Human Resources Division
Jon Everard
Update
- Salary Exchange – Pensions
Total Reward Statements (TRS)
Human Resources Division
Salary exchange - Pensions
• What is it?
• Why are we doing it?
• When are we doing it?
• Who will it apply to?
• What effect will this have on my pension benefits?
Human Resources Division
Salary exchange - Pensions
What is it?
•
It is a salary sacrifice scheme akin to child care vouchers
•
UCL will pay the pension contribution to the pension scheme on behalf
of you, the employee, with your gross pay reduced by the amount of
the pension contribution
•
Your pay will therefore be subject to less tax and national insurance
contributions. As pension contributions are already subject to tax relief
(tax is assessed after the contributions are paid) further savings now
made on NI contributions
•
Savings of upto £175 per annum in net pay for someone on £30,000
Human Resources Division
Total salary:
£25,000 (SAUL)
£50,000 (USS)
Before
After
Before
After
Monthly basic salary:
2083.33
1958.33
4166.67
3902.09
NICs:
152.24
140.49
278.39
275.74
Pension contribution:
125.00
0.00
264.58
0.00
Tax ( 603L)
291.00
291.00
782.53
782.53
Net salary:
1515.09
1526.84
2841.17
2843.82
Increase in take home pay per
month
0.00
11.75
0.00
2.65
Increase in take home pay per
year
0.00
£141.00
0.00
£31.80
Human Resources Division
EMPLOYEE NATIONAL
INSURANCE BANDS
Salary sacrifice
amount
1%
UEL £3337 pcm
Salary sacrifice
amount
9.4%
ET £453 pcm
LEL £391 pcm
0%
0%
£2083
£1958
£4166.67
£3902.09
Human Resources Division
Salary exchange – Pensions
Why are we doing it?
•
Cost of pension provision is escalating with the USS employer rate
increasing by 2% in October this year. This increase alone will cost
UCL in excess of £4M per annum
•
Salary exchange will bring savings to you with an increase in your take
home pay without affecting your pension benefits
•
UCL will also save money on employer national insurance costs
Human Resources Division
Total salary:
£25,000 (SAUL)
£50,000 (USS)
Before
After
Before
After
Monthly basic salary:
2083.33
1958.33
4166.67
3902.09
EMPLOYER NICS
146.03
134.65
366.31
332.34
Pension contribution:
125.00
0.00
264.58
0.00
Tax ( 603L)
291.00
291.00
782.53
782.53
Net salary:
1515.09
1526.84
2841.17
2843.82
Employer NIC savings per
month
0.00
£11.38
0.00
£33.97
Employer NIC savings per year
0.00
£136.56
0.00
£407.64
Human Resources Division
EMPLOYER NATIONAL
INSURANCE BANDS
EMPLOYEE NATIONAL
INSURANCE BANDS
Salary sacrifice
amount
1%
12.8%
UEL £3337 pcm
Salary sacrifice
amount
9.4%
ET £453 pcm
LEL £391 pcm
9.1%
0%
0%
0%
£2083
£1958
£4166.67
£3902.09
0%
Human Resources Division
Salary exchange – Pensions
When are we doing it?
•
Discussions and agreement on implementation of salary exchange has
been reached with our Unions together with their involvement on the
Implementation Group
•
Implement with effect from June 2009 salary
•
Communications start in March through to the end of May 2009 with
most information being provided during April and May
•
Individual notification to all employees either at the end of April or in
early May 2009
Human Resources Division
Salary exchange – Pensions
Who will it apply to?
•
Everyone who is a member of the USS or SAUL pension schemes.
•
Will not apply to NHS Pension Scheme members
•
Not beneficial for those employees who are being paid less than the
Lower Earnings Limit or possibly those contracted for less than 2 years
and who do not want to accrue pension rights
•
Salary sacrifice must not take earnings below the National Minimum
Wage
•
Employees to whom not beneficial will continue to pay pension
contributions and notified accordingly.
