Answers to your Pensions Plus questions

The USS rules allow additional pension contributions to be made by the employer under a Pensions Plus scheme which provides an opportunity to save National Insurance Contributions (‘NIC’).  Employee pension contributions will be reduced to nil and as a result, the employee’s take home pay will, in most cases, increase.

The amount of NIC saved depends on the employee’s earnings level and National Insurance category.  The table below provides an indication of the annual NIC savings available to the employee.

Typical annual savings

*Savings based on tax and NIC rates for 2015/16.  See question 3 ‘How will my salary be affected if I participate in Pensions Plus?’ for further details.

NIC savings are proportionately lower for higher earners. This is because the rate at which NIC is paid (and therefore saved under Pensions Plus) reduces to 2% for earnings over the NIC upper earnings limit (£42,380 per annum for 2015/16).

By implementing Pensions Plus, the University will also benefit from paying less employers’ NIC.  The savings incurred through the implementation of Pensions Plus will be used to fund a number of strategic staffing initiatives to support the University in meeting its ambitions.

Step 1
For all pay received, you'll stop making standard pension contributions from your Contractual Salary to the USS.

Step 2
The University will make contributions to the USS, equal to the contributions previously made by you, along with its employer contribution.

Step 3
Your Contractual Salary will reduce by the amount that you previously paid into the USS.  Your unreduced salary will be known as your ‘Reference Salary’.

Step 4
In most cases, your take home pay will increase because you are paying less NICs.  This is because the salary from which you previously paid pension contributions was subject to NIC, whereas employer contributions paid by the University are not.

Step 5
The level of benefits from your USS pension will not be affected.  The salary used in calculating payments such as pay awards and overtime will not be affected as this will be based on your Reference Salary.

Step 6
Your full Pensionable Salary will remain unchanged and the University will quote your Reference Salary for all external purposes, for example when quoting your salary for mortgage applications.

For all pay received, Pensions Plus will operate on the basis that all normal pension contributions are paid by the University.  Therefore you'll no longer pay employee pension contributions directly from your salary.  Instead, your salary will be reduced by the appropriate amount of pension contributions for the USS.  The University will make an equivalent additional employer contribution to the USS.

We will use the term 'Reference Salary' to mean your contractual salary before taking account of any Pensions Plus adjustment and the term ‘Adjusted Salary’ to refer to your contractual salary after the Pensions Plus Adjustment.

The following tables illustrate savings achievable to employees participating in the Pensions Plus arrangement.  The ‘standard tax code’ of 1000L has been used in the examples below to illustrate that the same amount of tax is paid before and after Pensions Plus.

USS Final Salary Section: Example 1

The example below highlights the approximate before and after position of an employee earning £40,000 per year, with a contribution of £3,000 (7.5% of Pensionable Salary) per year into the USS.  Under the Pensions Plus arrangement, the employee’s Reference Salary remains at £40,000, although the Adjusted Salary becomes £37,000.

The employee’s net take-home pay has increased by £318 per year and the total contributions to the USS have remained the same.

In this example the employee currently pays a £3,000 Pension Employee Contribution. Under Pensions Plus the employee no longer makes an Employee Contribution; however, the University pays an additional £3,000 contribution into the Scheme to ensure that the same level of overall contributions is maintained. 

USS Final Salary Section: Example 2

The example below highlights the approximate before and after position of an employee earning £20,000 per year, with a contribution of £1,500 (7.5% of Pensionable Salary) per year into the USS.  Under the Pensions Plus arrangement, the employee’s Reference Salary remains at £20,000, although the Adjusted Salary becomes £18,500.

The employee’s net take-home pay has increased by £159 per year and the total contributions to the USS have remained the same.

In this example the employee currently pays a £1,500 Pension Employee Contribution. Under Pensions Plus the employee no longer makes an Employee Contribution however the University pays an additional £1,500 contribution into the Scheme to ensure that the same level of overall contributions is maintained. 

USS Career Revalued Benefits Section: Example 1

The example below highlights the approximate before and after position of an employee earning £40,000 per year, with a contribution of £2,600 (6.5% of Pensionable Salary) per year into the USS.  Under the Pensions Plus arrangement, the employee’s Reference Salary remains at £40,000, although the Adjusted Salary becomes £37,400.

The employee’s net take-home pay has increased by £276 per year and the total contributions to the USS have remained the same.

In this example the employee currently pays a £2,600 Pension Employee Contribution. Under Pensions Plus the employee no longer makes an Employee Contribution however the University pays an additional £2,600 contribution into the Scheme to ensure that the same level of overall contributions is maintained.

USS Career Revalued Benefit Section: Example 2

The example below highlights the approximate before and after position of an employee earning £20,000 per year and a contribution of £1,300 (6.5% of Pensionable Salary) per year into the USS.  Under the Pensions Plus arrangement, the employee’s Reference Salary remains at £20,000, although the Adjusted Salary becomes £18,700.

The employee’s net take-home pay has increased by £138 per year and the total contributions to the USS have remained the same.

