Contributions and tax
Contributions and tax
Saving into a pension is a low cost and tax efficient way to save towards your future.
Salary sacrifice
IBM UK Limited may offer you the option of paying by salary sacrifice. You can choose to give up part of your pre You* salary in return for an increased pension contribution from IBM UK Limited. This means that your contribution is taken from your pay before tax, so you benefit from full tax relief straight away, and you save National Insurance too.
Use our salary sacrifice calculator to see how you could benefit.
Net pay
IBM UK Limited will take your regular contribution from your salary before tax and pass them on to us, along with any additional amount that they’re paying in for you.
This means that you’ll benefit from full tax relief straight away. If you don’t pay income tax because your earnings are below the income tax threshold, you will not benefit from the tax relief that a taxpayer would receive.
Your basic contributions
You build up your pension savings in your individual DC Member account.
You pay into your pension by making Smart* contributions. As part of your Smart* contributions, you elect to reduce your pre You* salary by 3%, IBM then puts this into your DC Member account.
IBM pays 8% of your pensionable salary into your DC Member account.*
*Enhanced M plan members will have different contribution rates depending on age.
For M Plan members there is a limit on how much you can save in a given year.
For further information on your contributions please contact us.
Ways to pay in more
Depending on which section you are in, you can choose to pay:
- Matched contributions –You can elect to reduce your Pre You* salary by an additional 1% or 2% at any time through You*, and IBM will match your contribution. This option is not available to Enhanced M Plan members.
- Additional Smart* Contributions (ASCs) – Every month you can elect to reduce your salary further and receive an uplift from IBM of 6%. So, for every £100 that you elect, IBM will invest £106 into your DC Member account.
- Additional Voluntary Contributions (AVCs) – You can pay AVCs either as a percentage of your salary, a fixed monthly amount, or a one-time payment. AVCs are taken directly from your salary.
Please visit w3.ibm.com/hr/web/uk/benefits/pension/topping_up_your_pension_additio for instructions on how to change/start/stop an AVC election. You will need to scroll down to the section titled 'How do you elect to start additional contributions & what investment options are available' and then read the section that applies to your pension plan.
How your contribution options compare
For more details on the M Plan, please view the M Plan Factsheet.
Basic contributions
Matched contributions
ASCs
AVCs
Income tax relief
Yes
Yes
Yes
Yes
National Insurance Relief
Yes
Yes
Yes
No
Matched contributions
No
Yes
No
No
6% uplift by IBM
No
No
Yes
No
Variable Monthly Amounts
No
Yes
Yes
Yes
Start, stop or change at any time
No
Yes
Yes
Yes
How your contributions are shown in Manage Your Account (MYA)
The descriptions on your payslip may not exactly match those shown in Manage Your Account (MYA). This is because contributions are grouped according to the Legal & General (L&G) DC Member account they are paid into, rather than the description used on your payslip.
Contributions shown on MYA are grouped into three L&G ‘pots’:
- Your regular contribution – contributions you are required to pay into the Plan under the scheme rules.
- Your employer's regular contribution – contributions IBM is required to pay into the Plan under the scheme rules, including any IBM matching contributions.
- Your employer's single contribution – additional contributions paid into the Plan, including Additional Voluntary Contributions (AVCs), Additional Smart Contributions (ASCs), Employee matched contributions and any IBM ASC Uplift contributions.
