We'd like to remind Forumites to please avoid political debate on the Forum... Read More »
We're aware that some users are experiencing technical issues which the team are working to resolve. See the Community Noticeboard for more info. Thank you for your patience.
📨 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!
Salary sacrifice queries
Options

MoneySavingUser
Posts: 1,667 Forumite
1) Does anyone have data on what proportion of employers contribute the 13.8% NIC saving into their employees pension plans?
2) If an employer states that they are keeping the saving to cover administrative costs - what are these costs likely to be:
a) Initial setup costs - getting all the documentation in place
b) Initial costs surrounding changing the settings in the payroll software to treat the contribution as a salary sacrifice contribution
c) Any initial costs to do with the pension provider
After the above - are there likely to be any ongoing costs for the employer in respect of existing employees?
3) I understand that in the past you had to commit to salary sacrifice for 12 months (unless a lifestyle event occurred) but this was relaxed when auto-enrolment came in because this would be at odds with the statutory right to opt out of a pension scheme - however it seems that the Scottish Widows form for entering into salary sacrifice says you have to commit for 12 months unless a lifestyle event occurs - is this just because they haven't updated their forms?
2) If an employer states that they are keeping the saving to cover administrative costs - what are these costs likely to be:
a) Initial setup costs - getting all the documentation in place
b) Initial costs surrounding changing the settings in the payroll software to treat the contribution as a salary sacrifice contribution
c) Any initial costs to do with the pension provider
After the above - are there likely to be any ongoing costs for the employer in respect of existing employees?
3) I understand that in the past you had to commit to salary sacrifice for 12 months (unless a lifestyle event occurred) but this was relaxed when auto-enrolment came in because this would be at odds with the statutory right to opt out of a pension scheme - however it seems that the Scottish Widows form for entering into salary sacrifice says you have to commit for 12 months unless a lifestyle event occurs - is this just because they haven't updated their forms?
0
Comments
-
1. In my experience, very few.
2. SMP recovery, protecting NMW for some employers (i.e. not being able to take the full sacrifice). There can also be a cost associated with more people joining the pension scheme (e.g. because of publicity, e'ee's NIC saving and any top up).
3. No, you have misunderstood the tax position. While there is nothing to say it needs to be 12 months, the right to go back to your pre-sacrifice salary immediately would mean that the sacrifice was not effective.0 -
Given you are getting over 12% savings thru not paying your own Nics, i'd not be too peed off if your employer is keeping his.
Obv, it would be nice of they paid some of it into your pension pot, but given most employers dont bother with SS at all, i'd take what I could get, while the getting is good.0 -
MoneySavingUser wrote: »1) Does anyone have data on what proportion of employers contribute the 13.8% NIC saving into their employees pension plans?MoneySavingUser wrote: »2) If an employer states that they are keeping the saving to cover administrative costs - what are these costs likely to beMoneySavingUser wrote: »3) I understand that in the past you had to commit to salary sacrifice for 12 months (unless a lifestyle event occurred) but this was relaxed when auto-enrolment came in because this would be at odds with the statutory right to opt out of a pension scheme - however it seems that the Scottish Widows form for entering into salary sacrifice says you have to commit for 12 months unless a lifestyle event occurs - is this just because they haven't updated their forms?
It's probably just an old form at SW because they do not have a choice so far as opting out goes. But they may choose not to allow changes other than opting out if they want to do that, even though the law allows them to accept the changes.3. No, you have misunderstood the tax position. While there is nothing to say it needs to be 12 months, the right to go back to your pre-sacrifice salary immediately would mean that the sacrifice was not effective.
It is a mandatory requirement of pension auto-enrolment law that employees are able to opt out at any time. It's also mandatory to refund contributions already deducted if an employee opts out just after being automatically enrolled. The old HMRC rules requiring a life event would not have allowed this, banning the use of salary sacrifice in auto-enrolment pension schemes. So HMRC changed the rules and it is now possible to change pension contributions at any time without any need for a life event:
"due to the advent of auto enrolment in October 2012 and its correlation with salary sacrifice rules, HMRC amended their guidance to remove the 12 month requirement where sacrifice was set up for employer contributions to a registered pension scheme"
The life event constraint still applies to other parts of a salary sacrifice setup.0
This discussion has been closed.
Confirm your email address to Create Threads and Reply

Categories
- All Categories
- 350.8K Banking & Borrowing
- 253K Reduce Debt & Boost Income
- 453.4K Spending & Discounts
- 243.7K Work, Benefits & Business
- 598.5K Mortgages, Homes & Bills
- 176.8K Life & Family
- 256.9K Travel & Transport
- 1.5M Hobbies & Leisure
- 16.1K Discuss & Feedback
- 37.6K Read-Only Boards