MAC Financial has launched a new, innovative approach to pensions in a bid to save employers and employees National Insurance contributions.
The MAC SMART Pension is a response to the recent introduction of a further 1 per cent rise in National Insurance contributions and the UK Government’s recent announcement of another 0.5 per cent increase for 2011, which is a further increase to the 0.5 per cent increase already announced for that year.
This pension offering gives employees the opportunity to increase their take-home pay, whilst not affecting any other benefits, and decrease employers' National Insurance contributions by up to 12.8 per cent.
The Isle of Man has already announced the 1 per cent rise, so there could be further costs to come if the Department of Health and Social Security follow suit with the UK Chancellor’s Pre Budget Report proposal.
MAC Financial Managing Director Jon McGowan (pictured) explains, "The MAC SMART pension is a form of salary sacrifice and as a concept has been around for many years.
"However, the different approach MAC’s SMART pension offering takes, together with clarification from the appropriate authorities, means that many of the previous drawbacks of salary sacrifice arrangements have been overcome. The important point is that MAC SMART will work with your existing pension scheme."
The MAC SMART Pension works by participating employees sacrificing a cash salary equivalent amount to the contributions they are making to the company’s approved pension scheme and the employer agrees to increase their contributions by an equivalent amount.
Employees are notified that the new arrangements will automatically apply from a particular date, unless they opt out in advance.
If they do not opt out at the start, employees cannot opt out again until the first anniversary of the commencement of the scheme, unless they experience a ‘lifestyle change’, such as marriage, birth of a child, separation or divorce, death of a partner or child or change from full-time work to part-time.
Participation in the scheme also brings about a change to the terms and conditions of participants’ employment and the employee’s previous gross salary remains the yardstick for other issues e.g. the calculation of overtime pay, annual salary increases or salary- related benefits.
