We’d like to remind Forumites to please avoid political debate on the Forum.
This is to keep it a safe and useful space for MoneySaving discussions. Threads that are – or become – political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!
Employers NI for Increased Salary Sacrifice
arbster
Posts: 172 Forumite
I recently opted to significantly increase my salary sacrifice contributions to my company pension. I was already at the limit of the employer contribution, so this didn't result in my employer having to contribute more to my pension. It does, however, result in my employer's NI payments reducing by £600-£700 per month. The pensions team has confirmed that it is not policy to contribute these "savings" to employees' pensions as AVCs - essentially, they take it back onto the bottom line.
So, I realise that there is no obligation for employers to pass on the savings, but what precedents are there for people putting pressure on employers to do so? It seems to me ethically questionable for an organisation to profit from their employees' responsible financial planning. Thoughts?
So, I realise that there is no obligation for employers to pass on the savings, but what precedents are there for people putting pressure on employers to do so? It seems to me ethically questionable for an organisation to profit from their employees' responsible financial planning. Thoughts?
0
Comments
-
It seems to me ethically questionable for an organisation to profit from their employees' responsible financial planning.
Some justify it by suggesting it goes to cover their admin, but that's a little stretched. When we started sal sac, our former CFO said that retaining all of the NI saved would help the company, so our share options would benefit, but we didn't let that go unchallenged!
Our compromise is that employee contributions get boosted by just over 10% as a thanks for saving the 13.8% NI and the company gets the rest of the saving. I'm more than happy with this.
But I understand that the company keeping it all is *very* common.I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0 -
It is an interesting moral debate and either side would have valid argument.
Take as an example another company benefit - a company car. If the employee moves nearer work or reduces his mileage for any other reason, the company will also 'profit' from this saving. Should that go back to the employee, of course not.
In my view the company is not 'profiting' from the Ni saving - it is a cost that has been reduced based on a change in your circumstances. Employers NI is one of your employers overheads, you don't pay it so why would you expect to benefit from the saving? If any other form of tax paid by your employer, such as corporation tax, is reduced would expect a cut of that too?0 -
Frankly, if I, through a positive action of my own volition, were able to reduce the corporation tax that my employer pays then yes, I would expect some kind of reward. When they chose to employ me on the salary they agreed to pay me, they factored in the employers NI as a cost. I have made a choice that reduces this cost. Why shouldn't I expect them to share that benefit with me?Employers NI is one of your employers overheads, you don't pay it so why would you expect to benefit from the saving? If any other form of tax paid by your employer, such as corporation tax, is reduced would expect a cut of that too?0 -
Frankly, if I, through a positive action of my own volition, were able to reduce the corporation tax that my employer pays then yes, I would expect some kind of reward. When they chose to employ me on the salary they agreed to pay me, they factored in the employers NI as a cost. I have made a choice that reduces this cost. Why shouldn't I expect them to share that benefit with me?
On the other hand....
When they chose to employ you did you take their costs into consideration before accepting? More likely it was simply that you were prepared to work for them at that rate. If their costs have gone down at no disadvantage to you why should you benefit? Surely the people who should benefit from the company operating more tax efficiently are the owners ie the shareholders.0 -
As I say, if the company operates more tax efficiently through running itself better, I'd agree.Surely the people who should benefit from the company operating more tax efficiently are the owners ie the shareholders.
Continuing to play advocate for the devil here, the benefit to me of making my contributions by salary sacrifice, rather than as a lump sum contribution, is that I save c. £140/mo of NI payments. The firm saves £600+. Seems inequitable to me. Surely it's good business to incentivise me to pay by salary sacrifice? Split it 60/40 or something and everyone wins?0 -
So, I realise that there is no obligation for employers to pass on the savings, but what precedents are there for people putting pressure on employers to do so?
Absolutely none. You've picked on a single item which is in your favour. Did your employer reduce your salary when rates for ERS NIC were increased for example.0 -
Fair enough - I'll tentatively enquire as to the possibility of them reviewing their policy, an an "investment in people" rather than any obligation.Thrugelmir wrote: »Absolutely none.
Given the paltry pay rises for the past few years, it feels rather like they did...Thrugelmir wrote: »You've picked on a single item which is in your favour. Did your employer reduce your salary when rates for ERS NIC were increased for example.0 -
Thrugelmir wrote: »Did your employer reduce your salary when rates for ERS NIC were increased for example.
My employer took this hit and also boosted our "kick back" on employer's NI for sal sac by 13.8/12.8, which was nice. (They even rounded up that odd fraction!)I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0 -
Sounds like a very reasonable employer to me - clearly one that recognises that its employees are also its assets. There's hope for us all...gadgetmind wrote: »My employer took this hit and also boosted our "kick back" on employer's NI for sal sac by 13.8/12.8, which was nice. (They even rounded up that odd fraction!)0 -
My employer shares the Er NI saving with staff. If they didn't then the higher earners would think 'What's the point if all it does is save me 2%?' (i.e the Ee NI), meaning that the employer would not benefit from the considerable Er NI savings at all.
To my mind there has to be a bit of give and take and sensible employers realise that SMART pensions are extremely good for them and so encourage staff to contribute as much as possible by giving them this 'sweetener'.'I want to die peacefully in my sleep, like my father. Not screaming and terrified like his passengers.' (Bob Monkhouse).
Sky? Believe in better.
Note: win, draw or lose (not 'loose' - opposite of tight!)0
This discussion has been closed.
Confirm your email address to Create Threads and Reply
Categories
- All Categories
- 351.8K Banking & Borrowing
- 253.4K Reduce Debt & Boost Income
- 454K Spending & Discounts
- 244.7K Work, Benefits & Business
- 600.2K Mortgages, Homes & Bills
- 177.3K Life & Family
- 258.4K Travel & Transport
- 1.5M Hobbies & Leisure
- 16.2K Discuss & Feedback
- 37.6K Read-Only Boards