Salary Sacrifice Benefits

Which benefits operate as Salary Sacrifice?

NTU currently operates the Holiday Buy Scheme and Cycle to Work as salary sacrifice benefits. We also operate the Retirement Savings Plan via salary sacrifice or non-salary sacrifice.

How do Salary Sacrifice benefits work?

In essence, salary sacrifice works by colleagues giving up part of their salary (before tax) in exchange for a non-cash benefit, like those above. When colleagues reduce their gross or pre-tax salary in exchange for a benefit, they pay less Income Tax and NI Contributions. This is why salary sacrifice is a popular way for people to save for retirement, buy additional holiday, and buy a bike.

However, it's important to note that not all colleagues will be eligible for salary sacrifice - deductions must not take the colleague's salary below the national minimum wage (NMW). When this happens, NTU looks, where possible, to support colleagues with alternative options.

We include information on the MyBenefits site explaining the eligibility criteria for colleagues on salary scale points close to the National Living Wage (NLW). The Holiday Buy Scheme FAQs also have a section (section 2) which sets out the NLW criteria and what will happen should deductions take colleagues below.

We have tried to accommodate all colleagues where possible, for example, colleagues at the NLW at the start of the year have been able to buy holiday through salary sacrifice although we know that changes to the NLW in April may take them below the NLW. For these colleagues, we’ve offered the option to exceptionally make a net payment for the difference or cancel future leave when this happens.

It may also be possible for colleagues to discuss with their line manager the possibility of taking unpaid leave, rather than buying leave.

This benefit is provided by a company called Cyclescheme. We include FAQs about the scheme on the MyBenefits site and there is information for colleagues who earn the NMW / NLW or are close to it on the Cyclescheme site. Alternative options for colleagues who are affected by the NMW / NLW are available, including a bike hire plan.

If you have any questions, email cycle@ntu.ac.uk .

If you cannot join the Plan on a salary-sacrifice basis, due to contributions taking you below the National Minimum Wage or the Lower Earnings Limit, you can still join the plan on a non-salary-sacrifice basis. In this circumstance, your contributions will be taken from your net pay, after tax and NI deductions.

Impact of Salary Sacrifice

Before applying for salary sacrifice benefits, employees should consider the impact of salary sacrifice arrangements on any benefits, pension, and life assurance cover. Independent financial advisors can provide you with unbiased advice on how these types of schemes could affect you.

Impact of salary sacrifice on benefits

Employees should be aware that the reduction in gross pay through salary sacrifice could have a negative impact on:

The calculation of any statutory benefits such as statutory maternity pay (SMP)
The salary used for finance agreements such as mortgage applications.

However, in some cases the reduction in gross pay may have a positive impact on eligibility for tax credits or Universal Credit.

Salary sacrifice pension implications

Participating in a salary sacrifice scheme has potential impacts on pension contributions and future benefits, which employees should be aware of. The impacts of salary sacrifice on each of the pension schemes in operation at NTU are detailed below.

Salary sacrifice impact on Local Government Pension Scheme (LGPS) and Teachers’ Pension Scheme (TPS)

The LGPS and TPS do not allow pension contributions to be deducted from a notional salary, i.e., before your salary is reduced by salary sacrifice deductions. An employee’s LGPS or TPS pension contributions must be deducted from the reduced salary. Therefore, this reduces the amount you are contributing to your pension for the year that the benefit is bought.

By entering into a salary sacrifice agreement, as an LGPS or TPS member, employees should be aware of the impact this will have on pension contributions and future benefits.

Members of LGPS may be able to purchase additional pension to make up for what is ‘lost’ because of the salary sacrifice scheme.
TPS offer an alternative option to their members, to purchase additional pension to make up for what is ‘lost’ because of the salary sacrifice scheme.

For more information on how to buy additional pension, email Pensions@ntu.ac.uk.

Salary sacrifice impact on Universities Superannuation Scheme (USS)

For employees who are members of USS, their pension contributions will be deducted from notional salary, i.e. before your salary is reduced by salary sacrifice deductions.

There is no impact on pension benefits for USS members when joining a salary sacrifice scheme.