pension salary exchange

[RobertT]

To be fair on this it's not Royal Mail or CWU's fault.....deep breath it's the Government. The change in pensions/NIC contributions means, in effect, that all POSS/POPS members will be faced with an increased National Insurance Bill next April (Thanks George Osborne....).

Although those people will be building up more state pension because of those increased NIC’s.

What PSE means, in effect, that RM will pick up the difference and pay your Pension contributions for you and in return not have to pay the increased employers NI contribution as well (Win/Win?).

RM’s NI bill will still go up but not by as much as it would’ve done without PSE.

However, that will mean the individual employee will also then not be paying 'full' National Insurance which may affect some current or future benefits. Given that most UK political parties are committed to 'means-testing' some or all benefits it may potentially include, amongst others, Second State Pension, Invalidity Benefit, Maternity/Paternity Benefit, Statutory Sick Pay and others.

It may affect the amount of Job Seekers Allowance, Sick Pay, etc that you may get should you need those benefits. But as such benefits are only there to tide you over for a period of time, you can’t put too much weight on them, surely?

It won’t affect the State Second Pension for RMPP members as they don’t currently pay into it anyway, because they are contracted out. Future accruals to S2P will end for everybody in April 2016 when contracting out ends and the way the state pension is worked out will change. The increase in NIC’s will actually mean people who are currently contracted out will be accruing more state pension than they would have before. Participating in PSE won’t change that.

It is possible that a future government may decide that salary sacrifice(PSE) is costing the country too much and stops it. But as it’s a HMRC backed scheme and probably millions of workers already participate, I can’t see any retrospective changes in state pension, etc being politically viable.

I would strongly urge individuals to consider their own personal circumstances, and if they believe it appropriate, consult a financial advisor since this might have some impact on the incomes to their household. For those people more concerned with not seeing a drop in their take home pay next April, and who are fully aware of the above then it's their own personal choice.

It’s always a good idea to consider your own personal circumstances and there will be some that PSE is not suitable for. But for most people, opting out is akin to looking a gift horse in the mouth.

[Poshpost]

Will PSE affect the calculation of NRA 60 benefits when taken at 60 or earlier?

[RobertT]

Will PSE affect the calculation of NRA 60 benefits when taken at 60 or earlier?

On page 22 of your booklet it says:

Your pensionable pay stays the same if you take part in PSE..........

[trythat]

It may affect the amount of Job Seekers Allowance, Sick Pay, etc that you may get should you need those benefits. But as such benefits are only there to tide you over for a period of time, you can’t put too much weight on them, surely?

I must admit one of the reasons I'm opting out is roughly the above, not for me personally, but for the rest of the country, if everyone and RM pay less NI, then how are the government going to pay benefits to people, whether you think people get to much benefit or not, I think its NI that goes towards them. But if people want to take advantage, I'm also not going to condemn them either.

Also as I've said in another thread, we've recently seen that HMRC and the government have changed what was once legal to illegal, so as you've mentioned it could be voided in the future.

[RobertT]

It may affect the amount of Job Seekers Allowance, Sick Pay, etc that you may get should you need those benefits. But as such benefits are only there to tide you over for a period of time, you can’t put too much weight on them, surely?

I must admit one of the reasons I'm opting out is roughly the above, not for me personally, but for the rest of the country, if everyone and RM pay less NI, then how are the government going to pay benefits to people, whether you think people get to much benefit or not, I think its NI that goes towards them. But if people want to take advantage, I'm also not going to condemn them either.

Also as I've said in another thread, we've recently seen that HMRC and the government have changed what was once legal to illegal, so as you've mentioned it could be voided in the future.

Salary Sacrifice is a government endorsed scheme, they will know if they can afford it or not. Yes, it may stop at some point in the future just as many other benefits may stop but that doesn’t stop people from taking advantage of it while it’s there. Tax relief on pension payments being a good example.

It baffles me why so people seem determined to bite their nose off to spite their face.

[trythat]

It may affect the amount of Job Seekers Allowance, Sick Pay, etc that you may get should you need those benefits. But as such benefits are only there to tide you over for a period of time, you can’t put too much weight on them, surely?

I must admit one of the reasons I'm opting out is roughly the above, not for me personally, but for the rest of the country, if everyone and RM pay less NI, then how are the government going to pay benefits to people, whether you think people get to much benefit or not, I think its NI that goes towards them. But if people want to take advantage, I'm also not going to condemn them either.

Also as I've said in another thread, we've recently seen that HMRC and the government have changed what was once legal to illegal, so as you've mentioned it could be voided in the future.

Salary Sacrifice is a government endorsed scheme, they will know if they can afford it or not. Yes, it may stop at some point in the future just as many other benefits may stop but that doesn’t stop people from taking advantage of it while it’s there. Tax relief on pension payments being a good example.

It baffles me why so people seem determined to bite their nose off to spite their face.

