Membership of the Scheme

The benefits of being in the Scheme

The State Pension is likely to provide you with a very basic income in retirement, so it’s likely you will want to build up an additional income to help you enjoy a comfortable retirement. Being a member of the Scheme provides you with an easy and flexible way to save for your future. You can choose extra contributions that best suit your personal circumstances, both now and in the future, and investment choices that are suited to your personal requirements and retirement needs.

By joining the Scheme, you will benefit from the contributions the Bank makes in addition to your own contributions (if you wish) as well as tax relief and potential National Insurance (NI) savings that the Scheme receives.

All employees are automatically enrolled into the Scheme on their first day of employment. If you decide to opt out of the Scheme, then you will be able to join at any time in the future and will be automatically re-enrolled three years after the date that you opted out.

What evidence may I need to produce to join the Scheme (initially or later)?

You don’t need to provide evidence to join the Scheme. Some evidence may be required when you take your benefits, which can include health details (depending on the options taken).

How do I opt out of the scheme?

You will need to complete an opt out form. You can request this from your HR department.

Life Assurance

Life Assurance is provided to permanent employees via an Excepted Group Life Arrangement. You can find further information via the HR Portal or by contacting your HR department.

For details of the potential benefits payable from the Scheme should the worst happen, take a look at the Death benefits section of this website.

What happens if I already have a personal pension?

You can contribute to a personal pension arrangement whilst being a member of this Scheme, however you may wish to consider the HMRC annual allowance restrictions.

Can I transfer benefits into the Scheme from previous pension arrangements?

Yes - although occasionally the Scheme is unable to accept transfers from workplace pension arrangements due to the scheme you wish to transfer from not signing a form confirming that the benefits in that arrangement have been calculated in line with European law. The Scheme is also unable to accept transfers in relation to Guaranteed Minimum Pension or any contracted out benefits. If you would like further information, please contact Capita directly using the details here.

Transfers from other pension arrangements may be accepted by the Trustees if allowed by HMRC.

Annual allowance (AA)

The Annual Allowance (AA) is the amount of money you can save in pension benefits each year without incurring a tax charge. The AA for the 2025/26 tax year is £60,000.

If the total annual contributions you and the Bank pay into the Scheme, or any other arrangement in any tax year, exceed the annual allowance you may be subject to an additional tax charge. You need to consider pension benefits you build up under other registered pension schemes when working out whether a tax charge may be due.

Tapered annual allowance (TAA)

The annual allowance reduces to an amount between £10,000 and £60,000 if you earn over £200,000. This is called the tapered annual allowance.

Please note there is a section under the Scheme, "The Capped Defined Contribution Section", which allows you to limit the Bank's contribution into the Scheme to the minimum TAA which currently applies without making you liable for any extra tax charges. Please refer to the guidance in the Library or contact your HR department for further information.

Lifetime allowance

Between 6 April 2006 and 5 April 2024, there was a limit on the pension savings an individual could build up in their lifetime without being subject to additional tax charges, known as the lifetime allowance (LTA).

In the 2023 spring budget, the Chancellor announced that from 6 April 2023 there would be no additional tax charge on any benefits over the LTA, and with effect from 6 April 2024, the LTA would be removed completely.

However, a change was made to tax-free lump sums which came into effect from 6 April 2024.

Death benefits

From 6 April 2024, there is a maximum amount of tax-free lump sum death benefit that can be paid. This is the lump sum death benefit allowance (LSDBA) and for most people it will be £1,073,100.

The following are measured against this allowance:

  • Death benefit lump sums from any scheme paid on your death
  • Serious ill-health lump sums paid to you before your death
  • Certain tax-free cash lump sums paid to you before your death

If these add up to more than the allowance, then tax is paid on the excess.

The above limits on tax-free cash lump sums will apply as at 6 April 2024. If you have taken benefits already then some of your LSA or LSDBA may be counted as having been used if you come to take more benefits after April 2024. The underlying calculations are complicated so please contact us if you think this applies to you.

Limit on tax-free lump sums from pensions

You can take 25% of the value of your pension as a tax-free lump sum. Whilst the LTA has been removed, a limit has been retained on the maximum amount you can take as tax-free lump sums from all your pensions over your lifetime. This is the Lump Sum Allowance (LSA) and for most people this limit will be £268,275, but in some instances a higher limit may apply. This doesn’t mean you can necessarily take a lump sum of £268,275 – that is the limit that applies on your 25% lump sum.

These tax-free lump sums can be either:

  • Pension Commencement Lump Sums – where you exchange part of your pension for cash at the start of your retirement (or are entitled to a cash sum in addition to your pension).
  • Uncrystallised Funds Pension Lump Sums (UFPLS) – in a Defined Contribution scheme, you and your employer pay into a pension pot towards retirement and can then be taken a number of different ways (with the most common being an annuity i.e. an annual pension). However, you could choose to take to take your pension pot as a one-off lump sum, but only 25% of an UFPLS is tax-free. As the RMSPS is a defined benefit scheme, you cannot take an UFPLS from the Scheme, but it may apply for other pension savings you have outside of the Scheme.

Any amount you take as a lump sum over the LSA will be taxed as income. You are responsible for providing information to your schemes on any lump sums taken from other registered pension schemes.

If you previously applied for lifetime allowance enhancement or protection from HMRC, you may be able to take more of your pensions as tax-free cash, subject to 25% of your total benefits.

You also need to have available Lump Sum and Death Benefit Allowance. Further information on this allowance can be found below.

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