Enhance: Construction Pension Scene, Northern Ireland

Enhance

A selection of Frequently Asked Questions about Enhance.

Frequently Asked Questions for Member

What is a pension?

  • A pot of savings built up during working life

  • Provides an income in retirement

  • Money is paid in by you and your employer

  • Contributions benefit from tax relief

What is tax relief?

Tax relief means some of your pay that would have gone to the government as tax goes into your pension instead. Enhance is an occupational scheme therefore tax relief goes into your pension through the ‘net pay arrangement’.  This means you do not need to do anything to get the tax relief paid into your pension. It will happen automatically.

Why do I need a pension?

Nearly one in five people currently in the UK will live to see their 100th birthday according to Age UK. Whilst this is good news, the reality is that the longer you live, the more money you will need to fund your retirement. 

 

State pensions are funded by those in employment – as the proportion of people over state pension age grows, the more expensive it becomes. 

 

Currently if you were single and retired this year (2018/19) you would only receive a basic state pension of £125.95 per week. Many people could find this amount difficult to live on. 

 

Saving into a pension will help replace some of the income shortfall between what you earn whilst working and the amount you will receive from your state pension – see table below. 

 

Your current annual pay (based on £350 per week)

£18,200

Basic State Pension (assuming will be revised to £140 per week)

£7,280

Earnings gap at retirement

£10,920

 

Some Benefits of Pension Savings

 

  • Tax Relief

    For a basic rate taxpayer, every £10.00 you pay into a pension will be increased by £2.50 through tax relief.

  • Employer contributions

    With occupational pensions, your employer also makes contributions, increasing the amount going into your fund.

  • Tax efficient growth

    Money in your pension fund grows largely free of tax. This can help boost the amount you have in your fund. You must remember that the value of your fund can go down as well as up.

  • Access to tax free cash in retirement

    When you take your benefits you may have the option of taking 25% of your pension fund as a tax free lump sum (depending on your age, the rules of the scheme and tax allowances).

 

The above is based on our understanding as at July 2015, of the current tax legislation and HM Customs & Revenue practice, both of which can change without notice. The impact of taxation (and any tax relief) depends on individual circumstances. 

 

Pensions depend on investment returns, which can go down as well as up and you may not get back the full value of your investment. 

 

Note 

The government made changes in April 2015 which mean that anyone from aged 55 can take their fund as a lump sum regardless of the size of their pension. After taking tax free cash the remaining fund would be charged at marginal rates of income tax. For further details of the Budget 2014: Pension Changes click here.

What is Enhance?

Enhance is a local pension scheme, based in Belfast, and is available to all employees in the Northern Ireland construction industry.

What are the benefits of Enhance?

  • It’s a simple way to save for your retirement

  • You receive tax relief on your contributions

  • 25% of your fund can be paid as a tax free lump sum

  • From April 2015 if you are aged 55 you may take your fund as a lump sum

  • Lump sum death in service cover of £30,000 plus return of pension fund

  • If you change employer you can take your pension with you

  • Money invested is held in trust and is safe if your employer goes out of business

How much does it cost?

From 5 December 2016, employer contributions are either £10.24 per employee per week or 4% of normal weekly pay (whichever is higher).

 

The employer also makes a contribution of £1.76 per employee per week towards lump sum death in service cover for each employee.

 

The employee pays weekly pension contributions only, currently 5% per week of normal weekly pay since December 2016.

 

The employer deducts the employee contribution from normal weekly pay before tax and after National Insurance contributions.

 

Contributions will be kept under review by the Joint Council and adjusted as necessary to ensure compliance with auto-enrolment requirements.

Can I make additional contributions to the Scheme?

Yes, you can contribute more than the minimum employee contribution within HMRC limits.

 

If you are interested in paying AVCs please download and complete the AVC Form and pass to your employer.

When can I take my pension benefits?

The Normal Retirement Date for the Scheme is your 65th birthday. However, retirement benefits may be taken from age 55 (or at any age due to ill-health) whether you leave employment or not, in accordance with legislation.

How much pension can I expect to receive?

The value of your pension pot depends on:

  • The value of contributions paid into the Scheme by you, your employer and tax relief

  • Investment returns

  • Annuity rates at retirement

Will I receive a State pension if I have my own pension?

You will receive a State pension as normal. Your Enhance pension is in addition to your State pension.

Will I lose my savings if I change jobs or die before I retire?

With Enhance you can take your pension with you to your next employer.

 

You can let us know who you would like to leave your savings to should you die before you retire by completing and returning an Expression of Wish form.

Are pensions safe?

Money invested in Enhance is held in trust, which means that it is safe if your employer goes out of business.

What is Auto-enrolment?

To help people save more for their retirement, the government requires employers to enrol their employees into a workplace pension scheme (auto-enrolment) if they are not already in a ‘qualifying scheme’. 

 

The government’s aim is to get more people to have another income, on top of the State Pension, when they come to retire. The full basic State Pension in 2017-18 is £122.30 a week. 

 

Enhance - Construction Pension Scheme Northern Ireland is a qualifying scheme which is fully compliant with auto-enrolment requirements.  

 

The minimum contributions for Enhance are provided in the table below. 

 

December 2013

December 2014

December 2016

Employer   Contribution

3%

3%

4%

Employee   Contribution

2.4%

3.2%

4%

Employee Tax Relief

0.6%

0.8%

1%

Total   Contribution

6%

7%

9%

Contributions are kept under review by the Joint Council for the Building & Civil Engineering Industry (Northern Ireland) and are subject to change.  

 

Your employer also pays a weekly contribution towards lump sum death in service cover.