Maximising Employee Benefits through Workplace Savings

Click to Like 0

In 2012, the introduction of Automatic Enrolment legislation in the UK made it mandatory for all employers to provide their staff with access to a pension scheme and make a minimum contribution level into it. 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 offering and demonstrate a commitment to their workforce’s financial wellbeing.

A February 2024 survey conducted by the Pensions and Lifetime Savings Association on Retirement Living Standards revealed a concerning statistic: 77% of people do not have a clear understanding of how much they need in retirement. The survey indicated that to maintain a moderate standard of living during retirement, a single person in the UK requires an annual income of roughly £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.

Given that every employer now has to offer their staff a pension scheme, it is worth considering the key benefits (to both you and your employees) in offering a pension scheme and in what areas you can differentiate your pension offering.

Benefits for you as the employer

• A set contribution structure to meet budgetary requirements
• A choice of competitive pension providers
• Employer contributions are classed as a business expense reducing your corporation tax bill
• The option to introduce Salary Exchange, or if its already in place the option to retain the generated NI savings, to help mitigate the recent employer tax increases
• A great tool to attract and retain a high calibre workforce

Benefits for your employees

• Long term tax efficient savings vehicle – support in retirement

• The benefit of an employer contribution
• Personal contributions benefit from tax relief at employee’s highest marginal rate
• It could potentially help reduce tax bills
• IHT benefit – pension schemes are currently outside of an employee’s estate (although Consultation is underway on this)
• The pension policy remains in the employee’s name after leaving employment (unlike most other employer-related benefits)
• Paternalistic approach resulting in employees feeling looked after

Our Employee Wealthcare™ team, are here to help you review your existing pension scheme to ensure it remains appropriate, cost-effective and attractive to both current and future staff. If you need advice or help, please contact us to speak to one of our Employee Benefits advisers.