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The company I work for has just adopted a pay scheme which reduces NI contributions for both the employees AND the company. Basically, there is a negligible increase in take-home pay (actually, my take-home will increase by 90p per month.....wooohooo!) but the company reduces the employees gross salary and makes equivalent pension contributions on their behalf. I have just seen calculations that show my gross salary falling by 3.5% (with an equivalent increase in the pension contribution benefit).

I wondered if anyone else has seen this and how widespread the change could be. Also, and more importantly, would the apparent reduction in salaries be skewing the ONS wage growth figures, or do they include benefits as well? Finally, how long before Gordo closes this loophole....surely he won't like losing all those NI pennies.....

Any thoughts/insight greatly appreciated.

CF.

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Still, if you cannot access the money until retirement this negates any possible wage-price spiral.

Excellent point, which had escaped me completely.

However, even though I have no more money to play with, it's the effect on the figures I'm interested in.

If 5 of every 100 wages are 'falling' (but not really) by 3%, then offset by a 4% pay rise and the rest are simply rising by 4%, then this might be calcuated as an average rise of:

((5*1.01)+(95*1.04)) = 103.85/100 = 3.85% when, in fact, wages areactually rising by 4%

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The company I work for has just adopted a pay scheme which reduces NI contributions for both the employees AND the company. Basically, there is a negligible increase in take-home pay (actually, my take-home will increase by 90p per month.....wooohooo!) but the company reduces the employees gross salary and makes equivalent pension contributions on their behalf. I have just seen calculations that show my gross salary falling by 3.5% (with an equivalent increase in the pension contribution benefit).

I wondered if anyone else has seen this and how widespread the change could be. Also, and more importantly, would the apparent reduction in salaries be skewing the ONS wage growth figures, or do they include benefits as well? Finally, how long before Gordo closes this loophole....surely he won't like losing all those NI pennies.....

Salary sacrifice is now a fairly common method of contributing to occupational pension schemes particularly final salary based ones. HMRC are fully aware of such schemes having even issued guidance notes on them, after an employer instigates such a scheme they need to have the sacrifice vetted by HMRC inspectors validate it is a genuine cash sacrifice. ONS may have access to the data on such schemes held by HMRC and thus be able to factor it into there wage models.

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Salary sacrifice is now a fairly common method of contributing to occupational pension schemes particularly final salary based ones. HMRC are fully aware of such schemes having even issued guidance notes on them, after an employer instigates such a scheme they need to have the sacrifice vetted by HMRC inspectors validate it is a genuine cash sacrifice. ONS may have access to the data on such schemes held by HMRC and thus be able to factor it into there wage models.

Damn, you beat me to it by about 40 minutes :blink:

Absolutely true in every detail.

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  • 441 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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