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PensionsExchange is a Salary Sacrifice arrangement for members of the SAUL and USS Pension Schemes.
Members of SAUL (Final Salary and Career Average Revalued Benefits Plans) and USS (Final Salary & Career Revalued Benefits Sections) are able to participate in PensionsExchange, a Salary Sacrifice arrangement introduced at UCL with effect from 01 May 2010. Your participation in PensionsExchange is automatic upon commencement of your SAUL or USS membership, unless it is identified that by participating in PensionsExchange whilst a member of SAUL or USS would have an adverse effect on your take home pay. You will be informed accordingly if this applies in your case
How it works
Under PensionsExchange an individual’s regular pension contributions (excluding any Additional Voluntary Contributions - AVCs) are reduced to nil, and UCL makes payments equivalent to those the individual previously made to USS / SAUL, as well as its employer contribution. The individual’s contractual gross pay is reduced by the amount that they used to pay into USS / SAUL. As a result, take-home pay in most cases increases because they are paying less National Insurance. This is because the salary from which the employee pension contributions were previously paid were subject to National Insurance but contributions made by the employer are not.
Pension entitlements and pay-related benefits are not adversely affected by this change and the scheme ensures that all pension contributions continue to be paid in full.
Annual Anniversary Date
PensionsExchange has an annual anniversary date of 1 May. On this date you can choose whether you wish to continue to participate or not in PensionsExchange. Employees may only opt-in or opt-out at the PensionsExchange annual anniversary date, or as a result of a Lifestyle Event.
Your choices at each 1 May are:
- Continue membership: If you wish to continue to participate in PensionsExchange, you don’t need to take any further action, you don’t have to do anything – your membership of PensionsExchange will automatically continue.
- Opt-in to PensionsExchange: If you have previously decided not to participate in PensionsExchange and have opted-out, but would now like to enjoy the benefit of participation in PensionsExchange, you are required to complete the Opt-in Form and send the completed form to UCL Pension Services no later than 30 April of each year.
- Opt-out of PensionsExchange: You can opt-out of PensionsExchange initially on joining UCL. Or, if you have been participating in PensionsExchange, but have decided that you wish to withdraw, you may do so from the PensionsExchange anniversary of 1 May, and each year thereafter. You are required to complete the Opt-out Form and send the completed form to UCL Pension Services no later than 30 April each year. By opting out of PensionsExchange you will continue to receive your existing salary and make pension contributions under the normal arrangements. However, you will not benefit from the reduced National Insurance Contribution rate and a higher take home (net) pay, than if you had continued participation in PensionsExchange.
Employers NI savings
Through implementing PensionsExchange UCL will benefit from paying lower employers' National Insurance Contributions. Most of these savings will be used to meet the rising cost of pension provision which increases each year in line with UCL's salary bill.
Some savings will be used to enhance the working environment for staff. These savings will be attributed to the UCL Summer 2010 Programme of improvements run by Estates and Facilities.
UCL are also looking to introduce a voluntary benefits package as a result of these savings and this will be communicated once implemented.
Your other choices and actions
Your continued participation in PensionsExchange, whilst continuing to be a member of SAUL or USS) is automatic, you don’t have to do anything. You are able, as a member of SAUL or USS to opt in to PensionsExchange and enjoy the benefits of PensionsExchange participation at either at any Annual Anniversary Date of 1 May 2013 or if you experience a Lifestyle Event.
You are able to opt out of PensionsExchange but only on commencement of your SAUL or USS membership, or at any Annual Anniversary Date of 1 May, or if your experience a Lifestyle Event. By opting out of PensionsExchange, this means you remain a member of SAUL or USS but will see a reduction in your take home pay as you will not be benefitting from a reduction in National Insurance contributions as you would have had you remained in PensionsExchange.
If you leave SAUL or USS, ie no longer be a member of SAUL or USS, your participation in PensionsExchange automatically ceases at the same time; you don’t need to do anything.
IMPORTANT NOTE: Refunds of USS and SAUL contributions
Under PensionsExchange a refund of employee contributions is only permitted if you withdraw from membership within 3 months. The refund will be subject to a tax charge.
You can opt out of PensionsExchange at the commencement of your employment by completing an ‘Opt out of PensionsExchange Form’ and forwarding it to pensions@ucl.ac.uk. You will then continue with your USS or SAUL membership whilst retaining the right to opt out of the scheme within 23 months.
Pension contributions are subject to full tax relief. This tax exemption is lost when you withdraw from pension scheme membership. All refunds of pension contributions would be subject to a tax charge.
Once you have reached two years membership a refund of your contributions is not available but you will have built up a benefit entitlement in the pension scheme.
