Benefits Plus: frequently asked questions
Why are my terms and conditions of employment changed?
To benefit from the savings in tax and/or reduction in NI, it is necessary to reduce your gross contractual salary. This requires a change to your terms and conditions of employment but this is the only change; there is no impact on any other element of your pay or benefits. These will be based on your reference salary; your annual salary before Benefits Plus.
The automatic opt out arrangements are designed to ensure that all employees who participate in Benefits Plus will not be worse off.
What is the difference between my reference salary, gross contractual salary and my pensionable salary?
Reference salary is your annual pay before adjustment for Benefits Plus. Your reference salary is the amount used to calculate your other salary-related benefits including salary increases and overtime. It is also the amount used in any personal official letters eg mortgage letters, loan applications or job references.
The ‘Payments’ figure shown on your payslip will be one twelfth of your reference salary (ie monthly) plus any other contractual payments, less any Benefits Plus contributions. This is known as your gross contractual salary.
Your pension benefits are based on your pensionable salary. This is your reference salary including any other earnings which are recognised as pensionable by the University.
Who might not benefit from Benefits Plus?
Benefits Plus has been designed so that most employees will benefit from participating. However, there are some who may not benefit for various reasons. These include:
- Employees who earn less than the Earnings Threshold for NI, currently £5,435 for the 2008/9 tax year. This is because you would not make any NI savings and may see your State benefits affected.
- Employees whose salary will be reduced below the National Minimum Wage (NMW) by participating in any or all parts of Benefits Plus. It is not possible to reduce an employee’s pay below the NMW (£5.73 per hour from 1 October 2008).
To ensure employees are no worse off financially, the University is introducing a pay protection limit (PPL) of £6,600 a year. The PPL will be reviewed each year to take into account any changes to tax and/or NI thresholds. If your earnings fall below the PPL or the NMW, you will automatically be opted out of all or part of Benefits Plus.
For example, if you are already using the Childcare Plus approach for childcare, and you would like to use Parking Plus for a parking permit, the combination of these may take you below the PPL. If this were likely to happen, you would automatically be opted out of Parking Plus and/or Pensions Plus to ensure that you would not be worse off financially. You keep these benefits but you would revert to paying for them the same way you do now. If your salary increases over the thresholds mentioned above, you will automatically be opted back into the parts of Benefits Plus in which you have agreed to participate.
There is a priority order for opting out and an employee participating in all parts of Benefits Plus would be opted out of benefits in the following sequence: Pension then Parking then Childcare then Cycles - this maximises the benefits to the individual.
What happens if I have more than one contract of employment with the University?
If you have more than one contract of employment, your basic salary for your multiple assignments will be taken into account. If you fall below the PPL you will automatically be opted out. If you choose to opt out of any one of the parts of Benefits Plus, this will apply to all your posts in the University.
What will my payslip look like?
Your payslip will change slightly following the introduction of Benefits Plus. Here’s an example of how your payslip would change with Benefits Plus.
This example is based on a member of USS with a basic salary of £25,000 a year and has a University parking permit.
Example payslip without Benefits Plus
Example payslip with Benefits Plus
The employee’s total annual NI and income tax saving would be £202.
There is a simple Benefits Plus calculator so that you can see exactly how Benefits Plus might affect you.
Do I need to sign a new contract?
Under Pensions Plus and Parking Plus, you do not need to sign a new contract, as you will be deemed to have accepted the new terms and conditions of employment, unless you opt out, and your existing contract will be varied to this effect. If you wish to opt out please contact the Pensions Section on 0141 330 5366 or email finpensions@mis.gla.ac.uk
If you currently participate in the childcare voucher scheme you have already agreed to a change in your terms and conditions of employment for this benefit as part of the joining process. New participants to Childcare Plus and Cycle Plus will need to agree to a change in their terms and conditions of employment for this benefit as part of the joining process.
What is a ‘lifestyle event’?
Normally you can only make a decision to opt in or out of Benefits Plus once a year at the annual enrolment; 1 October each year. However, there are certain situations that mean you will need to make changes at other times. These are referred to as ‘lifestyle events’: some examples are:
- Divorce or separation
- Birth or adoption of a child
- Death of a spouse/partner/dependant
- Start of, or return from, maternity leave
- Significant change in personal financial circumstances (for example, your partner being made redundant)
Additionally, in the event of a change in your childcare arrangements, you can change your childcare voucher decision. For more information on making changes to childcare vouchers you will need to complete a lifestyle change form. Please contact Ali Silverstein in Human Resources for further details on 0141 330 2666 or email Ali.Silverstein@glasgow.ac.uk
What happens if I go on maternity/paternity/ adoption/parental leave?
We would advise that you contact your HR Assistant for general guidance on the impact of Benefits Plus.
Will Participation in Benefits Plus affect my occupational pension?
If you are a member of the following occupational pension schemes; UGPS, USS, LGPS, STSS or NHS your pensionable salary will be based on your reference salary including any other earnings which are recognised by the University as pensionable. This means that participation in Benefits Plus will not affect your occupational pension.
Will participating in Benefits Plus affect my state pension?
The State Pension consists of two pension elements. The first is the Basic Element. Provided that you continue to earn more than the pay protection limit (currently £6,600) your participation in Benefits Plus will not affect your basic state pension. By having this pay protection limit it means no ones basic state pension will be affected.
The second element of the State Pension is earnings related and known as the State Second Pension (S2P). Those who are currently members of USS, UGPS, LGPS, STSS or NHS pension schemes are already contracted out of S2P. This means that you do not contribute to the second state pension and participation in Benefit Plus will have no impact. This is the position for the majority of the University’s employees.
If you are not a member of an occupation pension scheme and are contributing to S2P, by participating in Benefits Plus, your contributions towards the State Second Pension will be decreased. This is because your salary is reduced for the period of your participation. The effect on S2P is likely to be very small.
For further information on your state pension, you may find the link below useful.
For more information about the impact on Pensions contact the pensions section on 0141 330 5366 or email finpensions@mis.ac.uk.
Will joining Benefits Plus have any impact on my student loan repayments?
The Student Loans Company normally uses your P60 return (which shows your taxable earnings) to calculate the amount you pay each month. This figure already excludes any pension contributions you make but further reductions as a result of participating in other parts of Benefits Plus may reduce the amount of student loan repayments you make.
How long will Benefits Plus last?
The University plans to operate Benefits Plus indefinitely. However, if tax, NI or pension law is changed, or, if it is no longer viable for the University to continue Benefits Plus, it reserves the right to withdraw any part or all of Benefits Plus. In the event, your original terms and conditions of employment prior to Benefits Plus would be reinstated.
What happens if I am entitled or may be entitled to working tax credit or child tax credit?
Pensions Plus, Parking Plus and Cycle Plus will not reduce the childcare element of Working Tax Credit. However, participating in Childcare Plus may reduce tax credits. This will depend on your individual circumstances. For more information, visit HM Revenue & Customs (HMRC) website.
Further information
The University is holding a series of roadshows where you will be able to find out more about Benefits Plus. The briefing sessions will be held as follows.
- 5 September: Graham Kerr Lecture Theatre, Gilmorehill campus: 12.00 - 12.45pm
- 8 September: Islay Lecture Theatre, Garscube campus: 12.00 - 12.45pm
- 10 September: Gregory Lecture Theatre, Gilmorehill campus: 1.00 - 1.45pm