Salary Exchange
By introducing a salary exchange arrangement into a Group Personal Pension Scheme, an Employer would be able to realise some potentially significant savings to their National Insurance costs.
A salary exchange arrangement means that an employee gives up part of their cash pay in return for the provision of a non-cash benefit. The 'exchange' is achieved by varying the employee's terms and conditions of employment relating to pay.
The savings are to be gained both by the Employer and the individual employee, but will vary according to the level of earnings of the individual and the amount they contribute into their pension plan.
A salary exchange arrangement means that an employee gives up part of their cash pay in return for the provision of a non-cash benefit. The 'exchange' is achieved by varying the employee's terms and conditions of employment relating to pay.
The savings are to be gained both by the Employer and the individual employee, but will vary according to the level of earnings of the individual and the amount they contribute into their pension plan.
Sovereign has significant experience in the analysis and implementation of salary exchange for employers. The key phases to successful delivery are:-
- Data analysis and feasibility study - this would include calculating the expected savings to the employees and the Employer; identification of those employees who may potentially be disadvantaged by entering into a salary sacrifice arrangement; discussion of all key considerations when implementing these arrangements; exploring the options for sharing the savings and agreeing the way forward.
- Implementation - this would include developing and delivering the communication plan and associated literature, including the provision of template letters for the setup.