Change in Pension

StephenM_2

You don't lose money. You gain money.

Suppose my salary was £30000 (its not, but its a nice round number) and my pension contributions were 5%. Then I'd pay £1500 pa in pension contributions.

If I don't do Salary Sacrifice this £1500 would would be liable to 10.4% National Insurance, which is £156 pa.

If I did do Salary Sacrifice they would effectively reduce my salary by £1500 and use that to pay the pension. But I'd no longer need to pay National Insurance on that £1500 so I'd be £156 pa better off.

How much better off you are depends on your salary, your pension contributions and whether the pension scheme is "contracted out" or not.

ste_coxy

StephenM wrote: »

You don't lose money. You gain money.

Suppose my salary was £30000 (its not, but its a nice round number) and my pension contributions were 5%. Then I'd pay £1500 pa in pension contributions.

If I don't do Salary Sacrifice this £1500 would would be liable to 10.4% National Insurance, which is £156 pa.

If I did do Salary Sacrifice they would effectively reduce my salary by £1500 and use that to pay the pension. But I'd no longer need to pay National Insurance on that £1500 so I'd be £156 pa better off.

How much better off you are depends on your salary, your pension contributions and whether the pension scheme is "contracted out" or not.

Would you recommend doing this even though I might not be with the company in say 18 months time as I am barely making ends meet now and have just had to get a 2nd job recently.

Also what is contracted out? Sorry for the Spanish Inquisition.:)