Pension salary exchange
Pension salary exchange
We launched Pension Salary Exchange, or PSE, at the start of August 2015.
Monthly-paid employees were enrolled in PSE on 1 August, and weekly-paid employees on 3 August 2015. The arrangement has continued since then for new employees joining Royal Mail.
You will have been automatically enrolled in PSE if you were a member of a Royal Mail pension plan and did not opt out before the 15 July 2015 deadline, or if you joined service after July 2015.
Employees of Royal Mail Courier Services, Storefeeder and Royal Mail Property & Facilities Solutions Limited are also eligible to participate in PSE.
What is PSE?
PSE is a way for eligible employees who pay National Insurance contributions (NICs) to increase the amount of money they take home each week or month, without changing their pensionable pay, the overall level of contributions made to their pension or the Royal Mail benefits they receive.
By changing the way pension contributions are made, eligible employees – who are enrolled into PSE – can make a saving on their NICs.
You should receive an increase in take-home pay (also known as your net pay) equal to the NICs that you would otherwise have made on your pension contribution.
As a result of launching PSE we, Royal Mail, will also pay lower NICs
Full details about PSE can be found in ‘Your guide to Royal Mail Pension Salary Exchange’, which was produced when the business introduced PSE in the summer of 2015.
Legal note: We have the right to withdraw, suspend or amend PSE or any Royal Mail pension arrangement at any time.
Under PSE, you no longer make a personal contribution to your Royal Mail pension. This means contributions coming out of your weekly or monthly basic paystop. Your basic weekly or monthly pay is reduced by the amount equal to the contribution you currently make to your Royal Mail pension. This includes any Additional Voluntary Contributions (AVCs) you may be paying.
We pay an increased employer contribution so that the amount paid into your pension is the same as before. The payments column of your payslip will start showing your basic pay and the PSE adjustment.
Because your basic pay has been reduced, you will start paying lower National Insurance contributions (NICs), if you pay NICs. Your take-home pay increases by the same amount as any NICs saving you make.
PSE has no effect on the overall level of contributions made to your pension, your pensionable pay, pensions benefits or other Royal Mail benefits you receive.
If you are a member of the Royal Mail Pension Plan (RMPP) or the Royal Mail Defined Contribution Plan (RMDCP), you will have been automatically enrolled in PSE, unless you opted out.
We have designed PSE so that as many colleagues can benefit as possible. However, because of how certain legislation works, some employees could be financially disadvantaged if they take part. To make sure this doesn’t happen, some colleagues will continue to make a personal contribution to their Royal Mail pension plan, and have pension contributions deducted from their pay, even though they are enrolled in PSE.
These are employees:
- whose post-PSE pay is below the PSE participation limit (currently £10,000 a year, around £192 a week if you are paid weekly or around £833 a month if you are paid monthly);
- who are brought below the National Minimum Wage by taking part in PSE and any other salary-exchange arrangements, for example childcare vouchers;
- on Statutory Sick Pay with no extra payments from us; or
- on unpaid leave, for example, a career break or seconded to another employer and paid on another payroll system.
If your pay changes so that none of the above apply to you, you will automatically start taking part in PSE.
Note: Employees of Royal Mail Courier Services, Storefeeder and Royal Mail Property & Facilities Solutions Limited are also eligible to participate in PSE.
You would have been automatically enrolled into PSE but if you have previously chosen to opt out of PSE but have now changed your mind, you can opt back in at any time by calling HR Services on 0845 60 60 603 (Monday to Friday, 8.30am to 5pm, excluding bank holidays) or emailing advicecentrePAY@royalmail.com and asking for an opt-in form.
This must be filled in, signed and dated and returned to: HRSC PSE, Royal Mail, 2nd Floor, Pond Street, Sheffield, S98 6HR.
If you want to opt out of PSE, you can do so once a year during a specific opt-out period.