UK - BT and its staff will make tax and NI savings of around £20m over the next year from a pension salary sacrifice scheme.
Around 90% of BT’s 84,000 final salary scheme members will have their pension contributions deducted before salary, saving them tax and national insurance contributions in what is believed to be the biggest scheme of its kind.
Savings for employees will range from £34 per year for someone on £6000 per annum to £169 for anyone earning £30,000.
In total, employees will save close to £10m. BT will make similar savings but it denied the scheme had been introduced to reduce the deficit on its £26bn final salary plan.
A BT spokesman said: “We have £2bn worth of free cash this year and we are plugging the deficit very successfully without any need for a salary sacrifice scheme. This just happens to be very tax efficient and makes sense for the company in general.”
But one expert is doubtful over how many other FTSE100 firms will follow BT’s lead.
Ernst & Young director PAYE/NIC solutions, Alastair Kendrick, said: “Many of the corporates I have talked to have not wanted to raise the issue. Many employees are currently suspicious about pensions and to go into them and say ‘we are rearranging your pension contribution’ might not be a good idea.”
BT’s scheme, which takes effect this week, used a call centre to take employee inquiries, employed tax specialists at Deloitte and involved a large administration exercise.
The top stories this week were the High Court's decision to block the £12bn annuity transfer from Prudential to Rothesay Life, and a separate court ruling that 'raises the bar' for pension rectification exercises.
Guaranteed minimum pension (GMP) equalisation has soared to the top of pension schemes' to-do lists, with 58% stating it is a priority project, research from Equiniti has revealed.
Professional Pensions is holding its defined contribution (DC) conference on 4 September.