Equiniti’s proprietary service – which is set to be rolled out to employers in H2 2018 – will sit within flexible benefits and facilitate accumulation into a fund through monthly salary sacrifice contributions which can then be claimed back from the employer to go towards the cost of pension advice.
Due to the salary sacrifice element, employees will benefit from tax and national insurance savings of between £160 and £310 (dependent on their rate of income tax) while the employer will also profit from tax efficiencies.
The service comes following new government legislation that came into effect on 16 November 2017 introducing the £500 towards employee pension advice as a non-taxable benefit - take up has been disappointing. Equiniti hopes to boost these levels through its service and that the advantages of greater workforce engagement and job satisfaction will encourage employers to sign up, with regulated advice highly recommended yet used by a minority.
The FCA’s Financial Lives survey1 revealed that of those planning to access their Defined Contribution pension in the next two years, more than two thirds (67%) have not yet taken any advice to help them understand their options and a further 9% are unsure. Yet of those that have taken regulated advice, 84% would score it between 7 and 10 in satisfaction, suggesting that cost rather than utility is deterring people from taking pensions advice.
Advice is also compulsory when making Defined Benefit transfers of over £30,000 to prevent costly mistakes which again strengthens the view that advice represents money well spent and is also recognised by both the industry and the government as a means of achieving positive outcomes for more pensioners.
Tim Brook, Head of HR Solutions Platform and Engagement, at Equiniti, commented, "Given the additional choice and risk the consumer has taken on since the introduction of pension freedoms in 2015, proper advice has taken on an increasing importance in educating citizens to the choices they can make with their pension.
"While the government’s initiative in 2017 to introduce a sum of £500 that could be reclaimed by the employee from their employer was a big step forward, it has seen limited take up thus far. We hope our service will start to entice more employers to offer access to advice through salary sacrifice which will in turn drive employee engagement and that employees see the value of receiving pensions advice."
Equiniti’s salary sacrifice pension saver will be formally launched as a flexible benefit in the second half of 2018 but it has already been generating interest with many companies expressing their interest in the scheme.
Andrew Woolnough, Director of HR Solutions at Equiniti, commented, "The response that we have seen from our clients has been immensely heartening and demonstrates the appetite employers across the country have in educating their workforce in the importance of making good pension decisions."
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Notes to Editor:
About the Service:
Employees can elect to save up to £500 in a tax year, and if at the end of the tax year there have been no claims, or the claim is a lower value than the savings amount, the employee will be refunded and taxed as appropriate.
Claims can be made up to three time in a lifetime. The claim must be accompanied by an IFA invoice or receipt clearly stating the appointment was for pensions advice or related topics.
Equiniti Group is a multinational specialist outsourcer delivering technology-enabled solutions to some of the [worlds] best-known brands and UK’s largest public-sector organisations.
It is the UK’s leading provider of share registration, employee share plans, and associated investor services, and also has market leading positions in pension administration and software, and employee benefit schemes.
Equiniti’s services, which are delivered by over 4,300 employees, benefit 28 million people in the UK and 120countries around the world.
Equiniti has been managing flexible benefit schemes for over 10 years dealing with over 100,000 employees and over 5,000 HR records each week, including administration for one of the largest and most complex schemes in the UK. The proposition is an end-to-end service ranging from benefits consultancy and benefits broking to in-house design and marketing assistance all implemented by a knowledge benefits administration team.