Salary exchange arrangement for pension contributions coming soon
This June, London Business School is introducing a salary exchange arrangement for pension contributions, to help mitigate some of the impact of recent tax and pension changes.
LBS salary exchange at a glance
From 1 June 2016, you will stop making standard pension contributions from your Basic Pay to the Universities Superannuation Scheme (USS) or the London Business School Group Personal Pension Plan (LBS GPP) with Scottish Widows.
Instead, your Basic Pay will be reduced by the rate you previously paid and the School will make your employee contribution to USS or LBS GPP, along with its current employer contribution, on your behalf. Your salary prior to salary exchange will become known as your ‘Reference Salary’.
In the salary exchange arrangement, National Insurance Contributions (NICs) are only paid in line with the new lower Basic Pay amount (as opposed to your previous ‘Reference Salary’). So you will pay lower NICs and your net take home pay will increase.
The level of benefits from your USS or LBS GPP pension will not be affected. For USS, the salary used in pension calculations remains unchanged as it continues to be based on ‘Reference Salary’. Pay increases will not be affected as they are also calculated based on your ‘Reference Salary’.
If you do not wish to participate in Salary Exchange you will be able to opt out. The deadline for opting out is 3 June 2016.
Look out for further information along with your April payslip and full details about the arrangement in May. The School will be also hosting an information session on 19 May. Booking details will follow soon.
Please note, this information applies only to LBS employees who are members of either the Universities Superannuation Scheme (USS) or the London Business School Group Personal Pension Plan (LBS GPP) with Scottish Widows.