6 simple tips to manage annual allowance tapers for high earners

The early bird apparently catches the worm. This begs the question, what does the late bird get? What could be worse than eating a worm? Answers on a postcard please…

But this gives a flavour (not worm-flavoured) of a sensible approach to managing annual allowance tapering - a measure which is still relatively new, captures more people each year and is a real challenge for those affected by the rules.

So it’s very important to get your planning done early. Why? Because far too many people leave it too late, which often leads to poor decisions being made. The best time to raise awareness of the need to plan is between January and March – the final months of the tax year. A workplace engagement or communication initiative during the first quarter of the calendar year will act as a significant nudge or reminder to the higher earners from the reward team.

What extremely nice behaviour from employers! After all, the tapering allowance is a personal taxation issue - not an employer responsibility. Hmm - not sure I fully agree. The wellbeing of all employees is a big deal now. Getting these planning issues sorted is an important financial hygiene factor for your workforce.

6 top tips to get the experience right for your higher earners:

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Start the exercise early.
Produce useful and simple guidance on the issues. Avoid huge detail - it turns the recipient off. You should never try to solve problems, instead aim to provoke focused contemplation.
Provide relevant information. The maths requires all income from all sources (including non-work income which is the individual’s responsibility to review).
Offer some workplace guidance and support. A one-to-one chat always goes down well. You can conduct these over the phone to accommodate the very busy diaries of this target group.
Have a conduit for this guidance to lead to advice. Typically paid for by the member, there should be no risk to the employer. The main advantage is the affected individuals could enjoy a discounted corporate advisory rate.
Ensure your workplace savings scheme has the option for non-pension savings. This allows those receiving ‘cash in lieu’ the opportunity to access other options, such as individual savings accounts (ISAs) and general investment accounts (GIAs), via the same platform and with a similar discount to the pension scheme. This is potentially a huge benefit but broadly under-used due to lack of awareness.

End result - higher earners (and typically senior ranking employees) are financially more content and less distracted by the spectre of nasty additional taxation! And no one has to eat any worms for breakfast.

The author is James Briggs, consultancy and wellbeing partner at Lorica.

This article is provided by Lorica.