Jon Everard Update - Salary Exchange

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Jon EverardUpdate - Salary Exchange Pensions
Total Reward Statements (TRS)
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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?

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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

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Total salary 25,000 (SAUL) 25,000 (SAUL) 50,000 (USS) 50,000 (USS)
  Before After Before After
Monthly basic salary 2083.33 1958.33 4166.67 3902.09
  2083.33   4166.67  
  2083.33   4166.67  
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
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EMPLOYEE NATIONAL INSURANCE BANDS
Salary sacrifice amount
1
UEL 3337 pcm
Salary sacrifice amount
9.4
ET 453 pcm
0
LEL 391 pcm
0
2083
1958
4166.67
3902.09
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Salary exchange PensionsWhy 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

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Total salary 25,000 (SAUL) 25,000 (SAUL) 50,000 (USS) 50,000 (USS)
  Before After Before After
Monthly basic salary 2083.33 1958.33 4166.67 3902.09
  2083.33   4166.67  
  2083.33   4166.67  
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
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EMPLOYER NATIONAL INSURANCE BANDS
EMPLOYEE NATIONAL INSURANCE BANDS
Salary sacrifice amount
1
12.8
UEL 3337 pcm
Salary sacrifice amount
9.4
9.1
ET 453 pcm
0
0
LEL 391 pcm
0
0
2083
1958
4166.67
3902.09
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Salary exchange PensionsWhen 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

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Salary exchange PensionsWho 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.

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Salary exchange PensionsWhat 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

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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

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Total Reward StatementWhat 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.

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FinancialRewards
Total Reward
Base pay
Quality of working life
Career opportunities
Variable pay



Total Remuneration
Non FinancialRewards
Skills development
Pensions
Recognition
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Total Reward StatementHow 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 its a low
  cost. How should it be valued, as the insurance
  premium or the maximum possible payout?

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Total Reward StatementWhat 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

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Total Reward StatementWhat 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

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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

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Total Reward StatementFuture 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

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Any questions?

• 0207 679 1999 or ext 41999
• pensions_at_ucl.ac.uk
• www.ucl.ac.uk/hr/pensions
• www.uss.co.uk
• www.saul.org.uk