Beverley Standing’s Post

Salary sacrifice - let your employer fund your retirement 🛣️ Salary sacrifice is a government backed scheme to help employees save for their retirement As long as you earn at least £6,240 a year, employers must also match workplace pension contributions to a minimum of 3% By sacrificing a portion of your salary to be contributed into a nominated pension, both you and your employer will benefit from a reduced tax liability 💰 Let’s create a scenario to illustrate this. Based on a £50,000 salary, and employer matching up to 5% of pension contributions… 🧑🏼✈️Employee salary is reduced to £47,500 🧑🏼✈️Employee contributes £2,500 into pension 👩🏾💻Employer also matches this contribution, totalling the pay go £5,000 across 12 months Employee taxes With SS = £3,126.79 Without SS = £3,293.45 Net change = £166.66 So, the employees pension pot has grown by £10,000 per year (before accounting for investment growth), at a cost of only £166.66 a month 😳🤑 This is beneficial for employers as well as employees. By reducing taxable income, employers pay less in National Insurance contributions 📉 It can also be instrumental keeping staff morale levels high, as their employers are taking a proactive approach in improving their workforces financial wellbeing 😄 This attractive company benefit can also be used to recruit new talent. Considerations ⚠️ 🏚️ Pension fundamentals- many companies, particular smaller ones, may opt for cheap, low value workplace pension schemes. These may involve restrictive fund options, poor administration, and high costs. 🪙 Value vs necessity - whilst this is a lucrative method to accelerate the growth of your pension, not all people can afford to sacrifice any of their pay, which may already be squeezed due to the cost of living crisis 🙅 Some higher earners may have a salary that tapers their pension annual allowance, and contributing over a certain amount will incur further taxes #Pension #Retirement #Tax

Is it time to optimise your group pension scheme to save tax? The budget announcement yesterday brings forth an ideal opportunity to consider salary sacrifice as a cost-effective and rewarding way to manage pension contributions. Based upon a 20 employee business with an average salary of £35,000 it will now increase your employer national insurance costs by up to £7,600 per year, changing to a salary sacrifice arrangement would increase your costs by just £2,200, saving companies up £5,400 per year. Why make the shift? Switching your company’s pension scheme to salary sacrifice doesn’t just reduce employer and employee National Insurance contributions—it’s also an attractive way to maximise take-home pay for your team and reinforce your business's reputation as an employer that prioritises employee well-being. Here’s how salary sacrifice can benefit your company: 💰 Cost Efficiency: Both employees and employers can save on National Insurance, translating into increased disposable income for your team and potential savings for your company. 🔍 Tax Optimisation: Contributions made through salary sacrifice are tax-efficient, meaning employees can put more toward their retirement without losing out on immediate earnings. 🤝 Employee Retention & Attraction: Competitive benefits are key to keeping top talent. Offering a salary sacrifice scheme shows your commitment to your team’s long-term financial security and can set your organisation apart in the talent market. With the latest budget updates, this is a perfect time to evaluate your group pension approach and explore how salary sacrifice might fit in. Need help with a personalised analysis? Let’s connect and discuss how your company could benefit from a review. #Pensions #SalarySacrifice #Budget2024 #BusinessFinance #EmployeeBenefits #FinancialPlanning

Navigate Pension Remittance with Confidence: Ensuring Compliance and Avoiding Penalties Managing pension contributions can feel like navigating a complex maze, especially when juggling employer and employee contributions alongside salary payments. But fret not! This post will equip you with the knowledge to ensure timely remittance, avoid penalties, and achieve full compliance. First, let's break down the key components: Employer Contributions:As an employer, you are obligated to contribute 10% of the employee's basic salary towards their pension. Employee Contributions:Employees contribute 8% of their basic salary towards their pension. Salary Payment:Salaries must be paid to employees before the pension contributions are remitted. Accurate Calculation:Meticulously calculate both the employer and employee contributions based on the employee's basic salary. Timely Remittance:Adhere to the established deadlines for remitting contributions. Delays can result in significant penalties. Proper Documentation:Maintain meticulous records of all contributions made, including dates, amounts, and payment references. Clear Communication:Communicate clearly with your employees about their pension contributions and the remittance process. Benefits of Compliance: By diligently following the regulations, you will: * Avoid hefty penalties. * Protect your employees' retirement benefits. * Foster trust and transparency within your organization. * Maintain a positive reputation for responsible business practices. My next post will focus on calculation of pension remittances 💯💯 #pension #remittance #compliance #humanresources #payroll

