Pension (S&LAS) -Paysave - Superannuation and Life Assurance Scheme (S&LAS)

1. Introducing Paysave
2. How to take part
3. How Paysave works
4. Salary
5. Payslip
6. Savings
7. Important notes
8. What do I need to do now?
9. Who should opt out?
10. Frequently asked questions

Introducing Paysave

Paysave will be introduced for staff in the S&LAS Pension Scheme from 1 April 2008 as a more effective way of contributing to your pension and saving for your retirement.

By participating you will most likely be able to increase your take home pay through National Insurance (NI) savings. At the same time the University will also make NI savings which is good for the long term success of the University, staff and students. Paysave is not a new concept and has been introduced by a number of other organisations, including Universities.

Because most staff will benefit from taking part in Paysave you will automatically be included unless you are informed that you will be worse off by taking part.

Please note that Paysave is a change to your contractual terms and conditions.

This is explained in more detail in the booklet and details of how to opt out are also included.

If you have any questions about Paysave, please contact Lisa Harley by emailing ljh10@st-andrews.ac.uk.

How to take part

Paysave will benefit most staff therefore you do not need to do anything to join. You will automatically be included from your start date unless we have contacted you to suggest that you are not going to be better off.

How Paysave works

In the past you would have paid into the Pension Scheme directly from your salary. Paysave enables you to benefit by paying less NI.

This is how it works:

1. You stop making your normal contributions to your Pension Scheme.
2. The University pays an additional amount into the Pension Scheme equal to your normal contribution.
3. Your basic salary is reduced by an amount equal to your normal contributions.
4. You pay less NI (than you would otherwise do without Paysave) so your take home pay increases unless you choose to reinvest the NI saving.

• Let’s assume you currently pay £1000 into the Pension Scheme each year. After the change you would no longer pay this amount.
• At the same time your contractual gross basic salary will reduce by the £1000 that you no longer pay into the Pension Scheme.
• The University will pay an extra £1000 into the Pension Scheme to make up the difference.
• You’ll pay less NI for the year (as a result of the reduction in your gross basic salary) and receive the same pension benefit as you would do without Paysave.

Salary

As a participant in Paysave you will now have two “types” of salary. These are explained below:

Basic salary

This is your basic annual salary before the adjustment for Paysave and is the salary that will be used by the University when calculating all salary-related benefits (e.g. pension contributions and benefits, salary increases, overtime, life assurance). It will also be the salary used for any external references (e.g. mortgage references) which will remain unchanged.

Paysave salary

This is your salary after the adjustment for Paysave. This is the salary used by the Salaries Office to calculate how much NI you pay.

An example

Pensionable salary is £20,000 a year and the pension contribution rate is 7.77%.

Payslip

This is how a payslip will look as a result of Paysave - Payslip S&LAS (PDF, 284 KB)

Savings

The following table illustrates the likely savings for staff under Paysave.

Important notes

1. Examples use NI rates and earnings from the 2008/2009 tax year.
2. There will be no change to your overall income tax position.
3. From April 2008, for staff earning up to around £40,000, the saving is calculated at the rate of 9.4% (i.e. the NI you save); for staff earning more than this the saving is calculated at the rate of 1%.
4. Pensionable salary is assumed to be equal to your total annual salary.

What do I need to do now?

You will automatically be included in Paysave, but you will have an opportunity to opt out of Paysave in March each year (to be effective from the following April).

Who should opt out?

We have designed Paysave so that most of you will benefit from taking part. However, you may be worse off in Paysave, either now or in the future, in the following instances:

1. If you earn less than the lower earnings limit, currently around £5,000 a year. This is because you would not make any savings and may see your state benefits affected. Therefore, you will automatically be opted out of Paysave.
2. If your salary will be reduced below the National Minimum Wage (NMW) by Paysave. This is because it is not possible to reduce your pay below the NMW. Therefore, you will automatically be opted out of Paysave.
3. If you work less than 16 hours a week for the University then you will be opted out automatically. This is because your Job Seekers Allowance may be affected. However if you work somewhere else bringing your total employment above 16 hours per week then you may ask to be included in Paysave by emailing Lisa Harley at LJH10@st-andrews.ac.uk. You will need to decide whether this is an issue for you and whether you wish to take part in Paysave or not.

Please note: You will automatically be excluded if any of the above applies.

Staff over State Pension Age do not pay any NI and as a result will not make an NI saving. However, you will still be automatically included in Paysave.

Paysave will not reduce the following tax credits:

• Childcare Element of Working Tax credit
• Working Tax credit

Frequently asked questions

• Frequently asked questions