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What effect does Pay Plus have on my take home pay?
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Do all staff benefit from Pay Plus for pensions?
The majority of staff see an increase in their take home pay through participating in Pay Plus for pensions.
For some staff whose earnings would fall below the Lower Earnings Limit (the minimum level of earnings that an employee needs to qualify for state benefits) as a result of Pay Plus for pensions, there might be an impact on their entitlement to various state benefits. If the reductions from Pay Plus bring your pay below the National Minimum Wage (NMW) (currently £6.08 per hour for a member of staff aged 21 and over), the University cannot legally allow you to participate in Pay Plus. Procedures are in place to ensure nobody falls below the NMW or is worse off, as a result of Pay Plus for pensions.
Staff over the state retirement age do not pay National Insurance so will see no change in their take home pay as a result of Pay Plus for pensions, although their department or research project will benefit from a reduction in employer National Insurance. |
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Will my pension entitlement be the same at retirement?
| Yes, it will remain the same. |
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What salary can I quote when arranging a mortgage or a loan?
| You can quote your pre-reduction salary i.e. your salary before any reduction due to Pay Plus. This will be shown on your payslip. |
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What's the catch?
| There is no catch. Pay Plus for pensions is a 'salary sacrifice' scheme following HM Revenue and Customs recognised methods of paying pension contributions, and is designed to make pension schemes more attractive. |
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Under what circumstances might I consider not participating in Pay Plus for pensions?
There are two situations where you may want to consider not participating:
• If you are above the state pension age (currently between age 60 and 65 for women and 65 for men). You do not pay National Insurance on your earnings and as a result you will not see any change in your take home pay through participating in Pay Plus for pensions. However, the University is still required to pay employer's National Insurance and, if you participate, your department or research project will make a saving which will help to reduce its costs.
• If you are within the first two years of membership of the pension scheme and are unsure of whether you intend to stay in the pension scheme beyond the first two years. If you participate in Pay Plus for pensions and decide to leave the scheme within the first two years, your refund for the time you have been in Pay Plus for pensions will be nil because you have not made any employee contributions. Please see the next question for further details.
It is up to you to decide whether you want to be in Pay Plus for pensions, and whether your own circumstances may mean the Pay Plus for pensions scheme would not be beneficial to you. You may wish to seek independent financial advice if you are unsure of how these changes may affect you. |
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What happens to my pension if I leave the pension scheme?
If you leave the pension scheme with more than two years' service there will be no change. You will have the choice of a deferred pension or a transfer value of your deferred benefits.
If you leave the pension scheme within the first three months of membership, you will be put back into the position you were in before joining the scheme, and will receive a refund of the contributions made on your behalf, less tax and National Insurance.
Currently, if you are in USS and leave with less than two years' service you have the option of taking a deferred pension or a transfer value, plus the option of a refund of your own contributions (less statutory deductions). In USPS you currently have the option of taking a transfer value or a refund.
Under Pay Plus for pensions you will no longer make employee contributions and therefore your refund for the time you have been in Pay Plus for pensions will be nil. You will also be bought back into the State Second Pension. The other options for both schemes remain available. Please contact the Pensions Office on 0114 22 21399 or email pensions@sheffield.ac.uk if you require further details of the options.
It is up to you to decide whether you want to be in Pay Plus for pensions before you have completed two years' service in the pension scheme, and whether your own circumstances may mean that being in Pay Plus for pensions would not be beneficial to you. You may wish to seek independent financial advice if you are unsure of how these changes may affect you. |
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What happens if I leave the pension scheme, but not the University?
| You will need to leave Pay Plus for pensions at the same time as you leave the pension scheme; otherwise your salary will remain at the reduced level. |
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Does Pay Plus for pensions affect pay increases?
| All pay increases including National Pay Awards, increments and Exceptional Contribution Awards will be based on your pre reduction salary. All of your pay related benefits will also be calculated using this amount. However, Pay Plus for pensions will mean that you should receive a slightly larger proportion of the increase in your take home pay. |
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If my salary is being reduced how will I be able to check that my overtime etc has been worked out correctly and paid to me?
| Your salary, before the pension reduction, remains on your payslip for reference, and overtime etc continue to be based on this figure. |
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How does this appear on my payslip?
Your salary will be shown on your payslip together with the Pay Plus for pensions reduction labelled "Pay Plus USS" or "Pay Plus USPS".
