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Yahoo
09-06-2025
- Business
- Yahoo
What salary sacrifice changes could mean for your pension
The government has insisted recent reports indicating that it is considering changes to salary sacrifice pension schemes are "purely speculative". It comes off the back of research published by HMRC in May that suggested the government was exploring reducing the tax and national insurance advantages by changing pension contribution schemes for workers. While the research was commissioned by the Conservative government in 2023, the timing of its publication raised eyebrows because of it's proximity to Rachel Reeves's spending review on 11 June. The spending review is when Reeves will lay out all government departments' budgets for the coming years. It could also be a strong indication as to whether the government will need to announce any increase to taxes later this year in the autumn statement. Experts have told Yahoo News why the prospect of targeting salary sacrifice schemes would be so appealing for the government - and who would most likely miss out. A salary sacrifice scheme is a formal agreement between an employee and employer in which the employee agrees to reduce their gross salary in exchange for a non-cash benefit - like a bicycle through the Cycle to Work scheme - provided by the employer. In turn, as the employee pays for this through their salary, they not only pay less income tax, but their employer pays lower national insurance (NI) on the person's remaining take home-pay. As national insurance is one of the main revenue streams for the government, this means that when an employee enrols in a scheme, the Treasury misses out on the extra tax. When you use salary sacrifice for your pension, you agree to take a lower salary, and your employer pays the 'sacrificed' amount directly into your pension. Like with any other salary sacrifice, because your official salary is lower, both you and your employer pay less in NI, and you pay less income tax on your earnings. Salary sacrifice schemes are very popular, with 70% of UK pension schemes using them as the default method for contributions. If the salary sacrifice scheme was limited or cut for pensions, the government could remove or limit these tax and NI savings. For example, you and your employer might have to pay NI on the amount you sacrifice, or there could be a cap on how much salary can be sacrificed before the benefits are lost. "Salary sacrifice along with income tax relief makes it very attractive to save into a pension," Stuart Price, Partner and Actuary at Quantum Advisory told Yahoo News. "For a lower rate tax payer £1 invested only costs them 72p, and for a high rate tax payer £1 invested only costs them 58p. "If the provision of salary sacrifice is removed and hence national insurance relief is no longer provided these numbers increase to 80p for a lower rate tax payer and 60p for a higher rate tax payer," he added. By removing or scaling back the tax and National Insurance (NI) exemptions that benefit employees and employers benefit from through salary sacrifice, the government could boost its revenue. 'Salary sacrifice along with the annual allowance often appear top of the list of options when the government needs to save money," Helen Morrissey, head of retirement analysis at Hargreaves Lansdown told Yahoo News. The move would therefore be an attractive prospect for HMRC because it would generate "significant income". "I would expect that they would be in favour of the removal of salary sacrifice on pensions," John Mullaly, a group risk and healthcare consultant from actuary Cartwright Employment Awards, told Yahoo News. This may be even more significant as the government is just days away from its spending review, the process the government uses to set all departments' budgets for future years. 'The government may be tempted to turn its eye to salary sacrifice... particularly given the amount it costs in lost national insurance revenue," Martin Willis, a partner at independent consultancy Barnett Waddingham explained to Yahoo News. While the government might benefit, employees earning the least would be the hardest hit. "High earners may be insulated from any potential shift; the real impact would be on lower and moderate earners - particularly those using salary sacrifice to top up pension contributions," Waddingham said. The move could also be an additional blow for businesses after the government's hike on national insurance rates for employers in the last Budget. "Removing it now could disproportionately affect basic rate taxpayers and employers who've only just faced a rise in national insurance costs," Willis added. Morrissey echoes this. "At a time when employers are battling higher wage and NI bills, salary sacrifice might be seen as one way of reducing these costs – making changes will add an extra burden to struggling employers.' While both employees and employers benefit from salary sacrifice arrangements, Mullaly said employers "do not pocket all of the savings." "Quite often they use it to fund additional benefits to be used to attract and retain employees," he added. Additionally, if salary sacrifices adversely affect pension pots, savers could be discouraged from putting away enough into their pension — which is unwelcome news when the figure for a comfortable retirement continues to rise. According to the Pensions and Lifetime Savings Association (PLSA), to live a comfortable retirement in the UK, the estimated annual retirement income needed in 2025 is around £43,100 a year. "There does seem to be a trend of focusing on increasing tax revenue at the expense of all other considerations, rather than focusing on the underlying social reasons for having things like a pension," Price said. "The result of all of this is less money will be saved by employees towards their pension. Not a great thing when as a nation we are nowhere near saving enough for our retirement." Added to this, the change in uptake could affect how and where pension funds invest their money. "Many of the largest pension funds invest in our high streets, shopping centres and other real estate," Mullaly explained. "With many high streets already under threat, any reduction in investment is only going to make the situation in this area worse." While salary sacrifice reduction may be a highly attractive prospect for the government, it is clear that it would be far from popular. The Society of Pension Professionals has already warned the government against salary sacrifice changes, writing in a statement that it would affect earners "very selectively". Added to this, there would be some serious logistical hurdles to tackle to implement it. Firstly, Willis said implementing these reforms after the new financial year has started "would likely be far from straightforward". "Currently, salary sacrifice reward structures are set by employers, so implementing changes could be very messy, especially when it comes to capturing salary decisions for new hires or changes mid-year," he told Yahoo News. "Today salary sacrifice is largely used to support improved pension saving, and is limited since the system was already tightened in 2017." A government spokesperson said: 'These claims are totally speculative. HMRC regularly commissions independent research on all aspects of the tax system, and this research was commissioned under the previous government. 'We are committed to keeping taxes for working people as low as possible which is why, at last autumn's Budget, we protected working people's payslips and kept our promise to not raise the basic, higher or additional rates of income tax, employee national insurance or VAT."
