Salary Sacrifice for Employee Pension Contributions
Salary sacrifice for employee pension contributions is now seen as the main way for employees to contribute to their pension arrangement resulting in National Insurance contribution savings for both employees and the employer.
Employee pension contributions attract income tax relief but do not attract relief from National Insurance contributions. Salary sacrifice changes the way employees contribute to their pension arrangement so that both the employer and employees obtain National Insurance relief on employee pension contributions. This is achieved by employees giving up that part of their earnings which they would have normally used to pay their employee pension contributions (it is this reduction in earnings which triggers the National Insurance savings), with the employer paying the employee pension contributions on their behalf.
Our Approach
There is no ‘one size fits all’ arrangement – different employers will have varying membership profiles which will impact on how salary sacrifice is implemented and also, crucially, how it is communicated and managed. Our offering is flexible and tailored to meet your needs. The process of introducing and administering a salary sacrifice arrangement is relatively straightforward, but special care must be taken with employee communication.
We provide bespoke communications that include personalised ‘before and after’ payslips for employees; the design of the payslips replicate what is actually provided to employees, so they can see the real benefit to their take-home pay of salary sacrifice. We find that these, combined with employee presentations, results in a very high take-up rate, and employees fully appreciate the win-win situation resulting in savings for both employers and employees.
Talk to our team
Get in touch with our friendly team today to talk about how we can help your business.