In this example the employee currently pays a £1,300 Pension Employee Contribution. Under Pensions Plus the employee no longer makes an Employee Contribution however the University pays an additional £1,300 contribution into the Scheme to ensure that the same level of overall contributions is maintained.

The University will need to make amendments to your current terms and conditions of employment.  It's important you understand the changes to your contractual pay and payment of pension contributions, as you'll automatically be included, unless you choose to opt out.  All other terms and conditions of employment remain unaffected.

If you're unlikely to benefit from participation, you'll be contacted separately, see Questions 7 and 14 for more details.

Existing Scheme Members
If you're already a member of the USS and are happy to participate in the Pensions Plus arrangement you don't need to do anything: we'll automatically include you. If you don't wish to participate in the Pensions Plus arrangement but wish to remain in the pension scheme, you'll need to complete the non-participation form to opt out of Pensions Plus.  You can obtain this form from the Pensions Team (pensions@strath.ac.uk) within Finance.

New Members of the USS
If you've been contractually enrolled or auto-enrolled into the USS and wish to participate, you don't need to do anything: we'll automatically include you.  If you wish to remain a pension scheme member but do not wish to participate in Pensions Plus, you'll need to complete the non-participation form. 

If, however, you wish to opt out of the USS Pension Scheme altogether within the first 3 months of scheme membership, you will only need to complete the USS – Opt out of Pension Saving Form.  Your participation in the Pensions Plus arrangement will automatically cease at the same time that your membership of the USS ceases.

Many other organisations, including a number of universities, have already introduced arrangements similar to Pensions Plus. The approach is therefore tried and tested.

Your Pensionable Salary will continue to be calculated as at present, i.e. based on your higher Reference Salary prior to the Pensions Plus adjustment.

If you're currently a member of the USS, you'll be able to participate, provided the new arrangements don't adversely affect your take-home pay or your ability to claim certain state benefits.  

You'll not be able to participate if it would bring your Adjusted Salary to below the National Minimum Wage (‘NMW’).  

The NMW is currently £6.50 per hour for somebody over the age of 21 and lower for those under 21 or apprentices.  We'll monitor pay levels and advise you if you are likely to be affected. However, if your circumstances change and you think you might fall into this category, you should contact the Pensions team (pensions@strath.ac.uk).

Pensions Plus is not applicable to individuals with no set hours of work.

All future pay rises will continue to be based on your higher Reference Salary.  All of your salary related pay and benefits from the University of Strathclyde, such as overtime, will also be calculated on your higher Reference Salary.  There may be an impact on statutory payments such as Statutory Maternity Pay. 

Please see Questions 9,11 and 18 for further details.

Overtime will not be affected by your participation in the Pensions Plus arrangement. The hourly rate for overtime will be calculated on your higher Reference Salary and will therefore remain the same hourly rate as before.

Yes. Your pension at retirement is based on your service in the USS, the benefit section you are a member of and your Pensionable Salary. Your Pensionable Salary will be based on your higher Reference Salary: therefore, your pension benefits will remain unchanged.

These benefits are unchanged and will continue to be based on your Pensionable Salary, which is not affected by Pensions Plus and is based in your higher Reference Salary.

You will be treated as if you had paid contributions to the scheme in full from your salary instead of the University making additional pension contributions.

Your payslip will look slightly different.  There will be an entry on the payslip to show that you are participating in Pensions Plus.

Current payslip     

Payslip with Pension Plus

No, the amount of tax relief received will not be affected. You'll pay exactly the same amount of tax under Pensions Plus as you did before. See the examples contained in Question 3.

It will not be advantageous for you to participate if any of the following apply:

• Your earnings are close to the National Minimum Wage.  See Question 7.

• If you earn less than £8,060 (2015/16) you'll not benefit from any savings from the scheme as you do not currently pay NIC (NIC is payable at 0%).

• Participation in the Pensions Plus arrangement could also affect your state benefits.  For these reasons, a University of Strathclyde pay protection level of £8,100 per year has been put in place.  It would not be advisable for any employee whose earnings are at or below this level to participate. The pay protection level will be reviewed annually and adjusted where required.

• If you plan to leave the USS within two years of joining the scheme and get a refund of contributions.  See Question 16.

If the University thinks either of the first two categories applies to you, we'll contact you separately. However, if you don't hear from us and believe you might fall into one of the above categories, please contact the Pensions Team.

If you're over the State Pension Age you will not pay NIC on your earnings and as a result you will not benefit from any NIC savings through participating in the Pensions Plus arrangement.

However, you'll help generate employer NIC savings for the University of Strathclyde to reinvest in strategic staffing initiatives. Therefore, on the basis you'll not be disadvantaged by participating in the Pensions Plus arrangement, you'll automatically be included in Pensions Plus unless you choose not to participate.

If you leave the University of Strathclyde and/or USS with two or more years’ qualifying service, there will be no change to the benefit options of either a deferred pension or a transfer value to another registered pension arrangement.

If you leave with less than two years’ qualifying service you have similar options (a deferred pension or a transfer value) as above. Pension scheme rules normally permit a refund of member contributions as an additional option where the member leaves with less than two years qualifying service, but this will not be possible under the Pensions Plus arrangement, as the amounts paid to the pension schemes are not member contributions.