If you have already made pension contributions at the University before joining Pay Plus for pensions, your previous pension contribution deduction, shown as "USS" or "USPS" will not be on the payslip as you are no longer paying any contribution. If in any month, your reduced salary falls below the National Minimum Wage or Lower Earnings Limit, a deduction to cover your pension contribution will be shown on your payslip, as we will not be able to reduce your salary below these levels. |
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Why does my payslip show two pension entries?
| If you have two pension entries on your payslip, it is likely that you had pension changes in this month’s payroll that relate to time when you were not in Pay Plus for pensions. Your Pay Plus for pensions entry is shown on the left hand side of the payslip as a reduction, and your non Pay Plus entry is shown on the right hand side as a deduction. |
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Does participating in Pay Plus for pensions affect the amount of State Pension I receive?
No, in most cases Pay Plus does not affect your State Pension. The State Pension is based on the number of years for which you have been paying National Insurance, not how much National Insurance you have paid. So if your pay is above the Lower Earnings Limit, you are considered to be paying National Insurance and are entitled to the State Pension.
If your salary is below the Lower Earnings Limit, you do not make National Insurance contributions and, therefore, this will have an effect on your State Pension. Procedures are in place to take staff out of Pay Plus for pensions if the Pay Plus reduction causes their salary to fall below the Lower Earnings Limit. If a member of staff’s salary increases back above the Lower Earnings Limit, they will automatically be put back into Pay Plus.
The State Second Pension (S2P) does depend on the value of contributions an individual makes, but, if you are a member of the Universities Superannuation Scheme or the University of Sheffield Pension Scheme, you are contracted out of S2P and so make no contributions to it. |
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How does the University ensure that Pay Plus for pensions does not affect entitlement to state benefits?
| Your pay which is subject to National Insurance contributions will be monitored to ensure that the Pay Plus for pensions reduction doesn’t cause it to fall below one twelfth of the annual Lower Earnings Limit in any month. If this happens you automatically drop out of Pay Plus for pensions, until such a time as your reduced salary rises above the Lower Earnings Limit, when your pension contributions revert to being made through Pay Plus. When you drop out of Pay Plus, your pension contributions are made via a deduction from salary, and do not attract National Insurance savings. |
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Does Pay Plus for pensions affect maternity pay?
| Calculating maternity pay is complex. Pay Plus for pensions does affect these calculations and the amount the University can claim back from the government but the University will ensure that the amount you receive will not be less than the amount you would have received had you not been in Pay Plus for pensions. |
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Does Pay Plus for pensions affect adoption pay?
| The University will replicate current practices, so you will be no worse off as a result of participating in Pay Plus for pensions. The qualification rules for adoption leave and adoption pay are complex. If you are considering, or going through an adoption placement, please contact the Human Resources Department for further advice. |
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Will Pay Plus for pensions leave me worse off if I am on long term absence (for instance sick leave or study leave)?
| No, you will not be any worse off. |
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Does Pay Plus for pensions affect student loan repayments?
| If you are repaying a student loan through payroll, your student loan repayments may be reduced slightly as a result of participating in Pay Plus for pensions. This is because your repayments are calculated based on your pay which is subject to National Insurance contributions, which is reduced under Pay Plus for pensions. You may wish to seek independent financial advice if you are unsure of how these changes may affect you. |
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Does Pay Plus for pensions affect Tax Credits?
There may be an effect on your entitlement to these credits. You should contact the Tax Credits helpline on 0845 300 3900 for further information. They may ask you to provide details of the changes to the way your pension contributions are made.
HMRC provide a tax credit calculator which is available at www.hmrc.gov.uk/taxcredits/calculator.htm. |
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Does Pay Plus for pensions have any impact on payments to the Child Support Agency (CSA)?
Child maintenance payments to the CSA are calculated with reference to your net income i.e. your pay after the deduction of pension contributions, tax and National Insurance. Under Pay Plus for pensions your net income increases because you are paying less National Insurance and your child maintenance payments may therefore increase as a result.
