Frequently asked questions.

The State Pension is divided into the Basic State Pension and the State Second Pension.

Basic State Pension is a flat-rate pension for everyone who‘s paid enough National Insurance contributions. It’s currently £97.65 a week (tax year 2010/2011).

State Second Pension is a broadly earnings-related pension that’s only available to people who have been or are employed. It is paid for by National Insurance contributions. Its value is linked to pay and is not dependent on investment returns or the cost of buying a pension annuity at retirement.

For more information, visit www.direct.gov.uk or www.thepensionservice.gov.uk

If your contributions go over the Annual Allowance (including employer contributions), there’s a 40 per cent tax charge. For the 2010/11 tax year, up until the 2015/2016 tax year, the Annual Allowance is £255,000. After that it will be reviewed on an ongoing basis.

This limit will not apply in the actual tax year when you take all your benefits. The calculation of the Annual Allowance charge is different for members of a defined benefit scheme.

You can make gross contributions of up to 100 per cent of your annual earnings (or £3,600 if greater) each tax year and get tax relief.

How much you should put into your pension plan now depends on:

• how much you can afford
• what income you think you’ll need in retirement
• how much pension income your fund will buy
• what your State provision is likely to be
• how inflation may affect your savings
• how many years you’ll be contributing
• how your pension fund performs
• if you have any other source of income in retirement

You’ll also need to consider what your outgoings might be in retirement and whether you’ll need to support your children or other dependants.  Use our retirement planner tool to help you plan ahead and see if you’re on track to fund the retirement you want.

Modern pension plans allow you to stop, start, increase and decrease your contributions as often as you wish.

If you are a member of a pension plan:

• your employer is not legally obliged to change the amount they deduct from your salary more than once in any six month period
• you can stop making contributions at any time
• you may also choose to change the fund your contributions are invested in, or transfer the value of your plan to another pensions provider.

You can stop contributions at any time without penalty.  Think about why you’ve decided to stop contributions, as it can have an effect on your retirement income. We’ll still take charges from your fund even if you stop contributions.

You can restart contributions at any time, again without penalty. If your employer is deducting the contribution from your salary they may restrict when you can restart.

It’s worth bearing in mind that saving regularly can be easy to stop but difficult to start up again. After a month or so you may not notice the contribution going from your salary, but if you decide to stop, starting again can be hard.

Use our retirement planner tool to help you plan ahead and see if you’re on track to fund the retirement you want.

A company pension scheme is a valuable benefit but you do not have to join. If you have a private pension you can normally continue paying into it, but you should check with your financial adviser.

If your employer makes contributions they may choose to only pay these into the company pension scheme and not your private pension.

Your employer will often make a contribution for you if you join:

• Small Self Administered Scheme
• Group Stakeholder Plan
• Group Personal Pension Plan
• WorkSave Pension Plan

Your employer is obliged to make a contribution for you if you join a Company Pension Scheme.

Your employer is not obliged to make a contribution for you if you join a Group Additional Voluntary Contribution Plan.

Yes, you can get tax relief on contributions you make to your pension plan. You don’t pay tax on any growth in your pension fund either. However, you can't reclaim the tax paid on dividends from UK companies.

You can make gross contributions of up to 100 per cent of your annual earnings (or £3,600 if greater) each tax year and get tax relief.

If your contributions go over the Annual Allowance (including employer contributions), there’s a 40 per cent tax charge. For the 2010/2011 tax year, up until the 2015/2016 tax year, the Annual Allowance is £255,000. After that it will be reviewed on an ongoing basis.

If you have a Group Stakeholder, Group Personal Pension or WorkSave Pension Plan:

Net contribution: the amount you pay after basic tax has been taken from your income.
Gross contribution: we add the basic rate tax relief and invest the total in your plan.

So if you pay £100 from your salary into your pension, you can claim £25 tax relief and a total of £125 is invested in your pension plan (this example assumes a tax rate of 20 per cent).

If you have a Company Pension Scheme, Group Additional Voluntary Contribution Plan or Small Self Administered Scheme, your employer uses the Net Pay Arrangement system. Your contributions are taken from your gross pay before your tax is worked out.

We automatically add basic rate of tax relief to all net employee payments we receive. The basic tax rate currently stands at 20%. If you’re a higher rate taxpayer you can claim the excess tax relief owed to you from the HMRC (Her Majesty’s Revenue & Customs). 
Rules for higher rate tax payers are complex and have also recently changed. Visit HMRC for more information, or speak to a financial adviser.
You can request a tax certificate from our employee support team by calling us on 0845 070 8686, or write to us, making sure you quote your plan number on the letter. We may record and monitor calls. Call charges will vary.

A money purchase scheme is also known as a defined contribution scheme. It means you’re not guaranteed a set level of pension income when you take your benefits. Instead, the benefits you receive are based on a number of factors including:

• the amount of money paid into your pension fund
• the performance of the assets in which you invest
• the annuity rates available when you take your benefits

• The most common type of defined benefit scheme is a final salary scheme. The benefits depend on:· your number of years of service
• your final salary at the time benefits are taken
• the accrual rates of the scheme (determined by your employer)

Defined benefit schemes can be:

• contributory – both the employer and employee pay contributions to provide benefits
• non-contributory –  only the employer pays contributions

For further information on defined benefit schemes please speak to a financial adviser.

