Shire Pharmaceuticals has seen a drop in take-up of its bonus sacrifice scheme from 17% to 11% year on year.
To help its 315 eligible staff make a decision around the scheme, which enables them to sacrifice their bonus into the pension plan and save tax and national insurance, the Basingstoke-based firm set up a helpline called ‘Financial advice for bonus waivers’. Offered in conjunction with its pensions helpline provided by Hargreaves Lansdown, the line was open for staff to use from 5-26 February.
Kerrie Rowland, associate director, international benefits and HR policies at Shire Pharmaceuticals, said the fall in take-up was due to a combination of the recession and the anti-forestalling rules introduced in the Finance Act 2009, which will come into effect on 6 April.
“As you are waiving cash, maybe more households wanted to take the cash than lock it away in a long-term savings plan, such as a pension, but I think it is also due to reduced saving capabilities brought about by the Finance Act 2009,” said Rowland.
The anti-forestalling rules, which are designed to prevent those earning over £130k a year from making large additional pension contributions before April 2011, have classed contributions to the bonus sacrifice plan as “irregular and, as such, have significantly reduced the level of bonus which can be waived, if at all”, said Rowland.
The number of queries staff were making about these measures to the company’s pensions helpline prompted it to add a more specialised advice line.
“We kept the same [telephone] number and used this facility to assess the initial need for financial advice,” said Rowland. “If the telephone service determined that it was required, for example if the caller was caught by the anti-forestalling rules, the call was passed to the financial advisers to perform further specific calculations and advise accordingly.
“We outsourced this to our pension advisers so those that could make a final contribution out of their bonuses this way were able to do so without negatively impacting their tax position.”
Shire is now considering introducing a broader financial advice helpline, including financial advice for bonus sacrifice, as a permanent part of its employee helpline.
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