Martindale Pharma used the savings it made from adding a salary sacrifice arrangement to its group personal pension scheme to fund the cost of auto-enrolment and to improve its healthcare benefits.
The organisation introduced pensions salary sacrifice in April 2013. Keith Baker, compensation and benefits manager at Martindale Pharma, says: “We wanted to take advantage of the national insurance (NI) savings for employees and the employer. It is a quick win and had an impact on some other areas, such as auto-enrolment and healthcare.”
The concept of salary sacrifice was communicated to the employer’s 400 staff with the help of benefits adviser Secondsight, which held a series of presentations for small groups of staff, and included personalised calculations within its information packs for employees.
“It gave them specific details on how salary sacrifice would impact their own net pay,” says Baker. “Within the presentations, we encouraged them to reinvest that saving to increase their pension contributions with no impact on their net pay and, ultimately, make a difference to their retirement income.”
The organisation’s initial NI saving was £21,000, much more than it had expected. The savings, which have continued to rise, have been used to fund auto-enrolment . Baker adds: “We were given costs in terms of the pension provider, access to their hub for assessments and all the statutory communication that is required.
“We made sure that was covered by some of the cost savings we made. But because it was actually more than we anticipated, we were able to put that into some other areas as well.”
These other areas included changing the organisation’s private medical insurance scheme from an underwritten plan to a medical-history-disregarded plan at no extra cost, and improving the terms available on its life assurance cover.
“It wasn’t just pension members who were benefiting from the savings,” says Baker. “It was broadened out across as many employees as we could touch.”