HR managers: help your employees save more for retirement, and put money back in their pockets right now
Now the dust’s settled on the Autumn Budget, we asked James Justice – an independent financial adviser what the new cap on pension salary sacrifice savings means for your employees and their savings.
What you’ll learn:
- Pension Salary Sacrifice – what’s changing?
- Is Pension Salary Sacrifice still worth it?
- What should your employees do now?
- How can your employees maximise their savings?
1. Pension Salary Sacrifice: What’s changing?
James breaks down how Pension Salary Sacrifice currently works, and what’s changing in 2029.
Right now:
- Employees and employers pay no National Insurance on pension contributions made via salary sacrifice
From April 2029:
- The government is introducing a cap on Pension Salary Sacrifice savings
- Employees and employers will continue to pay zero National Insurance on pension contributions up to £2,000 a year, per employee
- Once an employee has contributed £2,000, National Insurance will be applied as usual to their contributions for the rest of the year
Key takeaways:
- The changes aren’t being introduced until 2029.
- So there’s plenty of time to enjoy the full uncapped savings on offer.
- Even after 2029, Pension Salary Sacrifice will remain the most tax efficient way for employees to contribute to their pensions.
- Employees and employers will continue to save money, even after the cap is introduced.
2. What should your employees do now?
James’s advice here is simple: most employees don’t need to do anything.
The exception is employees who are coming up on retirement.
They might want to consider paying more into their pension now, before the cap is introduced. By taking advantage of the uncapped savings, they can afford to save more, faster.
3. How can your employees maximise their savings?
James says most of us get it wrong about where our retirement savings come from.
- Most of our pension comes from investment growth – not from tax relief.
What does that mean?
- Tax relief is a great way to save your employees money right now.
- But investments are how they build bigger pots for retirement.
He explains how giving your employees access to financial advice can dramatically increase their savings for retirement.
- Financial advisers get employees an extra 2% growth on average.
- That could be worth £200,000 for an employee contributing £450 a month.
- An adviser will walk your employees through their options.
- Do pots need consolidating? Are they in the right risk profile?
And not only that...
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