Fiscal Efficiency
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Fiscal Efficiency David O’Connor Simon Parsons. Agenda. Objective: Create a common point of view about fiscal efficiency & How it can realise significant value for organisation Context Salary Sacrifice & Flexible Benefits Fiscal Efficiency Impact Fiscal Efficiency in Action

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Fiscal efficiency david o connor simon parsons

Fiscal Efficiency

David O’Connor

Simon Parsons


Agenda

Agenda

Objective: Create a common point of view about fiscal efficiency & How it can realise significant value for organisation

Context

Salary Sacrifice & Flexible Benefits

Fiscal Efficiency Impact

Fiscal Efficiency in Action

Key salary sacrifice & flexible benefits considerations

Summary


Context fiscal efficiency

Context – Fiscal Efficiency

Low or negative GDP growth in short-medium term

UK debt levels are at an unprecedented high, Bank bail out, etc

Governmental Spending (and collecting review) 20th October

Demand on public services increasing…£6.2bn of cuts

Current Tax system under immense pressure

NI Holiday for small start ups (1%) but still unprecedented levels for employees

Increased taxation burden on business


Context fiscal efficiency opportunity for organisations

Context: Fiscal Efficiency Opportunity for Organisations

35% of ceridian customer base offer some form of salary sacrifice benefit recorded in payroll

Key benefits offered are Childcare Vouchers (60%); Pensions (24%) and Retail vouchers (6%)

10% of those salary sacrifice users are in the retail space

Of the retailers 83% of sacrifice benefits focus on two key areas

Child Care – 39%

Pensions – 44%

Opportunity to use benchmark NI payments to realise fiscal efficiency

Move to 5.9% as per best example

John Lewis

Debenhams

Next

ASDA

Selfridges

M&S

BHS

Somerfield

5% range

Primark

Sources: Statutory Accounts & Ceridian Payroll Data


Salary sacrifice flexible benefits

Salary Sacrifice & Flexible Benefits

Salary sacrifice & fiscal efficiency benefits are accessible through payroll only

Role of payroll is to demonstrate compliance/auditability to regulatory body (HMRC)

Choice of what, when & who is determined by employer only – no concept of enrolment (pensions)

No scenario modelling for employees – the first time they see impact in pay is via payslip

Flexible benefits can provide both broader access to many benefits and pass choice back to employee

Drive greater employee engagement & reward through choice and enrolment

Will manage a greater basket of benefits (salary sacrificable or not)

Flexible Benefits

A benefits plan that allows employees to select from a pool of choices, some or all of which may be tax-advantaged.

(Engagement)

Salary Sacrifice

Contractual arrangement where employee gives up cash remuneration in return for non-cash benefit.

(NI saving)

Not Mutually Exclusive

Employee

Reward

Employer

Reward


Fiscal efficiency impacts

Fiscal Efficiency Impacts


Fiscal efficiency opportunity in action

Fiscal Efficiency Opportunity in Action

Dynamic Pay Processing (auto opt in)

Increase take up through change in policy

Inclusion of NMW colleagues on a payrun by payrun basis

Extends into part-time workers and Lower Earnings Limits (LEL)

Policy & process integration with WFM and Payroll

Maximum hours contracts for staff – control NI at shop floor level

Manages shop floor staff from exceeding hours and NI payment threshold, the complexity/ rules are in the hardwired into the system

Opportunities are directly linked to attitude to fiscal boundary defined by organisation, this is not necessarily uniform

All fiscal efficiency opportunities are validated with independent 3rd party & internal tax advisors

Ceridian operationalise / execute advice through payroll & benefits


Key considerations

Key Considerations


Questions to consider

Questions to consider

Where will fiscal efficiency be driven from?

From Payroll or Flex benefits?

Which population will we apply this to, can we carve out distinct employee segments

One approach for customers has been to offer payroll fiscal efficiency to staff and flex to management

Understand the operational boundary where organisations wish to take fiscal efficiency

How far is organisation prepared to go to realise employer reward

How much does organisation wish to engage employees

Can this be Linked to a wider transformation programme

Avoid “death by 1000 cuts”


Summary

Summary

Fiscal efficiency can be driven from both payroll and flex solutions

Payroll fiscal efficiency delivers employer reward whilst flexible benefits delivers employee rewards

FE through payroll is functional, enrolment limiting & no scenario modelling

Flexible benefits systems enable easy enrolment, employee choice & selection

Our experience shows most organisations access employer reward via payroll – focusing on pensions and child care vouchers

Opportunity is to drive down the NI % across the workforce to a best in class ratio (5.9%)

Each percentage point is a significant employer reward


And finally

And finally…

Where is your organisation on the chart?

John Lewis

Debenhams

Next

ASDA

Selfridges

M&S

BHS

Somerfield

5% range

Primark

Sources: Statutory Accounts & Ceridian Payroll Data


Fiscal efficiency david o connor simon parsons

Fiscal Efficiency

David O’Connor

Simon Parsons


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