Federation Circulars
Force Pension Plus
Circular 02/10
25 January 2010
Salary Sacrifice or Smart Pensions has become increasingly popular in recent years as currently a legitimate way of reducing National Insurance contributions.
In simple terms it involves employees salaries being reduced by the amount of their pension contributions and those contributions instead being paid by the employer at exactly the same level.
The amount sacrificed normally would be subject to National Insurance contributions both for the employee and the employer, this is where the savings are found. As employers pay the national Insurance at a higher rate they stand to gain more by the introduction of such a scheme.
Unless safeguards are built into a Scheme there can be disadvantages due to your salary being reduced in such area's as pay increases, pension benefits, applications for mortgage / loans.
These issues and others are covered in the Employee Guide and Frequently Asked Questions issued by the Force which contain the safeguards built into the Scheme and would form part of the necessary change to your Contracts of
Employment should you not opt out. If further advice is needed due to individual circumstances Independent Financial Advice should be sought.
Whilst an "Opt In" Scheme would have been preferable coupled with a longer response period the Force and their advisors chose the "Opt Out" option. This is legal.
We have written to each member individually to ensure they are aware of the deadline.
