Frequently asked questions

In his Budget in March 2023, the Chancellor announced the discontinuance of the Lifetime Allowance Charge from 6 April 2023 and the intended abolition of the Lifetime Allowance (‘LTA’) from 6 April 2024. The LTA was a limit on the total tax-favoured retirement savings a member could accrue during their lifetime. Any retirement savings in excess of this limit (which was £1,073,100 for the 2022/2023 tax year) were subject to an additional tax charge (the ‘LTA Charge’).

Further legislation has now been enacted to remove the LTA from 6 April 2024. Instead, two new allowances have been introduced from 6 April 2024 to restrict the amount of tax-free lump sum benefits payable at retirement and on death. These are the Lump Sum Allowance and the Lump Sum and Death Benefit Allowance.

Retirement

As a member, you will usually be entitled to take up to 25% of your individual account in the Plan as a tax-free lump sum, but this is subject to you having sufficient available Lump Sum Allowance and Lump Sum and Death Benefit Allowance.

The standard Lump Sum Allowance is currently £268,275 and the standard Lump Sum and Death Benefit Allowance is currently £1,073,100. For members with protection certificates from HMRC, the allowances may be higher.

Each time you take a tax-free lump sum benefit from a registered pension scheme, your available Lump Sum Allowance and Lump Sum and Death Benefit Allowance will be reduced by the amount you take. If you have insufficient available Lump Sum Allowance and Lump Sum and Death Benefit Allowance when you come to retire from the Plan, then your tax-free lump sum will be restricted to what you have available.

If you elect to take your entire individual account in the Plan as a lump sum (known as an Uncrystallised Funds Pension Lump Sum) then, subject to you having sufficient Lump Sum Allowance and Lump Sum and Death Benefit Allowance available, 25% of your savings would be paid tax-free with the remaining 75% being liable to income tax at your marginal rate. If you elect to take your individual account in the Plan via multiple lump sums, then typically each instalment you take would comprise 25% tax-free with the remaining 75% being taxed at your marginal rate of income tax (though the tax-free component of each instalment would be tested against your available Lump Sum Allowance and Lump Sum and Death Benefit Allowance).

If you take a tax-free lump sum in respect of part of your individual account and designate the balance of your savings to a flexible access drawdown arrangement (for which you’d need to transfer-out of the Plan), any drawdown income payments taken will be liable to income tax at your marginal rate . Likewise, if you use the balance of your individual account to purchase an annuity (i.e. pension), then the income from the annuity will be taxed as earned income in line with your marginal rate of income tax and the annuity secured would not count towards your Lump Sum Allowance and Lump Sum and Death Benefit Allowance. Only the tax-free lump sum would be assessed against the allowances.

Death

As a member, if you die prior to retirement the investment value of your individual account in the Plan is usually paid as a lump sum death benefit to your nominated beneficiaries (subject to the Trustee’s discretion). If you’re an active (i.e. contributory) member of the Plan at date of death, an additional insured lump sum (based on a multiple of your annual basic pay) is also usually payable on the same basis (subject to any terms and conditions imposed by the insurer).

Generally, any lump sum death benefit payable from the Plan is tax-free up to your available Lump Sum and Death Benefit Allowance at date of death. Any lump sum death benefit payable from the Plan that exceeds your available Lump Sum and Death Benefit Allowance at date of death would be subject to income tax at your beneficiary’s relevant marginal rate.

If you’ve built up pension savings with other providers, you may be able to transfer the value of these into the Sky Pension Plan. The final decision on whether or not this will be allowed will be up to the Trustees, but if you want to apply, you should fill in a ‘transfer in request’ form.

You can download a transfer in request form by clicking here.

The Financial Conduct Authority offers useful tips and guidance to help you find a financial adviser, including access to its Financial Services Register which lists the financial advisers it regulates and approves. Go to www.fca.org.uk/consumers/finding-adviser for further details.

Depending on how you chose to use your individual account at retirement, there may or may not be benefits for your spouse/partner if they outlive you. For example, with a traditional annuity, you can choose to buy a pension for your dependant to be paid after your death. However, if you chose to take your individual account as cash, then there will not be any benefits left in the Plan for your spouse/partner. If you chose drawdown, you will have moved your individual account from the Sky Pension Plan.

Your Plan administrator, Gallagher (formerly Buck), will include information about death benefits when writing to you with your options on retirement.

Only the value of your individual account, at the date of your death, would be payable.