Human Resources Division
Salary exchange – Pensions
What effect will this have on my pension benefits?
•
None – because the contributions paid to your pension scheme will be
the amount based on your unreduced or pre salary sacrifice pay level.
•
Therefore, your pension benefits will be calculated using the pay rates
pre salary sacrifice
•
Any requests from a bank or building society will be informed of the pre
salary sacrifice pay level
Human Resources Division
Total Reward Statement
• What is meant by Total Reward?
• How can we quantify or value Total Reward?
• What is a Total Reward Statement (TRS) and what
could be included on it?
• When and how will a TRS be made available?
• Future developments
Human Resources Division
Total Reward Statement
What is meant by Total Reward?
A Definition (one of many!)
Total reward is the term that has been adopted to describe a reward
strategy that brings additional components such as learning,
development, remuneration and other financial benefits, together
with aspects of the working environment, into a Total Reward or benefits
package. It goes beyond standard remuneration by embracing the
organisations culture and is aimed at giving all employees a voice in the
operation, with the employer in return receiving an engaged employee
performance.
Human Resources Division
Pensions
=
+
Non Financial
Rewards
Financial
Rewards
Variable
pay
Total Remuneration
Base
pay
Quality of
working
life
Career
opportunities
Skills
development
Recognition
=
Total
Reward
Human Resources Division
Total Reward Statement
How can we quantify or value Total Reward?
•
Arguably every aspect of development, training, pay, benefits, working
arrangements (flexi, carers leave) can be valued, but how much?
•
Is a training course valued at the course value or the career benefits it offers
in the future
•
Are pensions valued at the employers contribution into the scheme or the
increase each year in the overall capital cost of your pension benefit value
•
Should we place a value on annual leave in excess of the minimum
statutory required
•
EAP is an important and valuable requirement for staff who need to use it.
But per head it’s a low cost. How should it be valued, as the insurance
premium or the maximum possible payout?
Human Resources Division
Total Reward Statement
What is a Total Reward Statement (TRS)
•
A TRS is a document which aims to provide to an employee using
graphical, financial values and descriptive text, a holistic cost or value of
their employment
•
A TRS enables the employer to show that being employed is much more
than just pay
•
It enables an employee to more easily compare other employer
packages aiding the retention of employees and assists in the
recruitment of new employees
Human Resources Division
Total Reward Statement
What could be included on a TRS?
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Base pay
Other permanent allowances (eg. LW)
Temporary allowances e.g. acting up
Overtime
Bonuses
One off awards
Pensions
Professional body subscriptions
Season ticket loans
Relocation expenses
Holidays in excess of statutory
Carers leave
Occupational sick pay
Occupational maternity pay
Salary sacrifice – child care vouchers
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
EAP
Healthcare provided – eye tests, physiotherapy
Core values of the organisation – equality
Flexible working Work environment
Leadership
Employee voice
Recognition
Achievement
Job design and role development
Quality of working life
Work-life balance Learning and development
Workplace learning and development
Training courses
Performance management
Career development
Human Resources Division
Human Resources Division
Total Reward Statement
When and how will they be made available?
•
Aim to have designed and built the TRS by 31st August 2009
•
Roll out in Autumn 2009
•
Yet to determine whether the TRS will be updated monthly, quarterly, half
yearly or annually
•
Will be an on-line document via MyView. Those not able to access
MyView will be sent annually a hard copy document.
•
On-line document will have hyperlinks to policies, latest annual pension
benefit statement, child care voucher provider, payslips
Human Resources Division
Total Reward Statement
Future development of TRS
•
Recruitment Reward Statements.
•
These will enable those of you recruiting for a position in the future to
provide an online statement of the overall Total Reward package for that
post based on some assumptions e.g. appointed on lowest point on
grade, any fixed allowances and membership of pension scheme
relevant to grade
Human Resources Division
Any questions?
0207 679 1999 or ext 41999
pensions@ucl.ac.uk
www.ucl.ac.uk/hr/pensions
www.uss.co.uk
www.saul.org.uk