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Excess defined contributions (including TUCs)
Who is Legal & General?
The Trustee has delegated responsibility for the day to day administration and investment management of the Defined Contribution (DC) Excess contributions and Top Up Contributions (TUCs) to a specialist pension provider, currently Legal & General Assurance Society Limited (Legal & General), one of the largest occupational DC providers in the UK. Legal & General will work closely with the Pensions Office on behalf of the Trustee.
STANDARD SECTION MEMBERS WITH DC EXCESS CONTRIBUTIONS
What are DC Excess contributions?
Pensionable earnings growth is subject to a cap of 1.75% per annum. Pensionable Earnings which would otherwise have been pensionable in the Standard Section but for the application of this cap continue to be pensionable in the Scheme but on a DC basis.
Should your pensionable earnings exceed the cap, DC Excess pension contributions will be payable to your Member Account in the BSPS DC Section. You will be notified by the Pension Office if this applies to you.
Employee contributions of 6% are paid to the DC Section. Additionally, the Company’s contribution of 10% will also be paid into your Member Account.
Where will my DC Excess contributions be invested?
Members who do not actively make an investment decision will be invested in the default option (currently the Cash Focused Lifestyle Strategy). Alternatively, there is an extensive range of investment options available to members to choose from. Please go to Investments for further information.
The value of the Member Account at retirement will depend on the amount of contributions that you and the Company have paid in and investment returns (less charges) achieved on those contributions.
STANDARD SECTION MEMBERS WITH TOP UP CONTRIBUTIONS (TUCS)
What are TUCs?
TUCs operate on a DC basis and are a simple and effective way to supplement your benefits from the British Steel Pension Scheme. At retirement, your TUCs are used to provide you with additional income on top of your Standard Section and DC Section benefits.
TUCs are entirely voluntary, and as the name suggests, they are paid on top of your ordinary contributions and it’s up to you to choose how much you pay and how your contributions are invested.
The value of the TUCs at retirement will depend on the amount of contributions that you have paid in and the investment returns (less charges) achieved on those contributions.
Where will my TUCs be invested?
There is an extensive range of investment options available to members to choose from. Please go to Investments for further information.
If you are interested in joining the Scheme's TUCs arrangement and require further information, please click here to access the Standard Section members' TUCs application form.
TRANSFERS FROM OTHER PENSION SCHEMES
You may be able to transfer the value of your benefits from previous pension arrangements into your Member Account in the Scheme, subject to agreement of the Trustee. If you wish to investigate the possibility of a transfer into the Scheme you should contact the Pensions Office.
Transferring benefits from other pension arrangements may not always be in your best interests. If you are in any doubt about whether to proceed with a transfer of benefits, you should consider seeking independent financial advice because of the complexities involved.
TAKING YOUR BENEFITS AT RETIREMENT
At retirement you can use the funds available in your Member Account to provide retirement benefits as shown below.
Members with DC savings have greater flexibility in how they use their pension savings to provide a retirement income. Members with savings in a DC Member Account may be able to access them, with the consent of the employer, from age 55 and use them in a number of ways, as summarised in the table below.
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Value of your Member Account |
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Pension income (Annuity)
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100% Cash (Single cash lump sum) |
100% Cash (Multiple cash lump sums) |
Flexible income (Income drawdown)
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The option of taking up to 25% as a tax-free lump sum (taken upfront)
plus
Balance used to purchase an annuity from an insurance company. An annuity provides a secure income for life. You can choose between a fixed or increasing annuity. Income is taxed at your marginal rate |
Entire Member Account can be taken as a single cash lump sum. 25% will be tax free, with the remainder taxed at your marginal rate
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To manage the tax your Member Account can be taken as cash in up to 3 instalments over consecutive tax years
Each cash lump sum taken will consist of 25% tax-free cash with the remainder taxed at your marginal rate
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The option of taking up to 25% as a tax-free lump sum (taken upfront)
plus
Balance drawn down as income as required. You keep your savings invested and withdraw cash (taxed at your marginal rate) as and when you need it
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Available from the BSPS DC Section
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Not available from the BSPS DC Section – you would need to transfer your savings out of the Scheme |
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FINANCIAL ADVICE
Neither the Company, Trustee nor the Pension Office can advise you what to do but it is important that you invest your contributions in a way that is right for you. If you are not sure which investments are best in your circumstances you may wish to take independent advice.
MANAGE YOUR ACCOUNT
Once you have commenced payment of either DC Excess contributions and/or TUCs, Legal & General will issue you with a unique reference number. This number is required when registering on Legal & General’s “Manage My Account” where you can review and change your investment choices.
You can manage your account online by clicking on the 'Click Here' link box below. This will take you to the Legal & General website where you can access information about your Member Account whenever you want.
Legal & General has provided a guide, “Keep your eye on things”, to help members register for online services.
