UK Pensions
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Who can join the Plan?
The Plan is available to permanent employees.
When can I join the Plan?
Membership of the Plan is voluntary. Permanent employees may join on the first day of any calendar month in the first three months of employment. If you do not join within the first three months, you may apply at a later date but entry will be at the discretion of Wood and the Trustee.
All employees who don’t join the pension scheme will be assessed and if eligible, enrolled in the Auto Section.
How do I Join?
Onshore members of staff join the Plan by selecting a pension contribution rate from the pension section of Wood’s Flex benefits portal. Login details to Wood’s Flex portal will be emailed to eligible employees within the first few weeks of joining. Offshore members of staff do not have access to the Flex portal and join the Plan by completing the relevant joiner form which will be provided either with the contract of employment, upon commencing employment or on request from the Pensions Team. Members who don’t join the Plan may be automatically enrolled in the Auto Section.
Contribution rates
You pay contributions as a percentage of basic salary*.
Salary Exchange - SMART Pensions
Your contributions are normally paid via salary exchange arrangement called SMART Pensions. This means that instead of making contributions directly to the Plan, your pay is reduced by the amount you wish to pay. Wood then pays these contributions on your behalf as well as its own contributions. The result of this is that you pay less in National Insurance contributions because your salary is reduced.
Salary exchange does not affect any other salary-related benefits you may have because your ‘notional’ (pre-exchange) salary is used for calculating such benefits. You can choose to opt out of the SMART Pensions arrangement if this is a concern to you and further information and the opt out form can be found here.
Contribution rates in detail
The below refers to Monthly onshore staff only, different rates are applicable for Monthly offshore, RWG and Weekly offshore staff. Please refer to the pension portal for further details
| Your contribution rate* | Employer’s contribution rate* |
|---|---|
| 3% | 6% |
| 4% | 7% |
| 5% | 8% |
| 6% plus | 9% |
*Onshore members only.
It costs you less than you think
This is because you receive tax relief on your pension contributions. If you are a 20% taxpayer, every £1 you contribute costs you just 80p. If you are a higher rate taxpayer, every £1 you contribute costs just 60p. If you contribute via salary exchange you also pay less National Insurance contributions.
For example
Joe earns £25,000 a year and has chosen a contribution rate of 5%. This means that Wood contributes 8%, giving a total contribution of 13% or £270.84 a month. But the actual cost to Joe is less than this:
| Your contribution rate | Costs |
|---|---|
| Joe’s contribution (5% of his salary) | £104.17 a month |
| Less tax relief | -£20.83 |
| Less National Insurance saving (SMART) | -£13.80 |
| Actual cost | = £69.54 a month |
You could pay more
The more you pay into your Retirement Account, the higher your benefits are likely to be when you retire. Paying in more while you are a long way from retirement can really help to boost your benefits because your contributions will be invested for longer. Depending on how your investments perform, this can significantly increase their value. You can change your rate of contribution through the Flex portal, or via the contribution change form on the pensions portal if you do not have access to Flex.
Contribution limits
There are certain limits on the amount of contributions which qualify for tax relief but, as these are set at a high level, they are unlikely to affect most members.
The Annual Allowance (AA) is set by the Government each year and sets out the amount of pension savings on which you can receive tax relief. Currently the AA is a maximum of £60,000 and this will apply for most members. However, under legislation the AA is reduced on a tapered scale for members whose earnings are above £110,000 and can be reduced to a minimum of £10,000. This reduced limit will also apply if you are subject to the Money Purchase Annual Allowance (MPAA). You can receive tax relief on pension contributions up to the lesser of the AA and your annual salary. This limit applies to the total contributions into your Retirement Account (including Wood’s contributions), as well as to any other pensions you may have such as a personal pension.
Focus on the cost
- You can choose to join within the first three months of employment.
- You can choose your contribution rate – the minimum is 3%.
- You can change your contribution rate via the Flex Portal*.
- Wood will contribute between 6% and 9% depending on the contribution rate you choose.
- The higher your contribution rate, the faster your Retirement Account is likely to grow (dependent on investment returns).
- Your contributions are paid via salary exchange, called SMART Pensions, which means that you make National Insurance savings.
- You receive tax relief on your pension contributions.
- If you do not have access to the Flex Portal a change of contribution form is available on the pensions portal.