Benefit: Salary Sacrifice Pension Contribution
Provider: Universities Superannuation Scheme
Background: The USS scheme allows members to convert their normal employee contributions to an increased employer contribution by agreeing to a reduced salary. The advantage provided by salary sacrifice means that members of the USS scheme can save NI as well as benefit from existing tax relief. This will increase the total saving for a basic rate tax payer to approximately 29.4% of their contribution, and 41% for a higher rate tax payer. To be eligible to salary sacrifice you have to have been a member of the USS pension scheme for more than 3 months. Unfortunately, the Local Government Pension Scheme (LGPS) does not currently allow salary sacrifice arrangements and this option will not be displayed in the online system for LGPS members.
The system will automatically include your existing choice (carried over from last year); you can then change your preference if you wish.
Amendments to Benefit: This benefit can only be selected at the start of each benefit year and cannot be amended.
Tax and NI implications: You will save NI on your contribution to the pension if you select salary sacrifice.
Savings: Based on the current employee contribution for the pension (6.35% of pensionable salary), an employee earning £25,000 per annum would save approximately £12.44 per month in NI by choosing salary sacrifice.