Default options

When you join the Telefónica UK Pension Plan you need to make three decisions:

1. How much to contribute
2. How to pay your contributions
3. Where to invest your contributions

To make things simple we’ve come up with some default options to help you make your decisions.

How much to contribute - 4%
contribution level

We have chosen this contribution level because it’s the minimum you can pay to be a member of the Plan. It’s a good place to start building up your pension as Telefónica will match it, so you will end up with 8% of your salary going into your pension each year.

You can also choose to put aside more than this amount and Telefónica will match any level of contributions up to 10% of your salary.

How to pay your contributions - Salary
sacrifice

We’ve made salary sacrifice the default option for paying your contributions because this allows you to save National Insurance (NI).

It’s called salary sacrifice because you literally have to give up (or sacrifice) part of your salary back to Telefónica in exchange for them paying your pension contributions. Less salary in your pay packet (the equivalent of your contributions) means less for you to be assessed against for NI, which is where the saving comes from.

The amount of National Insurance that you save depends on your earnings. For the first £5,460 you earn there is no saving, but you will then save 11% on all your earnings up to £40,040 and 1% on everything above this level. Over a few years this could save you a lot of money.

There are some implications of contributing through salary sacrifice so please click here and read the details.

Where to invest your contributions - The Balanced Lifestyle option

We have chosen this option because we believe it offers the best combination of growth and security for the majority of plan members.

Your contributions will be invested for you in funds selected by the Trustee, which are adjusted as you get closer to retirement. The amount that is invested in each of the chosen funds will vary depending on your age and the age you select for retirement, which is why this is referred to as “lifestyle”.

While you are still a number of years from retirement, your contributions will be invested in the BlackRock Diversified Growth Fund, which is designed for investment growth. In the five years leading up to retirement, you will be gradually switched into the BlackRock Over 15 Year Corporate Bond Fund and the Standard Life Managed Cash Fund, which aim to offer greater security and stability.

There are other investment choices available, including two more Lifestyle options. For more information click here.