Aegon UK has given its employees the option to sacrifice part of their salary and contribute it to one of the financial services company’s two staff pension schemes.
The firm has decided to pass on most of the national insurance (NI) savings it makes from salary sacrifice to those staff in its 5,000-strong workforce who are members of its group personal pension (GPP) or defined benefit (DB) pension schemes to encourage them to save more for their retirement.
This means GPP members will receive combined employer and employee NI savings of about 20% on the amount sacrificed. The company already makes age-related contributions, ranging between 6% and 12%, on behalf of GPP members.
Employees electing to contribute to the firm’s final salary pension scheme via salary sacrifice will also make savings. DB pension scheme members currently make contributions of 1% to 9% depending on their level of accrual and retirement age.
So far, 95% of members of Aegon’s DB pension scheme have signed up for pension contributions via salary sacrifice. The company does not have take-up rates for salary sacrifice among DC pension members because they are still in the election period.
John Fitzgerald, senior reward consultant at Aegon Scottish Equitable, said: “We figured by bringing in salary sacrifice we would be sharing the NI saving with [staff] and, hopefully, it will increase the level of contributions paid by members.
“For employees, it is just a more tax-efficient way of boosting their pension scheme. Hopefully, by enabling staff to make contributions via salary sacrifice, it will encourage more to pay into the scheme. It has not been done as a profit-making [scheme] for the organisation.”
Aegon used its intranet to inform staff about the option to make pension contributions via salary sacrifice. Financial education roadshows focusing on pensions were also held at the company’s offices around the UK.