27% Believe Salary Sacrifice Limitations Damage Engagement
Over a quarter of workers believe limitations to salary sacrifice will damage employee engagement and employee relations according to new research.
There is a period of consultation on salary sacrifice’s draft legislation which will run until 1st February 2017 and the final details will be confirmed in the spring of 2017. The proposed changes are greater than was initially suggested at the start of the consultation process and will impact a large number of employers and their employees.
There will be no change to the tax and NICs advantages of salary sacrifice arrangements for: pension saving into a registered pension scheme, employer-provided pensions advice, employer-supported childcare, cycle to work schemes or ultra-low emission cars (ULEVs).
The research also found:
- 24% of respondents will need to make adjustments to their benefits package in light of the salary sacrifice changes.
- 75% of respondents do not believe employees will fully understand the limitations of the Lifetime Isa (Lisa).
- 26% of respondents expect some employees to save into a Lisa instead of a workplace pension.
- 90% of respondents believe the introduction of new saving options in the Budget 2016, such as the Lisa, increases the need for financial education in the workplace.
Steve Herbert, head of benefits strategy at Jelf Employee Benefits who conducted the research said: “Change in [the salary sacrifice] space has been widely expected for some time, yet the pace of change has taken many employers by surprise. Employers across the country will now have to spend significant time and effort considering how to react to this announcement.
“The UK already has a worrying productivity and employee engagement deficit and these figures need to be urgently improved as the country starts on the road to Brexit. Unfortunately, these changes have the potential to make a bad situation worse.”
We’d recommend getting a head-start on salary sacrifice as soon as possible. Handily, IRIS have just the thing to help your business prepare for April – the IRIS Payroll Year-end & HR Pack.
The pack has been designed to help ensure you have a smooth year end and are able to comply with the latest payroll and HR legislation. The on-demand training video will show you how to complete the year end process in your IRIS payroll software and avoid potential HMRC fines. It also covers new 2017/2018 legislation changes, including the new Apprenticeship Levy, Payrolling Benefits-in-Kind and the end of the Transitional Period. The pack also includes tips from our HR legislation expert, Marie Walsh, IRIS discount vouchers and access to free on-demand training webinars.