We are considering a bonus sacrifice / exchange scheme. This where employees can sacrifice their annual bonus into the pension scheme saving tax and ni.
I would be grateful for your feedback if you have this option.
Hi Daniel, we do this. The advice we recieved was that the election has to be made in the month before the bonus is paid - this always creates a slight issue that employees won't necessarily know their bonus amount before making a decision on the sacrifice.
We don't pass on any of the Employer NI savings to the employee - we take the view that this is the cost of the admin in doing so.
just to echo the two others. so yes, I know my previous employer does this - following a process of not sharing the amount as the total take-home differs based on pension or not etc.
Some organisations allow for splitting - i.e. 50% pension 50% cash...
Overall - it's a real plus - potentially in this current climate it is understanding if you are to promote it how you address those who are closer to living hand/mouth.
We're having calls with people who's utility bills have increased from £100/month say in 2020 to now £700+... and in that time salaries have definitely not increased 600%
Hi Daniel, couple of hints and tips for you on this: 1. Engage with your external benefits advisors on this as they will I am sure have some great communication and application form templates you can use 2. Make clear to colleagues how much tax and NI they would pay on their cash bonus...many are really surprised! 3. Make clear that you can sacrifice all or some of your bonus 4. Recommend that they get independent financial advice, especially if they are higher rate tax payers, have a big pension pot, are 50+ or have other considerations (e.g. saving for a new home, maintenance on a buy to let property, or a mortgage that allows them to pay a chunk off etc)
Hi Daniel, we do this.
The advice we recieved was that the election has to be made in the month before the bonus is paid - this always creates a slight issue that employees won't necessarily know their bonus amount before making a decision on the sacrifice.
We don't pass on any of the Employer NI savings to the employee - we take the view that this is the cost of the admin in doing so.
James
just to echo the two others.
so yes, I know my previous employer does this - following a process of not sharing the amount as the total take-home differs based on pension or not etc.
Some organisations allow for splitting - i.e. 50% pension 50% cash...
Overall - it's a real plus - potentially in this current climate it is understanding if you are to promote it how you address those who are closer to living hand/mouth.
We're having calls with people who's utility bills have increased from £100/month say in 2020 to now £700+... and in that time salaries have definitely not increased 600%
Many thanks Michael
Hi Daniel, couple of hints and tips for you on this:
1. Engage with your external benefits advisors on this as they will I am sure have some great communication and application form templates you can use
2. Make clear to colleagues how much tax and NI they would pay on their cash bonus...many are really surprised!
3. Make clear that you can sacrifice all or some of your bonus
4. Recommend that they get independent financial advice, especially if they are higher rate tax payers, have a big pension pot, are 50+ or have other considerations (e.g. saving for a new home, maintenance on a buy to let property, or a mortgage that allows them to pay a chunk off etc)