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The University of Southampton
Finance, Planning and Analytics

PASNAS: Contributions and Retirement Benefits

What Contributions Will I Pay and How?

Your contribution will be 7.2% of your pensionable salary. However, the effect on your take home pay should be less than this as contributions are deducted from your pay before tax (gross pay), giving you automatic tax relief.

 

What Contributions Will the University Pay?

The University currently pays contributions at 18.95% of pensionable salary.

What are the Tax Advantages of Being a Member of PASNAS?

The following tax advantages currently apply to PASNAS members:

  • Full tax relief on your contributions to PASNAS; and
  • The cash lump sums payable on retirement or death are free of tax.
  • If you pay your contributions by salary sacrifice you will receive National Insurance relief on your contributions in addition to the tax relief mentioned above.

When can I Retire and Receive my Pension Benefits?

Current legislation allows a minimum retirement age of 55; however, pension benefits would be reduced if you retired at this age. The scheme’s Normal Retirement Age is 65.  At this age you can receive your pension benefits without reductions.
 
However, you may receive any pension benefits accrued prior to 1st October 2010 unreduced from age 60.

Please contact the Pensions office for more information: pensions@soton.ac.uk

How will my Pension be Calculated?

PASNAS is a "Defined Benefit" scheme.  This means pension benefits are calculated using a set formula.  The calculation uses the service you have accrued within the scheme and your pensionable salary at your leaving date.

You have three benefit options when you retire, as follows:  

  • Option 1 – standard benefits
    Pension = 1/80th x Final Pensionable Salary x Pensionable Service, plus
    Lump Sum = Pension x 3 (tax free)

  • Option 2 - increased lump sum and reduced pension
    Please note: the maximum amount of lump sum that may be taken on retirement is arrived at by calculating your Lifetime Allowance (LTA).

    Your LTA is calculated as:  Standard pension entitlement x 20, plus retirement lump sum.

    If you have other pension ‘pots’ elsewhere the total capital value of the pot(s) should be added to your PASNAS benefits for comparison against the LTA.

  • Option 3 - no lump sum and increased pension.

Can I retire and continue to work?

PASNAS rules allow members of the scheme to continue in employment whilst drawing part of their pension. This is called Flexible Retirement.  A member of the scheme may be paid between 20% and 80% of their pension providing they reduce their working hours by a minimum of 20%.  Members of the scheme are allowed a maximum of 3 flexible retirement events. The third event must result in the member’s full retirement and 100% of pension benefits being in payment.

Can I pay contributions by salary sacrifice?

Yes, contributions can be paid by salary sacrifice through the University's Enhanced Employee Benefits Scheme. Under this scheme you agree to sacrifice part of your salary by an amount equal to your pension contributions. the University increases its own contributions to PASNAS by the same amount. Further details on the University's salary sacrifice scheme can be found here.

Please note, if you choose to pay contributions by salary sacrifice and then leave PASNAS within two years of joining it, you will not be able to receive a refund of any contributions paid this way.

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