Aviva CEO Dame Amanda Blanc has issued a warning to Labour MP Rachel Reeves, cautioning against her proposal to cap salary sacrifice tax benefits to £2,000 a year. In an interview with the Financial Times, Blanc expressed concerns that this move would not only penalise employers, but also raise National Insurance (NI) costs and discourage pension saving. Despite these concerns, Aviva has posted strong Q3 results, showcasing their resilience and ability to weather any potential challenges.
Reeves, who is the Shadow Chancellor of the Exchequer, has proposed this cap as part of her plan to fund a £75 billion National Care Service. The aim is to use the money saved from this cap to help fund the care service, which would provide free personal care for over 65s and cap lifetime social care costs at £100,000. However, Blanc argues that this proposal would have negative repercussions for both employers and employees.
According to Blanc, the proposed cap would penalise employers who offer salary sacrifice schemes to their employees. These schemes allow employees to give up a portion of their salary in exchange for non-cash benefits, such as pension contributions, childcare vouchers, or cycle-to-work schemes. This not only helps employees save on tax and NI contributions, but also allows employers to offer attractive benefits without incurring additional costs. A cap on these benefits would discourage employers from offering such schemes, ultimately affecting their ability to attract and retain top talent.
Moreover, Blanc argues that the proposed cap would also result in an increase in NI costs for both employers and employees. This would be a double blow for employers, who are already facing financial strain due to the ongoing pandemic. It would also mean that employees would have less take-home pay, making it harder for them to save for their retirement. This goes against the government’s efforts to encourage pension saving and would have a detrimental effect on the financial well-being of individuals in the long run.
Despite these concerns, Aviva has managed to post strong Q3 results, showcasing their resilience and ability to navigate through challenging times. The insurance giant reported a 2% increase in operating profit, with its general insurance business seeing a 9% rise in operating profit. This is a testament to the company’s strong leadership and strategic decision-making, which has enabled them to adapt and thrive in the face of adversity.
Blanc also highlighted that Aviva’s success is not just limited to financial performance, but also in their commitment to responsible business practices. The company has set ambitious targets to achieve net-zero carbon emissions by 2040, as well as increasing the representation of women in senior leadership roles to 40% by 2023. These efforts have been recognized by various organizations, with Aviva being named the Most Sustainable Insurer in the World by the Dow Jones Sustainability Index.
In light of these achievements, Blanc urges the government to reconsider the proposed cap on salary sacrifice tax benefits. She believes that this move would be “bad news” for Britain, as it would hinder the country’s economic recovery and discourage responsible business practices. Instead, she suggests that the government should focus on creating a supportive environment for businesses to thrive and continue to contribute to the growth of the economy.
In conclusion, Aviva CEO Dame Amanda Blanc’s warning to Rachel Reeves serves as a reminder of the potential consequences of the proposed cap on salary sacrifice tax benefits. While the intention behind the proposal may be noble, it is important to consider the impact it would have on businesses and individuals. Aviva’s strong Q3 results and commitment to responsible business practices are a testament to their resilience and ability to navigate through challenges. As we continue to recover from the pandemic, it is crucial for the government to work together with businesses to create a sustainable and prosperous future for all.
