CPPIB Cash in Lieu Allowance Guide

TAA Impacted Individuals

• The key objective is to help individuals facing restricted annual pension contribution allowances (as a result of the TAA). • For individuals that qualify for (and opt-in to) CIL, the CPPIB employer pension contributions continue at the minimum level. This is £10,000 per year (the amount of pension contribution that can be paid, no matter how severely an individual is impacted by the TAA) with a CIL allowance (pre-deductions) providing the remainder of the entitlement. • To emphasise, the most efficient contribution of all is the employer pension contribution (as opposed to using some of the limited allowance with mandatory personal contributions). Employer contributions are optimised with the CIL Allowance Program. • For individuals who are only partially affected by the TAA (where standard pension contributions are still within the partially tapered allowance or where sufficient carry forward allowance remains to justify full pension membership for at least another year), CIL should possibly not be selected (you can elect to switch to CIL at a subsequent review point). • Individuals with an annual salary of £100,000 or greater (and have total taxable income of >£260,000) can request to participate in the CIL Allowance Program. • The CIL allowance: ➢ Qualifying participants in CIL will receive a flat rate CPPIB employer pension contribution of £833.33 per month (equivalent to £10,000 per year – using up the entire TAA). ➢ Zero mandatory employee pension contributions. ➢ CIL monthly allowance payment equivalent to the CPPIB employer pension contribution entitlement that exceeds £10,000 per year. ➢ Lump sum CIL allowance payment based on the annual in-year incentive award. Employer pension contributions are subject to the definition of pensionable earnings. ➢ Pensionable earnings are defined as an individual’s annual base salary plus their in -year incentive award up to a maximum of 50% of their basic salary. • The CIL allowance payment will be reduced by 13.8% to take into account the current level of corporate NIC CPPIB must pay on this type of allowance payment (i.e. cash payment). Please note that if the rate of corporate National Insurance changes, this deduction will change accordingly. • The CIL allowance payment will be subject to personal NIC and income tax in the normal way (exactly the same as basic salary). • Examples of how the CIL allowance works in practice are shown on the following pages.

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