The leading pensions and financial services consultancy says that for those employers who do not have the system set up it’s simple to do. For employers that already have a salary sacrifice system in place, the focus should be on encouraging staff to maximise their pension contributions. This will help to minimise the NICs cost increases for employers in early April.
The rise in employer NICs, from 13.8% to 15%, will come into effect on April 6. On this day, the threshold at which NICs are paid will drop by nearly 50%, from £9,100 to £5,000 – adding a further burden on employers’ ability to balance the books.
Commenting on the need for employers to implement or, revamp a salary sacrifice arrangement for staff pension contributions, Hannah English, Head of DC Corporate Consulting, Hymans Robertson, says: “The savings employers could benefit from, by introducing a salary sacrifice system for employee pension contributions, should not be understated. For every £100,000 of salary sacrificed, a £15,000 saving unlocks doors for businesses at a time where costs are being squeezed.
“Employers who already have a salary sacrifice system in place should maximise employee pension contributions in this way. They could also encourage further savings into a pension through other means – for example, through bonus sacrifice. This would help mitigate the changes that come into place in early April while improving the retirement prospects of existing employees. Some employers already make pension contributions on a matching basis. They could consider a different design structure – or else any savings in NICs will be offset by an employer pension contribution cost increase.
“By increasing default employee contribution levels annually and providing staff with meaningful retirement guidance and advice support, employers could offset their looming National Insurance costs while improving the retirement prospects of their employees.
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