How important is a guaranteed sum?
If you are not comfortable with investment risk, you may prefer to remain in Afterwork as the Afterwork Credit Account will provide you with a cash sum that is guaranteed if you take it at Normal Retirement Age (normally 60) or later.
Of course, there is also the risk of not saving enough for retirement. Will your Credit Account alone provide you with enough income to live on? You can monitor how your Credit Account is building up via the ePA website (which can be accessed directly from the My Rewards website) and you can use the pension option calculator to see how much income it could provide at retirement.
If you are only contributing to the Credit Account you’re missing out on Barclays matched contributions to the Investment Account (currently, up to 3% of your Pensionable Salary). So, if you are comfortable with some investment risk, you may also wish to contribute to the Investment Account, if you are not already doing so. It will help to increase your Afterwork retirement savings and take advantage of Barclays matched contributions. Again, you can use the pension option calculator to see how also contributing to the Investment Account could increase your retirement income.
Would you prefer to contribute more and maximise Barclays’ contribution?
Currently, Barclays will match your contributions to the Afterwork Investment Account up to 3% of your Pensionable Salary. So, if you contribute 6% of your Pensionable Salary to Afterwork (3% to the Credit Account and 3% to the Investment Account), Barclays will credit your Credit Account with 20% of your Pensionable Salary (available at Normal Retirement Age) and 6% will be paid into the Investment Account (3% by you and 3% by Barclays).
Barclays does not match your contributions to the BPSP, but does pass on its employer National Insurance (NI) saving on pension contributions made via salary sacrifice (15.05% of your contribution for the 2022/23 tax year) to you through Pension Boost. So, if you choose to contribute £100 of your Basic Salary each month to the BPSP, approximately £115.05 would be paid into your BPSP account (your £100 contribution plus an additional £15.05 NI saving passed on by Barclays). This contribution would be paid in addition to the age-related contribution paid by Barclays to your BPSP account. Note that the NI saving that is passed on to you is due to revert to 13.8% of your contribution from the 2023/24 tax year.
You can use the pension option calculator to compare how much income you could receive from each plan based on how much you choose to contribute.
How well do you think investments will perform?
The Barclays credit of 20% of your Pensionable Salary to your Afterwork Credit Account is not the same as a contribution – it is a promise to provide you with a sum that is guaranteed, if you take it at your Normal Retirement Age (usually 60) or later. You may access this sum (and other retirement savings) after age 55 (due to rise to age 57 from 2028 onwards) to purchase your choice of annuity, transfer it to another scheme to take advantage of income drawdown or take it as cash.
Barclays’ contributions to your Barclays Pension Savings Plan (BPSP) account are invested. Depending on how well your choice of investments performs and how long you have until retirement (i.e. how long your savings will have to grow in value), Barclays’ contribution of, say, 14% (based on a member who is age 30 when they switch) could be worth more than 14% when you retire. However, you need to be aware that investments can go down in value as well as up.
You can use the pension option calculator to see how much income you could receive from each plan based on different levels of investment returns.
How experienced an investor are you?
You don’t have to be an expert in investing to save for retirement via the Afterwork Investment Account or the BPSP. Both schemes offer a range of investment options. You should read the Investment Guide for more details about the investment options.
If the default option does not reflect your future retirement plans, you can make your own investment decisions. Both Afterwork and BPSP offer a range of investment funds for you to choose from.
You can monitor your Afterwork Investment Account online via the ePA website. If you decide to join the BPSP, you will be able to monitor your retirement savings online via the Legal & General Manage Your Account website.
Read more about the investment options in both pension plans by visiting the Read section.
Do you have any other savings?
If you also have other retirement savings, either from Barclays or another employer, remember to take these into consideration when deciding whether Afterwork or the BPSP would be the best plan for you. These should also be factored in when reviewing your situation against the Annual Allowance and Lifetime Allowance.
Your retirement savings from your Afterwork Investment Account (and your BPSP account if you choose to join this plan) will depend on the contributions made and the investment growth of those investments. If you choose to buy an annuity with your retirement savings the income you receive will depend on the cost of buying an annuity when you take your savings, and the type of annuity you choose. At the start of the year, approximately £30 of retirement savings could buy £1 of income at age 60, increasing at 3% per year and providing income for your spouse after your death (depending on your health and other factors). So, in this example, if you wished to retire on an income of £10,000 a year, you may need to build up retirement savings of approximately £300,000.
Please note these figures are given as very broad examples only.