How it works
As with all pension schemes, there’s a lot of information which can be confusing. Our aim is to make pension saving as simple as possible. To help you, we have broken it down into three steps.
To contribute into a pension scheme, you will need to choose and enrol in a suitable scheme, unless you have been automatically enrolled into a pension scheme by your employer. These vary in terms of their investment approach, people and charges so it’s a good idea to compare plans to find the one that suits you best.
BCF makes it simple to join and start saving whatever your situation:
Once you are enrolled in a scheme (or you have been enrolled by your employer), you can start making contributions into your pension pot.
If you’re employed and have been automatically enrolled into BCF then you don’t need to do anything to save for your retirement. On top of any contributions you make, your employer will make a contribution directly to the Scheme each time you get paid. The government may give you tax relief which is added to your pot too.
If you are self-employed or not working, how much and how often you contribute is up to you. At BCF you can set up a direct debit through the portal with your chosen contributions.
There is a maximum combined amount which can be contributed to your fund by you or your employer in a year without losing tax benefits. This is determined by your relevant earnings, including your salary, bonuses and any profits from self-employment.
Earnings x 0.8 = maximum annual net contribution (subject to a maximum net contribution of £48,000 per year*). If you have low, or nil, earnings you can make personal contributions up to £2,880 per year and BCF will claim basic rate tax relief and add this to your pension pot.
The more you contribute, and the longer it is in there, the more likely you are to have a good pension at retirement. While the aim of a pension is to grow your money at a higher rate than it would if it were invested in a bank or building society savings account, there is always a risk that the value of your investment goes up and down depending on the investment strategy of your chosen scheme.
*This figure applies to the 2023/24 tax year and may be reviewed by the Government in future)
You can access your BCF pension at any time after the age of 55. The government has given pension scheme members complete flexibility in the way they can take their money out. Different schemes offer different options, and you can transfer your money to different providers for flexibility.
Decisions taken at retirement are vitally important and could have potentially far-reaching effects. Pension Wise is the Government’s pension guidance service, and provides a free impartial service to help you understand your options at retirement. It’s available online at Pension Wise, by calling 0800 138 3944 or face to face.
Below we set out the options at retirement offered by BCF. Please note that the different options have different features, different rates of payment and different tax implications.
You can usually take up to 25% of your retirement fund as a tax-free lump sum, with the balance used to provide you with a taxable retirement income.
You can keep funds in your pension pot to be invested and taken as a taxable income. You have the freedom to choose when and how frequently you take your income, and what level of income you will take. This is known as a flexi-access drawdown pension.
You can take the whole of your fund as a cash lump sum if you wish. One quarter of the cash would be tax-free and the rest would be taxed as income. You should consider the tax consequences of this option.
Known as buying an annuity, this option means that you use your pot to buy yourself an income which is paid to you for the rest of your life.
You may take a series of lump sums, with 25% of each withdrawal tax free and the other 75% taxed as income. This may help to manage the amount of tax you are liable to pay.