The Chartered Institute of Payroll Professionals
News On Line
The ‘yet to be published’ CIPP Benchmarking Report 2023 found that the number of people using salary sacrifice as a way to contribute to a workplace pension, has reduced, due to the increased NMW rates. This means that:
• people who were previously paid above the National Living Wage (NLW) are now in fact being paid at the NLW, therefore, they are unable to use a salary sacrifice pension scheme
• salary sacrifice is a great way for lower earners to save on their income tax bill, but unfortunately, this is something that seems to defeat the purposes and intention of salary sacrifice schemes.
The policy team are working in the background to raise awareness about this and are wanting to make changes, through various government forums, so watch this space.
Have your say and take part in the Quick Poll now. The Quick Poll should take less than a minute to respond to, and we would like to thank you in advance for your participation. Back to contents
Quick Poll results: Would you welcome an easement which will allow workers to go under the national minimum wage (NMW) rates in order to contribute to a workplace pension via salary sacrifice?
Published: 24 October 2023 Emailed: 25 October 2023
Thank you to all those who answered our previous quick poll.
The results were as follows:
Answer
Responses %
No
13
No - I'd prefer a NI exemption on pension contributions
17
Other
2
Yes
68
68% would welcome an easement, whereas 13% wouldn’t and 17% would prefer a NI exemption on pension contributions. Some of the shared comments, were: • salary sacrifices should be exempt from reducing NMW pay • workers shouldn’t be paid so low that it takes them below the NMW • there should be an easement that allows all salary sacrifice to be excluded when calculating NMW • any easement would need to be accredited • salaries should be increased to allow pension salary sacrifice schemes • NMW legislation is extremely complicated for employers / pensions being allowed to go under is just another add on • there should be no minimum wage altogether • if a worker goes under, the employer should pick up this contribution i.e. no employee contribution • exemption on salary sacrifice arrangements are needed by the low paid e.g. cycle to work scheme, as the lower paid are more likely to require help with the payments • it's unfair for the lower paid and for them not to be able to take up this advantage • enable NI relief on pension contributions as that is the primary reason for salary sacrifice.
Your input really is appreciated, please keep taking part in our Quick Polls and continue to have your say.
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