Further information about the restrictions applicable to a refund of contributions options is outlined in the Pensions Exchange Guide (Q13, Q18, Q19) and the General FAQs (Q3)
Glossary of Terms
USS | USS Trustee Company. This is a Defined Benefit scheme which is contracted out of the State Second Pension. The current employee contribution rate is 6.35% of pensionable salary |
SAUL | SAUL Trustee Company. This is a Defined Benefit scheme which is contracted out of the State Second Pension. The current employee contribution rate is 6% of pensionable salary |
PensionsExchange | The method of making pension contributions to USS or SAUL. The employee agrees to reduce their salary by an amount equivalent to their pension contribution and pays over full contributions to the relevant pension scheme (contribution previously paid by the employee + UCL's contribution currently paid). |
Basic Salary | Your contract of employment with UCL sets out your basic salary and grade. |
Pensionable Salary | Any part of pay that attracts pension contributions |
Reference Salary | The total salary prior to any reductions in respect of PensionsExchange |
Adjusted Salary | The sum of pensionable salary less the appropriate % reduction in respect of PensionsExchange plus the full value of any other non-pensionable pay elements |
Take Home Pay | The adjusted salary minus statutory deductions and any voluntary deductions (i.e. student loan repayments) |
Anniversary Date | 1st May. This is the date each year on which you can opt in / out of PensionExchange |
Lifestyle Event | A change in circumstances that permits an employee to opt in / out of PensionsExchange on a date other than the anniversary date |
Terms and Conditions
If you are currently in the Universities Superannuation Scheme (USS) or the Superannuation Arrangements of the University of London (SAUL) you will automatically be included in PensionsExchange. This will constitute a change to your current Terms and Conditions of employment (see below). It is important that you understand and agree the changes to your basic salary and payment of pension contributions, as you will automatically be included in PensionsExchange. All other terms and conditions of employment remain unaffected.
If, however, you would prefer to opt out, you must sign and complete in full an opt out form. This is available from Pension Services and must be returned by 30 April 2010. If an opt out form has not been received by this date, you will not be able to opt-out of PensionsExchange until the following 30 April 2011 and thereafter any subsequent 30 April unless you experience a lifestyle event. Opt outs received by 30 April will be effective from 1 May.
| Basic Salary: | Your contract of employment with University College London (“UCL”) sets out your basic salary and grade. The changes under PensionsExchange mean that your Basic Salary will be reduced with effect from 1 May 2010 by 6.35% (for USS members) or 6% (for SAUL members). UCL will increase its employer pension contribution into the Universities Superannuation Scheme (“USS“) or the Superannuation Arrangements of the University of London (“SAUL”) by the equivalent amount. |
| Reference Salary | Your Reference Salary is your Basic Salary prior to any reduction for PensionsExchange. This will have been notified to you in your original employment contract. Should your rate of pay change as a consequence of a pay review this will be applied to your “Reference Salary”. |
| Pensionable Salary | Pensionable Salary is the sum of your Reference Salary and any other pensionable pay elements (e.g. London Allowance). Your Pensionable Salary and all entitlements to benefits under the USS or SAUL are unaffected by PensionsExchange. |
| Adjusted Salary | Adjusted Salary is the sum of your Reference Salary and other pensionable pay elements, reduced by 6.35% (for USS members) or 6% (for SAUL members), plus any non-pensionable payments you may receive. (The latter are unaffected by PensionsExchange.) PAYE and NIC calculations will be made on your Adjusted Salary. These statutory deductions, together with some other statutory and voluntary deductions that may be applicable (e.g. season ticket loan repayments) are deducted from your Adjusted Salary to produce your ‘net’ take home pay. |
| Overtime etc. | If you are entitled to additional pay for overtime working, acting up and similar pay supplements, these will continue to be calculated based on your Reference Salary prior to any PensionsExchange Adjustment. Therefore such payments will not be affected by participation in PensionsExchange. |
| Sick Pay / Maternity Pay / Adoption Pay /Paternity Pay | In accordance with statutory requirements Statutory Sick Pay, Statutory Maternity Pay, Statutory Adoption Pay and Statutory Paternity Pay will be based on your Adjusted Salary; however any enhanced occupational pay you receive will be based on your Reference Salary. The amount of pay you receive while in receipt of occupational pay will not be negatively affected by PensionsExchange and you will continue to Participate in PensionsExchange throughout this period. During periods where you are in receipt of Statutory Sick/Maternity/Paternity/Adoption Pay only, there will be no PensionsExchange Adjustment and UCL will continue to make additional pension contributions. During periods of unpaid maternity leave you will not have any PensionsExchange Adjustment and no contributions will be made by UCL. When you return to from your unpaid period of leave PensionsExchange will apply as before. |
| Holiday Pay | Any holiday pay which you might be entitled to receive on leaving UCL’s employment will be based on your Reference Salary. |
| PensionsExchange | PensionsExchange is a salary sacrifice arrangement where an employee agrees to reduce their Basic salary and UCL agrees to provide the employee with an additional benefit equivalent to the salary reduction. In the case of PensionsExchange this is additional pension contributions. UCL reserves the right to amend or discontinue PensionsExchange should UCL determine that it is appropriate for it to do so taking into account such matters as it may consider relevant from time to time including changes to UK tax and National Insurance Contributions legislation. If you agree to these terms (i.e. do not opt-out by 30 April 2010) you will not be able to opt-out of PensionsExchange until 30 April 2011 and thereafter any subsequent 30 April unless you experience a lifestyle event. These include the following:
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