Salary Sacrifice??

Frozenace

I'm gonna opt out of the mandatory pension thing when it comes along and get out of the UK.

Dick_here

Frozenace wrote: »

I'm gonna opt out of the mandatory pension thing

Oxymoron alert.

Paul_Herring

!!!!!!_here wrote: »

Oxymoron alert.

Hardly - it's just wrong, in that it won't be mandatory, hence the reason it can be opted-out of.

pensionpot_3

If I am just over the Higher rate tax threshold and I intend to sacrifice 15% - 20% of my salary, can that drop me into the basic rate area and thereby reduce the value of my contributions?

jonathon_hart

If you are making the contributions to a company pension plan then no, as the contributions are not grossed up in a company pension plan - it simply reduces the tax you pay.

Purple_Peril

My employer has just introduced a "salary exchange" scheme for pension contributions (it was already in operation for the workplace nursery and childcare vouchers - but they don't affect me).

They explain that the scheme will not the final pension as it will be based on what they call the "reference salary" - i.e. the salary before these contributions are taken into consideration. They also state that the reference salary will be the amount used in letters in relation to mortgages, loans or job references.

At the moment they are only offering this in relation to standard pension contributions - I hope they offer it for AVCs as well, then I would save some money!

pensionpot_3

Thanks Jonathon.
Its called a Group Personal Pension Plan. Is that Company or Personal?

The company is fairly large electronics company who are contributing 10% (from the NI savings).

Adviser21

pensionpot wrote: »

Thanks Jonathon.
Its called a Group Personal Pension Plan. Is that Company or Personal?

The company is fairly large electronics company who are contributing 10% (from the NI savings).

A Group Personal Pension [GPP] is NOT a Company Pension Scheme in the legal sense. A GPP is a collection of Personal Pensions which your employer offers you membership of in order to kept it simple. There are benefits in admin for them and benefits for you. The GPP offers you your own pension contract with the pension provider [usually an insurance company]; if you leave your current employer you will usually have the option of continuing personal contribuitions from your own bank account by setting up a direct debit.

If you sacrifice salary and you pay less tax, the tax relief will be less by which I mean you can only claim 40% relief if you have paid 40% tax. However the pension contribution retains the same value.

One thing to check with salary sacrifice is the impact it can have on other benefits. I notice that state benefits have been mentioned in this thread; one other area to consider is other benefits your employer may offer. Check with them that they continue to use your previous salary [before sacrice] for death in service life cover or income protection schemes they may offer.

As everone has different circumsatnces I would ask your employer if they can put you in touch with the pension schemes advisers to get advice on if/how salary sacrifice will benefit you.

pensionpot_3

Thanks

I understand, the other factors you mention are not important in my case.

chigham

Help!!

If I were to take a salary sacrifice on bonus payments would the payment have to be made to the company pension scheme or could the payment be made directly into my private pension scheme?

I currently make no contributions through my payroll to my private pension scheme (it was setup through an old employer). Would the payment just go through the payroll of my new company or does the company just send payment directly?

Thanks!