Salary sacrifice schemes now ok for auto-enrolment

HMRC has issued guidance today which confirms that salary sacrifice pension schemes will be able to meet the automatic enrolment requirements arriving this year, according to Hargreaves Lansdown. Previously HMRC required that employees entering into salary sacrifice arrangement for pension contributions could not easily revert to their higher salary. This was generally taken to mean that employees could not opt out within 12 months, unless due to a lifestyle change. If they did so all tax and NI benefits could be withdrawn. This conflicted with auto-enrolment regulations which permit automatically enrolled individuals to opt out as soon as they have joined their pension. Today HMRC has resolved this matter by adding pension contributions to the list of salary sacrifice schemes which allow opting out at any time. Pension contributions now sit alongside child care vouchers, the cycle to work scheme, and the workplace parking scheme in enjoying this level of flexibility. Tom McPhail, head of pensions research, said: "Salary sacrifice arrangements for pensions have just been made more flexible, and can now happily comply with auto-enrolment regulations arriving from this year. Employers who don’t currently use salary sacrifice for their pension schemes should seriously consider doing so, because the National Insurance savings are considerable, both for them and their employees." Founded in 1981 by Peter Hargreaves and Stephen Lansdown, Hargreaves Lansdown floated on the UK stock market in May 2007. Hargreaves Lansdown provides Isas, Sipps, funds, equities, venture capital trusts and pensions as well as fund selection, stockbroking, advisory, discretionary and asset administration services. It administers approximately £21.9 billion of assets through Vantage directly on behalf of approximately 396,000 private investors. In total, Hargreaves Lansdown has £23.4 billion of assets under administration and management. Based in Bristol, the business employs over 600 people.

Salary sacrifice schemes now ok for auto-enrolment

Related items

News from Twitter