BRASS

Johnboy · 9 May 2019

I'm just a few weeks into my railway career.
I can see the benefits of being a member of the RPS, particularly as the TOC are making a significant contribution to my pension fund. That said, my last job with the Local Authority were contributing 3 x my contribution, so the TOC and not that generous.

Nevertheless, my query relates to BRASS. I have got some money that I can invest, and many of my new colleagues tell me that I must invest in BRASS. Their reasoning is that the 20% that would normally be devoured by HMRC, is invested in your pension pot. My thinking is that this applies to any pension, and there are hundreds of products out there. So is there anything that makes BRASS more attractive than those? Am I missing something?

RailUK Forums

Halfway Boy · 11 May 2019

There is an obsession with BRASS and AVC’s on the railway.

It used to be really good when they would match your contributions into it, so if you didn’t do it you were effectively throwing away free money.

Nowadays I don’t think any TOC matches BRASS contributions unless you’re grandfathered but I stand to be corrected, so it’s not as good.

I personally don’t do it. I’d rather enjoy my life now than shove extra money into a pension pot that I may never see if I kick it before retirement.

Stigy · 11 May 2019

I don’t understand pensions that much, but one of my main reasons for applying to the Railway was because of a half decent pension. I started paying an extra £50 a month by way of BRASS contributions a couple of years ago. I don’t notice the extra amount going out of my salary, and I was advised it was worth doing. It’s not without risk, as it’s an investment, but I think the pros outweigh the cons at this time.

Railweigh · 11 May 2019

The amount you invest comes out of your wages pre-tax, so if you want to save a bit of extra money for retirement then it’s a no brainer as a decent portion of it is effectively free money.

Jonfun · 11 May 2019

Ultimately BRASS is a personal choice. Some companies allow you to make BRASS contributions via Salary Sacrifice, which means you can factor in a reduction in NI contributions etc too, which makes it more financially advantageous. Each year I tend to tie in upping my BRASS contributions with the payrise, such that I don't notice any reduction in pay. It also acts as a bit of a safety net - if I look at my bank account and see it's looking a little unhealthy, I can just cut my BRASS contributions for a while to ease off the pressure on that.

furnessvale · 11 May 2019

Halfway Boy said:
There is an obsession with BRASS and AVC’s on the railway.

It used to be really good when they would match your contributions into it, so if you didn’t do it you were effectively throwing away free money.

Nowadays I don’t think any TOC matches BRASS contributions unless you’re grandfathered but I stand to be corrected, so it’s not as good.

I personally don’t do it. I’d rather enjoy my life now than shove extra money into a pension pot that I may never see if I kick it before retirement.

As you say a personal choice, but having been drawing a railway related pension, including as much BRASS as I could put in, for over 21 years, I think my personal choice was the correct one!

Aivilo · 11 May 2019

Personally prefer the old set up but still contribute so I am always under the tax threshold

dctraindriver · 11 May 2019

Halfway Boy said:
There is an obsession with BRASS and AVC’s on the railway.

It used to be really good when they would match your contributions into it, so if you didn’t do it you were effectively throwing away free money.

Nowadays I don’t think any TOC matches BRASS contributions unless you’re grandfathered but I stand to be corrected, so it’s not as good.

I personally don’t do it. I’d rather enjoy my life now than shove extra money into a pension pot that I may never see if I kick it before retirement.

It used to be really good, however now it’s good.

Personally I’d shove extra in as soon as I can because time flies and you want to have a nice amount of money to hopefully enjoy in retirement and still enjoy life now. Once you put into it you forget you’re doing so and think nothing of it.... and if you do die before retirement, your nominated person entitled to your pension will thank you for doing so.

Tom Quinne · 11 May 2019

My view is that with 24 years left, even if I don’t make it to that golden 65 my Mrs will get what’s in there so either way it’s worth it.

I put in £100 extra a month, I don’t notice it - as for risk, yes it’s an investment as is your normal RPS but the RPS strictly governed by a commitment of people who understand pensions and are generally railway people who are also in the scheme, so I’d say it’s in pretty good hands.

sw1ller · 11 May 2019

Join the dedicated Facebook group if you’re able. I will say though, it’s not for enthusiasts, you must prove you work on the railway. Some great advise on there and it’s highly accurate. The bloke who runs it it’s very knowledgeable.

RJ · 11 May 2019

I had a look through it with a friend who is an actuary. Went through the maths and decided it wasn't worthwhile for me. Horses for courses however!

Mag_seven · 11 May 2019

Johnboy said:
I'm just a few weeks into my railway career.
I can see the benefits of being a member of the RPS, particularly as the TOC are making a significant contribution to my pension fund. That said, my last job with the Local Authority were contributing 3 x my contribution, so the TOC and not that generous.

Nevertheless, my query relates to BRASS. I have got some money that I can invest, and many of my new colleagues tell me that I must invest in BRASS. Their reasoning is that the 20% that would normally be devoured by HMRC, is invested in your pension pot. My thinking is that this applies to any pension, and there are hundreds of products out there. So is there anything that makes BRASS more attractive than those? Am I missing something?

