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54% of people say rising living costs are stopping them saving as they want

·2-min read
More than half (54%) of people say the surging cost of living is holding them back from saving as they want to, according to a survey for Cushon (Gareth Fuller/PA) (PA Archive)
More than half (54%) of people say the surging cost of living is holding them back from saving as they want to, according to a survey for Cushon (Gareth Fuller/PA) (PA Archive)

More than half (54%) of people say the surging cost of living is holding them back from saving as they want to, a survey has found.

And nearly two-fifths (38%) believe April’s national insurance (NI) hike to help pay for health and social care will make the situation worse, according to financial technology firm and workplace pension and savings provider Cushon.

Cushon said if their workplace pension uses “salary sacrifice” then NI contributions could be reduced.

Under salary sacrifice schemes, employees agree to reduce their salary by an amount equal to their pension contributions.

Their employer will then pay their total pension contributions, which saves the employee and the employer money in lower NI contributions.

Although it might not be right for some employees, especially those applying for a mortgage or close to minimum wage, for most workers salary sacrifice can be a great way to get more money into their pockets

Baroness Altmann

Ben Pollard, chief executive and founder of Cushon said: “Salary sacrifice is a simple way for people paying into workplace pension schemes to save hundreds of pounds each year just by changing the way their contributions are made.”

However, people should bear in mind there could be downsides to salary sacrifice, such as decreased mortgage affordability based on someone’s income.

Employees currently pay NI on annual earnings above £9,880, but from July the threshold will increase to £12,570.

Baroness Ros Altmann, a former pensions minister, said: “Although it might not be right for some employees, especially those applying for a mortgage or close to minimum wage, for most workers salary sacrifice can be a great way to get more money into their pockets.

“Those people who are able to access salary sacrifice through their employer but choose not to take it up are missing out on ‘free money’ from the Government.

“As so often in pensions, the terminology is a major problem here. To most people sacrifice means giving something up rather than gaining anything extra.”

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