You will need to check your policy documents to find out whether you have a Stakeholder Pension, Group Personal Pension, Trustee Buy Out Plan or a WorkSave Pension Plan. You can find the relevant funds guide for your plan detailing all the funds available to you in the document library.

If you would like advice on what funds to invest in you should speak to a financial adviser.

The value of your pension fund may fall as well as rise, and is not guaranteed. You should choose your funds carefully and review them regularly, particularly if you are close to retirement.

We offer a range of funds from low to high risk – all have a risk rating to help you decide. You choose how much of your contribution goes into each fund and build a range of investments (called a portfolio). Your fund choice depends largely on your attitude to investment risk. Use our tool to find out more on the way you feel about risk.

If you don’t want to choose a pension fund and there’s a default fund or lifestyle profile available, this will automatically be selected for you.

You can change where your future contributions and existing pension funds are invested (within certain limits), so you’re not tied to a fund for the length of the plan. Log in to manage your account to do this online. There’s currently no charge for this with our Stakeholder and Personal Pension Plans. However, if you're invested in With Profits we may reduce the value of the switched amount by applying a Market Value Reduction. We apply the Market Value Reduction to treat customers who stay in With Profits fairly, along with those who withdraw from it.

If you switch into certain funds, your total Annual Management Charge (AMC) may increase. See the Legal & General pension funds guides for full details.

For Stakeholder Pension Plans your total AMC will not go over the maximum allowed (1.5% a year of the value of the fund for the first 10 years and 1% a year thereafter).

The value of your pension fund may fall as well as rise, and is not guaranteed. You should choose your funds carefully and review them regularly, particularly if you are close to retirement.

A lifestyle profile is an investment option. Your contributions initially go into a fund that’s typically invested mainly in shares. This offers you the potential for long-term growth. In the years before your selected retirement date, we steadily switch your investment into funds with lower risk.

You can stop a switch, or switch into other funds, by telling us in writing. It means you stop the lifestyle profile approach, but you can rejoin it later.

The value of your pension fund may fall as well as rise, and is not guaranteed. You should choose your funds carefully and review them regularly, particularly if you are close to retirement.

You can make changes to your investments by logging in to manage your account.

You can also make changes by sending us the request in writing. Please make sure you quote your arrangement number on the letter.

Please note - you can’t combine a lifestyle profile with any other fund. If you’re already invested in a lifestyle profile and want to change your investment, you’ll have to switch all existing payments and redirect any future payments to your new fund choice. Likewise, if you’d like to start investing in a lifestyle profile, you’ll have to switch all existing payments and redirect all future payments into the lifestyle profile.

The value of your pension fund may fall as well as rise, and is not guaranteed. You should choose your funds carefully and review them regularly, particularly if you are close to retirement.

This only applies if your employer has allowed self investment under the rules of the WorkSave Pension Plan.

Self investment gives you greater control over where your pension fund is invested. With insured funds, the fund managers decide which assets – such as shares, property, cash and bonds – the fund is invested in. With self investment you make the investment decisions. This gives you greater investment control but you also need a good understanding of each investment and the costs and risks involved.

Self investment is not appropriate for everyone. Before you make a decision, speak to your financial adviser.

Although your pension with Legal & General may accept transfers, we would always recommend you speak to a financial adviser before transferring any other pensions you have to us just to make sure that you won’t lose out financially. Your other pension providers may charge you if you transfer out of their policy and there may be other benefits attached to your pension that you might forfeit if you decide to transfer it.

You can visit www.unbiased.co.uk to help you find a financial adviser in your local area. If you decide not to speak to a financial adviser, you can contact our Employee Support Team on 0845 070 8686 to discuss transfer options that may be open to you. We may record and monitor calls. Call charges will vary.

All you need to do is inform us of the request in writing. Simply send us a letter, quote your policy number and give us the full name and address of whomever you want added to your plan.

If you want any beneficiaries removed, likewise simply inform us of the change in writing (although please note, once you’ve nominated a beneficiary you can’t go back to having no beneficiary at all).

If your pension payments come straight from your salary then you need to tell your payroll department about any changes you wish to make to your payments.

If you pay by your own direct debit simply send us a letter, quote your arrangement number and tell us what you’d like to change your payments to.

Upon leaving your company you'll have some options available to you with regard to your pension:

• You can leave the pension with us for as long as you want and not pay into it. Everything that's in the pension will still be invested for you and annual management charges will continue to be deducted. At any time in the future you start making payments into the pension again.
• At any time in the future you can transfer the pension you hold with us to another provider. We won't charge you to do this.
• As soon as we receive the last payment from your old employer, we'll send you a leavers pack which explains all your options in more detail.

You can request a retirement quote from our Claims team by ringing them on 0370 165 9406. Please note, the annuity rate used to calculate any retirement quotes will only be guaranteed for 18 days.  We may record and monitor calls. Call charges will vary.