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Jon Everard Update - Salary Exchange – Pensions Total Reward Statements (TRS)

Jon Everard Update - Salary Exchange – Pensions Total Reward Statements (TRS). What is it? Why are we doing it? When are we doing it? Who will it apply to? What effect will this have on my pension benefits?. Salary exchange - Pensions.

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Jon Everard Update - Salary Exchange – Pensions Total Reward Statements (TRS)

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  1. Jon EverardUpdate - Salary Exchange – Pensions Total Reward Statements (TRS)

  2. What is it? Why are we doing it? When are we doing it? Who will it apply to? What effect will this have on my pension benefits? Salary exchange - Pensions

  3. It is a salary sacrifice scheme akin to child care vouchers UCL will pay the pension contribution to the pension scheme on behalf of you, the employee, with your gross pay reduced by the amount of the pension contribution Your pay will therefore be subject to less tax and national insurance contributions. As pension contributions are already subject to tax relief (tax is assessed after the contributions are paid) further savings now made on NI contributions Savings of upto £175 per annum in net pay for someone on £30,000 Salary exchange - PensionsWhat is it?

  4. EMPLOYEE NATIONAL INSURANCE BANDS Salary sacrifice amount 1% UEL £3337 pcm Salary sacrifice amount 9.4% ET £453 pcm 0% LEL £391 pcm 0% £2083 £1958 £4166.67 £3902.09

  5. Cost of pension provision is escalating with the USS employer rate increasing by 2% in October this year. This increase alone will cost UCL in excess of £4M per annum Salary exchange will bring savings to you with an increase in your take home pay without affecting your pension benefits UCL will also save money on employer national insurance costs Salary exchange – PensionsWhy are we doing it?

  6. EMPLOYER NATIONAL INSURANCE BANDS EMPLOYEE NATIONAL INSURANCE BANDS Salary sacrifice amount 1% 12.8% UEL £3337 pcm Salary sacrifice amount 9.4% 9.1% ET £453 pcm 0% 0% LEL £391 pcm 0% 0% £2083 £1958 £4166.67 £3902.09

  7. Discussions and agreement on implementation of salary exchange has been reached with our Unions together with their involvement on the Implementation Group Implement with effect from June 2009 salary Communications start in March through to the end of May 2009 with most information being provided during April and May Individual notification to all employees either at the end of April or in early May 2009 Salary exchange – PensionsWhen are we doing it?

  8. Everyone who is a member of the USS or SAUL pension schemes. Will not apply to NHS Pension Scheme members Not beneficial for those employees who are being paid less than the Lower Earnings Limit or possibly those contracted for less than 2 years and who do not want to accrue pension rights Salary sacrifice must not take earnings below the National Minimum Wage Employees to whom not beneficial will continue to pay pension contributions and notified accordingly. Salary exchange – PensionsWho will it apply to?

  9. None – because the contributions paid to your pension scheme will be the amount based on your unreduced or pre salary sacrifice pay level. Therefore, your pension benefits will be calculated using the pay rates pre salary sacrifice Any requests from a bank or building society will be informed of the pre salary sacrifice pay level Salary exchange – PensionsWhat effect will this have on my pension benefits?

  10. What is meant by Total Reward? How can we quantify or value Total Reward? What is a Total Reward Statement (TRS) and what could be included on it? When and how will a TRS be made available? Future developments Total Reward Statement

  11. A Definition (one of many!) Total reward is the term that has been adopted to describe a reward strategy that brings additional components such as learning, development, remuneration and other financial benefits, together with aspects of the working environment, into a Total Reward or benefits package. It goes beyond standard remuneration by embracing the organisations culture and is aimed at giving all employees a voice in the operation, with the employer in return receiving an engaged employee performance. Total Reward StatementWhat is meant by Total Reward?

  12. FinancialRewards Base pay Quality of working life Total Reward Career opportunities Variable pay = + = Total Remuneration Non FinancialRewards Skills development Pensions Recognition

  13. Arguably every aspect of development, training, pay, benefits, working arrangements (flexi, carers leave) can be valued, but how much? Is a training course valued at the course value or the career benefits it offers in the future Are pensions valued at the employers contribution into the scheme or the increase each year in the overall capital cost of your pension benefit value Should we place a value on annual leave in excess of the minimum statutory required EAP is an important and valuable requirement for staff who need to use it. But per head it’s a low cost. How should it be valued, as the insurance premium or the maximum possible payout? Total Reward StatementHow can we quantify or value Total Reward?

  14. A TRS is a document which aims to provide to an employee using graphical, financial values and descriptive text, a holistic cost or value of their employment A TRS enables the employer to show that being employed is much more than just pay It enables an employee to more easily compare other employer packages aiding the retention of employees and assists in the recruitment of new employees Total Reward StatementWhat is a Total Reward Statement (TRS)

  15. Base pay Other permanent allowances (eg. LW) Temporary allowances e.g. acting up Overtime Bonuses One off awards Pensions Professional body subscriptions Season ticket loans Relocation expenses Holidays in excess of statutory Carers leave Occupational sick pay Occupational maternity pay Salary sacrifice – child care vouchers EAP Healthcare provided – eye tests, physiotherapy Core values of the organisation – equality Flexible working Work environment Leadership Employee voice Recognition Achievement Job design and role development Quality of working life Work-life balance Learning and development Workplace learning and development Training courses Performance management Career development Total Reward StatementWhat could be included on a TRS?

  16. Aim to have designed and built the TRS by 31st August 2009 Roll out in Autumn 2009 Yet to determine whether the TRS will be updated monthly, quarterly, half yearly or annually Will be an on-line document via MyView. Those not able to access MyView will be sent annually a hard copy document. On-line document will have hyperlinks to policies, latest annual pension benefit statement, child care voucher provider, payslips Total Reward StatementWhen and how will they be made available?

  17. Recruitment Reward Statements. These will enable those of you recruiting for a position in the future to provide an online statement of the overall Total Reward package for that post based on some assumptions e.g. appointed on lowest point on grade, any fixed allowances and membership of pension scheme relevant to grade Total Reward StatementFuture development of TRS

  18. 0207 679 1999 or ext 41999 pensions@ucl.ac.uk www.ucl.ac.uk/hr/pensions www.uss.co.uk www.saul.org.uk Any questions?

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