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Natalie Holt
Pensions are much cheaper than pay rises, says Boulding
Boulding: ‘Employer should spend on paying advisers to promote pension scheme
Paying pension contributions on behalf of an employee is considerably cheaper than rewarding employees through their salary, according to Legal & General.
Speaking at the Personal Finance Society annual conference in Coventry last week, L&G pensions strategy director Adrian Boulding said that employers could use the saving they make through paying pension contributions to help advisers promote the scheme to staff.
He calculated that the cost to an employer of paying £1 into an employee’s pension pot is £1 but the cost of paying an employee £1 as take-home pay is £1.67.
This is based on the cost to the employer of paying an employee’s income tax and National Insurance at the basic rate of tax, plus the employer’s NI contributions. Boulding used NI rates as at 2011 to make the comparison.
He said: “There is 67p worth of value there to play with. The employer should spend some of that on paying advisers to help promote its pension scheme to employees so that they understand what a great deal they are getting from their employer by being part of the pension scheme.”
Boulding added that advisers should show this calculation to corporate clients and argue the case for using the saving to contribute towards promoting the scheme, especially since by 2012 advisers will be charging for this service anyway.
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