Salary Exchange on pensions is an arrangement whereby an employee gives up an amount of his/her cash salary equivalent to the contributions he/she is making to an approved employer pension scheme. In return, the employer agrees to increase the employer pension contributions to the pension scheme by the same amount. The advantage arises because the employee and employer will have a reduced National Insurance liability (ie will pay less National Insurance) due to the fact that National Insurance will be paid on the reduced salary rather than the full salary.
Members of the Universities Superannuation Scheme (USS), the University of Sussex Pension and Assurance Scheme (USPAS) or Sussex Group Stakeholder Scheme (SGSS) could receive a cash advantage from Salary Exchange being introduced at Sussex. An employee who participated in Salary Exchange would see his/her net pay increase as a result whilst the overall level of actual pension contributions to his/her pension, and pension benefits, would remain unaffected.
Many employers, including other universities and USS, have introduced salary exchange on pensions. Introducing it at Sussex has the agreement of the recognised trade unions, provided employees have the opportunity to opt out (ie to not participate) which will be the case.
For further information on Salary Exchange, this website provides extensive and detailed FAQs.
Letters sent to members
Letters are being sent to all pension scheme members at Sussex in the week ending 26 August 2011. PDF copies of the letters are provided on these pages.
This site also provides opt-out forms, as well as the letters and the presentation booking form on the documents page.