Salary Sacrifice for Pensions
Salary Sacrifice for pensions is HM Revenue and Customs (HMRC) approved "salary sacrifice" scheme which benefits members of the Universities Superannuation Scheme (USS) and the University of Sheffield Pension Scheme (USPS).
A pension salary sacrifice (or exchange) works when a pension member gives up the right to receive part of their salary equivalent to the value of their pension contributions. The employer will, in exchange, pay the equivalent value of the employee contributions on the member’s behalf to the scheme (along with the normal employer contributions). For the majority of members, this results in a lower National Insurance contribution for both them and their employer. This is in addition to the tax relief members already receive on their pension contributions.
Please note that in the fourth month of pension membership following automatic enrolment, your contributions will automatically become Salary Sacrifice for pension’s payments unless you opt out (not applicable to members on the casual payroll). This means that if you subsequently leave or opt-out of the scheme after 3 months of membership, you will not be able to gain a refund of these contributions given that they are technically paid by the employer. Please see the Policy and Frequently Asked Questions below for further information on this.
Contributing to pension through Salary Sacrifice formally varies your terms and conditions of employment, in that the balance of pay and benefits provided to you by the University will be adjusted, whilst the overall value of you contractual entitlement will remain the same. The amount of the reduction in your base pay will be offset by an additional employment benefit, paid as an additional employer pension contribution by the University of the same amount.
The pre-reduction salary figure remains on payslips and pension benefits, overtime and other superannuable payments continue to be based on this figure. The pre-reduction salary is also quoted for external purposes e.g. mortgage or loan applications.