ITV News
04-06-2025
- Business
- ITV News
Café that offers paid internships to SEND youth struggling to stay open
The Gamesmaster cafe, run by Silver Lining, is struggling because of a reduction in Access to Work grants from the Department for Work and Pensions.
The National
01-05-2025
- Business
- The National
UAE school group sets global benchmark for teacher satisfaction standards
A UAE school operator has become the first education group in the country to receive a prestigious global accolade for promoting the well-being of teachers and fostering a positive working environment. The Taaleem school group was awarded 'Best School to Work Certified Group' status by global education organisation T4 Education, a recognition granted only to school bodies where more than half of individual schools have received high satisfaction scores from staff in detailed, anonymous surveys. While a number of institutions have received 'Best School to Work' status, this is the first time that an entire school group in the UAE has received the accolade. To achieve the award, school groups are assessed on leadership, collaboration, professional wellness and working environment. The accolade is part of the Best School to Work programme, a global industry standard for school culture and workplace conditions. The initiative is backed by a community of more than 200,000 teachers and school leaders worldwide. 'Congratulations to Taaleem on the rare distinction of becoming a Best School to Work Certified Group,' said Vikas Pota, founder of T4 Education and Best School to Work. 'Your leadership, culture and vision have created an environment in which teachers can flourish.' The certification process includes a forensic assessment of school leadership, inclusivity, collaboration and staff development opportunities. According to T4 Education, the anonymous surveys are weighted by an algorithm to produce final scores. Salman Shaheen, T4 Education's director of communications, told The National that while a number of other UAE schools have announced they have been certified as a Best School to Work. These include British School Al Khubairat, The Arbor School, Deira International School, Horizon International School. 'Taaleem is the first UAE school chain to announce it has achieved Best School to Work Certified Group status.' Taaleem, which operates a growing network of premium private schools across the Emirates, attributed the recognition to its sustained investment in staff development and well-being. 'The quality of a school never exceeds the quality – and well-being – of its teachers,' said Alan Williamson, chief executive of Taaleem. 'At Taaleem, we are deeply committed to fostering a culture where educators feel valued, supported, and inspired to thrive. 'Achieving Best School to Work Certified Group status is a powerful testament to this commitment. It reflects our dedication to placing educators at the heart of our mission.' The group has introduced several support mechanisms, including Taaleem Teaching School – an online and in-person professional learning platform, that delivers coaching and training to staff. The group also offers online counselling, employee discounts, regular interactive wellness sessions both online and in schools and medical check-up days. The UAE has in recent years increased efforts to position itself as a hub for quality education. With more than 200 private schools in Dubai alone and a growing expatriate community, competition to attract top teaching talent remains intense. 'This recognition will help us continue to attract and retain the very best teaching talent, ensuring we deliver the very highest standards of education,' said Mr Williamson. The group recently announced the opening of new Harrow-branded schools in Dubai and Abu Dhabi.
