Palmer & Harvey introduce Pension Salary Exchange

Workers employed at Palmer & Harvey who pay into any one of the Company’s pension schemes will be entered into a new arrangement for paying their pension contributions starting on 1 July.

The new arrangement for paying contributions is called Pension Salary Exchange (PSE).

PSE is a salary sacrifice arrangement and this is how it works:

Employees will no longer pay their own pension contribution – P&H will pay it for them along with the Company’s own regular contribution.

In return, the employee accepts a reduction to their gross pay equal to the amount they regularly contribute to the pension scheme.

However, because of the reduction to gross pay, employees will pay less National Insurance contributions meaning an increase in the amount of pay they take home with them.

P&H also save money because they will pay less employer NI contributions.

All P&H employees who pay into the Company’s pension schemes will be automatically entered into this new arrangement.

Most of the employees entered can expect to benefit now by the increase in their “take-home” pay, however, because they will be paying less NI contributions this could result in a small decrease to the earnings-related part of the state pension they will receive in later life.

Also, lower paid workers (those whose pay will fall below £4,680 a year after PSE) might become ineligible for a number of state benefits by taking part.  If this applies then they should think carefully about whether they might be better off opting out of PSE.

Workers whose pay after PSE will fall below the National Minimum Wage cannot take part.

If you work for P&H and you don’t wish to take part you need to contact the Company’s Payroll & Pensions Manager at Head Office no later than 30 June.  After that, you will not get the opportunity to opt out (or opt back in) for another year.

Overtime rates, holiday pay, bonus, statutory maternity/paternity/adoption and sick pay will not be affected.  Any future pay review or redundancy payments would also be based on pay before any adjustment is made for PSE.

These kinds of arrangements are becoming more popular with employers and have already been introduced by Tesco and Co-op Group amongst others.  As you will see elsewhere on our website, Boots are putting in place a similar arrangement also due to start on 1 July.

Usdaw members who have questions or concerns about this new arrangement can contact the Union ’s Pensions Section at Central Office by telephoning 0161 224 2804 or emailing pensions_section@usdaw.org.uk

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