{"id":180,"date":"2009-01-06T16:07:23","date_gmt":"2009-01-06T16:07:23","guid":{"rendered":"http:\/\/www.clearbooks.co.uk\/blog\/?p=180"},"modified":"2018-11-07T10:28:16","modified_gmt":"2018-11-07T10:28:16","slug":"salary-sacrifice-the-smart-pension-scheme","status":"publish","type":"post","link":"https:\/\/www.clearbooks.co.uk\/blog\/salary-sacrifice-the-smart-pension-scheme\/","title":{"rendered":"Salary sacrifice pension scheme"},"content":{"rendered":"

The Smart Pension Scheme is a salary sacrifice scheme that provides an option for companies to save cash and increase the take home pay or pension contributions\u00a0made to employees.<\/p>\n

In a difficult economic climate, companies are looking at ways to cut costs and reduce overheads. We have recently seen retailers such as Woolworths and Adams\u00a0go to the wall, victims of the global economic recession. In light of this, salary sacrifice schemes are likely to become increasingly popular.<\/p>\n

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The scheme works by an employee<\/em> ceasing\u00a0to contribute to their pension scheme and instead\u00a0the employer<\/em> increases its contribution to the scheme by the same amount.<\/p>\n

In the first instance, the employee<\/em> was paying NICs on contributions to the pension. This was by virtue of their basic pay being taxed, from which a contribution to the pension was then made.<\/p>\n

Under the smart pension scheme\u00a0the employer<\/em> is now making equivalent contributions which are not taxed. This is because employers do not\u00a0pay NICs on their pension contributions.<\/p>\n

A tax saving is made as\u00a0 national insurance contributions are cut. Ask your accountant for more details about implementing a salary sacrifice scheme.<\/p>\n

HMRC provides some guidance on the smart pension salary sacrifice scheme<\/a>:<\/p>\n

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