Metropolitan
Salary Exchange for Pensions
February 2012
Why have MHP introduced this now?
• Your take home pay should increase
• This will make our pension arrangement affordable...
What does this presentation cover?
• What is Salary Exchange for pensions
• How it works
• Is it right for you?
• What you...
Who is this presentation aimed at?
1. Current members of the Social Housing Pension Scheme
(‘SHPS’) i.e.
- The Final Salar...
Who is this presentation NOT aimed
at?
• Current members of any alternative pension schemes
sponsored by MHP i.e. Legacy P...
WHAT IS SALARY EXCHANGE?
What is Salary Exchange?
• Salary Exchange is where an employee gives up their right to
receive part of their cash pay in ...
HOW DOES IT WORK?
How does Salary Exchange work?
Net pay
National
Insurance
Income tax
Pension
contribution
Pre
Exchange
How does Salary Exchange work?
Net pay
National
Insurance
Income tax
Pension
contribution
Salary
Exchange
Pre
Exchange
How does Salary Exchange work?
Net pay
National
Insurance
Income tax
Pension
contribution
Salary
Exchange
Net pay
National...
Pension Salary Exchange – Worked
Examples
• Some practical examples in the Appendix
• These provide you with an indication...
Example – Final Salary, £14,000 salary
Net pay
National
Insurance
Income tax
Pension
contribution
Salary
Exchange
Net pay
...
Example – Final Salary, £14,000 salary
Net pay
National
Insurance
Income tax
Pension
contribution
Salary
Exchange
Net pay
...
IS IT RIGHT FOR YOU?
Is it too good to be true?
• Her Majesty’s Revenue and Customs approved
• Operates indefinitely
Why should I bother?
• It’s a more efficient way of making your pension contributions
• You’ll pay less National Insurance...
Will it have an impact on any other
statutory arrangements?
- Statutory Sick Pay
- Incapacity Benefit
- Tax Credits
- Jobs...
Will it affect my State pension?
• Your Basic State Pension will not be affected
• Your State Second Pension may be affect...
Will my contractual terms change?
• Yes – participation in Salary Exchange constitutes a change to
your terms and conditio...
Who will not benefit from Salary
Exchange?
• Not all SHPS members will benefit
• For example – those earning less than £12...
What if I leave MHP?
Less than two years service
•A Refund of Contributions is available
(but not during any period you pa...
WHAT DO I HAVE TO DO?
What do I have to do?
• Enrolment will be automatic
• To acknowledge this you need to tick the box within the Pick
Your Ow...
What if I do not want to join Salary
Exchange for Pensions?
• You can Opt-Out through Pick Your Own
• This will apply to a...
What if I do nothing?
• Enrolment is automatic
• You MUST acknowledge this by ticking the box and ‘Request
the benefit pac...
PICK YOUR OWN – A REMINDER
Pick Your Own – a reminder
• Salary Exchange for pensions is important and forms part of
Pick Your Own
• Look out for your...
Questions?
For more information please contact the reward team:
– Peter Garratt on 020 3535 3924 / email
peter.garratt@mht...
Appendix
Special note for Money Purchase
Section members
• Change contribution rate (SHPS Money Purchase
only)
• Enrol int...
SHPS Final Salary
 
Before salary
exchange
After salary
exchange
Annual Salary pa £14,000.00 £12,544.00
Monthly Gross Pay ...
SHPS Final Salary
 
Before salary
exchange
After salary
exchange
Annual Salary pa £25,000.00 £22,400.00
Monthly Gross Pay ...
SHPS Final Salary
 
Before salary
exchange
After salary
exchange
Annual Salary pa £42,000.00 £37,632.00
Monthly Gross Pay ...
SHPS CARE
 
Before salary
exchange
After salary
exchange
Annual Salary pa £14,000.00 £12,950.00
Monthly Gross Pay pm £1,16...
SHPS CARE
 
Before salary
Exchange
After salary
exchange
Annual Salary pa £25,000.00 £23,125.00
Monthly Gross Pay pm £2,08...
SHPS CARE
 
Before salary
exchange
After salary
exchange
Annual Salary pa £42,000.00 £38,850.00
Monthly Gross Pay pm £3,50...
SHPS Money Purchase (4%)
 
Before salary
exchange
After salary
exchange
Annual Salary pa £14,000.00 £13,440.00
Monthly Gro...
SHPS Money Purchase (4%)
 
