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Pension+Plus Factsheet by SabeerAli1

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									For members of the Universities Superannuation Scheme (USS)
Heriot-Watt University




Pension+Plus Factsheet

Contents
Introduction
What is Pension+Plus?
How it works
Does everyone benefit?
Who might not benefit?
Frequently Asked Questions
Find out more

Introduction
Following changes to the rules of the Universities Superannuation Scheme (USS), Pension+Plus
was introduced by the University because it offers a more cost-effective way to pay contributions
into the Scheme.

What is Pension+Plus?
Pension+Plus is a new way to contribute to the USS which reduces the amount both you and
the University pay in National Insurance (NI). Your take home pay increases because you pay
less NI. The University also pays less NI and will be able to reinvest the savings it makes into
new initiatives.

Pension+Plus will not affect any other salary-related payments or benefits that you receive from
the University. Your salary increases, bonuses and overtime will continue to be calculated on the
basis of your salary before Pension+Plus (your notional salary).

Pension+Plus will not affect your income tax position, as pension contributions are not taxable
whether they are made by you or the University.

We have designed Pension+Plus so that the majority of staff who are members of the USS will
benefit from taking part, and those who could be adversely affected will automatically not be
included. Pension+Plus will not normally reduce Working Tax Credit or Child Tax Credit. Please
call the Tax Credit Helpline (details can be found on page 4) for advice on how it will impact your
tax credits, as it depends on your personal circumstances.

How it works
   Individuals’ pension contributions are no longer paid by them into the USS
   Instead, the University will increase its contributions by 6.35%, taking its total contributions
    into the USS to 20.35%
   Your salary will reduce by 6.35% (the percentage of your salary you currently contribute to
    your pension)
   You and the University will both pay lower NI
   Your actual take home pay will increase
   Pension+Plus will not affect your income tax position
The increase in your take home pay will depend on how much you earn. The table below gives
you an idea of the annual saving you should expect. Should you wish to use the saving to
increase your Additional Voluntary Contributions (AVCs) to boost your retirement benefits, please
contact the Payroll Office on ext. 8006.

Annual pensionable salary                Estimated saving
                                  per month            per year
£10,000                           £4.97                £59.64
£15,000                           £7.46                £89.52
£20,000                           £9.95                £119.40
£25,000                           £12.43               £149.16
£30,000                           £14.92               £179.04
£35,000                           £17.41               £208.92
£40,000                           £19.90               £238.80
£45,000*                          £2.38                £28.56
£50,000*                          £2.65                £31.80

* The rate of NI paid by staff reduces from 11% to 1% on income above £40,040 (for the 2008/9
tax year). This is why you see a reduced NI saving after this level.

Does everyone benefit?
Pension+Plus will benefit the majority of Heriot-Watt staff who are members of the USS.
However, if any of the circumstances listed below apply to you, you will not be included in
Pension+Plus and will pay your pension contributions in the normal way.

Who might not benefit?
If any of the following circumstances apply to you, you may not benefit from Pension+Plus.
Therefore you will automatically be excluded from taking part, or you will need to consider more
carefully whether or not you should participate.
    If you earn less than the earnings threshold, £5,460 a year (for the 2008/09 tax year)
    If your salary would be reduced below the national minimum wage by participating
    in Pension+Plus
    If you work less than 16 hours a week and you receive Job Seekers Allowance you may find
     this allowance affected

To ensure that you will be no worse off financially, we have introduced a pay protection limit of
£6,500 a year (for the 2008/09 tax year). If your earnings fall below the pay protection limit, or the
national minimum wage, you will be automatically opted out of Pension+Plus.

If your salary subsequently increases above the pay protection limit or the national minimum
wage, you will automatically be opted back into Pension+Plus with effect from the beginning of
the next enrolment period which will be 1 April each year, unless you decide to opt out.

If you are over state pension age, you do not pay any NI and as a result, will not make an NI
saving. However, as you will not be adversely affected and the University will still make savings,
you will be automatically enrolled into Pension+Plus. If you do not want to participate, you will
need to opt out.

If you opt out, you will continue to pay contributions in the same way as you do now and will not
benefit from Pension+Plus.
Frequently Asked Questions
Will my final salary pension be affected?
No, don’t worry, participating in Pension+Plus will have no impact on your final salary pension
from the USS.

