Although changes to pension tax reliefs have been scrapped for now, there are still changes that have been made to pension legislation that can affect many employees. The changes to the Lifetime Allowance and Annual Allowance could impact employees who don’t even realise they will be affected. Many employees may think their pension savings are under the Lifetime Allowance limit, but haven’t taken into account their Death in Service benefits. Others may not take into account contributors to their income other than their salary and be in danger of suffering a reduction in their Annual Allowance. The people in a business who are most likely to be affected by these changes are managers and executives; those who are considered high earners.
There’s a misconception that employees with higher pay don’t need help when it comes to their finances. In fact, they need just as much help and support but they may be ignored or forgotten due to their position in the company. Executives and managers are the ones keeping the company running and who have everything under control, but they may not have control of their finances. People who are earning more are likely to be at a particular stage in their lives where they have more financial responsibilities. A larger pay cheque doesn’t automatically ease financial pressure, and it can cause more problems when it comes to tax and legislation.
Although they may have more money, time is often the thing they value the most and have the least. So they are unlikely to have the time to review, let alone understand important tax changes. You not only need to be aware of these changes themselves, you need to communicate changes effectively to your employees. Effective communication doesn’t just mean one flyer or one email that executives and managers are unlikely to have time to read. What’s really needed is education to give these employees time set aside specifically for learning about and understanding the things that could affect them.
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