OMERS Pension Guide

What are the advantages ?

The main advantages are the considerable tax savings and resulting ‘boost’ to your retirement plans. Again, please refer to the Calculator for personalised details of just how tax efficient this arrangement can be. If you are eligible to participate in the Bonus Exchange, you will also benefit from instant tax relief. Contributions towards the Bonus Exchange are treated as company payments and therefore, you do not need to claim any additional tax relief – it is allocated immediately. You do not need to mention the Bonus Exchange on your HMRC self-assessment tax returns.

How do I calculate my level of tax relief?

As you are probably aware, the UK tax bandings have become much more complicated over recent years. Working out what tax saving you could possibly receive has become very difficult indeed. The Calculator should provide the help you need and gives personalised details (if used correctly). Please note that this should be used for guidance only and any calculations cannot be guaranteed. Please ensure that you carefully read the guidance notes when you open the calculator and follow the specific instructions.

How much of my Bonus can I exchange?

You can exchange as much as you wish, up to the current HMRC maximum pension contribution allowances. Please remember that you do not have to exchange your entire STIP award – you can nominate a chosen amount and take the balance as cash through the payroll in the normal way. Please also remind yourself of the Tapered Annual Allowance (TAA) legislation (especially if your total income from all sources exceeds £260,000 per year). The following section explains this in detail. If you are in any doubt as to how the TAA impacts you, specialist financial advice should be sought.

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 Bonus Exchange arrangement could be an ideal way to do so.

What are the potential disadvantages of the Bonus Exchange Plan?

If you are interested in participating, you must bear in mind the following:

Accessibility – Remember that any Bonus is being exchanged for an enhanced pension contribution and normal pension rules will apply. Consequently, you would have no access to the money until at least age 55 (the earliest age that pension benefits can be withdrawn). This minimum withdrawal age will rise to 57 from April 2028.

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