A pension is a tax-efficient way of long-term saving. The idea is to put some money aside now, to live off in later life, when you want to start working less or retire completely. 

A pension is basically a pot of money – employees pay in a percentage of their wages and the employer adds some more. The employee gets tax relief on the money they save into their pension pot too. Then, with pensions like The People’s Pension, the pot of money gets invested to grow over time. The pension normally becomes available anytime from someone’s 55th birthday (the government proposes to increase this to age 57 from 2028). 

We have set up your pension plan with People’s Partnership (previously known as B&CE), provider of The People’s Pension, to help you save for your retirement. As a business without shareholders, People’s Partnership reinvest their profits to help customers and achieve better financial outcomes for everyone. In line with requirements all employees are automatically enrolled into the scheme 3 months after they join us.  You have the option to “opt-out” of the scheme if you do not wish to take advantage of the scheme.

Monthly contributions for the People’s Pension are based on % of pensionable pay (sometimes also known as qualifying earnings) not total pay.  Pensionable pay is your basic pay (currently set between £6,240 and £50,270). The levels are set by the government and are subject to change. 

You will pay in 5.00 % of Pensionable Pay each month. This will be taken directly from your pay and will include tax relief from the government. 

Lodha pay in 3.00 % of Pensionable Pay each period.

Your contributions will be made using salary exchange (sometimes referred to as salary sacrifice). This means you “give up” part of your salary for a non-cash benefit, in this case an additional pension contribution from Lodha.  As your salary is reduced, you pay less tax and National Insurance Contributions (NICs). 

You will also receive tax relief from the government. If you’re a basic rate taxpayer, you’ll automatically get 20% tax relief on money you pay into your pension. So for every £80 you put in; the government will top it up to £100. You’ll receive tax relief on all regular contributions you make to your plan up to a maximum of £3,600 a year or 100% of your earnings, whichever is greater 

This means your total contribution to your pension pot will be 8% of your pensionable earnings plus the saving you will make on tax and NIC plus tax relief from the government which all helps to boost your pension savings. 

Salary Sacrifice and Net Pay Arrangement

Prior to enrolment, you will receive a Salary Sacrifice agreement. As part of this process, you can choose whether to contribute more than the standard minimum contribution rate to your pension.

If you wish to participate in Salary Sacrifice, you must complete and return the agreement before auto enrollment kicks in (your 3-month anniversary).

If we do not receive your completed agreement, you will automatically be enrolled into the pension scheme under a Net Pay Arrangement (NPA). Under NPA, pension contributions are deducted directly from your pay and tax relief is applied through payroll.

Please note that contribution levels under Salary Sacrifice can normally only be changed during the annual review period. NPA offers greater flexibility, allowing contribution levels to be amended throughout the year, subject to payroll deadlines and scheme rules. Employees who do not elect Salary Sacrifice at enrolment will have the opportunity to join the arrangement during the next annual review period in April.