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Question on pension contributions and SSP

What is the interaction between SSP and pensions, and salary sacrifice

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Here is the scenario:

Pension payments are made under salary sacrifice arrangements.

Pensionable pay includes all of basic pay in our definition, but not overtime or commission.

If an employee is entitled to SSP, how should the amount sacrificed by them be calculated - ie should it include the SSP value, or not?

Similarly, should the employer part be calculated on the whole amount payable including the SSP.

Or - should the employer contribute the full amount (ie including a percentage of the SSP) without making any deduction.

Normally, absence for us is only the odd day per month per head, so never really cropped up. This time, though, I have someone off all month.


Replies (7)

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By lionofludesch
16th Apr 2019 11:56

Pension payments won't be part of SSP.

Therefore you must pay at least the minimum SSP in money.

As the employee isn't sacrificing any pay, I wouldn't be thinking that you'd need to pay pension during those weeks. However, pension payments at 3+5% on a month's SSP is only £30 or so - I'm not sure I'd be spending a lot of time on this. If you want to be sure you're on the right side, I'd just pay it.

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Replying to lionofludesch:
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By tom123
16th Apr 2019 12:17

Thanks Lion, I agree it is not much - and it is more of a process issue for me, getting all the various software bits to agree etc.

We have a bit of a sickly workforce this year, so having to give SSP more thought.

We have a "15 days full pay in rolling 12 months" policy, which has tended to keep most people on their normal salaries in prior years.

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By HuntFord
16th Apr 2019 13:29

I'm not sure how this will interact with salary sacrifice, but AE pensions are meant to continue at the original earnings, and not be reduced when someone is off on SSP. This should apply to the Employer's part, but you'd have to look into how to apply it with your pension provider - they should know exactly how to treat ssp in their scheme too

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By tom123
16th Apr 2019 13:38

Thanks - a lot of the TPR guidance seems to defer to the pension provider for further info.

The reality is that mine has no view on how I calculate anything. There are no "scheme rules" or anything like that.

I can feel whole days being swallowed up in trying to look at the TPR stuff again :)

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By natalie.warner
23rd Apr 2019 13:42

Thinking out loud...
Salary sacrifice pension contributions by nature are employer contributions, so if employer pension contributions should continue at the normal rate and not be reduced when someone is off sick/receiving SSP only, then this would include salary sacrifice pension contributions.
As salary sacrifice can't occur if the reduction takes the employee below the NMW/NLW for their age, you would need to process additional pay to fund it, like you would when continuing salary sacrifice pension or childcare vouchers for employees on SMP only for example.

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By Mike Nicholas
23rd Apr 2019 10:49

It's unclear from your post whether the pay for the month includes contractual sick pay (CSP). If so, the CSP is likely to be based on the lower salary (i.e. post salary sacrifice reduction).

If only SSP is being paid, there can be no reduction for sal sac. (Do not confuse matters by referring to sal sac as a 'deduction'.) In essence, SSP is statutory entitlement and not contractual pay.

As regards offsetting of SSP and CSP...even if the CSP reflects the lower salary, the SSP is offset against the residue.

As regards whether the employer pension contrib is payable you need to refer to the employee's contractual terms and conditions of employment - including what it says about sal sac - and whether SSP is pensionable.

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By tom123
23rd Apr 2019 11:36

Thanks for the replies, particularly the most recent two.

I was particularly interested in the comment about contributions being maintained at the previous (ie normal) rate.

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