Employee Benefits - BenefitsPlus
These Frequently Asked Questions explain how BenefitsPlus Pensions works and will hopefully answer any questions you may have. However if there’s anything you are unsure of after reading through the information please email benefitsplus-hr@salford.ac.uk or phone your Personnel Link Manager with your question.
1) What is BenefitsPlus Pensions?
The idea behind BenefitsPlus Pensions is to increase your take home salary by reducing the amount of National Insurance Contributions (NIC) you pay.
This concept is known as ‘salary sacrifice’ as you are giving up an amount of salary in exchange for a benefit. This will not affect other pay and benefits provided by the University as we will use your Notional Salary to calculate these (see question 17). Notional Salary is your original salary amount before the salary sacrifice reduction.
By joining BenefitsPlus Pensions:
- You will stop making pension contributions directly into the pension scheme but…
- The University will increase its contribution into your pension scheme by an amount equal to your current pension contribution.
- Your basic salary will be reduced by the amount equivalent to the pension contribution you would normally pay. You will see this on your payslip as a BenefitsPlus Pensions adjustment.
- As your basic salary is reduced, you will pay less NIC and so your take home salary will increase.
- The amount of Income Tax you pay will remain the same under BenefitsPlus Pensions as you already receive Income Tax relief on your pension contribution.
2) How much will I save if I join BenefitsPlus Pensions?
The amount you save will depend on your personal circumstances, such as how much you earn, as this affects the amount of NIC you pay on your pension contribution. If you earn below £43,888 (using 2009/2010 rates) you will save NIC at 9.4%, whilst if you earn above £43,888 you will save NIC at 1%.
3) Does BenefitsPlus Pensions affect my Income Tax?
The amount of Income Tax you pay is not affected because your current pension contributions are deducted before Income Tax is calculated so you already receive tax relief. It is only your NIC that are affected by BenefitsPlus Pensions.
4) How do I join BenefitsPlus Pensions?
If you are a current University employee and a member of the USS pension scheme then you have been automatically entered into BenefitsPlus Pensions from March 1 2009 unless you notified us otherwise by completing an Opt-Out form. New employees get the option of joining BenefitsPlus Pensions at the time of appointment.
Certain employees may not benefit from joining BenefitsPlus Pensions (see question 9) but these people will be identified and contacted individually.
Please note that only USS members can apply. If you are a member of the Teachers Pension Scheme (TPS) or the Local Government Pension Scheme (LGPS) then you are not eligible to join BenefitsPlus Pensions. TPS members who pay USS top-up fees are also ineligible.
5) Will my terms and conditions of employment be affected by BenefitsPlus Pensions?
If you join BenefitsPlus Pensions there will be one change to your terms and conditions of employment that reflects the reduction in salary corresponding to your pension contribution.
This will be the only change to your terms and conditions of employment; all other terms and conditions will remain the same.
6) Do I have to join BenefitsPlus Pensions?
No. You can remain in the USS and not be a member of BenefitsPlus Pensions however you will not benefit from NIC savings.
7) Once I have been included in BenefitsPlus Pensions, can I opt out later?
Once you have been included in BenefitsPlus Pensions you will remain in the scheme for as long as you are making contributions to the USS pension scheme. If you no longer wish to be in BenefitsPlus Pensions then you can opt-out at the annual renewal date of 1 March 2009.
We recognise that as a result of changes to your personal circumstances e.g. long term sickness leave or a change to your hours, you may no longer benefit from BenefitsPlus Pensions. The University will make regular checks to ensure that you continue to benefit from the scheme and will notify you if you will no longer benefit.
If you wish to opt out due to a significant change in personal circumstances then please contact your Link Personnel Team who can discuss with you whether you are eligible to opt-out before the annual renewal date.
If you are a member of BenefitsPlus Pensions and leave the USS pension scheme you will be automatically removed from BenefitsPlus Pensions. If you leave USS with less than 2 years qualifying service, any refund payable would not include those contributions paid by the University under the BenefitsPlus arrangement.
8) What is the value of my 'salary sacrifice'?
Your salary sacrifice is equal to the value of your normal pension contributions to the pension scheme (excluding Additional Voluntary Contributions or “AVCs”). Your normal annual contribution is based on a percentage of your pensionable salary. Therefore, your salary sacrifice will equate to the agreed percentage currently contributed annually by you.
Please contact the Pensions Officer Rachel Nield r.nield@salford.ac.uk or x52101 for further information.
9) Is BenefitsPlus Pensions suitable for everyone?
In simple terms if you currently pay NIC and are a member of the USS pension scheme you will probably benefit from BenefitsPlus Pensions. However, there are three circumstances where you may not:
- If your hourly rate after BenefitsPlus Pensions falls below the National Minimum Wage (NMW, currently £5.73 an hour over the age of 21) then we will not include you within BenefitsPlus Pensions as we cannot pay you below the NMW. It is unlikely any University employees will be affected by this but we will carry out checks to ensure this does not happen.
- If you earn less than the Lower Earnings Limit (LEL) for NIC purposes (£95 per week at 2009/2010 rates) you may lose entitlement to state benefits. We will carry out payroll checks to identify if your earnings are close to the LEL and, if they are, we will not include you in BenefitsPlus Pensions. You may still consent to join BenefitsPlus Pensions as, for example, you may have earnings from another job in which you pay NIC. However, you will not personally save any NIC under BenefitsPlus Pensions arrangements unless you pay NIC on your earnings at the University.
