Pension salary exchange scheme implemented at 50 companies in the North East
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Market conditions have prompted local businesses to consider the HMRC-approved mechanism of providing staff with net pay increases whilst making bottom-line savings.
Clair Williams, an employment tax director at Azets, said: “The current economic climate and cost of living pressures mean that businesses, in many cases, don’t have spare funds to expand their staff reward package. However, savings are available to most businesses and their employees.”
A form of salary sacrifice, PSE changes the way staff pension contributions are made.
Essentially, the employee stops making personal pension contributions and reduces their salary to match that saving.
At the same time the employer increases its contributions to ensure the employee’s pension fund receives the same as before. This produces National Insurance Contributions savings.