Pensions Plus
The University is committed to making your pension contributions work more efficiently and Pensions Plus does just this. If gives both you and the University the opportunity to make savings.
Instead of making your monthly pension contributions from your salary, you agree to give up an amount of your contractual gross pay equal to your pension contributions. In return, the University increases its contributions to cover both the employee and employer elements of the pension contributions.
As a result the amount you pay in NI reduces and your take home pay increases. The University also pays less NI.
Your pensionable salary will be based on your reference salary including any other earnings which are recognised by the University as pensionable. Your basic state pension will not be adversely affected.
How Pensions Plus works in brief
You will no longer pay your normal pension contributions into the pension fund directly.
Your gross contractual salary will be reduced by either 6.35% for Universities Superannuation Scheme (USS) members, or 6% for University of Glasgow Pension Scheme (UGPS) members.
In return, the University will increase its contributions by an equivalent amount. These will be paid into the pension fund.
As your salary will be lower, you will pay less NI. Your tax position will remain unchanged.
If you are a member of UGPS and pay Additional Voluntary Contributions (AVCs) these can also be included in Pensions Plus at your request.
It is currently not possible for members of USS to include their AVCs in Pensions Plus. We will notify USS members if the situation changes.
What savings can I make?
The example below illustrates the savings that are made by an employee who belongs to USS (6.35% contributions) and earns £25,000 per year. These figures are based on 2008/2009 National Insurance rates.In this example the employee would see an increase in take home pay of £149 as a result of participating in Pensions Plus. The University would make a corresponding saving of £145 in employers National Insurance contributions.
| Payments | Before Pensions Plus |
After Pensions Plus |
|---|---|---|
| Salary |
£25,000 |
£23, 412 |
| Pension contributions |
£1,588 |
£0 (£1,588 paid by the University) |
| Salary after contributions (taxable pay) | £23,412 | £23,412 |
| National Insurance | £1,839 |
£1,690 |
| Salary after Pension and NI (but before income tax) | £21,573 |
£21,722 |
| Indicative income tax |
£3,595 |
£3,595 |
| Indicative take home pay |
£17,978 |
£18,127 |
In this example the employee would see an increase in take home pay of £149 as a result of participating in Pensions Plus. The University would make a corresponding saving of £145 in employers National Insurance contributions.
What happens next
From 1 October 2008, if you are a member of either USS or UGPS pension schemes, you will automatically be enrolled into Pensions Plus unless:
- you choose to opt out,
- your contractual earnings less than the Benefits Plus Pay Protection Limit of £6,600 or,
- your earnings would fall below the National Minumum Wage if you were to participate (see page 11 for more information).
If you currently participate in the childcare voucher scheme or you hold a University parking permit, this will be taken into account when deciding if you will be automatically enrolled in Pension Plus. You will be informed if you will be automatically opted out.
Changing your terms and conditions of employment
Please note that by participating in Pensions Plus, you are agreeing to a change in your contractual terms and conditions of employment with the University with effect from 1 October 2008.
If you don’t want to participate, you can opt out by completing an opt out form. For a copy of the form, contact the Pensions Section on 0141 330 5366 or email finpensions@mis.gla.ac.uk
The University will assume that you accept the proposed change unless you complete and return an opt out form before 29 September 2008.
If after reading this section and the Pensions Plus: frequently asked questions, you require any further information regarding Pensions Plus please contact the Pensions Section.
If you are still unsure about whether or not you should participate in Pensions Plus, you might want to talk to an Independent Financial Adviser (IFA). You can find a local IFA by contacting IFA Promotion Ltd online at: www.unbiased.co.uk or by telephone on: 0800 085 3250.