OMERS Pension Guide

As rules stand, when you reach age 55, the first 25% of your total pension fund can be taken as a tax free lump sum (up to a maximum of £268,275). The remaining 75% must be used to provide income which is subject to income tax. This must be considered before you choose to participate – there will be absolutely no opportunity to “unwind” the arrangement later. Mortgages and Other Borrowings – Lenders sometimes include a percentage of Bonus income when assessing affordability for a mortgage. If you elect to exchange Bonus, the maximum loan from a subsequent mortgage application may be affected. In saying this, most lenders accept an employer’s reference as proof of income. Here, your employer may have the opportunity to disclose Bonus entitlements.

How will the Pension contribution be invested?

Any Bonus Exchange related contribution will be invested as per your existing instructions with Aviva. If you wish to invest an Exchange in different funds, please log in to your Aviva account and instruct accordingly. Please always remember that the value of your pension investment can go down as well as up .

What about Employer Matching?

To remind, OMERS generously matches any personal contributions you choose to pay over the 5% minimum monthly contribution. Personal contributions are matched up to 10% of Pensionable Basic Salary. Please refer to the previous ‘Contributions’ section for full details. For those that pay less than 10% monthly and who participate in the Bonus Exchange, your employer will match the contribution – up to a maximum of 5% of Pensionable Basic Salary (with an overall annual ‘cap’ of £30,000 employer contribution). This is best explained in the following examples:

Example Member 1 – Pensionable Basic Salary of £60,000, paying 5% monthly contribution, Exchanges £4,000 Bonus:

➢

£4,000 pre-tax bonus exchanged.

➢ £600 - standard Bonus Exchange enhancement ➢ £3,000 - Employer Match (as member qualifies for a maximum ‘match’ of 5% of basic salary) ➢ £7,600 - Total Pension investment (from a £4,000 pre-tax relief Exchange) ➢ £2,320 – Cost of Bonus Exchange to member after 42% tax and personal National insurance relief.

Example Member 2 – Pensionable Basic Salary of £80,000, paying 8% monthly contribution, Exchanges £5,000 Bonus:

➢

£5,000 -pre-tax bonus exchanged.

➢ £750 - standard Bonus Exchange enhancement ➢ £1,600 - Employer Match (as member qualifies for a maximum ‘match’ of 2% of basic salary) ➢ £7,350 - Total Pension investment (from a £5,000 pre-tax relief Exchange) ➢ £2,900 – Cost of Bonus Exchange to member after 42% tax and personal National insurance relief.

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