PSE

[Thixty]

been looking into this and its all a bit confusing so who can help ?

It states your take home is more so does that mean RM is paying less into your pension meaning you have to make up the loss or does it mean you actually lose out in salary as more goes to your pension and RM saves a fortune and uses that money for i dunno another wage rise for Moya ?

Will this benefit a p/t doing 29.45hrs ?

[RobertT]

It means less of your pay is assessed for National Insurance, therefore your take home pay will be more.

Whether it benefits you will depend on your exact circumstances, but most RM pension members will be better off from it.

More info here:
http://www.myroyalmail.com/node/6796" onclick="window.open(this.href);return false;
http://www.royalmailchat.co.uk/communit ... 27&t=69020" onclick="window.open(this.href);return false;
http://www.royalmailchat.co.uk/communit ... 15&t=69022" onclick="window.open(this.href);return false;

[Thixty]

with yourself and the employer paying less NI how does this affect your state pension later in life ?

[borders]

been looking into this and its all a bit confusing so who can help ?

It states your take home is more so does that mean RM is paying less into your pension meaning you have to make up the loss or does it mean you actually lose out in salary as more goes to your pension and RM saves a fortune and uses that money for i dunno another wage rise for Moya ?

Will this benefit a p/t doing 29.45hrs ?

There are several advantages for eligible employees who take part in pension salary exchange (PSE).



•The same amount of money will be paid to your pension plan, but your take-home pay will increase.
•For Royal Mail Pension Plan (RMPP) members, PSE will help reduce the impact of the increase in National Insurance contributions when contracting-out (see jargon buster) ends in April 2016.
•Joining PSE could not be easier. If you’re eligible and want to take part, you do not need to do anything. You will be automatically enrolled unless you tell us you wish to opt out.

Protections

Because entitlements to some State benefits are based on the amount of NICs that have been paid, some employees could be financially disadvantaged. To make sure this doesn’t happen we have set a minimum basic pay level for PSE participation of £10,000 a year (around £192 a week if you are paid weekly and around £833 a month if you are paid monthly). This means that if your pay goes below this level in any given week or month, the payroll system will automatically exclude you from taking part in PSE for that specific pay period, and your pension contributions will be paid as they are currently.

You will also be automatically excluded from taking part in PSE if any other salary exchange arrangements that you may have, for example childcare vouchers, will reduce your post-PSE pay below the National Minimum Wage or the £10,000 PSE participation level for that specific pay period.

You do not need to take any action at this time. You will receive more information, including the full eligibility criteria, in due course.

[RobertT]

with yourself and the employer paying less NI how does this affect your state pension later in life ?

As long as you're earning enough to pay NI you're building up your entitlement to a state pension, PSE won't change anything. It's paying NI that matters not how much! Although you can earn NI credits by being on certain state benefits aswell.

In fact when 'contracting out' ends and NI rates for RMPP members go up in April 2016 from 10.6% to 12%, we'll actually be earning more state pension than before.

[IloveMYredTROLLEY!]

FTers like me should be fine, but I wonder if this complicate things for PT staff wanting to do the RM salary sacrifice bike schemes?

[dave72]

I've read it several times and still looking for the catch

[Biker Mouse]

If I remember correctly, to get the full enhanced state pension, you have to have paid 35 years NI payments. For each year you are "contracted out" you lose a year from the 35yrs NI payments. The RMPP is contracted out until 2016 so non of us will get the full enhanced state pension. Myself have worked since 1974 and have paid the full 35 yrs but for 8 yrs with RM and 6 yrs with a previous employer will not qualify as I only have 21 yrs full NI. Doesn't matter if you work 50yrs, the NI is a 35 yr max.

[Biker Mouse]

Also your RMPP Payments are already taken off your gross before tax, so they must be taking both RMPP and NI off before tax in this new scheme. Seems to be a RM con to get out of paying more NI.

[RobertT]

There effectively used to be two state pension schemes, to be precise there still is until April 2016.
If you were/are contracted out of SERPS/State Second Pension as members of the RMPP still are, then NI was reduced but the employer scheme agreed to offer a pension up to a certain limit instead.
If you were contracted in to SERPS/State Second Pension then you would have paid the full NI rate, currently 12% and you would have built up some state second pension instead.
In practice many people will have a bit of both depending on their employment history.

The amount of ‘basic state pension’ is based on the number of qualifying years you accrue over your working life and when the ‘new’ state pension starts you will start off with a foundation amount based on your NI history up to that date. That amount will be the higher of what you’d get from either the old system or the new one.

Somebody who has been contracted out for a large chunk of their working life will still get at least the level of the ‘basic state pension’ currently about £115 I think and could have some S2P from other employments along the way. And assuming they’re still working will have the ability to build up more entitlement via the new system.

You DO NOT lose a year for every year you are contracted out. You still have the at least ‘basic state pension’ but you may not have any S2P. The amount of BSP will obviously depend on how many qualifying years you have.

PSE/salary sacrifice is not a con, it’s a perfectly legal way for a company and it’s employees to pay less NI.
https://www.gov.uk/salary-sacrifice-and ... ts-on-paye" onclick="window.open(this.href);return false;

[Brainache]

Is the £10,000 paticipation level pro-rata for part-timers ?

[TrueBlueTerrier]

Is the £10,000 paticipation level pro-rata for part-timers ?

No its an absolute limit - because if you are paid less there are no benefits to doing it. How I am not sure but still researching.

[Biker Mouse]

I think I may have the NI thing sussed.
At the moment RMPP is taken off Gross pay and then you are taxed and pay NI, which is based on Gross pay.
The new scheme PSE is taken off Gross pay and then you are taxed but NI deductions are based on Gross pay less PSE.

[Darren Bent]

so when do this start.

How much will a typical full timer earn now after tax with 2.8% pay rise, plus increase tax free earnings to 10,000 and PSE changes. Just asking.

[rogersh]

I think I may have the NI thing sussed.
At the moment RMPP is taken off Gross pay and then you are taxed and pay NI, which is based on Gross pay.
The new scheme PSE is taken off Gross pay and then you are taxed but NI deductions are based on Gross pay less PSE.

I agree with your summary.