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What it costs

Saving towards your retirement might cost less than you think, especially if you contribute through salary exchange and make the most of Lloyd’s Register’s Company contributions. Have you tried using the pension calculator to see what your retirement savings might look like in the future?

What is salary exchange?

Contributions to the DC Section are based on a percentage of your pensionable salary and are taken directly out of your monthly pay (unless you choose salary exchange). Your pensionable salary is your basic annual salary from Lloyd's Register (adding back in any salary you have given up for childcare, or cycle to work schemes).

You can choose to make your contributions by salary exchange. This means that you agree to exchange part of your salary in turn for contributions to your pension account. The effect of paying through salary exchange is that you and Lloyd's Register make National Insurance (NI) savings, which should result in an increase in your overall pay packet.

How salary exchange works:

  • You will stop paying pension contributions directly from your pay each month
  • Lloyd’s Register then pays these contributions on your behalf along with its own contributions
  • Your salary will be reduced by the amount you would have contributed
  • This saves you money because your NI contribution is calculated on a lower salary
  • This means you will end up with an increase in your take-home pay

If you do not benefit by participating in salary exchange, you will be advised by Lloyd’s Register e.g. if you are over State Pension age, earning close to the Lower Earnings Limit for National Insurance, earning close to the National Minimum Wage or working outside the UK. If you don’t want to contribute through salary exchange, or if it’s not beneficial to you, you still benefit from tax relief.

Your contributions

You can choose to pay between 3% and 8% of your pensionable salary, and Lloyd’s Register will also contribute up to a maximum of 15%.

This table shows you the DC Section contribution breakdown, and also the savings you could make by paying in through salary exchange.

Selected contribution rate Salary exchange savings Actual cost Employer contributions Total Contributions
Ordinary contributions 3% 0.25% 2.75% 10% 13%
  4% 0.5% 3.50% 11% 15%
  5% 0.5%  4.50% 12% 17%
  6% 0.75%  5.25% 13% 19%
  7% 0.75% 6.25% 14% 21%
  8% 1% 7% 15% 23%

Your annual benefit statement contains a breakdown of your contributions, the value of your DC Fund and a projection of what it might be at your Normal or Selected Retirement Age. It’s worth considering increasing your contributions to stay on track for your retirement income goal.

Login to Lifelens from Connect on your work computer to increase your contribution rate. You can also watch this handy video if you’re thinking about changing your contributions, but need some guidance on how to do so.

Additional employee contributions

You can really boost your retirement income by paying additional employee contributions into your pension each month. This can really help, especially if you are further away from retirement. If you’d like to see what the impact might be, use the pension calculator to model what increasing your contributions might look like for your future retirement savings.

You can choose to pay Additional Employee Contributions via Lifelens or by contacting Group Pensions. When you make contributions above 8%, Lloyd’s Register’s contribution remains at 15%.

Contribution limits

When paying into your pension, there are certain limits on the amount of contributions which qualify for tax relief. As the limits are set quite high, they are unlikely to affect most members.

The Annual Allowance (AA) is determined by the Government each year and sets out the amount of pension savings on which you can receive tax relief on an annual basis. The current AA is £40,000 for the 2019/2020 tax year.

The AA amount drops to £4,000 for those people who choose to use their DC savings to access some of the new flexibilities at retirement. The £4,000 limit applies to members who use their account from a flexi-access drawdown fund; or who choose to take a cash lump sum.

The new flexibilities are only available to LRSFA members upon leaving the scheme. However, you may have other pensions in addition to your Lloyd’s Register pension where this applies. If you think you may be affected by the change, you may want to seek financial advice.

The Lifetime Allowance (LTA) is the limit on the maximum value of pension benefits that you can build up, without facing a tax charge. The current LTA is £1.055m for the 2019/2020 tax year.