Jarvis, a pension fintech that empowers employees to actively plan for their retirement, has launched a free salary sacrifice calculator that allows businesses to see how much they can save while boosting pension contributions for their workforce in the upcoming financial year.
The tool found that SMEs can save up to £15,150 in National Insurance contributions (NICs) annually through salary sacrifice*.
With employer NICs increasing by 1.2% in the 2024 Autumn Budget, many businesses face growing pressures going into the new tax year. Employers, plenty of which are already struggling following a period of financial uncertainty, may resort to delaying pay rises, promotions, or new hires to offset costs, which will negatively impact talent retention and wider economic growth. Salary sacrifice schemes divert more money into employees’ pensions while cutting overheads for employers by reducing NICs.
Despite the fact that businesses and workers have steadily increased their pension contributions over the last two decades, the average person isn’t putting away enough money for retirement. People often fall £115,000 short of the amount for a standard pension pot. Jarvis’ calculator will help businesses and employees identify how salary sacrifice can bridge pension shortfalls while alleviating tax burdens.
Through salary sacrifice, employees can agree to redirect part of their gross salary into a ‘non-cash’ benefit, such as extra employer contributions to their pension pot. As the redirected money reduces gross pay, it lowers the amount employees and employers owe HMRC, which creates savings for both.
Royden Greaves, CEO and Founder of Jarvis, said: “‘Salary sacrifice’ might sound daunting or elicit an immediate negative reaction, but it’s a much more straightforward and beneficial strategy for businesses and employees. We want to help SMEs navigate rising costs without compromising on hiring, promotions or pay rises. Our new calculator makes it easier for all parties to see where they can save and what they stand to earn by providing clear, actionable insights. Jarvis has always been about financial freedom; we believe people should have better control over their retirement planning, and it’s great that we can help small and medium-sized businesses along the way, too.”
This launch comes at a time of continued growth for Jarvis. It follows a £1.8 million seed funding round last year, co-led by Ascension VC and Cornerstone VC and a recent partnership with leading payroll platform Finity, a leading back-office software platform for recruitment agencies and umbrella companies.
*This is based on a company of 55 employees with an average salary of £37,430, where employers contribute 3.5% to pensions and employees 8%.