Is taking a $40k pay cut worth the benefits and security of a government role with a defined benefit pension plan?   #CareerAdvice #WorkLifeBalance #PensionPlan Hey everyone! 💼💭 Is a 40k pay cut worth it? 🤔 Let's dive into this dilemma together! So, I'm currently facing a tough decision. I have a great paying job that I love, but there's uncertainty about the company's future. On the other hand, I have an offer for a government role with a significant pay cut, but it comes with benefits and a pension plan. ... Source: https://lnkd.in/egf4j83j #mymetric360

Did you know that there are planned changes afoot to workplace pension contributions? Announced in last years Budget, with cross party agreement and subsequent Royal Assent, it is proposed that under the statutory minimum contribution basis of Qualifying Earnings, the Lower Earnings Limit, currently £6,240pa, is removed, so pension contributions become payable from £1 of earnings, whereas at the moment contributions are only payable on earnings between £6,240 and £50,270. In effect this will mean employers currently paying 3%, will have an additional £187.20pa per member, contribution to pay. It will also mean employees will need to contribute more, £249.60 net pa. Coupled with this, it is also proposed that the minimum age that an employee is enrolled, reduces from 22 to 18, meaning that those younger members of your workforce will also need to be auto-enrolled. Whilst not yet rubber stamped, this is very likely to come into force, possibly at some point in 2025. Auto-enrolment introduced in 2012 was always only the first step in addressing the huge pension gap in the UK and these are the first meaningful changes since it was introduced. It will also mean that for those employers who currently have a more generous pensionable earnings definition, for example full Basic Salary, will no longer have such a competitive offering as all employees with salaries under £50,270 will also have contributions based on their full basic earnings under the statutory minimum. If your scheme doesn't already run on a salary sacrifice basis, now could be the perfect time to consider it to try and make these cost increases more affordable. Feel free to drop me a message if you'd like to discuss these planned changes in further detail. #HR #pensions #workplacepensions #autoenrolment #FD #pensioncontributions #salarysacrifice

Business leaders and decision-makers are continuously finding new benefits that are both profitable for the business and valuable for their people.   This article highlights the benefits of implementing a salary sacrifice pension scheme, and how this can increase financial structure while improving retirement prospects for your people: https://bit.ly/3Uql7P3   #MooreKingstonSmith #SalarySacrifice #PensionScheme

𝐔𝐬𝐢𝐧𝐠 𝐬𝐚𝐥𝐚𝐫𝐲 𝐬𝐚𝐜𝐫𝐢𝐟𝐢𝐜𝐞 𝐭𝐨 𝐦𝐚𝐤𝐞 𝐩𝐞𝐧𝐬𝐢𝐨𝐧 𝐜𝐨𝐧𝐭𝐫𝐢𝐛𝐮𝐭𝐢𝐨𝐧𝐬 I’ve been supporting an existing client this week to increase their monthly pension contributions. We had already established his existing pension contributions on a salary sacrifice basis, this increase will follow the same method. 𝐵𝑢𝑡 𝑤ℎ𝑎𝑡 𝑖𝑠 𝑠𝑎𝑙𝑎𝑟𝑦 𝑠𝑎𝑐𝑟𝑖𝑓𝑖𝑐𝑒? 🤔 It is an extremely tax-efficient way for you to make pension contributions. It is an arrangement that employers can make available to employees. You (the employee) agrees to a reduction in your salary (or bonus) that is equal to the level of pension contribution you wish to make. In return, your employer will pay this amount directly into your pension. What makes it so tax efficient is because you (the employee) is sacrificing part of your salary, both your employer and you pay less in National Insurance contributions (NICs). You will also pay less income tax. If you are lucky there may also be a further benefit offered by your employer… As your salary will be lower (the bit you have ‘sacrificed’ is being paid straight into your pension by your employer), your employer will pay less employer NICs. This is a 13.8% saving on the part of your salary that has been sacrificed. Some employers will pay this saving into your pension 🎉 For example, say you agreed a salary sacrifice of £500 per month. Your employer would pay this £500 per month into your pension, instead of paying it to you as a salary – as it is not paid as a salary you do not pay any income tax or employee NICs on this amount. Furthermore, your employer would have had to pay the equivalent of £69 per month (13.8% of £500) in the form of employer NICs. If they agree to pay this saving into your pension, you would end up with £569 per month going into your pension. Whilst it is a very tax efficient way of making pension contributions, it isn’t for everyone. This is because salary sacrifice reduces your salary, which could affect things like maternity pay and mortgage applications. Lower earnings may also have an impact on your state pension or other contribution-based benefits such as employment and support allowance. Therefore it is always worth seeking the appropriate advice before making the decision. #SalarySacrifice #PensionPlanning #Tax

