Enhance: Construction Pension Scene, Northern Ireland

Enhance

If something isn't making sense to you, look it up here on the Jargon Buster.

Jargon Buster

This Jargon Buster defines the key terms you are most likely to encounter if you are thinking of starting a pension, already have a pension, or are thinking about retiring.

 

A
Active Member

An Employee who has been admitted to membership of the Scheme.

Actual Retirement Date

The date the Member elects to retire, being age 65 or such other date agreed with the Member’s Employer and notified to the Trustee.

Additional Voluntary Contributions

Any additional voluntary contributions to the Scheme that an Active Member pays from time to time in addition to his Member Contributions.

Annual Allowance

The maximum amount of tax-relievable pensions that can be built up in one tax year. The annual allowance is currently £40,000 (2017/18).

Annual Management Charge

An Annual Management Charge (AMC) is deducted from your total pension fund each year to cover the costs of managing your fund. The AMC is currently 0.75%.

Annuity (also called an Annual Pension)

When you reach retirement you can convert your pension pot into a regular pension known as an annuity (also known as an annual pension).

 

From 6 April 2015, from age 55 you are no longer required to buy an annual pension (annuity) and can take your fund as a lump sum as follows:

  • 25% tax free
  • 75% subject to tax

Annual pensions are still available.

Automatic Enrolment (also called auto-enrolment, auto-enrol or AE)

The duty on an employer to ensure workers meeting certain requirements become members of a qualifying workplace pension scheme without them having to make any active decisions eg complete an application form or choose an investment profile (although they can make this choice if they wish). The employer will use a qualifying pension scheme to auto-enrol and re-enrol their workforce.

C
Contributions

From 5 December 2016, employer contributions are either £10.24 per employee per week or 4% of 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% from 1 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.

D
Deferred Member

A former Active Member who remains entitled to benefits under the Scheme which have not yet become payable.

Dependant

A Member's Spouse or any other person who in the opinion of the Trustee was financially dependent on the Member (or dependent on the Member because of disability) at the date of their death or retirement.

E
Employee

An employee of a Participating Employer.

F
Federation

The Construction Employers Federation Limited.

H
HMRC

Her Majesty's Revenue & Customs (formerly known as the Inland Revenue).

I
Incapacity

Physical or mental impairment which in the opinion of the Trustee prevents (and will continue to prevent) the Member from carrying on the Member’s normal occupation where the Member has in fact ceased to carry on such occupation.

Industry

The Construction Industry in Northern Ireland.

J
Joint Council

The Joint Council for the Building and Civil Engineering Industry (Northern Ireland).

M
Member

An Active Member, Deferred Member or Pensioner.

Member Normal Contributions

The regular contributions required from an Active Member.

Member's Account

Member’s Individual Investment Account.

N
Normal Retirement Date

A Member's 65th birthday.

O
Open Market

To enable you to take advantage of the best rates available in the open market you have the option to arrange your retirement pension with another pension provider.

P
Participating Employer

Employers engaged in the Industry who are subject to the Working Rules Agreement of the Joint Council or other employers in the Industry who agree to meet the Scheme’s requirements and are admitted with the consent of the Trustee.

Pension

A pension is a pot of savings built up during working life. It provides an income in retirement. Contributions are paid in by you and your Employer. Contributions benefit from tax relief.

Pension Commencement Lump Sum

A tax free cash lump sum authorised on retirement subject to the Scheme and HMRC rules.

Pensioner

A person whose pension under the Scheme has come into payment.

Q
Qualifying Pension Scheme

A workplace pension scheme which meets certain quality test requirements eg the level of contributions paid.

Qualifying Service

The current or only period of a Member's Active Membership ending on the Normal Retirement Date or earlier date.

R
Rules

The Definitive Deed and Rules.

S
Salary Exchange (also called Salary Sacrifice) An agreement between the employer and the employee whereby the employee forgoes part of his / her future earnings in return for a corresponding contribution by the employer to a pension scheme.
Scheme

Enhance - Construction Pension Scheme Northern Ireland.

Small Pots

If your pension fund is less than £10,000 and you are aged 55 or over you may be able to take the whole fund as a lump sum.  A quarter of the fund (25%) would be paid tax free.  The remainder (75%) would be taxed as income at your marginal income tax rate.

(Subject to a maximum of 3 personal pension pots)
(Occupational pots are unlimited)

Staging Date

Your staging date depends on the size of your PAYE scheme as at 1 April 2012. Employers with the greatest number of employees needed to have a pension scheme in place by October 2012. Smaller companies follow over the next four years. The Pensions Regulator writes to employers 12 months and 3 months prior to the staging date.

Statement of Investment Principles

The Trustee maintains a Statement of Investment Principles which can be obtained on request from the Enhance scheme.

T
Trustee

The Trustee is the legal owner of the Scheme's assets.

W
Working Rules Agreement

The Working Rules Agreement published by the Joint Council for the Building and Civil Engineering Industry (Northern Ireland).

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