OMERS Pension Guide

Example – Member B Partially Impacted by the TAA

➢ Member B has an annual salary of £220,000. When STIP allocations, investment income and the value of employer Pension contributions are added, the total income is expected to be £325,000. ➢ This means that Member B is partially impacted by the TAA. Their TAA is £27,500 (£325,000 - £260,000 /2 = £32,500). The standard AA of £60,000 reduces by £32,500 to leave the TAA of £27,500. ➢ If Member B participates in the OMERS Workplace Plan on the standard, fully matched basis (10% employer contribution, 10% personal contribution), they will comfortably exceed their tapered allowance – and face the associated tax bills. Consequently, they elect to join the OMERS CIL arrangement. ➢ However, the £17,500 of ‘spare’ contribution allowance can still be efficiently utilised by Member B. They can instruct a monthly Salary Exchange or a Bonus Exchange (remembering to allow for the OMERS 15% enhancement) to ‘mop up’ this allowance. ➢ OMERS provide the same level of member entitlement, just in the form of CIL and employer pension contributions. ➢ Member B can then specifically target the accurate, spare allowance in a highly tax efficient manner. ➢ Indeed, where exact incomes are not known until after the end of a particular tax year, members in this category can err on the side of caution. They can wait until tax returns for the previous tax year are submitted, exact incomes are known and then accurately calculate any spare Pension allowance. This can be safely utilised (by either Salary or Bonus Exchange) using the carry forward facility. ➢ The member is pleased. They are in complete control - and know that they will not exceed their own TAA – factoring in all sources of income (employment related and other investment income).

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