Before salary
exchange
After salary
exchange
Annual Salary pa £25,000.00 £24,000.00
Monthly Gro...
SHPS Money Purchase (4%)
 
Before salary 
exchange
After salary 
exchange
Annual Salary pa £42,000.00 £40,320.00
Monthly G...
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Pensions and benefits presentation feb 2012

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A presentation on MHP pensions and benefits

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Pensions and benefits presentation feb 2012

  1. 1. Metropolitan Salary Exchange for Pensions February 2012
  2. 2. Why have MHP introduced this now? • Your take home pay should increase • This will make our pension arrangement affordable and more sustainable • Other large employers participating in SHPS operate Salary Exchange
  3. 3. What does this presentation cover? • What is Salary Exchange for pensions • How it works • Is it right for you? • What you have to do • A reminder on Pick Your Own • To answer any questions you may have
  4. 4. Who is this presentation aimed at? 1. Current members of the Social Housing Pension Scheme (‘SHPS’) i.e. - The Final Salary Section - The CARE Section or - The Money Purchase Section OR 2. Any employee wishing to join the SHPS arrangement in the future
  5. 5. Who is this presentation NOT aimed at? • Current members of any alternative pension schemes sponsored by MHP i.e. Legacy Pension Arrangements
  6. 6. WHAT IS SALARY EXCHANGE?
  7. 7. What is Salary Exchange? • Salary Exchange is where an employee gives up their right to receive part of their cash pay in exchange for a non cash benefit – in this case pension contributions • It does not affect any other MHP benefits • Pension contributions made via Salary Exchange reduce your National Insurance Contributions • Your take home pay should increase
  8. 8. HOW DOES IT WORK?
  9. 9. How does Salary Exchange work? Net pay National Insurance Income tax Pension contribution Pre Exchange
  10. 10. How does Salary Exchange work? Net pay National Insurance Income tax Pension contribution Salary Exchange Pre Exchange
  11. 11. How does Salary Exchange work? Net pay National Insurance Income tax Pension contribution Salary Exchange Net pay National Insurance Income tax Pension contribution MHP pays Pre Exchange Post Exchange
  12. 12. Pension Salary Exchange – Worked Examples • Some practical examples in the Appendix • These provide you with an indication of the increase in take home pay for a range of salaries • Details of the current contribution rates applicable to each SHPS section are also shown in the notes below
  13. 13. Example – Final Salary, £14,000 salary Net pay National Insurance Income tax Pension contribution Salary Exchange Net pay National Insurance Income tax Pension contribution MHP pays Pre Exchange Post Exchange £121.33 £56.16 £989.18
  14. 14. Example – Final Salary, £14,000 salary Net pay National Insurance Income tax Pension contribution Salary Exchange Net pay National Insurance Income tax Pension contribution MHP pays Pre Exchange Post Exchange £121.33 £121.33 £56.16 £989.18 £43.54 £1,001.80
  15. 15. IS IT RIGHT FOR YOU?
  16. 16. Is it too good to be true? • Her Majesty’s Revenue and Customs approved • Operates indefinitely
  17. 17. Why should I bother? • It’s a more efficient way of making your pension contributions • You’ll pay less National Insurance • Your take home pay will increase • Helps the sustainability of the pension scheme in the longer term
  18. 18. Will it have an impact on any other statutory arrangements? - Statutory Sick Pay - Incapacity Benefit - Tax Credits - Jobseeker’s Allowance - Statutory Adoption Pay - Statutory Maternity Pay - Statutory Paternity Pay - State Pension (see next slide) - Repayment of Student Loans
  19. 19. Will it affect my State pension? • Your Basic State Pension will not be affected • Your State Second Pension may be affected
