A payroll deduction that reduces the employee's gross taxable wages before income tax and FICA are calculated, lowering both the employee's and employer's tax liability on that amount.
The employee's Section 125 election to fund the SIMERP is a pre-tax deduction. Every dollar elected reduces the FICA-taxable wage base, which is what generates the employer's 7.65% FICA savings and a portion of the employee's take-home pay increase.
Definitions only do so much. A live walkthrough of how all of this connects in your business takes about half an hour.