Q1 What is the Annual Allowance?

The Annual Allowance (AA) is the maximum amount of pension savings you can have each year that benefits from tax relief. This limit, or Pension Input Amount for the Scheme is measured over the period 1April to 31March each year

Q2 What is the Lifetime Allowance?

There is no limit placed on the amount of benefits an individual can build up under a registered pension scheme. However, everyone has a set level of benefits that they can draw from all registered pension schemes in their lifetime, without triggering certain tax charges.

The Lifetime Allowance is the total value of a member’s pension benefits from all registered pensions schemes. The LTA for 2011/2012 is £1,800,000. Your Annual Benefit Statement shows the percentage of the LTA you have used, you must also take into account any other pensions you have from other schemes. The LTA is not tested until you take your benefits.

Q 3 What is the Second State Pension Scheme (S2P)?

This is paid in addition to the Basic State Pension and is based on eligible individuals’ earnings. It was introduced on 6 April 2002 and replaces the State Earnings Related Pension Scheme. As the Scheme is contracted out of the S2P, you are unlikely to have earned any S2P for your period of membership of the Scheme.

Q4 What does contracted-out mean?

The Scheme is contracted out of the State Second Pension (S2P) and therefore undertakes to provide you with certain minimum benefits in place of the S2P while you are a member of the Scheme. As a result, you pay reduced National Insurance contributions.

Q5 Will my common-law wife receive a pension in the event of my death?

Only your legal spouse or registered civil partner (same sex partner) will automatically receive a dependant’s pension

If you are not married or do not have a registered civil partner, but live with someone, a pension could be paid to a person who is financially dependent on or inter-dependent with you, e.g. a partner. You need to notify EPAL of any dependants.