By paying into the Scheme now, you are taking important steps towards preparing for retirement.
Contribution levels are set on an age-related scale (see the flow chart below for details). Allen & Overy's contributions to the DC Section of the Scheme are shown below and will either be paid in by Allen & Overy or credited from the general assets of the Scheme.
All the contribution types detailed above are based on your capped Pensionable Salary, and are deducted automatically via payroll from your pay in order to ensure the correct tax relief is granted at source.
You can pay Additional Voluntary Contributions (AVCs) but they will not attract any further contributions from Allen & Overy. AVCs plus any Ordinary Contributions can be made up to a maximum of 80% of gross monthly earnings from Allen & Overy. AVCs are processed through the payroll in order for you to receive your full tax relief at your highest marginal rate. Restrictions apply to ensure you leave enough pay to cover your other statutory deductions such as National Insurance.
If your pension savings exceed the £40,000 Annual Allowance in any Pension Input Period (PIP), a special tax charge is payable on the surplus savings above this amount. The PIP under the Scheme has historically been the calendar year to 31 December. However with effect from 8 July 2015, the Government changed this for all schemes so that it would align with the tax year. Thus, your Pension Input Period for the 2017/18 tax year will be the year 6 April 2017 to 5 April 2018. Due to payroll processing, the last contribution that will be included in the current PIP year will be your February contribution, which is invested in March. Your March contribution will be received after 5 April and will therefore be recorded in the following PIP year. We recommend that you seek financial/tax advice if you think you will be likely to exceed this allowance.
The Annual Allowance (AA) is the amount of pension savings that can be made in a single tax year before extra tax is payable. The AA for the 2016/17 and 2017/18 tax years is £40,000 for most people, but it will be less for those whom the pensions tax regime deems to be on "high income". Broadly speaking, if your total taxable income is above £110,000 (which includes any taxable income from outside of your Allen & Overy employment) in a tax year, then you could have a personal AA which is below £40,000. The Firm as your employer does not have visibility of all your income so you will need to calculate what your personal AA limit is.
Please refer to the Annual Allowance, Lifetime Allowance and Pension Input Period notes in the Glossary of terms section for information on the maximum tax free payments you may make to your pension arrangements.
Allen & Overy’s Core Contributions automatically increase with effect from the 1st January following any change to your age band. If you wish to contribute at the higher level, as Allen & Overy’s Matching Contributions will only be increased if you increase your own contributions, you will need to make the change through 'My Self Service'.