I did a Poll on LinkedIn last week…. 1 in 3 respondents said that they don’t know how their current workplace pension is invested. If you exclude other Financial Planners and people working in Financial Services, the figure is over 40%!!! Of the people who DO know how their pension is invested, at least 1 in 3 of them don’t understand it! (Again, excluding my fellow Financial Services professionals). Overall, 50% of respondents either don’t know or don’t understand how their workplace pension is invested. This figure was 64% for people outside of Financial Services. I appreciate this is a relatively small sample size but the figures are quite staggering. Based on the average UK salary of £34,963 for full time employees (ONS) and the minimum 8% overall pension contribution under auto-enrolment, this means that for most people nearly £3,000 a year is going off into some mysterious pot, invested in an unknown portfolio at an unknown level of risk. If you voted “no” or “yes, but I don’t understand it”, I’m not blaming you for not being up to speed with your pension, this stuff isn’t taught at school and it’s obviously not simple….but it’s massively important….Getting the most out of your pensions during your working life gives you more freedom later on, and the first step is knowing what you have and how it works. I think running financial planning workshops at businesses for their employees is worth me doing! george@molvenowealthplanning.co.uk This post is for information purposes and does not constitute financial advice, which should be based on your individual circumstances.

There’s a lot of talk 🗣️ about #NationalInsurance at the moment. 🤔 One rumour I hope (like many others) has no truth in it is that employer #NIC will be charged on employer #pension contributions. ❓Why though? Well, see the below thoughts: 1️⃣ it will be the death knell of pension salary #sacrifice (and #BonusWaiver) meaning those hard working folk paying NIC could see the scheme pulled and their net pay reduced - in essence going against the #manifesto not to increase NIC costs for people. 2️⃣ It will be a major cost for employers across the UK, who are paying at least 3% of #pensionable pay into employee pensions currently. 3️⃣ It will add major complications to #payroll systems - how many payslips show employer pension contributions on them? A major #software update would likely be required. 4️⃣ When would the NIC be charged\reportable and payable to #HMRC? When the employer pension contribution is made (ie put in the pension pot). This could very much be a different date to the date the employee is paid their salary. Also, how does it interact with the #ApprenticeshipLevy charge too? 5️⃣ It will be a huuuge (more u’s = greater significance) impact for DB / Career Average etc schemes due to the size of the contributions employers are funding here - this will particularly hit the generous public sector and train company schemes, creating a bigger black hole…. If the public sector is carved out, this will create an even bigger gulf across #public and #private sector pensions. 6️⃣ Job creation will be impacted and investment fall due to less money being available to invest in wider reward, #innovation, business ideas and training. 7️⃣ It will further exacerbate the growing private pension bomb - less will be put into peoples’ pensions as employers will look at other more cost effective reward strategies, creating deeper longer term pension poverty and even greater reliance on state support. ☹️ I don’t like all the budget #rumourmill circus (has the feel of the build up to #football #transfer deadline day) but this one needs to be highlighted so that the initial consideration from the #FabianSociety’s paper over the summer does not develop traction. Feel free to add any thoughts. Jim Boylan Jane Gilmore Katie Sharpe Alan Frost Nabeel Thakur Christian Fell Craig Manson Daniel G. Jennifer Allison Aidan Moran Andrew Westhead George Lagarias, MBA

Union Budget 2024: 7 major changes brought into National Pension System; are more tweaks expected? https://lnkd.in/gWhZ2W2R #officenewz #unionbudget2024 #NPS