So sang Elton John on a track on 1989’s “Sleeping in the Past” album. Before I get all Patrick Bateman, I will get to the point. Much speculation took place before this year’s budget on whether Salary Sacrifice would survive much longer as a valid mechanism for facilitating pension scheme contributions. Looking back at my budget blog I wrote:
“Salary Sacrifice lives to be beloved by HR and payroll departments (and of course employees) for a bit longer. It is in the Government’s crosshairs though and another consultation will look at its continued existence. Trustees should keep an eye on this and start early discussions with employers, should the Government head towards changes which would affect their schemes.”
Well the consultation was published on 10 August, and whilst for HR departments there is likely to be a bit of angst about the proposals in relation to remuneration and benefit packages there is good news for employers and employees (and lets face it, trustees too) in relation to pensions.
The Consultation picks out certain benefits that should still enjoy full tax and NIC relief through salary sacrifice. Included in this are:
- Employer pension contributions;
- Employer-provided pension advice based on the recommendations of the Financial Advice Market Review (FAMR).
This is great news and a visible commitment from the Government to support contributions to workplace pension schemes. With significant increases in longevity and historically low interest rates, the need to maximise contributions has never been greater. Few suggest that contributions being made currently are sufficient to provide for even minimum living standards in retirement, so lets welcome this small victory for common sense. Extending the exemption to employer-provided pension advice is perhaps a bit of a no brainer, but it is welcome nonetheless.
This is of course just a consultation. The government will make an announcement at this year’s Autumn Statement on decisions made in light of the responses received. Any policy changes are expected to feature as part of the Finance Bill 2017.
So unlike Elton’s song, at least for pension contributions, there is sacrifice after all.