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.”