Reminder - Auto-enrolment levels to automatically increase on 1 January 2017
You may remember in April 2016 Telefónica had a legal duty to assess and auto re-enrol all eligible employees into the Telefónica UK Pension Plan, this followed the initial auto-enrolment back in April 2013. If you're a Section 1B (Defined Contribution, DC) member who was auto-enroled at any point and remained in the Plan at the minimum level of employee contribution then Telefónica is going to automatically increase their level of contribution to help build your overall retirement pot. To receive this increase in employer contributions your employee contributions will automatically increase on 1 January 2017.
Although the savings you're making are a good start, you’ve probably already realised how your current level of contribution is unlikely to provide you with enough money to support your preferred level of lifestyle upon retirement. If you're a Section 1A member (ex-final salary member e.g. with Defined Benefit, DB) your minimum allocation of pension supplement to your pension will also automatically increase on 1 January 2017.
How will the contribution levels change?
This will depend on what section of the Plan you're currently in. If you're a Section 1B member (Defined Contribution (DC) Money Purchase member) then your contributions will automatically increase as follows:
|Time Period||Employee Contribution (what you will pay)||Employer Contribution (what Telefónica 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%|
If you're a Section 1A member (ex-final salary member, e.g. Defined Benefit, DB) savings then your contributions will automatically increase as follows:
|Time Period||Pension Supplement Value %||Minimum % allocated from Pension to 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%|
What do I need to do to take advantage of this increase in employer contributions?
Nothing, the change to your employee and employer contributions will automatically take place with effect from 1 January 2017.
What happens if I want to remain at the current minimum level of auto-enrolment for both my employee and employer contributions?
Remaining at your current minimum level of employee and employer contributions will no longer be possible from 1 January 2017. Auto-enrolment is designed to encourage more people to save a greater amount for their retirement. You will notice in the table above how the minimum Telefónica auto-enrolment level will automatically increase again in April 2019.
Can I receive even more employer contributions towards my pension savings?
If you're a Section 1 member (DC) of the Plan and you're contributing at the minimum level of employee contribution 1% (or 2% on 1 January 2017) then yes you could benefit from greater employer contributions. It’s easy to take advantage of even greater employer contributions, all you need to do is increase your contributing by visiting the Telefónica Rewards website at www.telefonicarewards.com. Any change of contributions is likely to then take effect the following month. Did you know you can increase your contributions at any point? By increasing your contributions you can receive up to 11.5% employer contributions. After all, there’s a reason why so many of your colleagues are investing in the Telefónica Pension scheme.
If you're a Section 1A member (DB) of the Plan and you're contributing at the minimum level of employee contribution 3% (or 6% on 1 January 2017) of your pension supplement) then you can increase your allocation of your pension supplement to pension at any point by visiting the Telefónica Rewards website at www.telefonicarewards.com. Any change of contributions is likely to then take effect the following month. You can allocate your full 16% pension supplement to your Telefónica Pension but any additional employee contributions you make will not result in any additional employer contributions.
If I'm already contributing above the minimum auto-enrolment level then will there be any immediate change in the amount I contribute to the Plan?
No, the change of contribution levels only applies to those who are contributing the minimum possible level of employee contribution. This minimum level will increase again in April 2019 as per the above tables.
I no longer want to save for my retirement, how can I opt-out of the Telefónica Pension Plan?
Remember if you decide to opt-out of the Telefónica Pension Plan you will no longer be receiving any additional employer contributions towards your retirement and it’s unlikely you will be able to receive any refund of your employee contributions. Your life insurance cover is also likely to reduce. Additionally you will no longer be eligible for our Income Protection scheme, regardless of whether you re-join the Plan in future. You may also lose any dependants pension. For more details on the implications of opting out of the Plan please click here.
We hope you stay in the Plan but if you do decide you would like to stop making contributions then you can opt-out through www.telefonicarewards.com
Where can I find out more information?
To read more information on auto-enrolment and how the changing levels of contribution can impact you please click here to view the Telefónica Pensions website.
If this does not answer your question you can contact EPSC by phone on:
0800 731 2638, or Email EPSC@O2.com
The Telefónica Pensions Team