I paid into BRASS all my railway career, particularly as the employer used to match my contributions. Everybody has different circumstances though and it may or may not be appropriate for you. I would seek the advice of an independent financial adviser.

whoosh · 11 May 2019

Your normal railway pension would pay:
A lump sum
And a yearly pension.

If you make Additional Voluntary Contributions via BRASS, you can use that to have your lump sum, and convert your normal pension lump sum into a yearly pension - at a conversion factor of £12 of lump sum buys you £1 of yearly pension. Most other schemes only convert at £20 lump sum buys £1 yearly pension. This makes it a desirable scheme, and makes BRASS a good thing to contribute to.

Belperpete · 11 May 2019

As has already been pointed out, if the company you work for allows you to pay in through the payroll before tax and NI, then there is a distinct financial advantage compared to a personal scheme where you pay in yourself after you have been taxed and NI'd. Effectively, every pound invested costs you less - or you can invest more for the same effect on your pocket.

There used to be big restrictions on withdrawing money from BRASS pre-retirement - not sure if this still applies now, but worth checking if there is a possibility that you might need access to funds in the future, e.g. for a house purchase.

Tom Quinne said:
as for risk, yes it’s an investment as is your normal RPS but the RPS strictly governed by a commitment of people who understand pensions and are generally railway people who are also in the scheme, so I’d say it’s in pretty good hands.

Is BRASS managed by the RPS? Although RPS collect the contributions and make the pension payments, the BRASS funds themselves used to be managed by the Prudential (now Aviva?).

Halfway Boy · 12 May 2019

dctraindriver said:
It used to be really good, however now it’s good.

Personally I’d shove extra in as soon as I can because time flies and you want to have a nice amount of money to hopefully enjoy in retirement and still enjoy life now. Once you put into it you forget you’re doing so and think nothing of it.... and if you do die before retirement, your nominated person entitled to your pension will thank you for doing so.

True... each to their own.

I’d rather have that money just now - travel the world, do everything I want to do, than be sitting on my death bed not long after I retire thinking about how I amassed an amazing pension pot instead of just a great one compared to every other sector.

Seek advice from a good financial advisor is my advice... I hear so many mistruths and misunderstandings about pensions from other drivers it’s unreal.

Halfway Boy · 12 May 2019

Belperpete said:
As has already been pointed out, if the company you work for allows you to pay in through the payroll before tax and NI, then there is a distinct financial advantage compared to a personal scheme where you pay in yourself after you have been taxed and NI'd. Effectively, every pound invested costs you less - or you can invest more for the same effect on your pocket.

That’s actually quite a common misunderstanding amongst drivers.

If you open up a Self-Invested Personal Pension (SIPP) rather than do BRASS you’re entitled to the same tax relief. Most providers will automatically claw back 20% from HMRC and add it to your pot, and any further tax relief above that (if you’re in the 40% tax bracket for example) you can claim back from HMRC yourself if needed.

However, if you don’t know that then I probably wouldn’t recommend opening up a SIPP anyway.

Speak to an independent financial advisor.

bb21 · 12 May 2019

In addition to what people said above, AIUI BRASS is most effective when you are a higher rate (40%) payer, as the money goes in tax free so you reduce or even avoid your 40% amount, but when it comes back out, your retirement income most likely won't be liable for the higher rate.

There is also a bit of an emphasis on it in the facebook group as the shenanigans surrounding the pensions reform in 2016 meant reduced retirement income for many, so BRASS is a good way to top up back to the previous level.

Jonfun · 12 May 2019

Halfway Boy said:
That’s actually quite a common misunderstanding amongst drivers.

If you open up a Self-Invested Personal Pension (SIPP) rather than do BRASS you’re entitled to the same tax relief. Most providers will automatically claw back 20% from HMRC and add it to your pot, and any further tax relief above that (if you’re in the 40% tax bracket for example) you can claim back from HMRC yourself if needed.

However, if you don’t know that then I probably wouldn’t recommend opening up a SIPP anyway.

Speak to an independent financial advisor.

Yes, you aren't wrong in what you say, but here we're talking about the additional saving on NI contributions by paying in via a salary sacrifice arrangement over what you'd get if you paid in outside of such an arrangement. Speaking to a financial advisor is good advice.

tiptoptaff · 12 May 2019

Could someone DM a link to the Facebook group? Happy to prove railway employment. Thanks

Stigy · 12 May 2019

tiptoptaff said:
Could someone DM a link to the Facebook group? Happy to prove railway employment. Thanks

Same here please....alternatively, you can invite me when you’re “enrolled”? :lol:

Halfway Boy · 12 May 2019

Jonfun said:
Yes, you aren't wrong in what you say, but here we're talking about the additional saving on NI contributions by paying in via a salary sacrifice arrangement over what you'd get if you paid in outside of such an arrangement. Speaking to a financial advisor is good advice.

