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.

Get in touch with a Salary Exchange expert

Mercer Marsh Benefits (MMB) is a trading name of Jelf Insurance Brokers Ltd, which is authorised and regulated by the Financial Conduct Authority (FCA). Not all products and services offered are regulated by the FCA (for details see Registered in England and Wales number 0837227. Registered Office: 1 Tower Place West, London, EC3R 5BU.