Will my basic state pension be affected?
No, Pension+Plus will not affect your basic state pension. The pay protection limit (detailed on
page 2) ensures that anyone who earns less than the minimum levels of earnings an employee
needs to qualify for the basic state pension will automatically be protected.

What’s the difference between my notional salary and my pensionable salary?
Under the Pension+Plus arrangement, notional salary is the term used for your annual salary
before adjustment for Pension+Plus. It is the amount used to calculate your other salary-related
benefits including salary increases, bonuses and overtime. It is also the amount used in any
official letters including mortgage letters, loan applications and job references.

Pensionable salary is based on your notional salary plus any other earnings as may be
recognised by the University as pensionable.

On your monthly payslip, the total ‘Pay’ figure shown (with Pension+Plus) will be 1/12 of your
notional salary plus any other contractual or non-contractual payments, less an amount equal to
your normal monthly pension contributions (and any other contributions for benefits such as
childcare vouchers). This is also technically known as your contractual gross pay.

Can I opt out of Pension+Plus?
Yes. You will need to complete and return the attached opt-out form as soon as possible.
Thereafter, you can opt out by informing us before the next opportunity to change, which will be 1
April each year.

If I decide to opt out, can I opt back in?
You will be able to opt back in, but will only be able to do this by informing us before the next
opportunity to change, which will be 1 April each year.

If I have been automatically opted out, can I choose to opt back in?
If you have been opted out of Pension+Plus it is unlikely that you would benefit from opting back
in. If your salary after Pension+Plus increases, and goes above the pay protection limit or the
national minimum wage, you will automatically be opted back into Pension+Plus the following
April. But, if any other personal circumstances change and you feel you may benefit from
participating, please contact the Payroll Manager on ext. 4524.

Does the University use a similar approach for any of my other benefits?
The University already operates a similar approach for childcare vouchers. For more information
contact Human Resources on ext. 8258/3449.

What happens if I leave the University?
If you leave the University and have been a member of the USS for two years or more, your
deferred benefits will not change because of the introduction of Pension+Plus. Your benefits will
be secured as normal.

If you leave within three months of joining, you will be put back into the position you would have
been if you had not joined the USS.

If you leave after three months of joining but before completing two years’ pensionable service,
you will be entitled to a preserved pension or you can choose to transfer your benefits to an
alternative approved arrangement.
What happens if I have multiple contracts at the University?
If you have more than one contract with the University we will use your total pay to determine if
Pension+Plus will benefit you.

What happens if I go on maternity/adoption leave?
You will continue to participate in Pension+Plus whilst being paid enhanced maternity/adoption
pay but will automatically be opted out during periods of statutory maternity/adoption pay.

I have been on maternity/adoption leave – am I eligible for Pension+Plus on my return?
Yes, if your earnings are above the pay protection limit when you return to work, you will be
included in Pension+Plus (unless you decide to opt out). If your earnings are below this limit, you
will be automatically opted out of Pension+Plus.

If I earn less than the NI threshold, should I participate in Pension+Plus?
Because you earn less than the NI threshold, you would not make any savings by participating in
Pension+Plus, and you may see your State benefits affected. You will therefore be automatically
opted out of Pension+Plus.

Alternatively you can contact your own financial adviser for independent financial advice. See
below for further information.

Find out more
This factsheet aims to answer all of your questions. If, after reading it, you are still unsure
whether or not you want to participate, you should contact the Payroll Manager on ext. 4524

You may also find the following points of contact useful when making your decision:

Tax Credit Helpline
For more information about whether Pension+Plus would affect your tax credits please call
0845 300 3900 between 8am and 8pm.

State Pension Advice Helpline
Visit www.thepensionservice.gov.uk for more information or you can call The Pension Service
Monday to Friday from 8.00am to 8.00pm on 0845 60 60 265.

Independent financial advice
For details on IFAs in your area, visit IFA Promotion Ltd at www.unbiased.co.uk
or call 0800 085 3250.

All information correct at the time of going to print.


February 2008 (v2)
ension Advice Helpline
Visit www.thepensionservice.gov.uk for more information or you can call The Pension Service
Monday to Friday from 8.00am to 8.00pm on 0845 60 60 265.

Independent financial advice
For details on IFAs in your area, visit IFA Promotion Ltd at www.unbiased.co.uk
or call 0800 085 3250.

All information correct at the time of going to print.


February 2008 (v2)




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