Do you hear the word pension and automatically switch off? You’re not alone. Many of us don’t like to think too hard about the future and the Association of British Insurers’ figures from 2022 show that just 20% of people are confident about saving for their retirement.
At Meridian Trust, we’re proud to offer our employees two pension schemes that support our colleagues to save for and safeguard their future. Both the Teachers’ Pension Scheme and the Local Government Pension Scheme are guaranteed ‘defined benefit’ pension schemes, ensuring colleagues enrolled in the scheme will have a guaranteed income when they retire.
More about The Teachers’ Pension Scheme
If you’re a teacher at Meridian Trust, you’ll be auto-enrolled to The Teachers’ Pension Scheme. A teacher’s pension is one of the significant benefits of their career, providing protection to employees, both while they’re in service and once they retire.
The Teachers’ Pension Scheme is one of only eight schemes backed by the Government. It’s not reliant on investments so the pension is guaranteed. Pension contributions also benefit from tax relief.
Employees contribute according to a tiered structure, which means that lower earners pay a lower percentage of their salary. The amount of pension contribution that colleagues build up is based entirely on their salary and years of service. Employees build up 1.75% of their salary each year and at the end of the year, this is increased by the rate of inflation which ensures that the longer they’re a member, the more their pension will grow.
The Scheme also offers the security of a long-term pension that’s in place to protect their family if something should happen to them before or after they retire. If a colleague were to die in service (actively paying into their pension), their surviving spouse, civil partner, qualifying partner or nominated person would receive a death grant from this Scheme. There’s no minimum qualifying period, however, the entitlement to this payment benefit is lost if they opt out of the Scheme.
If an employee becomes too ill to continue teaching they could be entitled to receive any built up pension benefits immediately. If they’re unable to undertake any form of work, the accrued pension can be enhanced. Employees also have the option of being able to retire from age 55 as well as the ability to convert some of your pension into a tax-free lump sum.
Find out more about The Teachers’ Pension Scheme here.
More about the Local Government Pension Scheme
All other employees across Meridian Trust will be enrolled in the Local Government Pension Scheme (LGPS), which protects employees and their dependants with a range of benefits in a similar way.
In the LGPS scheme, an employee’s pension is worked out every year and added to their pension account. Each year, 1/49th of an employee’s pensionable pay is put into their pension account and at the end of the year, the total amount of pension in their account is adjusted in line with changes in the cost of living.
As a member of the LGPS, employees receive tax relief on the contributions that they pay and also have the option to exchange part of their pension for tax-free cash when they take it. Employees can boost their pension by paying more contributions, which they would get tax relief on. They can also pay half their normal contributions in return for half their normal pension. This is known as the 50/50 section of the Scheme and is designed to help members stay in the LGPS when times are financially tough.
An employee’s family enjoys financial security, with immediate life cover and a pension for their spouse, civil partner or eligible cohabiting partner and eligible children in the event of their death in service. If they become seriously ill and they’ve met the two-year vesting period, employees can receive their pension straight away.
The LGPS pension is usually payable from Normal Pension Age which is linked to an employee’s State Pension age. Employees can choose to retire and take their pension at any time between age 55 and 75. If an employee is made redundant when they are over age 55, they will receive immediate payment of the pension they have built up – providing they have met the two-year vesting period.
Flexible retirement helps employees to ease into retirement. If they reduce their working hours or move to a less senior position, they may be able to take some or all of the benefits they have built up.
Find out more about the Local Government Pension Scheme here.