What is Salary Sacrifice?
DRAFT
Salary Sacrifice is sometimes called Salary Exchange.
What is it?
An arrangement you make with the RHN where you get better value for money in relation to your pension contribution.
This is not a new pension scheme but an alternative method of making contributions to the existing defined contribution scheme.
How will Salary Sacrifice benefit you and your pensions?
Salary Sacrifice gives you the opportunity to pay more into your pension pot if you wish.
What if you decide to opt in and don’t want to increase your own contribution?
You would agree to your current pension contribution to be reflected as a reduction of your gross salary. The RHN will continue to make its existing employer pensions contributions into your pension pot.
Furthermore the RHN will make additional contributions into your pension pot from some of the savings in the RHN employer National Insurance Contributions.
Your pension pot is increased; your take home pay remains the same.
What else is “Good to Know”?
The pensions salary sacrifice does not impact on the current benefits which you enjoy e.g.
· Your tax relief from your contributions does not change.
· Your contributions are taken from your pay before any tax is deducted.
· The Pensions Salary Pensions Scheme boosts your pension with additional employer (RHN) pensions contribution.
You can only sign up to the Pensions Salary Sacrifice Scheme if it doesn’t reduce your salary to below the National Minimum Wage. The RHN’s minimum pay rate is the London Living Wage which is higher than the National Minimum Wage.
Some earnings related state benefits e.g. Statutory Sick Pay, Statutory Maternity and Paternity Pay, and the State Pension may be impacted.
What else is “Good to Consider”?
You have the right to adjust your salary sacrifice arrangements at any time by contacting the Payroll Department.
Where can you get further information?
Reliable and independent sources of information about Pensions Salary Sacrifice can be found on the following websited:
Boost your pension with salary sacrifice | MoneyHelper
Pensions: Everything you need to know for retirement - MSE (Martin Lewis Website) has a useful paragraph entitled “What it means if your employer offer 'salary sacrifice' pensions?”How will my Salary be affected?”
On line Pensions Salary Sacrifice Calculators are a useful tool which you can use. See below for links to 2 calculators: