When you're auto-enrolled you'll start paying contributions into the Plan each month. These contributions will start low, at just 1% of your basic salary. These contributions will gradually increase until you're contributing 3% of your basic salary (from April 2019).
The table below shows as the percentage of basic pay you would contribute to the Plan and how much Telefónica would contribute in return.
|Time Period||Employee contribution (what you'll pay)||Company contribution (what Telefonica will pay)||Total contribution|
|1 April 2013 - 31 December 2016||1%||2%||3%|
|1 January 2017 - April 2019||2%||4%||6%|
|April 2019 onwards||3%||6%||9%|
You can increase your contributions as any time through Telefónica Rewards.
If you're a ex-Final Salary or Section 1A member of the Telefónica Pension Plan and you have been auto-enroled will need to allocate the following percentage of your supplement into your Pension Plan:
|Time Period||Pension Supplement value %||Minimum % allocated to Pension from Pension Supplement||Remaining % Pension Supplement paid as cash|
|1 April 2016 - 30 June 2016||21%||3%||18%|
|1 July 2016 - 31 December 2016||16%||3%||13%|
|1 January 2017 - April 2019||16%||6%||10%|
|April 2019 onwards||16%||9%||7%|
If you're a Section 1A member of the Plan your Pension Supplement decreased from 21% to 16% on 1 July 2016. If you were previously allocating your 21% Pension Supplement to your Pension this would have automatically decreased to 16%. You can increase your contribution back to 21% by allocating your 16% pension supplement while allocating an additional 5% of your basic salary as an ‘employee contribution’. You can make this change at any time through Telefónica Rewards.
The minimum contribution level increases over time with the final increase due to automatically take effect on 1 January 2018. However, this has now been delayed until April 2019 which is the latest deadline for Companies to increase their auto-enrolment contributions to an overall contribution of 9% in line with the current legislation. This is illustrated in the tables above.
We’ve made salary sacrifice the default option for most employees because it allows you to save on National Insurance Contributions.
It’s called salary sacrifice because you give up (or sacrifice) part of your salary back to Telefónica in exchange for the Company paying your pension contributions. Because you have a lower salary (minus your equivalent contributions) your National Insurance Contributions are lower. Over a few years this could save you a lot of money.