Extend salary exchange for pensions to low-paid 8 November 2017
Employees on low wages should be allowed to share in the benefits of a salary exchange for pensions, according to Royal London and Radcliffe & Co.
Professional Pensions has reported that Royal London's director of policy Steve Webb wrote a letter to the secretary of state for business energy & industrial strategy MP Greg Clark last month, calling for changes to be made to salary exchange rules, even if it takes low-paid earners' wages below the minimum level.
A salary exchange arrangement allows a worker and employer to come to an agreement, whereby pension contributions are made wholly by an employer, rather than split between the employer and employee.
The letter apparently explained how under normal circumstances, any money paid in wages is subject to employer and employee National Insurance Contributions (NICs), even if it is then paid by the worker into a pension scheme. It was argued if pension contributions were to go directly from the firm into the pension, rather than via the worker, it would reduce the total NICs bill, to the potential benefit of both the worker and the firm. Steve Webb is reported to have said that he hopes the government will change the rules and allow lower-paid workers to share in the benefits of these arrangements. He also said that there is already an exemption for salary exchange type arrangements whereby a worker gets free accommodation as part of their job and that their ‘headline' wage can be below the minimum wage level as long as the value of the free accommodation would take them over the minimum. A similar approach should apply to pensions, and the Low Pay Commission should review the current rules in the interest of lower-paid workers and their long-term retirement prospects, he added. "Given the Treasury has specifically decided that employer pension contributions should continue to benefit from salary sacrifice arrangements, it seems unfair that lower-paid workers are currently missing out."
Read the full article from Professional Pensions .
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New Pensions Online Digital Service 16 November 2017
HMRC is introducing a new Pensions Online Digital Service and is looking for Pension Scheme Administrators (PSAs) to take part in user research and provide feedback on a prototype of the new service.
If you would like to take part in the user research, you can email HMRC for full details at: pensions.businessdelivery@hmrc.gsi.gov.uk . Please put ‘user research’ in the subject line of your email.
Background In Pension Schemes Newsletter 89 HMRC explained that pension scheme registration and administration will move onto the Pensions Online Digital Service so that they can improve the service for PSAs. The plan was to migrate existing registered pension schemes as well as scheme administrator IDs across to the new service from April 2019. However, to allow existing administrators to register new schemes on the new service, HMRC has decided to transfer existing scheme administrator data onto the new service a year earlier, by April 2018. HMRC will cleanse the data before thee move this across so they only migrate up to date details to the new service, but they need help with this. All PSAs should log onto the Pensions Schemes Online as soon as possible and check that their scheme administrator details are complete and up to date. Section 6 of Pension schemes newsletter 90 contains further details.
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The Chartered Institute of Payroll Professionals
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