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Jon Everard Head of Payroll & Pension Services j.everard@ucl.ac.uk 0207 679 1284. Salary Exchange – Pensions Salary Overpayments. What is it? Why are we doing it? When are we doing it? Who will it apply to?. Salary exchange - Pensions.
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Jon EverardHead of Payroll & Pension Servicesj.everard@ucl.ac.uk0207 679 1284
What is it? Why are we doing it? When are we doing it? Who will it apply to? Salary exchange - Pensions
It is a salary sacrifice scheme akin to child care vouchers Employer will pay the pension contribution on behalf of the employee with the employees gross pay reduced by the amount of the pension contribution Employees overall pay will therefore be subject to less tax and national insurance contributions Pension contributions were already subject to tax relief (tax is assessed after the contributions paid) so further savings for employee now being made on NI contributions Savings of upto £200pa in net pay for someone on £30,000 Salary exchange - PensionsWhat is it?
Cost of pension provision is increasing with USS employer rate expected to increase by 2% next year. This increase alone will cost UCL in excess of £2M per annum Salary exchange will bring savings to employees take home pay without affecting their pension benefits UCL will save money on employer national insurance costs Salary exchange – PensionsWhy are we doing it?
Discussions and agreement on implementation reached with Unions with their involvement on Implementation Group Implement with effect from April 2009 salary Communications begin December 2008 Individual notification to all employees in February 2009 Salary exchange – PensionsWhen are we doing it?
Assumption that all employees are opted into the scheme and therefore have their pay reduced by the amount of pension contribution paid by the employer, where they are a member of the USS or SAUL pension schemes. Will not apply to NHS scheme members Not beneficial for some employees i.e. being paid less than LEL, contracted for less than 2 years Employees to whom not beneficial will continue to pay pension contributions and notified accordingly. Salary exchange – PensionsWho will it affect?
What are the reasons for them happening? What can we do to stop them happening? What changes are UCL having to make going forward on overpayments to employees who have left Salary overpayments
Late notifications of employee having left employment Late or no notification of change of circumstance (reduction in hours) Incorrect notifications Employees not returning to work from maternity leave No notification of sickness Salary overpaymentsWhat are the reasons for them happening?
Payroll can recall the pay of an employee upto noon of the day before payday. Ring your payroll contact and advise them that you’ve got a late notification of a employee leaving and they will ensure the correct pay is applied to the employee Get all notifications of employees change of circumstances in by the deadline. If you can’t and you suspect that it will cause an overpayment, ring your payroll contact and advise them. Ensure that every day of an employees absence due to sickness is entered on MyView. This will ensure we correctly reduce pay to half or nil pay if sickness is long term and ensure employees are correctly paid Statutory Sick Pay Understand that employees not returning from maternity leave is an unknown but the earlier we are advised the easier it is to get back any monies that have been overpaid Salary overpaymentsWhat can we do to stop them happening?
In last 12 months there has been 100 overpayments to leavers (reason = 20% HR, 14% employee, 66% departmental) amounting to over £100K Including active employees there have been 179 overpayments amounting to £260K Current processes at UCL involve the reversal through payroll of any overpayment to an employee who has left with the department being credited with the overpayment and the net debt being recouped via a central ‘bucket’ account. This does not conform to HMRC requirements and needs to be changed. From today any new debt of a leaver will only be credited back to a department once it is repaid by the individual. On complete repayment by the individual we will then claim back the tax and NI from HMRC and further reimburse the department this amount Salary overpayments
