Employers can help members ease the pension tax squeeze
With pay increases returning to the agenda, those on the
highest earnings will be wondering how to avoid losing their
personal income tax allowance when their earnings go over
£100,000 pa and fall into a 60% marginal rate of income tax.
This marginal rate of tax applies on the band of earnings between
£100,000 and £120,000.
In a defined contribution scheme, the solution is to give up
salary or bonus and redirect to higher employer pension
contributions. National insurance savings for both employer and
scheme member increase the attraction, especially if the employer
is willing to add a proportion of their savings to the increased
employer pension contribution.
