A Pension Scam is a transfer of your pension savings to an arrangement that does not use your savings in an authorised way. The most common form of Pension Scam is the transfer of your pension to an arrangement which allows you to access your savings before the age of 55, the current legal minimum pension age if you are in good health.
Pension Scams may be fraudulent if you are misled or misinformed about the consequences of entering into one of these arrangements. Pension Scams may result in you losing all of your savings and still having to pay tax charges and penalties of more than half the value of your transfer.
If you think you’re being targeted by a Pension Scam follow these steps:
Your notional salary is the money you would normally be paid, before any AA Plus adjustment, for working your contractual hours. Before the introduction of AA Plus, you may have previously called this your ‘contractual salary or wage’.
Currently you pay a pension contribution either each week or each month based upon the pensionable element of your earnings. Under AA Plus you will not make any pension contribution at all. Instead, your gross contractual salary will be reduced by a sum equal in value to the pension contribution you would otherwise make in that pay period. The company pays a sum equivalent to your contribution (in addition to its own contribution) on your behalf.
Yes. If you do nothing and do not opt-out of AA Plus, you will be agreeing to a change in your contractual terms and conditions with effect from Wednesday 1 April 2009 for monthly paid and Saturday 4 April 2009 for weekly paid employees. For changes to your terms & conditions of employment see section 5.
Your salary will only reduce because you will no longer be making employee pension contributions. Instead, the company will make these on your behalf. Your take-home pay will increase as a result of National Insurance savings. Participating in AA Plus will not affect the amount of annual salary increase or benefits, which are calculated on your notional salary.
No. This is because your pension contributions already qualify for income tax relief at your highest marginal rate.
The reduction in salary means that you pay less National Insurance under these arrangements, resulting in higher take-home pay (see Q11 for the exception). This is because National Insurance is not payable on pension contributions that the company makes on your behalf. At the moment you pay National Insurance on your own pension contributions.
Yes. Because your salary is reduced, the company saves Employer National Insurance on the reduction. This saving (minus the costs of implementing AA Plus) will not be directly credited to the pension scheme, but will help the company to continue to fund the pension schemes going forward.
You cannot sacrifice statutory payments. If you are in receipt of only Statutory Maternity, Paternity, Adoption or Sick pay for a pay period and the AA Plus adjustment would need to taken either partly or wholly from your statutory payment, we would opt you out of the scheme.
While you will not benefit directly from any Employee National Insurance savings because you no longer pay National Insurance your participation in AA Plus would help the company to continue to provide the generous benefits offered under the current pension arrangements. If you do not wish to participate in the scheme in these circumstances please use the opt out form (available from Payroll). If you do not pay National Insurance because you are earning below the Earnings Threshold for paying National Insurance (£110 per week in the tax year 2010/11) we will automatically omit you from AA Plus because there is no benefit to the AA either. Very few AA employees earn less than the lower earnings limit.
It will reflect the fact that you are no longer making employee pension contributions. Instead, you will see a line called ‘AA Plus’ on your payslip. See section 4 for details of how your new payslip will look.
AA Plus has no impact on tax credits.
Yes. You will make slightly lower student loan repayments. This is because the amount you repay is calculated based on the same figures as your National Insurance Contributions, which will reduce under AA Plus. As usual, however, you can request to make voluntary contributions towards your student loan if you wish to do so.
AA Plus will not change mortgage reference letters. These will show your notional salary as will your payslip and add a line to explain the scheme.
No. The Job Security and Business Development Agreement and the Continuous Employment Agreement for both staff and management have been amended to ensure that redundancy payment calculations are based on your notional salary. Similarly the Continuous Employment Policies for all levels of management have been similarly amended.
No. AA Plus only affects basic pension contributions. AVCs will continue to be deducted from your salary in the normal way.
These benefits will not be affected by AA Plus as they will be linked to your notional salary.
No. Your benefits are based on your notional salary and will not change under AA Plus.
No. Arrangements have been put in place to ensure that refunds of contributions will not be affected by participation in AA Plus.
Provided your earnings do not fall below the threshold for paying National Insurance, £5,715 for 2010/11, ( £110 per week for weekly paid employees and £476 per month for monthly paid employees), your basic state pension will not be affected.
On learning you are pregnant you should opt out of AA Plus if you are not entitled to AA Maternity Pay. This is because the level of SMP is based on average weekly earnings (earnings after the AA Plus adjustment). When you opt out of AA Plus you will start paying pension contributions again, in the same way as you would have been if you did not participate in AA Plus.
Under AA Plus you will cease to make any contributions and the AA will make an equivalent payment to the pension scheme on your behalf. As a result if you leave the AA’s employment within three months of joining the AA pension scheme the pension fund is not in a position to refund these payments to you however the AA will refund them to you instead. You will therefore suffer no detriment.
It would not be affected. You would receive the same amount of pay in lieu of notice as you would have done if you had not joined the AA Plus scheme because notional salary will be used in the calculation.
If you are a current member of one of the AA’s pension schemes by 31 March 2009, you can ‘opt out’ of the AA Plus pension scheme arrangements. You will need to opt out before close of play 31 March 2009 and should request an opt out form from the Payroll Department. If you opt out, you will not receive any of the National Insurance savings from AA Plus.
If however you join the CARE section of the AA Pension Scheme on or after 1st April 2009 you will be automatically be opted in to AA Plus, unless you submit an AA Plus opt out form with your CARE Application form. You will also still be able to opt out at a later date, as detailed below.
Yes. You will be given the opportunity to opt out of AA Plus each April. In between these times, once you have made your choice you are unable to reverse your decision unless you have a ‘lifestyle change’. If you leave the pension scheme, you will cease to participate in AA Plus from the same date.
Please refer to section 6 for lifestyle changes.
Possibly. There is a chance that you may not benefit from AA Plus if your earnings are below or around the Earnings Threshold for paying National Insurance. For the tax year 2010/11, this means a gross salary of around £110 per week, £476 per month or £5,715 per annum. If your earnings are below this threshold in any pay period, we will automatically be omitting you from the AA Plus scheme. Similarly if in future your earnings drop below this level, we will remove you from AA Plus because you are no longer receiving any benefit.
The government’s National Minimum Wage provisions do not cater for these kinds of arrangements. Therefore, if the effect of AA Plus is to bring your earnings below the National Minimum Wage, you will not be permitted to participate in AA Plus. The National Minimum Wage rate (from October 2010) is £5.93 per hour for individuals who are aged 21 years or older. We are currently not aware of any AA employee affected by this provision.
Many state benefits (such as the state pension) are only paid to individuals who have been paying National Insurance for a certain period of time. The amount of National Insurance paid is not important, simply that some National Insurance has been paid for a set period of time. Therefore if participation in AA Plus causes you to fall below the National Insurance Lower Earnings Limit you will not pay any National Insurance at all. This will affect your eligibility for National Insurance related state benefits.
We will automatically opt you out of the scheme in the unlikely event of you reaching this threshold.
Initially contact the normal HR representative who may be able to answer your question immediately, or if not find out the answer for you.
The company is committed to AA Plus. However, if tax, National Insurance or pensions law changes, the company reserves the right to withdraw it. If this happens, the company will revert back to the pre-salary sacrifice arrangements as far as is reasonably practical.
Quite simply, there isn’t one. This is an excellent opportunity to enable you to benefit from an increase in take-home pay. It will also achieve a reduction in costs for the company, so by working in an AA Plus way, we can together save money.