How does ‘Pensions Plus’ work?
‘Pensions Plus’ is simply a more efficient way of making pension contributions.
You and the Company pay NI on your gross salary. If you make pension contributions, this amount is currently taken from your salary after NI has been deducted.
With ‘Pensions Plus’, instead of making pension contributions, you elect to give up the same amount of salary and the Company makes the contribution on your behalf. That way, both you and the Company save NI.
When you participate in ‘Pensions Plus’, the Company will reduce your gross salary by an amount equal to your contributions. However, it will still maintain a record of your salary before ‘Pensions Plus’ (known as your Reference pay). Your Reference pay will be used for any salary-related calculations, such as pensionable earnings, salary reviews, bonus and salary related benefits (such as life assurance) so they are not affected by ‘Pensions Plus’. This will also be the amount used in any personal official letters issued by the Company on your behalf, e.g. mortgage letters or loan applications.
Here is an example of how this works for a member with a salary of £40,000 who is currently making contributions of £200 each month or £2,400 a year.
