Virgin Money has released its yearly "desk divide" survey and revealed that many employers are still ignoring pension contributions for employees and favouring salary bonuses. The report highlights that 16% of employers had offered or increased bonuses whereas the numbers offering pensions had fallen by 9%.
The report also revealed that more than half of employers had not consulted their employees on what sort of benefits and bonuses they would like and many had not taken advice on the provision of benefits for employees.
Our view
This is like being "caught between a rock and a hard place". Employees generally do not value pension benefits offered by employers and some to their cost when they reach retirement date.
Bonuses are subject to tax and National Insurance whereas a payment into your pension fund by your employer is not. The value of a benefit can be reduced by 40 to 50% if you are a higher rate tax payer.
Likewise, from an employers perspective, paying pension contributions on behalf of employees can make that all important saving of up to 12.8% on Employers National Insurance Costs.
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