Is my company pension any good compared to others?

Rosey78

jamesd wrote: »

UEL means Upper Earnings Limit, a now-obsolete National Insurance term that was replaced a couple of years ago by the Upper Accrual Point, which has roughly the same meaning. It's the top limit on how much income you pay employee National Insurance on. It's roughly aligned with the start of the higher rate tax range.

It matters in this context because the NI saving is a significant part of what makes salary sacrifice attractive. When most of the NI saving stops, that's also the income level at which the company might lose a saving that is six times what the employee would save, if the employee made pension contributions to a different pension scheme instead.

Jamesd, so if I understand this right, this explains why they offer the extra 3% to encourage us to continue to pay into this scheme over and above a certain level? I.e they save on NI and we get the additional 3%?

jamesd

Correct. They are sacrificing 3% of their 13.8% to increase the chance of them getting the remaining 10.8%.

Otherwise the employee would save just 2% from salary sacrifice and that's not a sufficient reason to use a work pension if it has restricted investment choices or perhaps to accept the restrictions of salary sacrifice. This raises it to 5% and that's a bit more worthwhile and may be enough to persuade. Allowing transfers out to a personal pension is also useful so the employee and employer can get the NI saving then the employee can still move the money to get the better choices that may be available elsewhere.