  20. 20. Will my contractual terms change? • Yes – participation in Salary Exchange constitutes a change to your terms and conditions of employment • Agreeing to a reduced base pay with corresponding increase in MHP pension contributions • This is effective from 6 April 2012
  21. 21. Who will not benefit from Salary Exchange? • Not all SHPS members will benefit • For example – those earning less than £12,000 per annum • MHP will contact any affected members
  22. 22. What if I leave MHP? Less than two years service •A Refund of Contributions is available (but not during any period you participate in SHPS via Salary Exchange) More than two years service •Retain your benefits in the Scheme or •Transfer the value of your benefits to another registered pension arrangement
  23. 23. WHAT DO I HAVE TO DO?
  24. 24. What do I have to do? • Enrolment will be automatic • To acknowledge this you need to tick the box within the Pick Your Own system • Click on Request this benefit package • Your log on details will be provided to you in the post • Your response must be submitted between 5 March and 23 March 2012
  25. 25. What if I do not want to join Salary Exchange for Pensions? • You can Opt-Out through Pick Your Own • This will apply to all of your SHPS contributions • You MUST log onto the Pick Your Own website and Opt-Out on pension salary exchange between 5 March and 23 March 2012
  26. 26. What if I do nothing? • Enrolment is automatic • You MUST acknowledge this by ticking the box and ‘Request the benefit package’ within Pick Your Own website • Your response must be submitted between 5 March and 23 March 2012
  27. 27. PICK YOUR OWN – A REMINDER
  28. 28. Pick Your Own – a reminder • Salary Exchange for pensions is important and forms part of Pick Your Own • Look out for your username and password • Pick Your Own window open 5 March to 23 March 2012
  29. 29. Questions? For more information please contact the reward team: – Peter Garratt on 020 3535 3924 / email peter.garratt@mht.co.uk – Ian Morgan on 020 3535 3925 / email ian.morgan@mht.co.uk
  30. 30. Appendix Special note for Money Purchase Section members • Change contribution rate (SHPS Money Purchase only) • Enrol into SHPS Money Purchase section
  31. 31. SHPS Final Salary   Before salary exchange After salary exchange Annual Salary pa £14,000.00 £12,544.00 Monthly Gross Pay pm £1,166.67 £1,045.33 Employee pension contribution 10.4% pa £1,456.00 £0.00 pm £121.33 £0.00 Additional employer Pension  contribution pa £0.00 £1,456.00 pm £0.00 £121.33 Employee NI pa £673.86 £522.44 pm £56.16 £43.54 Employer NI pa £699.73 £552.67 pm £58.31 £46.06 Employee take-home pay (pre  income-tax) pa £11,870.14 £12,021.56 pm £989.18 £1,001.80 Employee saving per month £12.62 Employee saving per annum £151.42 Employer saving per month £12.25 Employer saving per annum £147.06
  32. 32. SHPS Final Salary   Before salary exchange After salary exchange Annual Salary pa £25,000.00 £22,400.00 Monthly Gross Pay pm £2,083.33 £1,866.67 Employee pension contribution 10.4% pa £2,600.00 £0.00 pm £216.67 £0.00 Additional employer Pension  contribution pa £0.00 £2,600.00 pm £0.00 £216.67 Employee NI pa £1,817.86 £1,547.46 pm £151.49 £128.96 Employer NI pa £1,810.73 £1,548.13 pm £150.89 £129.01 Employee take-home pay (pre  income-tax) pa £20,582.14 £20,852.54 pm £1,715.18 £1,737.71 Employee saving per month £22.53 Employee saving per annum £270.40 Employer saving per month £21.88 Employer saving per annum £262.60
  33. 33. SHPS Final Salary   Before salary exchange After salary exchange Annual Salary pa £42,000.00 £37,632.00 Monthly Gross Pay pm £3,500.00 £3,136.00 Employee pension contribution 10.4% pa £4,368.00 £0.00 pm £364.00 £0.00 Additional employer Pension  contribution pa £0.00 £4,368.00 pm £0.00 £364.00 Employee NI pa £3,617.22 £3,131.59 pm £301.44 £260.97 Employer NI pa £3,600.25 £3,086.56 pm £300.02 £257.21 Employee take-home pay (pre  income-tax) pa £34,014.78 £34,500.41 pm £2,834.56 £2,875.03 Employee saving per month £40.47 Employee saving per annum £485.63 Employer saving per month £42.81 Employer saving per annum £513.69
