Your pension plan with BP26 June 2017 Back to results
Once you feel confident that you understand how your pension plan works and why it’s important to save for the future, you can actively make your pension choices though your benefits, your way – BP’s flexible benefits programme. To access the site, follow the link to your benefits, your way on the My HR(Opens new window) home page.
Through your benefits, your way you can choose how much of your flexible benefits allowance(Opens new window) you would like BP to contribute towards your pension each month, and where to invest your contributions from the range of investment funds available.
If you don’t make any choices at your enrolment opportunity, your contribution level will automatically be set at one third of your flexible benefits allowance*. Through your benefits, your way you can change your contribution level once a month.
Your contributions will be made by salary sacrifice(Opens new window) (unless you’ve been told otherwise by BP) meaning that you pay less National Insurance (NI). Although the same amount of money goes into your pension plan as if you were paying personal contributions directly from your pay, it is all paid by your employer (BP) and, as a result, you pay less NI, which increases your take-home pay.
And it’s easy for you, as BP will make all the arrangements and pay the contributions to your pension plan.
The value of an investment can fall as well as rise and isn’t guaranteed. You could get back less than you originally invested.
*Salary means your salary plus relevant allowances, before any adjustment for flexible benefits or salary sacrifice.
We charge for managing your plan and investments.
The Plan has an effective annual management charge (AMC) of 0.21% of your fund value.
This is a gross AMC of 0.22% which is built into the unit price of each investment fund each day. And we apply a monthly rebate, that brings the annual charge down by 0.01%, giving you an effective annual management charge (AMC) of 0.21%.
The charges and rebates remain the same should you stop making payments into the plan.
Some investment funds can have an additional charge. You'll get more information on funds with additional charges from our fund list(Opens new window).
We reserve the right to vary charges in the future.
The normal retirement age for employees is 65. However, you can take your pension benefits from your plan at any time between the ages of 55 and 75 from us, including while you’re still working. You may be able to take your benefits earlier than this if you’re in ill health. If you don’t want to take your benefits at age 75, you can transfer the value of your plan to another plan and choose to remain invested. You may wish to speak to a financial adviser about your retirement options before you reach 55.
If you don’t already have a financial adviser, visit unbiased.co.uk to help you find one in your area.
For help and information about your defined contribution pension options, visit Pension Wise(Opens new window), a free and impartial government service. Here, you can find out what you can do with your pension pot, how to shop around and what to look out for with taxes and fees.
You can also search on My Learning if you would like to attend one of BP’s pre-retirement courses.
Your contributions will be made by ‘salary sacrifice’ (unless you’ve been told otherwise by BP), meaning that you pay less National Insurance (NI). ‘Salary sacrifice’ is where you exchange some of your future earnings in return for BP paying the same amount into your pension plan.
Although the same amount of money goes into your pension plan as if you were paying personal contributions directly from your pay, it is all paid by your employer (BP). As a result, you pay less National Insurance (NI) and less tax, which increases your take-home pay.
Where plan members pay their usual contributions from their after-tax salary, we add tax relief to their contributions. When you are part of ‘salary sacrifice’ the extra step of adding tax relief is simply not necessary. And it’s easy for you, as BP will make all the arrangements and pay the contributions to your pension plan.
The value of any tax relief depends on your individual circumstances / the individual circumstances of the investor. This information is based on our understanding of current, taxation law and HMRC practice, which may change.
If you decide to make single contributions to your plan you should pay these by cheque, directly to Aegon. These should be sent to Customer Services, Aegon, Edinburgh Park, Edinburgh, EH12 9SE. Any additional single contributions you make into a pension plan, that’s within the annual allowance limit (£40,000 from April 2012), is entitled to tax relief – normally at your highest rate. For higher rate tax payers you may have to claim this back - for more information speak to a financial adviser.
Basic rate taxpayer
If you’re a basic rate taxpayer on a salary of £30,000 and contributing £3,000 a year to your plan (10% of your earnings), your tax and NI savings would be:
|Salary sacrifice amount of||£3000|
|Income tax saving (20%)||£600|
|NI saving (12%)||£360|
|Total saving to you||£960|
In this example, if you contribute £3,000 to your plan each year then your yearly take-home pay is reduced by only £2,040 (£3,000 less £960).
Higher rate taxpayer
If you’re a higher rate taxpayer on a salary of £60,000 and contributing £6,000 a year to your plan (10% of your earnings), your tax and NI savings would be:
In this example, if you contribute £6,000 to your plan each year then your yearly take-home pay is reduced by only £3,480 (£6,000 less £2,520).
|Salary sacrifice amount of||£6000|
|Income tax saving (20%)||£2400|
|NI saving (12%)||£120|
|Total saving to you||£2520|
Here’s how it works
The amount of NI you save depends on how much you earn. For earnings below the upper earnings limit (£45,000 for 2017/18), the NI savings will be 12%. For earnings above this limit, the savings will be 2%.
The amount of NI you save depends on how much you earn. For earnings below the upper earnings limit (£45,000 for 2017/18), the NI savings will be 12%. Salary sacrifice is an agreed change to your contractual terms and conditions. Once you’ve joined the plan you can change the amount you sacrifice once a month. Simply follow the link to your benefits, your way from the My HR(Opens new window)(Opens new window) home page.
Please note: you can only use salary sacrifice on your future earnings.
Salary sacrifice isn’t always suitable for everyone but very much depends on personal circumstances. You should think about:
- mortgage lending that may be linked to your salary
- statutory benefits which may be affected by a reduced salary, for example:
- basic state pension
- statutory maternity, paternity and sick pay
- Working Tax Credit or Child Tax Credit
It’s your plan – you own it and it’s in your name for you to keep, even if you leave the company. You can:
- continue to contribute to the plan and you’ll continue to receive the same preferential contract terms
- make your plan ‘paid up’, which means you stop paying contributions and leave your benefits where they are
- take your plan with you to any scheme offered by a new employer at no additional cost – but you should get financial advice at the time and consider what benefits your new employer offers
Stopping contributions to your plan could have a serious effect on the final amount of your savings.
We reserve the right to vary charges in the future.
As long as you haven’t transferred your pension to another scheme, you’ll still be able to check your savings online with our online services.
Has this helped? If you still need more information, don't hesitate to contact us
Please note that the links below this line don’t apply to the DC2010 plan – these are links to generic Aegon information.