The Council, on the recommendation of the Finance Committee and the Human Resources Committee, has agreed to introduce a salary exchange scheme in respect of members' pension contributions. The University already operates two salary exchange schemes (for nursery and childcare vouchers); a third scheme for pension contributions is now in preparation which will apply to both the Universities Superannuation Scheme (USS) and the Cambridge University Assistants' Contributory Pension Scheme (CPS).
The scheme will involve employees who do not express a wish to be excluded from the scheme forgoing part of their salary by an amount equivalent to the existing levels of their pension contributions; in exchange the University will pay an equivalent amount into the relevant Pension Schemes in addition to the normal employer contributions. The total contribution for any member will be unchanged. All benefits and payments due to a member of either pension scheme will be based on her or his salary level before the salary exchange, thereby ensuring that the member is not disadvantaged.
Under the salary exchange scheme an employee's actual gross salary will reduce, and as a result most employees will pay less in National Insurance Contributions (NIC) (as this is based on actual gross salary) and their net pay will therefore increase. The arrangement proposed will also result in savings in the employer's NIC paid by the University.
The scheme is dependent on the approval of 'test cases' by HM Revenue and Customs but the Council expects that approval will be received in time for the scheme to operate from 1 April 2009.
It is intended that all members of the applicable pension schemes who will benefit or who will not be disadvantaged by the proposal will receive detailed information about the scheme and its benefits during March 2009 (for some low-paid or part-time staff no benefit would derive from the salary exchange scheme and these staff will not be included in the scheme).
The information will also be made available on the Human Resources Division's website (http://www.admin.cam.ac.uk/offices/hr/).