Contributions

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Contributions

IMPORTANT

Monthly employer and employee pension contributions must be paid to the Scheme by the 19th of the following month to which relate. Failure to do so is a breach of the Scheme Rules and your statutory obligations as an employer. The Scheme is required to report late payments of contributions to the Pensions Regulator.

Contributions rates

The following table summarises the contribution rates for the different benefit scales, expressed as a percentage of Earnings. The Contribution Rates are set out in a formal Scheme document called a Schedule of Contributions, which is renewed regularly following each formal funding valuation and is available on request.

Scale		Pension Contribution Rate
2017	Employee	3.75%
	Employer	7.5%

Basic	Employee	5.3%
	Employer	10.6%

H2	Employee	6.5%
	Employer	13.0%

H3	Employee	8.3%
	Employer	16.6%

H4	Employee	9.7%
	Employer	19.4%

The Scheme Actuary regularly reviews the Scheme’s contribution rates to check they remain appropriate to cover the costs of the benefits being built up by members. If a formal funding valuation shows that the Scheme’s assets at that time are not expected to be enough to cover the benefits that have been promised, the Trustee is required by law to put in place a Recovery Plan, which may require higher contribution rates or changes to benefits.

Paying Contributions

Employers must notify the Scheme of pension contribution amounts deducted from employees and ensure payment of the employer and employee contributions to the Scheme no later than the 19^th of the month following the month to which the contributions relate.

Failure to remit pension contributions by the due date is a breach of legislation, which the Trustee has to record and report to the Pensions Regulator.

The Scheme will accept payment of contributions by bank transfer directly to the Scheme bank account. By prior agreement, we may also accept payment by cheque.

Late payment of pension contributions will incur an Administration charge of £15 per month late along with 4% pa interest (accrues daily) on the value of unpaid pension contributions.

AVCs

The Scheme operates an Additional Voluntary Contributions (AVCs) section, which is administered by Prudential. An information pack and application form is available on request.

Employers should not commence the deduction of AVCs until such time as an AVC application form has been completed by the member and submitted to the Administration Team.

We shall acknowledge receipt of the AVC application form and advise you how to proceed. In brief, you must deduct the amount of AVC which the employee has elected to pay from employee Earnings and remit these along with your regular payment of pension contributions for onward submission by the Scheme to Prudential for investment. We shall provide you with an AVC Monthly Return form for this purpose.

Pension contributions should be calculated before the deduction of AVCs. AVCs should be deducted before the calculation of PAYE income tax.

Employers should advise the Administration Team of any change in the amount of AVCs that the member pays.

Contributions during family leave

During periods of Ordinary Maternity, Adoption and Paternity Leave and paid Additional Maternity, Adoption and Paternity Leave, employer pension contributions must be paid on the earnings the employee would receive if working normally. The employee is only required to pay contributions on the earnings he or she actually receives. The employer must pay employer contributions on the earnings the employee would have received if working normally as well as the employee contributions on the difference between the earnings the member would receive if working normally and the earnings the member actually receives.

Please note that in the case of Ordinary Maternity, Adoption and Paternity Leave, where the employee is not in receipt of statutory or contractual pay, the employer is required to pay both the employee and employer contributions on the earnings the member would have received if working normally.

Where an employee is in receipt of paid Parental Leave, employer and employee pension contributions need only be paid on the actual earnings received.

VAT invoices

Plumbing Pensions (UK) Administration Ltd issues an annual invoice to each VAT registered participating employer for their share of VAT paid on administration costs incurred by the Scheme, based on Scheme contributions paid.

Please note that this VAT payment can be reclaimed from HMRC as input tax subject to the Rules in HMRC’s VAT Notice 700.