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  • FIRST POST
    • MickT12
    • By MickT12 16th Oct 16, 12:36 PM
    • 4Posts
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    MickT12
    Should I take salary sacrifice or am I missing something?
    • #1
    • 16th Oct 16, 12:36 PM
    Should I take salary sacrifice or am I missing something? 16th Oct 16 at 12:36 PM
    Hi, this is my first post on the forum and I wondered if I could trouble you for your views please..

    My company car is due to be replaced and my employer has given me the option of salary sacrifice to a pension instead of the car. I am thinking that this makes sense but wondered if my logic is correct. My Company will increase my salary by £5,000 (plus their NI) and I will sacrifice this; they say this will give me around £5,880 in to my pension. My company car has a taxable value of around £8,000 and I pay around £140 tax per month.

    My logic: I give up the company car. This will save me £140 per month tax. I go with the pension which will receive just under £18,000 over the 3 years. I buy a second hand car for around £10,000 or look at a private lease plan. I would need to open a new pension plan (oh no that will be another big decision who to go with!) as I have a couple of old policies that I stopped paying and they will not accept any further contributions (value:30K: offered 50K to transfer out).

    It looks like I should go with the pension but have I got this correct or am I missing something? If it is relevant, I am 51 years old, I have paid the mortgage off and I have some cash savings, but I urgently need to consider my options for future retirement. Thank you so much for your views.
Page 1
    • Linton
    • By Linton 16th Oct 16, 1:06 PM
    • 6,957 Posts
    • 6,550 Thanks
    Linton
    • #2
    • 16th Oct 16, 1:06 PM
    • #2
    • 16th Oct 16, 1:06 PM
    Looks like a good deal to me with no pitfalls. Note that strictly speaking the company isnt increasing your salary, but rather increasing their employer's contribution to your pension. This isnt regarded as part of your salary.
    • kidmugsy
    • By kidmugsy 16th Oct 16, 4:58 PM
    • 8,503 Posts
    • 5,475 Thanks
    kidmugsy
    • #3
    • 16th Oct 16, 4:58 PM
    • #3
    • 16th Oct 16, 4:58 PM
    Your plan sounds sensible to me.

    But what does this remark mean?
    I have a couple of old policies ... (value:30K: offered 50K to transfer out).
    Originally posted by MickT12
    • MickT12
    • By MickT12 16th Oct 16, 5:14 PM
    • 4 Posts
    • 0 Thanks
    MickT12
    • #4
    • 16th Oct 16, 5:14 PM
    • #4
    • 16th Oct 16, 5:14 PM
    Your plan sounds sensible to me.

    But what does this remark mean?
    Originally posted by kidmugsy
    Thanks for the info. I have a couple of existing pension policies with Royal London that I stopped paying into around 10 years ago. Royal London say that I cannot make any further contributions to these and I would need to open a new policy if I want to start making payments again. The value of these is currently around £30k but they say the value would be around £50K if I wanted to transfer them to a new policy,
    • bigadaj
    • By bigadaj 16th Oct 16, 6:02 PM
    • 7,855 Posts
    • 4,795 Thanks
    bigadaj
    • #5
    • 16th Oct 16, 6:02 PM
    • #5
    • 16th Oct 16, 6:02 PM
    Thanks for the info. I have a couple of existing pension policies with Royal London that I stopped paying into around 10 years ago. Royal London say that I cannot make any further contributions to these and I would need to open a new policy if I want to start making payments again. The value of these is currently around £30k but they say the value would be around £50K if I wanted to transfer them to a new policy,
    Originally posted by MickT12
    Sounds like they may have guarantees so be very careful before transferring or doing anything else with them.

    Apart from defined benefit and those with guarantees then newer pensions are generally better as they are more flexible and should have lower charges.

    You can have as many pensions as you want and there is huge choice in providers.
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