- If you do not pay NIC (e.g. if you are above retirement age) then you will be no better or no worse off under BenefitsPlus Pensions and we will therefore not include you within BenefitsPlus Pensions without your specific consent.
If you are affected by any of the above circumstances you will be informed by the University that BenefitsPlus Pensions is not suitable for you.
If you cannot participate in BenefitsPlus Pensions at present you will continue to pay pension contributions as you do currently.
10) Do we have other salary sacrifice schemes at the University?
Yes we do - the concept of salary sacrifice is not new and we already use it at the University to provide childcare vouchers. From 1 March 2009 staff can also enter into BenefitsPlus Car Parking which enables employees to save tax and NIC on their car parking.
11) What’s the catch?
There is no catch. It is a way of making your salary work a bit harder for you and can save you money each year.
Salary sacrifice arrangements for pensions already operate in many other organisations, including Universities, and HM Revenue & Customs are fully aware of these types of arrangements.
12) Does the University benefit from BenefitsPlus Pensions?
Yes. Like you the University pays NIC on your earnings. When you participate in BenefitsPlus Pensions your salary reduces and both you and the University pay less NIC. As a guide the University pays employer’s NIC at 9.1% for most employees who are members of the pension scheme.
13) Does BenefitsPlus Pensions affect my pension benefits?
Under BenefitsPlus Pensions exactly the same amount overall is paid into your pension scheme. The University will pay its usual contribution plus an additional amount equivalent to your current contribution.
BenefitsPlus Pensions will not affect your retirement benefits in any way; when calculating your pension benefits and final salary for pension purposes we will use your Notional Salary.
14) Will BenefitsPlus Pensions have any affect on my entitlement to state benefits such as the state pension?
Your entitlement to state benefits depends on your earnings rather than the amount of NIC you pay. If your earnings are above the LEL your entitlement to benefits such as the basic State Pension, Incapacity Benefit and Jobseekers Allowance will be unaffected.
The University Payroll department will review earnings to ensure that any employees who may be affected will not be included within BenefitsPlus Pensions. You will be informed if you fall into this category of staff.
Entitlement to state benefits is a very complex area. Further advice can be found at www.hmrc.gov.uk 
or www.dwp.gov.uk
15) What impact will BenefitsPlus Pensions have on my Working Tax Credits/Child Tax Credits/Child Support Agency payments?
Working Tax Credit (WTC) and Child Tax Credit (CTC) payments are based on your salary after pension contributions. If you join BenefitsPlus Pensions, then WTC and CTC will be based on your salary after BenefitsPlus Pensions i.e. the same figure that is currently used to calculate your entitlement to WTC and CTC. Payments of WTC and CTC should therefore not be affected by BenefitsPlus Pensions.
Child Support Agency (CSA) payments are calculated using your take home salary. As your take home salary will increase under BenefitsPlus Pensions it follows that there may be an increase in the amount of CSA payments, however we understand that you are only required to inform the CSA if your take home pay increases by 5% or more. Further advice can be found at www.csa.gov.uk
16) Will BenefitsPlus Pensions affect student loan repayments?
Student loan repayments do not take account of your Notional Salary. As your salary will reduce under BenefitsPlus Pensions it is likely that your student loan repayment will reduce nominally. If you want to continue to make the same level of student loan repayments we understand that you can make additional payments to the Student Loans Company at any time.
Further information can be found at www.slc.co.uk
17) How does BenefitsPlus Pensions affect my other benefits?
BenefitsPlus Pensions will not affect any benefits, pay elements or statutory payments. We will use your Notional Salary as a basis for calculating:
- overtime
- commission
- pension scheme benefits
- salary increases
- sick and holiday pay
- statutory maternity, paternity and adoption pay
- death in service payments
Your Notional Salary will also be used to give information to mortgage lenders, loan applications and job references.
18) What about Additional Voluntary Contributions (AVCs)?
AVCs will not be included within BenefitsPlus Pensions and will continue to be paid in the usual way.
19) What if I am a member of more than one salary sacrifice scheme under BenefitsPlus?
If you are a member of more than one salary sacrifice scheme it is important to ensure that your hourly rate of pay is not reduced below either the NMW or that your salary for NIC purposes does not fall below the LEL. The University will check current employees’ salary upon the introduction of BenefitsPlus Pensions and on an ongoing basis and notify anyone if they are affected by this.
20) Will BenefitsPlus Pensions always be in place?
The University introduced BenefitsPlus Pensions because we believe that it is a great benefit for our employees and for the University.
However if it becomes unviable to operate the scheme the University reserves its right to withdraw from BenefitsPlus Pensions and you would revert to the system of making employee contributions as you do currently.
The University would not accept any liability to provide any form of compensation for any financial benefits lost from ceasing to operate BenefitsPlus Pensions.
21) Who has been consulted about the introduction of BenefitsPlus Pensions?
We have consulted with representatives from our Trade Unions and the USS regarding the introduction of BenefitsPlus Pensions.
22) What happens if I cease to be employed by the University?
The BenefitsPlus Pensions arrangement will automatically terminate on the date you leave the University.