UK - Accountancy giant Ernst and Young is introducing pension salary sacrifice for its staff from January 1.
All staff will be automatically included in the scheme, which is being administered through the firm’s flexible benefits package, unless they choose to opt out.
As most Ernst & Young staff earn above the upper earnings limit of £31,720 and can only make National Insurance savings of 1pc under the scheme, the accountant is passing back some of its larger employer NI savings to them by adding 6% to their annual pension contribution.
An Ernst & Young employee earning £50,000 with £5000 in pension contributions (employer and employee payments combined) will make NI savings of £50 a year and benefit from an additional employer contribution of £300 (6pc of £5000).
The £300 contribution will be subtracted from Ernst & Young’s NI savings of £640.
An Ernst & Young employee who earns £25,000 and who makes £2000 worth of pension combined contributions will make NI savings of £188.
Ernst & Young compensation and benefits director Richard Gartside said the firm promised to make good any subsequent loss of state benefits suffered by staff as a result of reducing their NI payments.
So, for example, the calculation of statutory maternity leave would be judged on an employee’s salary prior to pensions salary sacrifice.
Staff are also being given the option of making extra pension contributions through salary sacrifice.
Gartside explained: “Those approaching retirement can select to salary sacrifice big chunks of their salary over and above the 15% they could make through AVCs. They will benefit from the tax relief they could make on that, but also from the additional 6%.”
Ernst & Young offers its employees a choice of two defined contribution schemes, one of which enables employees to retain an earnings link with the firm’s closed final salary scheme.
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