Holiday Pay Funds. Good or bad?

marco772

Hi,
I work for a large retail chain and we have recently been opted into a Holiday Pay Fund (and given the option to opt out over the next week). As we understand, and due to a loophole in the legislature, we will have our holiday time paid for from a third party fund which saves both the employer and employee from paying National Insurance. Ergo, everyone ends up with more money.
This seems too good to be true and several members of staff have opted out, claiming that if the loophole is ironed out (which it seems it eventually will be) they will somehow end up losing out or having to pay back what they've saved in NI.

I would like to stay in as I find this unlikely and don't rally see that there is any risk. according to the paperwork the company has supplied us with, employees earning between 13000 and 34,840 pa will suffer a small deduction from their second state pension.
As I'm just below 13000, even this shouldn't affect me as far as I can see.
Essentially what I'd like to know is, to the best of your knowledge, should I stay opted in? Are there generally any "small print" type risks to these things? I would hate to lose out on any extra money just because others think it may possibly be a bad idea!
any advice would be most appreciated!
Thanks
Mark

Altarf

A fairly good summary of the issues is here -
http://www.paypershop.com/news-cat/working182.html
and a discussion here -
http://www.paypershop.com/phpBB2/viewtopic.php?t=235

Bean_Counter

marco772 wrote: »

we will have our holiday time paid for from a third party fund which saves both the employer and employee from paying National Insurance. Ergo, everyone ends up with more money.

Hi Mark,

I don't know about the specifics of your particular scheme, but I work in the construction industry where there is a similar scheme (well sort of!). It's all legit, above board, and I am not aware of plans to remove this.

If it saves you national insurance, then go for it!

Altarf

Bean_Counter wrote: »

I work in the construction industry where there is a similar scheme (well sort of!). It's all legit, above board, and I am not aware of plans to remove this

The scheme was originally designed for the construction industry, I believe back in the 1950's, as construction workers moved from site to site, they would never stay long enough with one employer to get a holiday like 'normal' workers.

Move forward 60 years and some 'normal' (non-construction) employers have seen it as a weeze to save some NI for both them and their employees.

The scheme itself is legal, whether you are in the construction industry or not (assuming that it has been correctly set up). There was talk last year of the government trying to limit the scheme to those it was originally intended for (i.e. construction industry workers) but nothing seems to have happended since.