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Auto-enrol to be altered for sacrifice

The Government is set to amend automatic enrolment guide- lines after concerns over the impact on salary sacrifice.

Under salary sacrifice, an emp-loyee agrees to a contractual drop in salary for an increased emp-loyer pension contribution.

Cancelling a salary sacrifice arrangement is not currently permitted unless it is due to a “lifetime event”. This means if a person is auto-enrolled into a salary sacrifice arrangement and opts out, they may not be entitled to a refund of the sal- ary sacrificed.

Friends Life says HM Revenue & Customs intends to change its rules so employees who are auto-enrolled via salary sacrifice will not be held to the arrangement if they opt out. Instead, they will be entitled to a refund of the salary they sacrificed, subject to tax and National Insurance.

Friends Life head of corporate benefits marketing Martin Pal-mer says: “This is a common-sense move that ensures consumers will not be left out of pocket if they decide not to remain in their employer’s scheme.”



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  1. If an employer and employee between them agree ~ privately ~ that the employee’s total remuneration shall be 90% of £XXX instead of the full £XXX, then who’s to know if that agreement subsequently amended?

    It may be a confession of ignorance (I’ve not operated in the corporate market for many years), but I’ve never heard of auto-enrolment into a (presumably group) salary sacrifice arrangement. Surely, it’s not legal for an employer unilaterally to cut any of his employees’ salaries, even if an equivalent amount is to be redirected into a retirement benefits arrangement? Wouldn’t the contract of employment have to specify the employer’s powers in this regard? I for one would refuse to sign any such contract.

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