Pension news

Your pension contribution increases

27 March 2018

As part of the government’s ongoing strategy to ensure that people are financially prepared for retirement, all members of The Pearson Pension Plan’s (the Plan) Auto Enrolment (AE) Section will see an increase to their contributions on 6 April 2018 and again in 2019.

What does this mean for AE Section members?
Contributions for all members of the AE section will increase as set out in the table below:

Date
Pearson pays You pay
Total minimum contribution
Before 5 April 2018 1% 1% 2%
6 April 2018 – 5 April 2019 2% 3% 5%
6 April 2019 onwards 3% 5% 8%

There are two reasons why it is important to understand the changes that are taking place:

1.    As a member of the AE Section your contribution rates will increase
2.    You may be able to save more while contributing less, should you join the Money Purchase 2003 (MP03) Section of the Plan.

Reasons to consider switching to the MP03 Section
The MP03 section of the Plan is open to all members, subject to qualifying criteria and on joining, Pearson will double match your contributions, with the minimum member contribution starting at 2.5% of pensionable salary * (compared to 3% of qualifying earnings in the AE Section). This means that in this example, the monthly contributions into your Pension Pot in the MP03 Section would be 7.5% of pensionable salary (2.5% employee contribution and 5% contribution from Pearson). The maximum contribution levels increase as you get older, giving you more opportunity to save. Your contributions go up to a maximum of 8% from age 45, which Pearson double matches to 16%, giving a total of 24% of pensionable salary into your Pension Pot. There are additional benefits for you and your dependants, for example increased Life Assurance.

The table below shows the additional benefits that you can receive through the MP03 Section of the Plan.

Benefit
MP03 Section
AE Section
 Contributions You pay: between 2.5% and 8% of your pensionable salary *. The maximum you can contribute depends on your age You pay: 3% of qualifying earnings **
Pearson pays: double what you pay in – between 5% and 16% of your pensionable salary * Pearson pays: 2% of qualifying earnings **
Life cover (lump sum) ✓ 4x pensionable salary * ✗ 3x pensionable salary *
A pension for your spouse/civil partner or nominated dependant
A pension for your children
Ill-health pension

* Pensionable salary is basic salary at 1 April each year, restricted in accordance with the Plan Earnings Cap (£160,800 a year for the 2018/19 tax year).

** Qualifying earnings means what you earn between a minimum £6,032 a year and a maximum £46,350 a year (for the 2018/19 tax year).

At Pearson, all employees are offered membership to the Money Purchase 2003 (MP03) Section of the Plan, as long as they meet the qualifying criteria.

How can you find out more?
Making a decision about your retirement savings can be a little daunting, which is why this website is designed to help you. You can find detailed information on the Plan on the website - from how to join the MP03 section, grow your savings, to calculators and animations, all of which have been designed to help you make informed decisions.

You can also visit the Aviva membersite where you will find full details of your current Pension Pot.

What you need to do next
If you are happy with these changes to contribution rates in the AE Section, then there is nothing that you need to do and your contributions will increase from 6 April 2018.

If you would like to join the MP03 Section, switching from the AE Section is simple and can be done by completing an online switching form. To ensure that you make the switch before the new AE contributions take affect you will need to complete and submit the form by no later than 2 April 2018.

If you require more information
You can contact us through a variety of channels, more information can be found through our contact us page.

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