If you participate in Pay Plus for pensions you should notify the CSA of the change in your net income immediately. Contact details for the CSA and further details of possible effects can be obtained from the CSA’s website at www.csa.gov.uk . |
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Does Pay Plus for pensions affect Death in Service and Spouse’s Pension?
| These benefits remain unchanged and will be based on your pre reduction salary. |
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Does Pay Plus for pensions have any effect on Additional Voluntary Contributions (AVCs)
| AVCs are not covered by Pay Plus for pensions, and continue to be calculated and paid in the usual way. |
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Does Pay Plus for pensions have any effect on non-superannuable payments?
| Pay Plus for pensions does not have an effect on non-superannuable payments. |
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Does Pay Plus for pensions affect the amount of tax relief I receive?
| No, the amount of tax relief received is not affected, nor does it affect the amount of Income Tax you pay. |
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I am over the state retirement age and therefore do not pay National Insurance. Can I participate in Pay Plus for pensions?
| You can participate in Pay Plus for pensions. Although you will see no change in your take home pay, your department or research project will benefit from a reduction in employer National Insurance. |
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I pay National Insurance at the reduced married women’s National Insurance rate. Do I benefit from Pay Plus for pensions?
| You still make National Insurance savings from participating in Pay Plus for pensions but your savings are based on these rates rather than the amounts referred to elsewhere in these web pages. |
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What happens if I have more than one job at the University?
| If you have more than one job at the University, your total superannuable pay will be taken into account when calculating the reduction of salary. If you opt out of Pay Plus for pensions, you will be opted out for all your posts at the University. |
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How are the employer savings used?
| Pay Plus for pensions results in a reduction in staffing costs for internally and externally funded staff. The savings for internally funded staff are available to departments. The savings for externally funded staff remain in project budgets. |
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Will the reduction in staffing costs created by Pay Plus for pensions lead to staffing budgets being reduced in future years?
| No. A staffing budget for one year will not be reduced as a result of the Pay Plus savings from the previous year. Pre reduction salaries will be used for costing research projects. |
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How long will Pay Plus for pensions be offered?
These types of schemes have been available for a number of years and there does not currently appear to be any indication that they will be withdrawn.
It is the University’s intention to run the scheme indefinitely. Pay Plus for pensions is a 'salary sacrifice' scheme following government recognised methods of paying pension contributions, and is designed to make pension schemes more attractive. If these change or if there is no longer any benefit in this arrangement, the University reserves the right to withdraw Pay Plus for pensions. Should this happen pension contributions would revert to deductions from salary and your salary would no longer be reduced by the amount equivalent to your employee pension contribution. In the meantime you would have benefited from increased take home pay. |
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| No. All new members of the relevant pension schemes automatically join Pay Plus for pensions. |
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What do I have to do if I don’t want to join Pay Plus for pensions?
If you don’t want to participate in Pay Plus for pensions when you join the pension scheme, you can download an opt-out form from the Pay Plus website at www.sheffield.ac.uk/payplus/pensions or request a copy from the Pensions Office (pensions@sheffield.ac.uk or 0114 22 21399). This form should be completed and returned to the Pensions Office with your pension scheme membership form.
If you choose to opt out of Pay Plus for pensions you will still be able to be a member of the pension scheme but will not be able to take advantage of the National Insurance savings, and the increase in take home pay achievable through Pay Plus for pensions. |
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What if I change my mind or if my circumstances change?
You are only able to change your mind and opt in or out of Pay Plus from 1 April each year, or if you experience one of the defined Lifestyle Events, as required by HM Revenue and Customs. The Lifestyle Events are:
• Notification/commencement of maternity/adoption leave
• Birth/adoption of a child
• Return from maternity/adoption leave
• Start of marriage/civil partnership
• End of marriage/civil partnership/long term relationship
• Material change in own/partner/dependant’s circumstances
• Commencement of a period of long term absence or secondment
• Return from a period of long term absence or secondment
• Significant change in working hours, job or contractual terms of employment
• Joining/leaving the pension scheme
• Reaching state pension age
• Reaching 3 months' pensionable service
• Reaching 2 years' pensionable service
In these cases you may, with the University’s acceptance, leave or join Pay Plus for pensions at any time.
You can download an opt-in or opt-out form from the Pay Plus website at www.sheffield.ac.uk/payplus/pensions or request a copy from the Department of Human Resources (payplus@sheffield.ac.uk or 0114 22 21490). |
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I am a member of a pension scheme other than USS or USPS. Can I participate in Pay Plus for pensions?
| No. Pay Plus for pensions is currently only available to USS and USPS members. |
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What are the arrangements for new starters?
| New starters who join USS or USPS will automatically join Pay Plus for pensions unless they complete an opt-out form. |
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Who can I ask if I have any additional questions?
| If you have any additional questions please contact the Pay Plus helpline on payplus@sheffield.ac.uk or 0114 22 21490. |
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