Salary Sacrifice??

DavidLaGuardia

KiNeL wrote: »

It's a one way deal, once it's sacrificed it's gone for good, you can't change your mind and get it back in your pay packet.

Says who? I wouldn't accept this crap from an employer

KiNeL wrote: »

Also it can affect your borrowing ability because your salary is now lower than it was.

True in theory, but retain a record to overcome this with most lenders.

jonathon_hart

Nothing to do with your employer. Once money is invested into a pension then the only way you can get it out is to retire or if you leave with less than 2 years service

DavidLaGuardia

jonathon_hart wrote: »

Nothing to do with your employer. Once money is invested into a pension then the only way you can get it out is to retire or if you leave with less than 2 years service

Fair comment. I read the post as if you could not reverse the situation for ongoing income.

Not being able to access your pension is true if you have put it from your net pay, so it is not per se, a disadavantage of salary sacrifice that is created to enhance the money chosen (at a given time) to be put into a pension.

brucie24

My company has just 'offered' SS but I am a cynic at heart and would no sooner trust my employer as jump into a bonfire.:rolleyes:

The reason I am concerned is the following:

1. The details of the scheme were sent out the end of the week before Christmas.

2. The deadline for opting out is 31st Jan.

3. The form for Opting Out (which has to be sent by snail mail) is buried somewhere on the companies internal website (intranet).

4. You have to opt out on a yearly basis.

This all smacks of 'burying bad news', something my esteemed employer is very good at.

It's trumpeting the fact the Unions have agreed the deal (that counts for nought in my book based on recent historical decisions/recommendations).

No extra money is being put into the scheme nor benefits enhanced etc so it's a purely MS exercise and from what I understand very much in the employers pockets rather than employee's.

I am also concerned that it would appear to turn the scheme into a 'non-contributory' one and I have been told this is much easier to close than a 'contributory' one.

Now I realise how paranoid this post appears but it is totally born of past experience so any facts would be welcome.

teeceee

LittleWoman wrote: »

I know a lot of people who use Salary sacrifice to put thier bonuses into their pensions. Bonuses tend to be purely financial (no extra benefits to lose, which are normally only based on Basic salary).

If the things that can effect the level of salary are not important or do not apply, then its a great way of adding to your pension. But as the previous posts mention - if there are others factors which do effect you and put you at a disadvantage then its not so great - but something to help you to decide - your employer will also save the Employers NIC contribution (12.8%) so perhaps you should ask them to add that or part of it to your pension contribution!

Am I taken to understand then that I can pay say £10k bonus payment as salary sacrifice into my pension scheme and it won't be taxed or NI'd so in reality my contribution will be the whole £10k + 12.8% company NIC (if they agree) + the bit I don't see of tax relief gross up @ 22% plus 18% as I'm a 40% tax payer? and as this isn't part of my regular salary I can simply authorise this with no worries about HMRC?
Many thanks

Grumpy_Old_Duffer

Can a bonus, paid annually, be part of Salary Sacrifice. i.e. I'm expecting about £3.5k - £5k bonus to be paid mid-year. Previous years it's been a nice-to-have extra as I haven't really been in need of the lump sum, so it's been taxable income at 40%. If I ask my employer to put it into my pension I assume it will be free from Income Tax & NI.

fimonkey

Hmm my employer claims it has a 'salary sacrifice' scheme, but it doesn't sound like these schemes. Basically I work for a private educational establishment and the board of governers have decreed that the employer should only contribute 5% to ANY pension.

I have the option of joining the Teachers Scheme, where employer contributions should be 14.1%, but as they won't pay more than 5% then that means I would have to make up THEIR portion of the contributions and take a 'salary sacrifice' of 9.1%. this is in addition to MY contribution which is set at 6.1%

Essentially this means my salary is reduced by 9.1%, this reduced figure is what's used to work out my final salary benefits, and also for any banks if I want to get a mortgage etc...

I earn 30K, I am a basic rate tax payer.. so I can't see any tax benefits and it doens't seem to fit in with the 'salary sacrifice' schemes mentioned above....

Anyone ever heard of this and is it allowed??

Cheers

Retired_I.F.A.

Thought I'd post this in this sticky thread as it'll be useful for anyone not just fimonkey who I found it for.

http://www.adviserzone.com/calculators/salarysacrifice.php

Peter167

Hi, I ran the calculator. What minimum contribution do I need to pay enough NI for the state pension contribution?

Thanks.

Retired_I.F.A.

Peter 167... see:
http://www.direct.gov.uk/en/MoneyTaxAndBenefits/PensionsAndRetirement/StatePension/DG_10014671