This is an excellent way of an Employer saving 13.8% due to legitimate National Insurance savings on all Member Contributions to any Qualifying Scheme and, provided the right systems and methodology are used to make things straight forward, this can be easy.
At Patterson-Mills Financial Planning, we believe Salary Exchange should be the default way to run any type of pension scheme.
The concept of salary sacrifice can continue within the auto-enrolment regime. However, attention needs to be drawn to the precise dates from which both auto-enrolment and the exchange of any salary amount take effect.
For this reason, we suggest that Employers using Salary Exchange, operate their qualifying pension scheme either by:
A) Offering salary exchange as part of the contract of employment (care needs to be exercised and legal advice taken), or
B) Using a voluntary Postponement Period (maximum permitted being 3 months from joining date, but any time period less than that can be used), so that the salary exchange and auto-enrolement compliance can be on the same date.
B) Using a voluntary Postponement Period (maximum permitted being 3 months from joining date, but any time period less than that can be used), so that the salary exchange and auto-enrolement compliance can be on the same date.
Caution should be exercised when calculating minimum contributions for compliance and certification of compliance too. The safest method is to ensure that system reporting uses the pre-sacrificed salary amount as the calculation point of minimum qualifying contributions.
Our specialist employee benefits service and systems are able to carry-out all necessary compliance reporting and the respective calculations without additional input from you, the Employer.
Patterson-Mills Financial Planning offers Employers exclusive systems and a market-leading competitive pricing structure, helping enhance Staff satisfaction, as well as provide all compliance reporting necessary under the new Auto-enrolment rules.