OMERS Pension Guide

In addition, there is absolutely no advantage in reducing actual pay below the Tax-Free Personal Allowance. If earnings do reduce below this level, zero tax relief may apply.

How much can I contribute via Salary Exchange?

You can exchange as much as you wish, if the total Pension contributions are within HMRC limits, and your remaining salary is above the National Minimum Wage.

What will be shown on my payslip because of making Salary Exchange contributions?

Your payslip will show your full, pre-exchange Salary. It will also show the deduction for Salary Exchange, the reduced amount of tax and NI payable and your take home pay.

What are the tax implications for higher-rate taxpayers?

With conventional Personal contributions, to obtain the full amount of higher-rate tax relief (the difference between the basic rate and higher-rate of tax) on your contributions, you are required to complete a tax return or to submit a claim direct to HMRC.

With Salary Exchange contributions, you are not required to do this as you will immediately receive the full amount of tax relief due via your payroll.

Please note that if your tax code has previously been adjusted to credit higher rate tax relief linked to conventional Pension contributions, you should contact HMRC to advise that personal contributions are to stop.

Can I participate if I’m in the Cash in Lieu Arrangement?

Yes – but please be extra careful to check your accurate TAA position. The very fact that you are a Cash in Lieu participant means that you are impacted by the TAA to a meaningful degree. But if there is some spare contribution allowance that you wish to utilise, the Salary Exchange arrangement could be an ideal way to do so. Please also remember to factor in the OMERS enhancement in any calculations. For example, if you wish to see exactly £10,000 invested in the Pension, you will need to allow for the OMERS ‘boost’ to reach this target.

Will making payments using Salary Exchange represent a change to my terms and conditions?

Yes. This is because your contractual pay is reduced by an equivalent amount to the Pension contributions you wish to exchange.

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