Hi, we are getting requests from our employees who are impacted by the UK Pension annual allowance caps. They are asking for the difference to be paid as cash awards. Can I please ask what other companies are doing for their employees impacted in this way? Do you offer cash or have other levels of flexibility - cash ISA, etc.?
many thanks.
We provide a cash alternative to our DB pension members who can evidence proof of impact on LTA and/or AA. We don't adjust for NI charges. The cash is processed as normal through payroll. We do allow the members to retain a salary link to their current salary so that whilst they don't continue to accrue service in the DB scheme, we allow their final salary to increase. We do also allow them a one-time opportunity to re-join the Scheme if they wanted to (e.g. if circumstances change e.g. divorce, change of job to lower/part-time, etc).
As above cash minus 13.8% ER NIC charge
Similar to previous comments, we offer cash allowance to cover the difference between annual allowance and full employer contributions (less 13.8% of employer NIC), so that employees could invest in the best way for them.
We provide employer pension contributions up to an employees max AA and then provide the difference to them as a taxable cash in lieu of pension allowance which is further reduced by 13.8% to cover Ers NI.