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Pensions+ FAQ

1. Why is the University introducing Pensions+?

Pensions+ is a method of arranging pension contributions which reduces the NI contributions payable by both employees and employers in a way which is acceptable to Her Majesty's Revenue & Customs (HMRC), without reducing the contributions paid or the benefits payable. The introduction of Pensions+ will mean more money in your take home pay.

2. What constitutes pay for the Pensions+?

For the purposes of Pensions+, pay is defined as Pensionable Salary (as defined in the Rules that govern the pension scheme of which you are a member).

3. What if I am not eligible to participate in Pensions+?

If you are not eligible to participate in Pensions+, you will automatically be opted out and your contributions will continue be paid as employee contributions as at present. Your eligibility to start paying contributions through Pensions+ will then be reviewed on 1st August each year.

4. If I participate in Pensions+ will it affect any other payments?

No. We will ensure that all future pay rises continue to be based on your Reference Salary, i.e. your salary before any adjustments for Pensions+. All of your salary-related benefits will also be calculated on your Reference Salary.

5. What do I need to do to arrange for my contributions to be paid through Pensions+?

You don't need to do anything. You will automatically be entered into Pensions+. If you do not want to participate in Pensions+ you can choose to opt out.

6. Can I opt out in the future?

There will be an opportunity to opt out, or opt into the scheme on 1st August annually. You can opt out at any other time if a life event has occurred.

7. Will the University still pay its own contribution into my pension if I participate in Pensions+?

Yes. The University will continue to make the normal employer contribution, in addition to the amount you have exchanged through participating in Pensions+.

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8. Will I still benefit from income tax relief as a result of Pensions+?

Yes, you still get income tax relief and this does not change with Pensions+.

9. Will the other salary-related benefits provided by the University (e.g. life assurance) be based on my reduced salary following Pensions+ contributions?

None of the earnings-related benefits you receive as part of your benefits package from the University such as life assurance and pension contributions will be affected. Your gross contractual salary before reduction for Pensions+ will be used to calculate all benefit entitlements and pay increases, overtime etc. Your salary before Pensions+ is known as your Reference Salary.

10. What happens if the amount that I am required by the University to contribute into my pension scheme changes?

Your contribution rate to the scheme can vary in accordance with the Rules of the pension scheme of which you are a member and your salary will be adjusted as appropriate. You will be notified of any changes.

11. Can I pay some contributions through Pensions+ and some contributions as employee contributions?

No. All ordinary contributions need to be paid through Pensions+ or continue to be paid in the conventional way. AVCs are excluded from Pensions+ so will continue to be paid as now.

12. What happens if I go on maternity leave?

The University will continue to pay your contributions in full based on your pre-maternity leave Reference Salary while you receive maternity pay. On return to work any additional payments that you choose to pay to make good any period for which contributions have not been paid will need to be made outside of Pensions+. Maternity leave is a qualifying life event if you wish to opt in or out of Pensions+.

13. What happens if I take parental leave?

Should your earnings reduce to below the Lower Earnings Limit or the National Minimum Wage, then your contributions will revert to the normal payment method and you will ineligible to contribute through Pensions+ until 1st August following your return to work. Paternity leave is a qualifying life event if you wish to opt out of Pensions+.

14. What happens if I go on long term sick leave?

You will continue to contribute to your pension scheme through Pensions+ based on your Reference Salary prior to going off sick. Should your pay be reduced to below the Lower Earnings Limit or the National Minimum Wage, then your contributions will revert to the normal payment method and you will be ineligible to contribute through Pensions+. Long term sick leave is a qualifying life event.

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15. Will my State pension benefits be reduced if I contribute through Pensions+?

Your Basic State Pension entitlement will not be affected irrespective of which pension scheme you are a member of. As the USS and UREPF are both contracted out of the State Second Pension (S2P), members of these schemes do not earn S2P whilst members of the scheme and so Pensions+ will not make any impact on their entitlement.

However, as the URPS is contracted in to S2P then if your pay is reduced to between £14,700 and £40,040, there will be a small reduction in the amount of S2P you could receive. The University's advisers have undertaken calculations and all current members are shown to save more in NI now than they would lose in S2P in the future.

16. Will my other State benefits be reduced as a result of making Pensions+ contributions?

As you will not be eligible to contribute through Pensions+ if your earnings are below the Lower Earnings Limit (currently £5,564), there should not be any impact on other State benefits as a result of switching to Pensions+ contributions.

17. As my contractual salary is reduced as a result of Pensions+, will this affect the amount of mortgage or loan I could receive?

No, it shouldn't have any impact. Reference letters provided by the University for mortgage or loan purposes will refer to your Reference Salary before Pensions If you have any concerns in this area, you are strongly recommended to speak to your lender to confirm their view.

