Salary lowered due to pension? (not nec. sacrifice)

A question about : Salary lowered due to pension? (not nec. sacrifice)

I have to admit to not having read the details on workplace pensions (they don't apply to me!) but it will apply to Marley-BIL and the small firm for which he works eventually.

I understand that minimum % contributions will be 8% (split between employer, employee & government-SMART-tax-wriggle thingie).

Marley-BIL has said that there is a notice on their board at work to say that they will have to take an 8% paycut when the pension is introduced in a few years time.

Question is, is this right? Effectively the company expect the employees to take a paycut that equates to the entire pension contribution - including the employer's contribution. So the employee is taking the full whack.

Sounds dodgy to me but I don't understand the detail of the scheme other than the SMART deduction thingie (as my pension has that).

Best answers:

• Take that notice, make a copy of it, or simply photo it. - make sure nobody sees you doing it - cameraphones are very useful when whistleblowing.
  Then send that to the pensions regulator.
  That is not right at all. The employer in this case is essentially forcing their staff to pay for the whole thing by proxy.
  They are being very stupid - breaking both the spirit and the letter of the rules. Additionally, they are being stupid in that they could simply get all their staff to sign up to the scheme via salary sacrifice and actually pay less out as they wouldn't have to pay employers NIC's on contributions.
  This is not right at all!
  0845 600 7060 available here: https://www.thepensionsregulator.gov.uk/contact-us.aspx
• Interesting reading on this thread i thought i will post about what may happen to me,
  The company have said due to the new business pressure they will find themselves in of the auto enrolment The company is proposing to stop the current Company pension scheme which is 5% employee and company 10% and start a new company pention scheme with maximum contributions of 5% employee and 5% employer. Also proposals that may result in changes to the following.
  Annual holiday, Overtime rates, Hours of work, Notice Periods, Sick pay and redundancy.
  (In my mind they are trying to offset the cost)
  I calculted on todays rates if the pension did change and i stayed with the employer untill i retired my pension pot would not see just over 40k.
  Watch this space....
• Yes, I did wonder about all these employers' actions to offset the cost. I will be interested to see how my employer will react to increase in cost. At least they cannot cut minimum wage!
  Cheers
  Joe
• If the employer's staging date is some time away e.g. 2015 then they could probably cut back on future pay increases to create room for the employer's contribution - but anyone on NMW will have to be paid at the full NMW rate, I believe.
  Cutting current rates of pay is more tricky and may require consultation (potentially a change of terms & conditions of employment if the current rate of pay has been communicated and is already in payment ...?)
  I agree with dtsazza in that in the long term, in companies that do not currently have a pension scheme, then total pay will be set at a level which is salary plus pension contributions. This is what happens in most companies who do have a pension scheme as most apply the concept of "total reward".
• It is illegal as it is a variation of contract without consent. Remember you can accept a variation verbally so be careful who you speak to.
  It is breaking the spirit of the rules - We have a pensions DEFICIT, that means the amount we pay in tax does not cover the current outgoings on old age pension. The rules were brought in to cover the gap and allow the private sector to take over. It was either this or a phased 8% tax hike in NIC's. If employers don't bother then they are effectively screwing their country for some short term profits.
  They have to start at 1% of BAND earnings (not even the total pay of an individual) - rising to 3% by 1 October 2018. I'm sorry but a couple of annual pay freezes over the years should cover that.
  Talk to the unions, https://www.ehow.co.uk/how_2050636_cr...nion-work.html, or form one and get the !!!!!!s sorted. If they have been posting profits for the past few years (you can find this out by paying Bizzy.co.uk Ј20 for a years sub) then they are greedy pigs and it needs stopping. If they have been posting losses then you may have to take it - better to have 90% of Ј20K than 100% of 0K.
• An employer who mentions cutting pay in most cases is simply failing to apply any intelligence they possess. The increase rate is low enough that it can be concealed in reduction of normal pay increases unless employees are on minimum wage.
  Such employers are also likely to try to use the lemon of the auto-enrollment bunch, NEST, to try to encourage as many people as possible to opt out.
  Please use the information provided by Daniel Elkington to report daft employers to the pensions regulator.
• Hi all,
  My current employer pays 4% of salary into a Scot Life scheme for evryone here 6 mths, (I've got Ј10k saved in it), although at 47 this is not a lot. I only earn Ј16706 a year. He has told us that this auto enrol thingy means me and the gang are going to have to start paying in some of our wages too and that as the firm is struggling a little of late all this pension talk has had him rethink things in general. He proposes paying 3% going forward on the understanding that we match him, (that's 3% out of my pay whether I like it or not), otherwise he is not paying in at all. He says he'll get me to pay in 1% this year, 2% next year, then 3% in 2015 . The secretary has said he'll look at going back to 4% in 2016 as long as we match him at this point. It's a pressure finding even this extra 1% of pay now to get the 3% he's offering but do I really have a choice? Is having a pension really worth it when it seems to buy so little these days, (my Uncle retired on one last year at 65 and his Prudential pension plan had Ј45k ish in it....he only gets Ј42 per week from this after saving in it for over 28 years!!!
  My boss is looking at giving all of us a cash plan thingy which he says is to make up for cutting the pension contribution, (must be cheaper for him)....he says it helps meet some duty of care legislation for eye tests for van drivers like me.
  Does this sound fair or am I better challenging him to stick to what we have got already. My wife says I can't really moan as she does not have any pension in her work....grocery shop and that my letter of job offer did not have any pension on it anyway.
  Sorry for all of the queries but I am new to this online stuff and would welcome any comments.
• Thanks guys.....appreciate the effort in communicating this in lay mans terms. I have to admit it seems to be that my boss is trying to do the right thing as everyone else I talk to tell me theirs is putting this stuff on the back burner until the govt actually force them to put something in place and that may be a couple of years away!
  Even the cash plan offer now looks like a really good idea as an eye test set me back Ј24 at the weekend and it looks as if this sort of stuff is going to get paid for by the firm.
  I fess up that I was probably just behaving selfishly.....having 4% paid in now and having firm tell me I'd have to pay in myself to keep something less, 3%, sounds like a con....now I realise that they are just giving me a kick up the backside to make the whole thing worthwhile.
  Again, thanks fortaking the time to reply.....they have an adviser that comes round once year and I will make a point of putting her on the spot this time round to see if her thinking is as clear as yours.....I am keen to hear how she gets paid for all of this....my brother's firm have just agreed to pay their adviser Ј150 per year from the pension he has, (although there are only 12 staff in his place and their is a Clerical Med pension). He pays 2% of his pay and his boss also pays 2% so I now see that I am not that badly off!