National Minimum Wage/National Living Wage and Salary Exchange

With effect from 1 April 2024 the National Minimum Wage (for those under age 21) and the National Living Wage have increased. The new hourly rates are shown here:

Source: National Minimum Wage and National Living Wage rates - GOV.UK (www.gov.uk)

Employers using Salary Exchange (also known as Salary Sacrifice) for employees’ pension contributions must ensure that any exchange or sacrifice does not bring eligible employees wages below this new level.

This may mean that their pension contributions can no longer be funded via Salary Exchange and will instead need to be processed via Relief at Source. Where this is the case, the amount funded from the employee’s net pay will be different, and the way that their contribution is flagged with your pension provider will also need to change for the tax relief to be correctly applied.

Finally, we are aware of some payroll software which doesn’t flag where a post salary exchange value falls below the National Minimum Wage or the National Living Wage. If your payroll system doesn’t have this safeguard, we urge you to be vigilant and ensure that any necessary checks and consequent changes are made manually.

Your usual Aspira consultant is happy to help you with any questions you have on this. Should you find it helpful we can also arrange for group overviews to be delivered for affected members.