The Star Group Pension Scheme Introducing Smart Pay

Here Today

Nigel MurdockManaging Director

Torquil Clark Employee Benefits

Agenda

• Who are we?

• Do you need to save for retirement?

• Advantages of saving in a pension plan

• Smart Pay v Direct Contributions

• Any risks?

• Scheme starts 1 May 2008 – how to join?

• Next steps

Introducing Torquil Clark

Torquil Clark Holdings plc – Your Lifetime Financial Group

Torquil Clark Financial Planning

Torquil Clark Investments

Torquil Clark Mortgages

Torquil Clark Life Insurance

Torquil Clark Insurance Services

Torquil Clark Employee Benefits

Torquil Clark Employee Benefits

• Established 1982• Joined Torquil Clark Group 2004• Specialist Employee Benefit Consultants • Independent Employee Benefit Advisers to

your employer• Regulated by the FSA• Communicate thoroughly to maximise

understanding

Do you need to save for retirement?

1974 Basic State Pension = 27% of National Average Earnings

2007 Basic State Pension = 15.7% of National Average Earnings

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

£10,000 £20,000 £30,000 £50,000

Drop in IncomeS2POAP

Do you need to save for retirement?

Advantages of saving to a pension plan

Your Contributions - Boosted by tax relief

Your Fund - Accumulates free of most taxes

Your Benefits at Retirement

- Substantial tax free cash

- Pension taxed as earned income

Life Assurance - Tax free

The Star Group Pension Scheme – benefit from an employer contribution and significantly lower costs than a private pension.

• From 1 August 2007 all employees future pension benefits are on a Defined Contribution basis. Contributions paid by you and on your behalf by your employer are credited to your personal account in the scheme.

• Your retirement benefits will depend on the value of your personal account at retirement.

• So the more you invest in your pension the better your retirement income.

• The purpose of this meeting is to explain the option to increase the amount credited to your account at no cost to you.

Smart Pay vs. Direct contributions

• Direct Contributions - deduction from your pay attracting tax relief (current method)

or

• Smart Pay - a deduction attracting tax relief and national insurance savings. The same total contribution at lower cost.

Smart Pay vs. Direct contributions

Salary £25,000* – Contributions 5%

Smart Pay vs. Direct contributions

Standard Contribution Salary SacrificeEmployee: 5% of Pay

Gross Contribution

£1,250.00Tax Relief (20%) £250.00

Net Cost £1,000.00

Total Invested £1,250.00

Salary Sacrifice: 5.79% of PaySalary

deduction:£1,449.24

Tax Relief (20%) £289.84

Reduction in NIC £159.40Net Cost £1,000.00

£115.93

£1,565.17Contribution Invested

Employer NI invested

An extra 25.22%

* Tax at basic rate of 20%

Salary £45,000* – Contributions 5%

Smart Pay vs. Direct contributions

Standard Contribution Salary SacrificeEmployee: 5% of Pay

Gross Contribution

£2,250.00Tax Relief (40%) £900.00

Net Cost £1,350.00

Total Invested £2,250.00

Salary Sacrifice: 5.08% of PaySalary

deduction:£2,288.02

Tax Relief (40%) £915.21

Reduction in NIC £22.88Net Cost £1,349.93

£183.04

£2,471.06Contribution Invested

Employer NI invested

An extra 9.82%

* Tax at higher rate of 40%

Any risks?

• We have been advising on “smart-pay” schemes for over 10 years.

• HM Revenue & Customs include details of how to operate salary sacrifice schemes on the website www.hmrc.gov.uk

• Salary sacrifice is available for other benefits (eg child care voucher scheme).

• If HMRC decided to change the “rules” members can opt out of smart pay – in the meantime extra contributions boost your pension fund.

• Employer pension contributions will be based on your contractual pay

Any risks?

• Your pay reviews will be based on your contractual pay.

• Your rate of overtime and any other benefits will be based on your contractual pay.

• Financial status for mortgages, other loans and rent are based on your contractual pay.

• SSP & Maternity pay will be based on your contractual pay.

• State Second Pension will be lower if you earn less than the Upper Earnings Limit (2008/9 £40,040) – but extra 25% contribution produces a significantly better pension and increased flexibility (early retirement, tax free cash & type of pension).

• Your basic state pension is not affected.

Scheme starts 1 May 2008 – to join

Current contribution

% salary sacrifice

Total contribution

Using the “salary sacrifice calculator” complete the application

• If you wish to join must return the application

• Can opt-out of scheme once a year (unless leave service)

• Can opt-out of paying by “smart-pay” once a year

• Can you afford to pay more? Additional voluntary contributions can also be paid by “smart-pay”.

• Use the “salary sacrifice calculator” to work out the change in salary and the increased pension contribution

What happens next?

Questions?

Other Important Information

This presentation has been prepared by P S Employee Benefits Ltd T/A Torquil Clark Employee Benefits

P S Employee Benefits Ltd is authorised and regulated by the Financial Services Authority.

It is intended through this presentation to provide additional information regarding the option to pay contributions through smart pay. Please also refer to the announcement issued to members on 20 March 2008.

You must make up your own mind based on the information supplied. If you are in any doubt or need further clarification regarding your own financial situation you should obtain independent financial advice.

The information contained in the presentation is based on our understanding of current legislation and practice. We are unable to anticipate changes in law.