Maximising Employee Benefits through Workplace Savings

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Issue 2 : Maximising Employee Benefits through Workplace Savings: A Guide for UK Employers

In 2012, the introduction of Auto Enrolment legislation in the UK made it mandatory for all employers to provide their staff with access to a pension scheme. While this requirement ensures that employees have a pathway to saving for retirement, it also presents a valuable opportunity for employers to enhance their employee benefits offerings and demonstrate a commitment to their workforce’s financial well-being.

A recent survey conducted by Retirement Living Standard revealed a concerning statistic: 77% of people do not have a clear understanding of how much they need in retirement. To maintain a moderate standard of living during retirement, a single person in the UK requires an annual income of £31,300. This highlights the importance of encouraging employees to actively engage with their pension savings and plan effectively for their retirement years.

Rather than viewing a pension scheme as a mere compliance obligation, employers can leverage it as a generous employee benefit that forms the cornerstone of their overall benefits package. By promoting the pension scheme as a valuable asset, employers can unlock a range of benefits for both employees and themselves:

Benefits for you as the employer

• A set contribution structure to meet budget
• Employer contributions are classed as a business expense reducing your corporation tax bill
• The option to introduce Salary Exchange to reduce NI bill so you can either retain savings or pass savings onto employees
• It is a great tool to retain and attract high calibre workforce

Benefits for your employees

• Paternalistic approach resulting in employees feeling looked after

• Long term tax efficient savings vehicle – support in retirement
• Benefit from employer contributions
• Personal contributions benefit from tax relief at the highest marginal rate
• It could potentially help reduce tax bills
• Tax free investment growth
• IHT benefits – pension schemes are outside of an employee’s estate
• Pension policy remains in employees name after leaving employment.

Our Employee Wealthcare™ team, are here to help you set up a comprehensive and tax-efficient benefit package so, if you need advice or help, please contact us on 0207 709 5560 and ask to speak to one of our Employee Benefits advisers.