Salary Sacrifice and the new NI Rates and Rules

Pat38493

I am lucky enough that my employer has shared 50% of the benefits of salary sacrifice on their side with employees (at least up to now).

Once the new rates of NI arrive in April next year, I guess the savings that I get from increased pension contributions will be even better than before?  Does this also mean that the benefit of making uneven contributions through the year will also be bigger?  

Dazed_and_C0nfused

Pat38493 said:

I am lucky enough that my employer has shared 50% of the benefits of salary sacrifice on their side with employees (at least up to now).

Once the new rates of NI arrive in April next year, I guess the savings that I get from increased pension contributions will be even better than before?  Does this also mean that the benefit of making uneven contributions through the year will also be bigger?  

Why will the savings you make be better?

Has your employer confirmed they will continue to pass on 50% of their savings?

Pat38493

Dazed_and_C0nfused said:

Pat38493 said:

I am lucky enough that my employer has shared 50% of the benefits of salary sacrifice on their side with employees (at least up to now).

Once the new rates of NI arrive in April next year, I guess the savings that I get from increased pension contributions will be even better than before?  Does this also mean that the benefit of making uneven contributions through the year will also be bigger?  

Why will the savings you make be better?

Has your employer confirmed they will continue to pass on 50% of their savings?

No, but they haven't said they won't either.  I guess I am thinking that 50% of what they would pay, will be more than before given that the rates are going up for the employer part?

I don't see a particular reason why they wouldn't continue to do that, given that they will have to pay the full amount if I choose not to put the money in the pension.

Marcon

Pat38493 said:

Dazed_and_C0nfused said:

Pat38493 said:

I am lucky enough that my employer has shared 50% of the benefits of salary sacrifice on their side with employees (at least up to now).

Once the new rates of NI arrive in April next year, I guess the savings that I get from increased pension contributions will be even better than before?  Does this also mean that the benefit of making uneven contributions through the year will also be bigger?  

Why will the savings you make be better?

Has your employer confirmed they will continue to pass on 50% of their savings?

No, but they haven't said they won't either.  I guess I am thinking that 50% of what they would pay, will be more than before given that the rates are going up for the employer part?

I don't see a particular reason why they wouldn't continue to do that, given that they will have to pay the full amount if I choose not to put the money in the pension.

I can see a particular reason why they wouldn't continue to do that: the very real financial strain many employers are facing as a result of the hike in employer NI rates. Don't forget that you'd have to pay more NI if you chose not to put money in the pension. 

So to answer your question - ask your employer what their plans are. I understand the hope aspect of your question, but ensuring an employer is in good financial health does a great deal for job security.

Ksw3

How is it described in your contract? Mine has similar but its X% (including 50% of NI savings) so dont expect to see an increase beyond x%

Pat38493

Ksw3 said:

How is it described in your contract? Mine has similar but its X% (including 50% of NI savings) so dont expect to see an increase beyond x%

It’s not contractual it was just their decision to do that for all employees who are in the pension scheme.

I am not expecting them to change what they are doing to increase the share that I get - the point is that if the employer percent goes up, they have to pay more NI for my employment.  Therefore 50% of the amount that they save based on my level of salary sacrifice  will be a higher amount.  Therefore, if you assume that they willl continue doing what they have been doing up to now, the benefit to me of salary sacrifice will be slightly more.  That’s all I am trying to confirm.

Of course, if they decide they are going to keep all their NI savings in order to offset their extra costs from next April, I will end up worse off - as said, this is not a contractual entitlement.

Hoenir

The payroll administration team that does all the background work for salary sacrifice is going to cost far more to employ. Not a free service. The NI burden across the board is going to significant. Likewise any taxable benefits provided will be hit with a higher rate of Class 1a NIC from April 2025. Assuming many employers are simply going to absorb this hit without consequences is sadly misguided. 

Pat38493

Hoenir said:

The payroll administration team that does all the background work for salary sacrifice is going to cost far more to employ. Not a free service. The NI burden across the board is going to significant. Likewise any taxable benefits provided will be hit with a higher rate of Class 1a NIC from April 2025. Assuming many employers are simply going to absorb this hit without consequences is sadly misguided. 

True, but we have no way to know what the consequences will be - they might hire less people, or give lower pay rises, rather than removing voluntary NI sharing.  They could continue to take the view that providing an additional carrot to employees to take action, that in the end reduces their own NI bill, could still be worthwhile.

Assuming that they can recoup their losses by stopping the sharing of NI gains on salary sacrifice, assumes that employees won't change their behaviour, by simply reducing their pension contributions, which will cost the company even more.

In any case, my question was whether if my employer continues to share x% of NI savings for salary sacrifice with employees (they are not the only employer that does this - quite a few good employers do this), will the additional benefit of making extra contributions be higher.  Even if they reduced number x% to a lower number but more than zero, the benefit to me would be proportionally higher than it would have been before with the same x (at least that was my conclusion).

MK62

As stated above, we can only speculate on your employer's plans here (or indeed any other employer who uses a salary sacrifice scheme who hasn't yet revealed their plans here)........but personally speaking, I wouldn't be at all surprised if the sharing of employer NI savings on salary sacrifice pension schemes, generally, gets "curtailed", in order to offset any overall rise in employer NI.......I would suspect this is a topic of discussion in many boardrooms at the moment.

Cobbler_tone

It was a 'stealth' move in the budget. If workers think they got away lightly then I suspect they're in for a nasty shock when the next pay rounds happen. The rise to NI isn't going to pay for itself or be totally footed by employers.

Probably a bit early for employers to be showing their hand on things like (potentially revised) shared NI contributions into a pension.

GunJack

I think any employee who reduces their contribution because the employer stops sharing their NI savings will be cutting their nose off to spite their face....if anything I'd be looking to maybe increase my employee conts. to offset the loss of employer conts. if possible.....