When you accrue pension with BeFrank, each month your employer deposits an amount: your pension contribution. Most schemes also allow you to make extra pension contributions. How exactly do we calculate your contribution?
We base the amount of your contribution on:
- Your pensionable salary
- Your graduated scale
- Your part-time percentage
When calculating your salary, we use your pensionable salary. That is the entire salary you earn in one year, which includes your holiday allowance. You only accrue pension on part of your salary because you will also get a State Pension later. The part you don’t accrue pension on is called the ‘contribution-exempt amount’. Again, the amount of the contribution-exempt amount varies per employer. You can check this in your pension regulations.
The graduated scale
The graduated scale is the percentage we use to set the amount of your pension contribution. When setting your graduated scale, we factor in your age. Usually, there is a different percentage for each age group. However, the graduated scale is sometimes the same for each age group. Your graduated scale can also vary per employer. You can find your graduated scale in the pension regulations on your personal pension page.
Maximum pension accrual
There is a cap on your pensionable salary. In 2023, it is approximately €128,810. If your salary is higher than that amount, you will not accrue pension on the remaining amount. Your employer may also opt for a net pension scheme. In that case, you also accrue pension above the upper limit.
You do not pay tax on your contribution now. You will only do that once you retire. This is called the reversal rule. Your pension accrual is therefore a gross scheme. If you make your own pension contributions, this amount will be deducted from your gross salary.