salary exchange - pensions
Salary Exchange – How the increases to minimum contributions as of April 2019 will make a difference
Moving employees from 3% - 5% pension contributions April 2019?
Benefit to Employee….
There is a strong argument to launch this ahead of the next phasing of contributions next April. It will help limit the extra cost to employees, particularly when those on the current minimum 3% are moved to 5%.
For example, a member with pensionable pay of £30,000 paying 3% currently pays £60 pm net. This will rise to £100 if they move to 5% in April, an extra £40 pm. By moving to salary exchange from April, their net cost will only rise to £85 (an extra £25 pm).
In addition, with the personal allowance now set to rise to £12,500 in April, basic rate taxpayers should see their take home pay rise by approx. £13 pm. This means the above employee would only see a £12 pm drop in income, which should avoid potential concerns from staff over the extra pension cost.
The same employee will see an increase in their monthly pension investment of £75, which for an extra cost of only £12 is great value and will help you communicate salary exchange in a really positive way.
How much can your business save? Call the team to find out.
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