18. What will happen to my Death-in-Service Benefits (including Life Assurance, Dependants' Pension and other benefits)?

None of your Death-in-Service Benefits (including Life Assurance, Dependants' Pension and other benefits) will be affected by participating in Pensions+.

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19. Will contributing through Pensions+ affect my student loan repayments as they are based on my earnings?

Yes. The amount you are required to pay in student loans will be lower as repayment calculations are based on your pay after the Pensions+ reduction. Of course, if you pay off your loan at a lower rate, you will end up paying it back over a longer period.

20. I am over State Pension Age (SPA) so do not pay NI. Will I be included in Pensions+?

Yes. Pensions+ is designed to create a NI saving for both employees and the employer. However, as you are over SPA, you are not required to pay NI anyway, so have no NI to "save". Whilst you have nothing to gain by participating in Pensions+, and can opt out if you wish, it has no negative impact on your entitlements from either the University or from the State, and the University will save NI.

21. I am paying married women's 'reduced stamp' NI, so how will Pensions+ affect my pay?

Prior to 12 May 1977, married women and certain widows could apply to pay reduced rates of NI (sometimes known as the "small stamp") in exchange for a reduction in State benefits - for example, no rights to a state pension, jobseeker's allowance or sickness benefit.

You will still make NI savings from Pensions+. However, your saving will reflect the lower rate of NI that you pay (currently 5.85% on earnings between £7,225 and £42,475).
If you are uncertain whether or not you are paying "reduced rate" NI, you can find out by contacting HR Operations.

22. Can I change my mind about contributing through Pensions+ at a later date?

Yes. You can change your mind on 1st August annually and may also be able to opt in or out of Pensions+ following a life event as listed in the booklet.

If your circumstances change and you want to review your position, you should contact HR Operations at hroperations@reading.ac.uk.

23. What if I don't want to participate in Pensions+?

If you don't want to participate in Pensions+ you don't have to. However, if you opt out of Pensions+ you won't make any NI savings so your take home pay won't increase. The Pensions+ opt out form (PDF - 157KB) is available upon request from hroperations@reading.ac.uk, or to download from the www.reading.ac.uk/benefitsplus website.

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24. What will happen if I leave?

If you leave the University or decide to leave your pension scheme (USS, UREPF or URPS) and have been a member of that scheme for two years or more, Pensions+ will not change anything.

However, if you leave with less than two years' service there could be relevant changes to the benefits you are entitled to on leaving service:

Pensions+ members who opt out of membership of USS within 3 months of starting work will receive a discretionary payment from the University equal to the amount of salary that was given up through Pensions+. Any such payment would be subject to tax and NI. USS leavers from University service, or opt outs with more than 3 months' membership, will be entitled to a deferred pension or a transfer of their pension benefit to another registered pension scheme.

If you are a member of URPS and either opt out of scheme membership, or leave employment with less than 3 months' service, you will receive a discretionary payment from the University equal to the amount of salary given up through Pensions+. Any such payment would be subject to tax and NI.

Members of URPS with more than 3 months', but less than 2 years' service have the option to a transfer of the pension benefit that they have earned in the scheme to another registered pension scheme. If this option is not taken within a specified timespan, there will be no entitlement to benefit under the scheme.

Pensions+ members of UREPF who opt out of the pension scheme, or leave service, will be entitled to a deferred pension and have the option to transfer their benefits to another registered pension scheme.

25. How long will Pensions+ be an option?

Pensions+ is based on current taxation and National Insurance law and practice. If the University's circumstances and/or legislation changes, the University reserves the right to withdraw Pensions+ and reintroduce employee contributions on the current basis. In this event you will be restored to the circumstances you would have enjoyed if you had not participated in Pensions+. Your gross contractual salary will be restored and you will resume paying your normal employee pension contributions.

26. Have the Trustees and unions been involved?

Yes, the Trustees of UREPF and URPS and the recognised trades unions are aware of Pensions+ and support its introduction.

27. How will life assurance and death benefits be affected?

Your death in service benefits will not be affected by Pensions+. These will continue to be calculated on your salary before any adjustment for Pensions+.

28. I am in a Final Salary Pension Scheme will this affect my pension?

A record will be kept of your gross contractual salary. This will be known as your reference salary. Your reference salary will be used for the calculation of pension benefits. Salary sacrifice arrangements have no effect on the salary used in any USS benefit calculations and the employer must continue to pay the full amount of pension contributions to USS based on the salary before any sacrifice is made. Please see the USS factsheet on salary sacrifice.

29. What if I have any further questions?

Please see the website www.reading.ac.uk/benefitsplus or contact hroperations@reading.ac.uk

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Claire Eckett
HR Manager
(Reward & Benefits)

HR Operations