The few people at work who have done the same gave a similar reason to mine i.e. they believed it took money away from others in the country, 1 person actually said they were a socialist and thought it went against their ideals. You don't hear that kind of ideal very often now, as I've said, I'm not trying to persuade anyone either way, it would be a boring place if we all did they same.

[bogstandard]

For me NIC's go towards the NHS and i can't argue for a better healthier NHS and pay less towards it.
As a coincidence i did havve a conversation 2 days before i got this and the person i was speaking to was saying they would pay an extra £5 a week for just that.
to me its £3 a week i've never had and i don't thinks i'll miss it

[bandit1157]

For me NIC's go towards the NHS and i can't argue for a better healthier NHS and pay less towards it.
As a coincidence i did havve a conversation 2 days before i got this and the person i was speaking to was saying they would pay an extra £5 a week for just that.
to me its £3 a week i've never had and i don't thinks i'll miss it

What he said, plus I'm on 27.5hrs so will be giving up slightly less

[nataddick]

The provision, entitlement and distribution of social security benefits from the National Insurance Fund is determined by the actions of Government rather than us as individuals.

I agree that the NHS could do with increased funding but NIC's only form part of the funding, the rest is from general taxation. See the following link :

http://www.kingsfund.org.uk/projects/nh ... wwodd0wANw" onclick="window.open(this.href);return false;

The greatest users of the NHS are people post retirement age and yet they stopped paying NIC's from state retirement age, so it could be argued that this whole concept is flawed. Then there is the subject of Government waste both from the National Insurance Fund and from general taxation !

[RobertT]

I appreciate that many people have principles and I don’t want to offend anyone, but you do need to realise that the idea that NIC’s go specifically to the NHS is a bit of a fallacy these days. In reality they actually go towards paying Job Seekers Allowance, Disability Allowance and the State Pension plus other benefits and not just the NHS. It can also be used to pay for other things that the government of the day chooses.

So in practice your additional NIC’s that you seem so happy to pay, are just as likely to go to a dole dosser with a dozen kids than to pay for caring for the countrys sick.

[wannabeek]

Or even to pay for a new duck pond for one of them, or possibly to help one of them take their wife's maid with them on a business trip. You may have socialist principles, but the government doesn't and surely they can decide what to do with this extra money you'll be giving them?

[bandit1157]

I appreciate that many people have principles and I don’t want to offend anyone, but you do need to realise that the idea that NIC’s go specifically to the NHS is a bit of a fallacy these days. In reality they actually go towards paying Job Seekers Allowance, Disability Allowance and the State Pension plus other benefits and not just the NHS. It can also be used to pay for other things that the government of the day chooses.

So in practice your additional NIC’s that you seem so happy to pay, are just as likely to go to a dole dosser with a dozen kids than to pay for caring for the countrys sick.

No offence taken, we're here to discuss not argue amongst ourselves. Everyone has different views

[tractorboy2]

Does it affect the state pension ?
If you agree to it , and at a later date it's abolished will you get your basic pay reinstated to the level it was at before ?

[RobertT]

Does it affect the state pension ?

In simple terms, as long as you earn enough to pay NI then you’re building up your state pension. Members of the RM Defined Contribution Pension(joined RM after April 2008) will see a very slight decrease in their State Second Pension, but at about £1.80 per year over their retirement(not including inflationary increases) it’s hardly going to make much difference to your standard of living. Members of the RMPP will see absolutely no difference at all because they are contracted out of S2P.

From April 2016 when NIC’s increase RMPP members will actually be building up more state pension than before. PSE does not change anything.

If you agree to it , and at a later date it's abolished will you get your basic pay reinstated to the level it was at before ?

NIC’s are increasing in April 2016 no matter what, PSE is just a way of reducing that increase, so participating in PSE will mean higher take home pay compared to opting out.
If the government or RM decide they no longer want to run the scheme our wages will just revert back to how they’re paid now and we will take the full impact of the increase in NICS.

[k979aaa]

Does it affect the state pension ?

In simple terms, as long as you earn enough to pay NI then you’re building up your state pension. Members of the RM Defined Contribution Pension(joined RM after April 2008) will see a very slight decrease in their State Second Pension, but at about £1.80 per year over their retirement(not including inflationary increases) it’s hardly going to make much difference to your standard of living. Members of the RMPP will see absolutely no difference at all because they are contracted out of S2P.

From April 2016 when NIC’s increase RMPP members will actually be building up more state pension than before. PSE does not change anything.

If you agree to it , and at a later date it's abolished will you get your basic pay reinstated to the level it was at before ?

NIC’s are increasing in April 2016 no matter what, PSE is just a way of reducing that increase, so participating in PSE will mean higher take home pay compared to opting out.
If the government or RM decide they no longer want to run the scheme our wages will just revert back to how they’re paid now and we will take the full impact of the increase in NICS.

Just received confirmation as such from a letter by the CWU so hopefully we will not lose any pay till the contributions go up in April which is when our new pay deal is due hope we get a good deal this time?