You will pay a variable contribution rate dependent upon your pensionable earnings.
What earnings are pensionable?
As a general rule, only permanent items of pay are pensionable. This includes any allowances that your employer tells you are pensionable, but will not include payments such as overtime.
Bonus payments do not normally count as pensionable earnings. But if you receive pensionable bonus payments, both you and your employer will pay contributions on them.
You may also have some non-cash pensionable earnings – for example, some people’s pensions will take account of a uniform allowance, and others may have an allowance for accommodation. In these circumstances you and your employer will also pay contributions based on the equivalent cash value of these non-cash pensionable earnings.
If you are on reduced pay during maternity leave (and in certain other circumstances) your employer will make contributions based on the pay that you would have expected if you were not off work. Your contributions will be based on your reduced pay.
There are tax limits on your pension contributions and your pension benefits. You may have to pay extra tax if you exceed the limits.
If you are a higher earner you also need to be aware that your pensionable earnings may be limited to the ‘earnings cap’ unless you joined the Civil Service pension arrangements before 1 June 1989.
The Scheme Administrator (MyCSP), can give you more information.
How much will my employer pay?
Your employer makes contributions, set at a level advised by thescheme actuary, to provide enough funds to pay the pension as promised.
Do I get tax relief?
Your employer takes your contributions from your pay before working out the tax, so you will automatically receive full income tax relief. This is subject to HMRC limits.
The new State Pension was introduced on 6 April 2016, for people reaching State Pension age from that point onwards, replacing the previous two part state pension arrangements – Basic Pension and earnings related *State Second Pension (S2P).
Members of the scheme were contracted-out of S2P between 6 April 1978 and 5 April 2016, when contracting out ceased.
Due to the contracted out status between 1978 and 2016, members of the scheme paid lower rates of National Insurance contributions and did not build up entitlement to the S2P element of the previous two part state pension.
Your new State Pension amount will take into account any period you were contracted out of S2P, plus your National Insurance record between 6 April 2016 and your State Pension age.
* The State Second Pension (S2P) was previously known as the State Earnings- Related Pension (SERPS).
What if I have periods off work?
You can usually only pay contributions and build up reckonable service if you are actually working. The main exceptions to this are certain periods of maternity, paternity or adoption leave which count as reckonable service.
If your employer allows you to take a career break you will continue to be a member of the scheme although neither you nor your employer will pay contributions and you will not build up reckonable service during this period.
If you are off work on long-term sick leave you will continue to build up reckonable service while you are receiving sick pay at full or half pay.