A fifth of employers could be incurring unnecessary tax bills by failing to take advantage of initiatives such as salary exchange, according to Mercer’s defined contribution (DC) MOT research.
Mercer noted that changes using salary exchange could save an employee national insurance (NI) charge of up to 13.25 per cent on their pension contribution while at the same time, saving the employer 15.05 per cent.
In light of this, it estimated that an employee with a pensionable salary of £40,000, paying an employee contribution of six per cent into their pension scheme would save £318 per year and the employer would save £361 per year.
For a company of 1,000 employees, this would represent a saving of over £360,000 per year for the employer.
Commenting on the findings, Mercer DC MOT lead, Ken Anderson, stated: “Mercer’s DC MOT research has identified huge opportunities for businesses to unlock greater savings and deliver better rewards for their people.
"In the face of economic uncertainty it is vital that businesses of all sizes take a mindful approach to pensions and employee benefits."
Calls for employers to take advantage of salary sacrifice schemes have been compounded amid the cost-of-living crisis, with recent research from Cushon revealing that savers could collectively be missing out on up to £1.9bn a year, while Scottish Widows has argued that the initiative can present a “win/win” amid the current growing financial pressures.
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