BBC News
11-04-2025
- Business
- BBC News
Jobs fears as Access to Work disability scheme owes businesses thousands
Businesses employing disabled people say they are owed hundreds of thousands of pounds by the government, and fear they may have to let staff the Access to Work scheme, companies and employees can apply for grants to help support disabled people in the businesses have told the BBC there are backlogs and huge payment delays leaving them out of company told the BBC it is owed nearly £200,000 by the Access to Work scheme and is worried it may have to said it had already been forced to shut down in part due to problems with the to Work was highlighted by ministers as a way of boosting the job prospects of disabled people when the government announced multi-billion pound welfare cuts last Department for Work and Pensions (DWP) said they had recently introduced a "streamlined claims process" to make swifter payments to programme can pay individuals with disabilities and the businesses that employ them for the extra costs associated with being in work. It covers a broad range of support, from paying for taxis to powered wheelchairs. Yateley Industries is a near 90-year-old charity in Hampshire that employs almost 60 people, most of whom have disabilities, in a range of packaging says it is owed £186,000 by the Access to Work scheme. "It's an existential threat to us," says chief executive, Sheldon McMullan. "If we don't get it, we could potentially close this magical place forever, and that would be a tragedy for the local community and for the government's agenda more broadly."Yateley Industries is part of a nationwide forum of dozens of supported businesses - companies specialising in employing disabled McMullan says many others are affected by the backlog."The annoying thing is that it's money that's been granted to us," he adds. "We have the paperwork saying this is what each person's been awarded, but the claim system is not set up for us to draw down the money effectively."Businesses say that as well as poor internal processes at the Department for Work and Pensions, there has also been a large increase in the bureaucracy associated with Access to Work in recent months, with many more forms having to be filled in and then posted – not uploaded or emailed – to the DWP."Until ministers realise that they've got this wrong, they're in danger of pushing so many disabled people out of the workplace," says Steven McGurk, president of the trade union, Community Union. "Its very bureaucratic, very difficult to claim - it's the biggest threat to disabled people's employment." In Newton Abbott in Devon, a cafe that employed people with learning disabilities shut last month. Its founders say new restrictions and problems with Access to Work contributed to the Thorp, who set up the No Limits cafe, said the scheme had in recent months started to refuse funding for people who wanted to get some work experience. The decision came despite the local Job Centre recommending the individuals to the cafe. The change left the business with a shortfall of £800 a week."In the last 18 months, we've got 20 people into paid employment, all with disabilities," she says. "When the issues around work experience changed in the last few months, we had to turn people down because we could not fund the support. It just seems really counter-intuitive when all the rhetoric is around getting disabled adults into work."When the government unveiled cuts and restrictions to disability benefits last month, the Chancellor, Rachel Reeves, name-checked the Access to Work scheme as a programme that could help those who will lose out to get a well as businesses being able to claim, disabled people themselves can apply for help under the scheme. They are also suffering delays and backlogs; in October, there were 55,000 outstanding applications, according to the claimants are waiting more than six months to be assessed, with people writing on social media that the delays have resulted in them losing job Department for Work and Pensions says it prioritises those who are newly offered a job. Lucy Earle, 31, is a social media executive for a has various disabilities and conditions, including agonising pain in her feet that means she needs to use a took six months for her claim to be looked at by Access to Work, and then she was assigned a wheelchair that wasn't suitable and left her upper body in pain."The last few weeks, I haven't been into work because I can't manage the pain of either using the wheelchair that isn't built for me, or being on my feet and not going very far."She credits the Access to Work scheme with helping her stay in employment, but feels they are refusing reasonable requests."They're saying that the benefits are being cut so we can push more people into work, but then also Access to Work is having all these problems."Steve Darling MP, the Lib Dem Work and Pensions spokesperson, says that while the principles behind Access to Work are excellent, "individuals and businesses are often covering significant sums from their own savings while waiting for payments from Access to Work, which risks pushing people into debt, or businesses even closing down. This is unacceptable."Minister for Social Security and Disability, Sir Stephen Timms, said in February that Access to Work, established in 1994, "was not in a good shape at the moment." Spending on the programme increased by 41% in 2023/24 to £257.8m. "What we will need to do…is make some fairly significant reforms to Access to Work, look at whether employers can do more. There is quite a big issue here and the current style of Access to Work is unlikely to be sustainable in the long term," he said. "We have to come up with something better and more effective, given the current very high level of demand."In a statement, the Department for Work and Pensions said: "Last month we introduced a new streamlined claims process to ensure outstanding payments are made swiftly to businesses."We also continue to work with employers to explore how the Access to Work Plus claims process could be made easier for their employees and so people with high in-work support needs can thrive in employment."
BBC News
10-04-2025
- Health
- BBC News
Scheme will draw youth into employment
Young people in the West Midlands with health conditions will be helped into work as part of a £5.7m scheme, regional officials to Work is expected to help up to 1,400 people aged between 18 and 24 to find jobs, the West Midlands Combined Authority combination with the seven councils in the region, the authority said it would work with businesses "so young people can be matched to the right jobs".Across the region 27,265 young people claim Universal Credit, of which 12,660 have health conditions, the authority said. All council areas have higher rates of people aged between 18 and 24 claiming unemployment related benefits than the national summer, West Midlands Mayor Richard Parker pledged to work with businesses to create 20,000 new work experience opportunities, training placements and apprenticeships for young month, YouthPath was set up by charity Movement to Work and the WMCA to help create career opportunities for young people not in education, employment or training."Every person in our region should have the same to access to work opportunities - including people with disabilities or long term health conditions," Mr Parker said."By having the same access to opportunities, everyone has the freedom to make the right choices for them - to help them earn, live independently and improve their health and wellbeing." Follow BBC Wolverhampton & Black Country on BBC Sounds, Facebook, X and Instagram.