Again that’s another common misunderstanding...

Your employers pension contributions are exempt from NI... so they don’t have to pay 13.8% class 1 NIC’s on the contribution they make to your pension.

You pay NI on your net wage so you actually pay NI on your pension contributions.

This is why you should speak a financial advisor.

ComUtoR · 12 May 2019

https://thepeoplespension.co.uk/salary-sacrifice/

Salary sacrifice is an arrangement employers may make available to employees – the employee agrees to reduce their earnings by an amount equal to their pension contributions.

And in exchange, the employer then agrees to pay the total pension contributions.

Using salary sacrifice means that the employee and the employer pay less National Insurance contributions. Employers may decide to maximise the amount of pension contributions by adding the savings they make in lower employer National Insurance contributions to the total pension contribution amount they pay

My TOC uses salary sacrifice. Not sure if BRASS is included in that part of the scheme.

Halfway Boy · 12 May 2019

ComUtoR said:
https://thepeoplespension.co.uk/salary-sacrifice/

My TOC uses salary sacrifice. Not sure if BRASS is included in that part of the scheme.

Salary sacrifice is a misunderstood term... If you see a pension deduction line on your wage slip you aren’t using the kind of salary sacrifice they are talking about to attract NI rate relief, as they are exploiting a tax loophole.

Effectively what they are referring to is you reduce your salary by your pension payments, and in return the employer pays extra pension contributions thus attracting NI relief as on paper it is all employer contributions and 0 for you.

I don’t know any section of RPS that uses this loophole.

Stigy · 12 May 2019

Halfway Boy said:
Salary sacrifice is a misunderstood term... If you see a pension deduction line on your wage slip you aren’t using the kind of salary sacrifice they are talking about to attract NI rate relief, as they are exploiting a tax loophole.

Effectively what they are referring to is you reduce your salary by your pension payments, and in return the employer pays extra pension contributions thus attracting NI relief as on paper it is all employer contributions and 0 for you.

I don’t know any section of RPS that uses this loophole.

Sounds like SWR’s section of the scheme that I switched to a few years ago. It’s still part of the RPS, but they changed it to a PaySave scheme which all staff changed over to unless they opted out, in which case they’d remain in the other scheme. I didn’t opt out as it seemed like the better scheme at the time. I’m no pension expert though, so might take some advice on it going forward. I guess if this scheme looks like you’re earning less, that could affect things like mortgage applications, as the salary won’t be as high?

Halfway Boy · 12 May 2019

Stigy said:
Sounds like SWR’s section of the scheme that I switched to a few years ago. It’s still part of the RPS, but they changed it to a PaySave scheme which all staff changed over to unless they opted out, in which case they’d remain in the other scheme. I didn’t opt out as it seemed like the better scheme at the time. I’m no pension expert though, so might take some advice on it going forward. I guess if this scheme looks like you’re earning less, that could affect things like mortgage applications, as the salary won’t be as high?

If you are using a proper salary sacrifice scheme then yes.

For example you get paid £55,000 and make £5000 pension contributions.

Your employer would reduce your salary to £50,000 and make an extra £5,000 pension contributions.

So on paper, you now make £50,000 not £55,000.

ComUtoR · 12 May 2019

Which is exactly what happens at my TOC. It's been in place for a few years now.

@Stigy You can still declare your full salary.

Jonfun · 12 May 2019

Halfway Boy said:
Again that’s another common misunderstanding...

Your employers pension contributions are exempt from NI... so they don’t have to pay 13.8% class 1 NIC’s on the contribution they make to your pension.

You pay NI on your net wage so you actually pay NI on your pension contributions.

This is why you should speak a financial advisor.

I'm not sure quite where the confusion is slipping in here, but what I'm saying isn't a misunderstanding, it's correct. I do agree folk should seek financial advice and not rely on the opinion of folk on the internet.

Stigy · 12 May 2019

@ComUtoR and @Halfway Boy thanks for the info.

ComUtoR · 12 May 2019

Just checked my documentation and it states that BRASS contributions would be included.

dctraindriver · 12 May 2019

Halfway Boy said:
True... each to their own.

I’d rather have that money just now - travel the world, do everything I want to do, than be sitting on my death bed not long after I retire thinking about how I amassed an amazing pension pot instead of just a great one compared to every other sector.

Seek advice from a good financial advisor is my advice... I hear so many mistruths and misunderstandings about pensions from other drivers it’s unreal.

But I have travelled the world, both can be done if you’re sensible....

BRASS

New Member

RailUK Forums

Member

Established Member

Member

Established Member

Established Member

Member

Member

On Moderation

Established Member

Established Member

Forum Staff

Established Member

Established Member

Member

Member

Emeritus Moderator

Established Member

Established Member

Established Member

Member

Established Member

Member

Established Member

Member

Established Member

Established Member

Established Member

Established Member

Member