Announcement: increase in Brady’s pension contributions across the Group

Do you need to do anything?

No, though please read this announcement carefully as it affects you financially..

The Background

As many of you will be aware, Brady has always been pro-active in taking on its Government pensions auto-enrolment duties for its Staff.  Historically, the pension schemes for Brady Energy and Brady Trading Staff have been entirely separate and then, after the launch in 2015 of the Brady Trading Aviva GPP, in 2016 the Brady Energy pension scheme became part of the same over-arching Aviva GPP, too.

The Company has always contributed much more generously than Government minimum amounts and so the latest change to Auto-enrolment rules, effective from April 2019, has led to the opportunity to completely harmonise the Aviva Scheme contributions for all Staff across the Group.

Here’s what’s happening

The final Government changes that come into effect in April 2019 require a total minimum pension contribution of 8%, which is the final phase of increases pre-set from the introduction of Auto-enrolment pensions in 2012.  We are pleased to announce that Brady has increased its Employer contribution to wholly cover the 8% and so you will be able to continue planing your own contribution amounts unaffected by this Government regulatory change.

The new statutory contribution rate above takes effect from your April 2019 pay.

In addition, the Company is investing the valuable add-on of 13.8% from the saving made on Employer’s National Insurance, on all employee contributions that you make.

The Company also decided to design its pension scheme in such a way as to save Employee National Insurance for all Staff (this is, for basic rate taxpayers, a whopping 12%).  This is in addition to the above-mentioned sharing of the saving in its own Employers’ National Insurance.

This announcement continues a positive trend from Brady, as its Employer contribution amount has always been greatly in excess of the minimum 2% employer contribution required to date, reflecting the desire to maintain a high standard in its benefits offering to our Staff.

Brady’s pension scheme: still best value for retirement 

The auto-enrolment rules are set by the Government and implemented by The Pensions Regulator.  These have involved a gradual increase over three time-frames to all UK minimum pension contributions.

The Brady pension scheme with Aviva remains extremely good value to you as an investment for retirement, because you make great tax savings in addition to the Brady contributions going to your pension fund.  We know that, as Independent Financial Advisers, your pension scheme still represents the very best value to meet your retirement income planning objectives.

The value in action

For basic rate taxpayers your tax relief and resulting total contributions invested are very much in your interests and works as follows:

Example of £100 from your monthly pay:

A contribution rate of 5%, after allowing for the lower taxes you pay, actually costs you just 3.40% of your pay.

The above calculation is proportionately accurate, where the example of an Employee contribution of £100 is taking place.

It also shows that the equivalent growth on your own after tax true cost is a huge 302.64%!  This is because you have a cost to you of just £68.00 for a total amount invested into your pension fund of £273.80 in the above table.
Thus, in principal, it is absolutely the case that investing into your pension makes sense for you and your Family’s financial future: there is nowhere better to invest for your retirement, when you have an Employer effectively more than doubling your contributions.  The Government knows that such an incentive is value for all Employees and that’s why Auto-enrolment was introduced back in 2012.

About the new minimum contributions from you

As Brady is keen to make investing into your pension scheme as easy and flexible as possible for you, there is no minimum Employee contribution rate.  This is made possible, as now Brady wholly covers the statutory total contributions of 8% as outlined above.

The new Employer contributions come into effect from your April 2019 pay.  Any amount you are already contributing will continue as before, though you are free to review this with us at any time, as you know.

Those not already in the pension scheme

The Company operates no statutory postponement period for its Auto-enrolment obligations.  This means that if you were not on the Brady March 2019 payroll, your personal automatic enrolment to the Brady company pension scheme will happen with the April 2019 payroll, or after as applicable to your joining date.  Therefore, this Announcement Notice still applies to you, except that it is from the month as relevant to you, following the Government rule change.

How to opt-out

Your Employer is not permitted by law to discuss opting-out of your company pension scheme and so you would need to contact ralitsa@pattersonmills.com by email in the first instance.  Ralitsa will inform you how to opt-out of the Scheme, which can only be done by you.
There is very little reason to opt-out, as you are not being forced into any minimum payments of your own, so even if you cannot invest any amount at all, it is worthwhile to remain in the Scheme at Brady, as you will still recieve to your Fund the full 8% of basic salary contribution amount.

Why investing into your pension is such a good idea

Although both the Government and your Employer (as well as Patterson-Mills!) believe that it is certainly a good idea to remain a member of your company pension scheme – and the financial incentive is clear above – at this time, the Govt cannot force you to agree to make personal contributions.

The table below summarises the minimum contributions changes referred to above.

As always, if you have any queries regarding the above, please don’t hesitate to get in touch confidentially with your HR Manager or indeed Chris or Edward at Patterson-Mills (who can be reached by email to chris@pattersonmills.com and edward@pattersonmills.com).
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