Hello Forum
A firm I am involved with offers 9% pension payments for all employees. A few have now asked if this can be paid to them as extra wages rather than as pension contributions.
The owner of the firm does not oppose paying it as extra wages instead in prinicple.
I'd be grateful for any thoughts or experiences from anyone regards this issue.
Thanks in advance.
Replies (10)
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and NICable and may be [ depending on contract ie zero or limuited hours] also holiday payable
could consider a small bonus at some point to ensure not part of regular remuneration ?
1. They are effectively opting out of auto-enrolment so watch the procedures for that
2. Employers NI will be on top of any payment
3. watch out for creeping differentials as time goes on (ie basic pay rates are consistent whichever pension scheme they go for...)
Employers and employees can enter into any arrangement that complies with the employer's "auto enrolment" responsibilities. Not sure what else can be said.
Do the maths. £100 pension contribution costs employer £100. £100 gross remuneration costs £113.80. £87.87 gross remuneration costs £100. £87.87 gross added as marginal income is £59.75 net to someone on average earnings.
Do the maths. £100 pension contribution costs employer £100. £100 gross remuneration costs £113.80. £87.87 gross remuneration costs £100. £87.87 gross added as marginal income is £59.75 net to someone on average earnings.
I think its more whether its a good idea in prinicple to offer the option and flexibility or whether best to just say pension is the only option.
If you treat employees as grown ups, they should be able to make their own decisions. In practice, the whole idea behind auto enrolment was to encourage pensions saving by "forcing" it onto employees.
If the concern is one where employees are likely to stay for the medium to long term, I'd be more inclined to not give a salary in lieu option.
I’d be very wary of offering cash in place of auto-enrolment pension. Inducements to opt-out are generally prohibited. Whether cash alternative qualifies as an inducement may be a question of the specifics. I would certainly seek specialist advice before proceeding.
See detailed guidance from The Pensions Regulator on safeguarding individuals: https://www.tpr.gov.uk/-/media/thepensionsregulator/files/import/pdf/det...
Easy peasy.
If you are going to live to 150 then go for pension.
If you are going to drop dead on the date of retirement or before then go for extra pay.
But from experience, you will see that you reach retirement before you realise. At this point you may have wished you had made better pension provision.