If you can’t do your normal job due to illness or injury, after 26 weeks continuous absence you may qualify for 2/3rds of your basic salary minus £5,300 per annum. This is paid for a maximum of up to 5 years, or earlier depending on when you return to work. Whilst you are in receipt of pay, both you and Sky will continue to pay contributions to your individual account within the Plan based on your selected contribution rate and the actual pay you receive.

In addition to this benefit you may also be eligible for State Benefits known as Employment Support Allowance (ESA).

A lump sum equal to the value of your individual account in the Plan at the date of your death will be payable to your beneficiaries, together with a one-off lump sum of 4x your basic salary. These payments are normally tax-free and are payable to your beneficiaries as determined by the Plan’s Trustees. You should ensure that your Expression of Wish details are completed in your Personal Pension Account with Gallagher so that the Trustees can take into account your wishes when determining your beneficiaries in this context.

For employees who were employed prior to 1 January 2022, if you have a partner, an additional one-off lump sum of 4x your basic salary will be paid. A ‘partner’ is defined under the Plan as either your spouse, or the person you nominate as your partner, regardless of that person’s gender, who:

• Is living with you as if you were married or in a registered civil partnership
• Is financially dependent on you, or who shares a financial interdependence with you 
• Is over 16
• Has the same main residence as you 
• Is not a relative (defined as child, parent or sibling) either by blood or adoption

Information is provided on Sky Benefits.

The lump sum death benefits referred to above that are based on a multiple of salary are insured and, therefore, payment is subject to insurability and any terms and conditions imposed by the relevant insurer.

If you go on parental leave you will remain a member of the Plan. Whilst you are on full pay, your payments to the Plan and Sky’s will stay the same.

If you receive Statutory Maternity Pay (SMP) or a reduced contractual salary your payments will be at the same percentage as when you were on full pay, but based on the reduced pay.

Although you will be paying less, the same amount will be going into your individual account. Sky will pay contributions based on your full pay before your parental leave, and Sky will make up the difference between your lower payments and the payments you were making before you went on leave.

If your pay stops completely, all payments to your pension will stop until you return to work.

Your Life Assurance and Income Protection benefits entitlements will continue for the whole of your leave.

Gallagher, will contact you with your options 6-8 weeks after you leave Sky. If you don’t hear from them, you can contact them on 0330 678 1504.

Gallagher, will contact you with your options 6-8 weeks after you’ve left Sky. If you don’t hear from them, you can contact them on 0330 678 1504.

Most complaints can be resolved informally and, if your complaint relates to the operation of the Plan, you should raise this initially with Gallagher via spp@ajg.com. However, the Plan has a formal Internal Dispute Resolution Procedure (‘IDRP’) for complaints that can’t be resolved in this way. If you would like to raise a complaint under the Plan’s IDRP, please refer to the IDRP Guide that is listed under the ‘Useful Documents’ tab on this page and then complete and submit the separate IDRP Application Form (also listed under the ‘Useful Documents’ tab on this page).

Your pension should be included in your financial settlement if you divorce or dissolve your civil partnership. You should notify Gallagher if you are divorcing at the earliest opportunity as they will need to provide the courts with prescribed information so that your pension can be taken into account as part of any financial settlement.

You are able to transfer all or part of your retirement savings in the Plan to another registered pension scheme (including to a new employer’s pension scheme where, for example, you have left the employment of Sky). If you’re still paying contributions, you can request a partial transfer (though there is a fee for doing so); otherwise you can only request a full transfer if you have left the Plan and stopped paying contributions. The amount transferred will reflect the investment value of your individual account in the Plan (or the relevant proportion of it if you are only partially transferring) as at the date of the transfer. Please note that the transfer-out process is highly regulated to mitigate the risk of pension scams and to ensure that transfers are paid to the correct receiving schemes. Depending on the nature of the receiving scheme in each case, the regulations may require you to have a call with MoneyHelper before the transfer can proceed. As such, please be aware that the process to transfer-out can take several months, but the administrators at Gallagher will always endeavour to complete this process as quickly as possible. Please help them by ensuring that the transfer-out paperwork is fully completed and submitted to them as early as possible. You are strongly encouraged to take independent financial advice when considering transferring-out.

If you started paying contributions to the Sky Pension Plan after 5 April 1997 and ceased contributions before 30 September 2024, then your individual account may have been transferred from the Plan to Sky’s section within the LifeSight master trust pension scheme. You will have received a communication from the Plan’s Trustee notifying you of this transfer at the time. You can check whether your individual account has transferred to LifeSight by contacting Gallagher on 0330 678 1504 (or via spp@ajg.com) or by contacting LifeSight direct on 01737 230 460 (or via lifesightsupport@wtwco.com).