k shortfall into my pension pot from what should have been contributed over the last 12months. My company have asked me to pay £2.7K towards the 10K and then they will top up my pension with the missing 10k contribution.

Question my contribution of £2.7k if I add my tax an ni contributions turns into nearly £4.4k which I think is too high a % for a 10k contribution should I be contributing £2.7k minus tax (40%)?

Hope this is understandable......and could you tell me are pension contributions pre tax?

What are the employer and employee contribution rates to this scheme?

EG employer 8% employee 3%.

zagfles

They should be deducting it from your pay, I assume they use sal sac or net pay, in which case you'll pay less tax/NI as a result. If it's too much for one pay period they should spread it across 2 or 3.


It's unusual for shift pay and other such extras to count as pensionable for a final salary scheme. What happens if you come off shifts towards the end of your working life? Your "final salary", on which your pension is based, would then not have the shift pay element and so you won't benefit from the higher contributions now! Sometimes they use best 3 of last 10 years which might protect you in these circumstances.

rugbyleaguesmate

Thanks for this just checked I contribute 4% and employer contributes 6%.

Apparently I am a rare example at work my scheme allows the contribution however other schemes don't. Good point about the shifts towards the end of career, I'm 49 now so do have a glimpse at the retirement door every once in a while. My scheme is a defined benefit scheme rather than the defined contribution schemes currently in place for employees

rugbyleaguesmate

My pension scheme details are here https://www.baesystemspensions.com/#/page/defined-benefit

I'm in the 200 scheme.....clearly looking for help because I don't understand!