FT Adviser (13/12/2018) – Small and medium-sized employers are being prompted to offer pension salary sacrifice to their staff, which cuts the national insurance bill for both employer and worker.
According to recent research of 568 human resources practitioners by the Chartered Institute of Personnel and Development (CIPD) and consultancy firm LCP, only 41 per cent of SMEs offer this benefit, compared with 61 per cent of large and 85 per cent of very large organisations.
Salary sacrifice – whereby an employee agrees to exchange part of their salary in return for a pension contribution from their employer – not only allows workers additional savings in tax and national Insurance contributions, but also benefits the company itself through lower national insurance contributions.
Alan Chan, director and chartered financial planner at London-based IFS Wealth & Pensions, said: “Salary sacrifice can be hugely beneficial for employers and employees due to the national insurance savings for both parties.
“There’s definitely a case for offering it but it does appear to be difficult and even costly for SMEs to implement and they would need to keep track of both salary figures pre-and post-salary sacrifice, which might seem like a bit of a headache to them.”
Mr Chan warned, however, that it might not be an option for much longer in its current form.
He said: “When salary sacrifice was first introduced it was only taken up by a small number of employers so this did not cause much concern for the government. Over the years as it’s got more and more mainstream, and with the government needing to raise funds to balance their accounts, they now realise they are losing out hugely in tax revenues through salary sacrifice so it may only be a matter of time before the Chancellor decides to attack it again once Brexit negotiations are out the way.”
Full article link: https://www.ftadviser.com/pensions/2018/12/13/less-than-half-of-smes-offer-salary-sacrifice/
