FINANCE
BY RICK SCHOFIELD , PARTNER , AZETS rick . schofield @ azets . co . uk
Pension Salary Exchange : a win-win for employers and employees
EMPLOYERS CONTINUE TO FACE UNPRECEDENTED CHALLENGES IN ATTRACTING AND RETAINING QUALITY STAFF . THE CURRENT ECONOMIC CLIMATE AND COST OF LIVING PRESSURES MEAN THAT BUSINESSES , IN MANY CASES , DON ’ T HAVE SPARE FUNDS TO EXPAND THEIR STAFF REWARD PACKAGE .
PENSION SALARY EXCHANGE ( PSE ) CAN HELP BUSINESSES TO SAVE CASH AND PROVIDE THEIR STAFF WITH A WELCOME NET PAY INCREASE .
What is Pension Salary Exchange ?
A form of salary sacrifice , PSE changes the way staff pension contributions are made . Essentially , the employee stops making personal pension contributions and reduces their salary to match that saving , whilst the employer increases its contributions to ensure the employee ’ s pension fund receives the same as before in total .
This produces National Insurance Contributions ( NIC ) savings for both employer and employee , subsequently creating a rare win-win situation of :
• Enhanced employee reward
• Savings for the business
A PSE explained further
Businesses can either retain their annual PSE savings or reinvest them ( in full or part ) to boost their staff benefits package . Private medical insurance , cash back plans , staff discount vouchers and death in service cover are all popular options .
Due to the amount of options , it can be difficult to decide which is best suited for you and your operations . However , our Employee Benefits specialists can help you to find the best solutions and assist with putting these in place .
The key benefit of PSE is that the cost of enhancing your staff rewards package can be in many cases entirely self-funded , helping the business to demonstrate its investment in its people for no actual extra cost . Annual savings can often be in the £ 10,000s , depending on employee numbers , salary levels and type of pension scheme .
PSE also provides a welcome increase in take home pay for your employees , again at no cost to the businesses . Each employee can save typically between £ 10 and £ 25 per month , depending on salary level and marginal NIC rate .
Our team have significant experience of implementing pension salary exchange schemes , meaning we can assist with putting them into place efficiently , effectively and with minimal time and effort on your part .
We help you to :
• Communicate the introduction of PSE to your staff via formal staff presentations or webinars
• Prepare bespoke calculations and letters for each employee to confirm their personal PSE savings
• Ensure the payroll system is ready for the change and check all appropriate changes are made
• Provide ongoing support , as needed , including annual renewal calculations for your staff
If you have any questions in relation to pension salary exchanges or would like to discuss the implementation within your business , please get in touch .
Local offices : Ashford : 01233 629 255 / Canterbury : 01227 454 861 Maidstone : 01622 690 666 / Orpington : 01689 827 505 Sandwich : 01304 249 997
www . azets . co . uk
198