If you withdraw from the USS within three months of being contractually or automatically enrolled into pension scheme membership, membership of Pensions Plus will terminate immediately and your contractual salary will revert to its pre- Pensions Plus value. If you wish the University can also make arrangements to retrospectively recalculate your salary and amend your records to reflect your wish to withdraw fully from the scheme from the date of enrolment.

You'll see an entry on your monthly payslip for ‘Pensions Plus’. An example is provided under Question 12.

Your P60 will reflect your taxable salary, which is your gross pay minus the Pensions Plus Adjustment. Currently it shows gross pay minus normal pension contributions. Your taxable salary will not be affected by participating in Pensions Plus. Bear this mind when using your P60 for a financial reference. Financial institutions usually recognise arrangements such as Pensions Plus and understand how this affects salary reporting.

The University will be happy to provide you with a mortgage reference letter to accompany any such request and will advise lenders of the amount of your Reference Salary.

The University of Strathclyde provides occupational maternity pay (OMP) over and above Statutory Maternity Pay (SMP) for eligible employees. Any OMP you are eligible to receive will be calculated based on your Reference Salary; therefore, you will be no worse off.

Unless you apply to opt out of Pensions Plus under a lifestyle event (see Question 21), you will continue to exchange an amount equivalent to 7.5% (for USS Final Salary Section) or 6.5% (for USS CRBS) of your maternity pay, during any period you are in receipt of OMP. Your Adjusted Salary will not be taken below the level of SMP and the University of Strathclyde will make any additional pension contributions to ensure the level of contributions paid into the scheme is not affected.

If this situation applies to you, you can opt out of Pensions Plus. The University will also make additional pension contributions for those only eligible to receive Statutory Maternity Pay. Please contact the Pensions team for further information.

The above considerations also apply to adoption pay and paternity pay.

If you are on a period of unpaid or sabbatical leave, you will be automatically opted out of Pensions Plus. You will however have the option, as you currently do, to maintain your employee contributions under standard (non Pensions Plus) arrangements. If you choose to do so the University will continue to pay employer contributions through the duration of your leave.

Participation in Pensions Plus is not compulsory and you can request a non-participation form from the Pensions team which should be completed and returned by the date stated on the form should you choose not to participate.

If you choose to opt out of Pensions Plus you'll not be able to take advantage of the NIC savings that would result in increased take home pay achievable for the majority of those participating in Pensions Plus.

If you decide not to participate in Pensions Plus you will need to opt out by the date stated on the form. The University recognises that certain ‘lifestyle events’ may affect your decision to participate. These include:

• Birth/adoption of a child

• Notification, commencement of or return from maternity/adoption leave

• Marriage/civil partnership

• Divorce/separation/dissolution of civil partnership

• Death of spouse/partner

• Significant changes in contractual terms e.g. move from full-time to part-time, move from fixed term to open ended contract

• Material changes in spouse’s/partner’s circumstances (e.g. redundancy)

• Commencement of or return from long term leave or secondment

In these circumstances you may, subject to the agreement of the University of Strathclyde, opt out of or opt in to Pensions Plus.

It's planned that Pensions Plus will operate indefinitely. However, the University reserves the right to withdraw Pensions Plus if, for example, tax, NIC or pensions law or practice changes, or it is no longer viable for the University to operate Pensions Plus.

You won't have to pay back any of the savings you have made if Pensions Plus is withdrawn in the future.

Further information for staff working outwith the UK is available from the Pensions Team.

No. Participation in Pensions Plus should not impact on any HM Revenue & Customs (HMRC) Tax Credits. Other Salary Exchange arrangements, such as childcare vouchers and Cycle to Work, should be considered separately as to their effect on other state benefits.

For further information contact:

• Tax Credits helpline - 0345 300 3900

• Tax Credits website

• Universal Credits helpline - 0345 600 0723

• Universal Credits website

Participating in Pensions Plus will have no impact on your State Pension.

Child maintenance payments to the CSA/Child Maintenance and Enforcement Commission/Arrestment of wages orders are calculated with reference to your take home pay i.e. your pay after the deduction of pension contributions, tax and NIC.

Under Pensions Plus your take home pay increases because you are paying less NIC and your child maintenance payments or payments made as a result of arrestment orders may therefore increase as a result. If you decide to participate in Pensions Plus, you should notify the CSA of the change in your net income. 

Contact details for the CSA and further details can be obtained from the CSA website.

If you are repaying a student loan taken out with the Student Loans Company, your student loan repayments may be reduced slightly as a result of participating in Pensions Plus. This is because your repayments are calculated based on your Adjusted Salary (your salary after the Pensions Plus adjustment).

If future contribution rates for the schemes are amended, the amount that your current salary is reduced by will be amended to reflect the change in contribution rates.

More information on Pensions Plus is available on the University’s Pensions web pages, including Frequently Asked Questions covering circumstances such as family friendly and unpaid leave and potential impact on benefits.  

If you have any additional questions regarding Pensions Plus please contact the Pensions team:
E-mail:            pensions@strath.ac.uk
Telephone:      0141 548 4771