  34. 34. SHPS CARE   Before salary exchange After salary exchange Annual Salary pa £14,000.00 £12,950.00 Monthly Gross Pay pm £1,166.67 £1,079.17 Employee pension contribution 7.5% pa £1,050.00 £0.00 pm £87.50 £0.00 Additional employer Pension  contribution pa £0.00 £1,050.00 pm £0.00 £87.50 Employee NI pa £673.86 £564.66 pm £56.16 £47.06 Employer NI pa £699.73 £593.68 pm £58.31 £49.47 Employee take-home pay (pre  income-tax) pa £12,276.14 £12,385.34 pm £1,023.01 £1,032.11 Employee saving per month £9.10 Employee saving per annum £109.20 Employer saving per month £8.84 Employer saving per annum £106.05
  35. 35. SHPS CARE   Before salary Exchange After salary exchange Annual Salary pa £25,000.00 £23,125.00 Monthly Gross Pay pm £2,083.33 £1,927.08 Employee pension contribution 7.5% pa £1,875.00 £0.00 pm £156.25 £0.00 Additional employer Pension  contribution pa £0.00 £1,875.00 pm £0.00 £156.25 Employee NI pa £1,817.86 £1,622.86 pm £151.49 £135.24 Employer NI pa £1,810.73 £1,621.35 pm £150.89 £135.11 Employee take-home pay (pre  income-tax) pa £21,307.14 £21,502.14 pm £1,775.59 £1,791.84 Employee saving per month £16.25 Employee saving per annum £195.00 Employer saving per month £15.78 Employer saving per annum £189.38
  36. 36. SHPS CARE   Before salary exchange After salary exchange Annual Salary pa £42,000.00 £38,850.00 Monthly Gross Pay pm £3,500.00 £3,237.50 Employee pension contribution 7.5% pa £3,150.00 £0.00 pm £262.50 £0.00 Additional employer Pension  contribution pa £0.00 £3,150.00 pm £0.00 £262.50 Employee NI pa £3,617.22 £3,258.26 pm £301.44 £271.52 Employer NI pa £3,600.25 £3,209.58 pm £300.02 £267.46 Employee take-home pay (pre  income-tax) pa £35,232.78 £35,591.74 pm £2,936.06 £2,965.98 Employee saving per month £29.91 Employee saving per annum £358.96 Employer saving per month £32.56 Employer saving per annum £390.67
  37. 37. SHPS Money Purchase (4%)   Before salary exchange After salary exchange Annual Salary pa £14,000.00 £13,440.00 Monthly Gross Pay pm £1,166.67 £1,120.00 Employee pension contribution 4% pa £560.00 £0.00 pm £46.67 £0.00 Additional employer Pension  contribution pa £0.00 £560.00 pm £0.00 £46.67 Employee NI pa £813.00 £745.80 pm £67.75 £62.15 Employer NI pa £956.06 £878.78 pm £79.67 £73.23 Employee take-home pay (pre  income-tax) pa £12,627.00 £12,694.20 pm £1,052.25 £1,057.85 Employee saving per month £5.60 Employee saving per annum £67.20 Employer saving per month £6.44 Employer saving per annum £77.28
  38. 38. SHPS Money Purchase (4%)   Before salary exchange After salary exchange Annual Salary pa £25,000.00 £24,000.00 Monthly Gross Pay pm £2,083.33 £2,000.00 Employee pension contribution 4% pa £1,000.00 £0.00 pm £83.33 £0.00 Additional employer Pension  contribution pa £0.00 £1,000.00 pm £0.00 £83.33 Employee NI pa £2,133.00 £2,013.00 pm £177.75 £167.75 Employer NI pa £2,474.06 £2,336.06 pm £206.17 £194.67 Employee take-home pay (pre  income-tax) pa £21,867.00 £21,987.00 pm £1,822.25 £1,832.25 Employee saving per month £10.00 Employee saving per annum £120.00 Employer saving per month £11.50 Employer saving per annum £138.00
  39. 39. SHPS Money Purchase (4%)   Before salary  exchange After salary  exchange Annual Salary pa £42,000.00 £40,320.00 Monthly Gross Pay pm £3,500.00 £3,360.00 Employee pension contribution 4% pa £1,680.00 £0.00 pm £140.00 £0.00 Additional employer Pension  contribution pa £0.00 £1,680.00 pm £0.00 £140.00 Employee NI pa £4,173.00 £3,971.40 pm £347.75 £330.95 Employer NI pa £4,820.06 £4,588.22 pm £401.67 £382.35 Employee take-home pay (pre  income-tax) pa £36,147.00 £36,348.60 pm £3,012.25 £3,029.05 Employee saving per month £16.80 Employee saving per annum £201.60 Employer saving per month £19.32 Employer saving per annum £231.84

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