Charities have been urged to implement salary sacrifice plans in order to save money when installing pension schemes and to also boost staff benefits.

With charities continuing to suffer from increasing deficits, Premier, the pensions and actuarial firm, stated that salary sacrifice can be useful because of the saving the employer achieves on National Insurance Contributions (NICs). The employer pays NICs on employees’ salaries but not on pension contributions.

Premier head of consulting services John Reeve said: “The charity sector is coming under continuing pressure, due to increased operating costs and decreasing donations. In terms of their employee benefits which make up a large percentage of charities’ costs they are suffering with spiralling pension deficits. All of this could ultimately force some charities to close so now, more than ever, there is a need for charities to review their pension costs.

“We think charities should consider a feasibility study to look at the introduction of a pension salary sacrifice plan. This is only one way charities can save money but it is probably the easiest way and most efficient way of using tax rules to the best possible advantage. Auto-enrolment will add yet more requirements and increase payroll costs as more non-pensioned employees join a pension arrangement. All employees that need to be auto-enrolled can be brought in on a salary sacrifice basis, reducing the overall spend on pension costs or better still, improving pensions for employees.”

Share Story: