Putting 90% of wages in pension to avoid CSA?

WYSPECIAL

Sorry Fission to add further to my query do you know what they consider as income for this?

For example my salary is quite modest (due to child care) so if they capped what I could pay into my pension scheme to a percentage of my salary it would be quite restrictive as I also receive CB and CTC for the children that live with me and CM from their Mother that she pays directly to me as a private agreement. Since they take the CTC into account for calculating what I should pay for the children that don't live with me presumably they would have to allow a % of that to be paid into a pension scheme too?

Fission

WYSPECIAL wrote: »

Are you aware of any precedents set as to % or amounts as obviously with these regulations each case would be an individual judgement call? I must admit I thought the Variation/Departure regulations were not law but were there to allow a more common sense interpretation of the actual child support acts to allow common sense and fairness into the equation.

Regulations are law. They are used as a way of providing detail for an Act.

I'm not aware of any specific precedents. As you say, the correct answer in any particular case is what seems reasonable to the person or body making the decision. Reasonable means reasonable in the circumstances, one of which is that there are children who need to be maintained and who may need a first call on a parents income rather than his disposing of large proportions of it in pension contributions. Pensions can wait (even if doing so isnt ideal). Children can't wait.

F

Fission

WYSPECIAL wrote: »

Sorry Fission to add further to my query do you know what they consider as income for this? For example my salary is quite modest (due to child care) so if they capped what I could pay into my pension scheme to a percentage of my salary it would be quite restrictive as I also receive CB and CTC for the children that live with me and CM from their Mother that she pays directly to me as a private agreement. Since they take the CTC into account for calculating what I should pay for the children that don't live with me presumably they would have to allow a % of that to be paid into a pension scheme too?

I don't understand how child care makes your salary modest. Do you mean that you can only work part-time?

All pension contributions are capped to a percentage of income in a sense. Most people can't pay anywhere near 50% into one because they need money to live on now. Someone in your apparent position with two or more children must need to retain a large chunk of income to live on in any case. AFAIK the income that is taken into account would be net salary and tax credits (not child benefit).

F

LunaLady

It might be legal but its definitely not moral!

nick01

WYSPECIAL wrote: »

Actually its perfectly legal and doesn't need to fool the CSA. He may be questioned as to how he is supporting himself and they may try to apply a variation for diversion of income but if he appeals he will win a tribunal.

If he then changes the amount he is under no obligation to report the change of circumstances unless asked. If his ex asks for a review he can then increase his contribututions again and ask for a review himself which they will legally be obliged to carry out.

One of the flaws in the system i'm afraid and if he wants he could actually up it to 100% up to a max of £50k per annum.

It's affording to live on whats left that prevents most people doing this.

Can someone please point to the CSA rule/clause number or to some official leaflet or CSA document that lists this 100% or upto £50k per annum contribution per annum rule?

WYSPECIAL

nick01 wrote: »

Can someone please point to the CSA rule/clause number or to some official leaflet or CSA document that lists this 100% or upto £50k per annum contribution per annum rule?

Thats the limits set by pension laws.

There doesn't seem to be any actual figures set in CSA rules. Fission has posted details about diversion of income but it is down to the PWC to ask for a variation and then would be open to appeal.

Ridiculously high figures are obviously going to look like diversion of income but what about the difference between 15% of income and 20% of income? Someone with no housing costs could argue that they could afford higher payments. Someone nearer to retirement might need to make higher payments to get a decent pension.

It seems a very grey area to me and no one seems to be able to show me any laws that actually quote a cap.

Fission

WYSPECIAL wrote: »

Ridiculously high figures are obviously going to look like diversion of income but what about the difference between 15% of income and 20% of income? Someone with no housing costs could argue that they could afford higher payments. Someone nearer to retirement might need to make higher payments to get a decent pension. It seems a very grey area to me and no one seems to be able to show me any laws that actually quote a cap.

To a certain extent you are right. It is a grey area. One of the relevant considerations is whether it is reasonable for an estranged parent to make generous provision for his or her own tomorrow where that means that no provision is made for his or her childrens today.

A parallel question might be what he/she would do if they had the children living with them. Would they really feel able to stick 90% or so of net income into a pension and let their resident children starve for lack of residual income which would have to be stretched over all expenditure? If they wouldnt why is it different if the child lives elsewhere?

13Kent

On CSA 1 only half pension contributions are considered, so if someone put 90% of their pay into a pension scheme the CSA would only consider take half that amount away from their assessable income.

WYSPECIAL

13Kent wrote: »

On CSA 1 only half pension contributions are considered, so if someone put 90% of their pay into a pension scheme the CSA would only consider take half that amount away from their assessable income.

True but on CS1 housing costs were taken into account. More people probably manipulated this than pension payments.

chall1964

buel wrote: »

Hi,
A friend of mine claims he can drastically reduce the amount of child maintenance he has to pay for his 3 children by a 'masterplan' of paying in around 90% of his wages into a private pension and claimed this was then 'protected income'. He is doing this as he is doing a lot of overtime so his wages are more than they have ever been.
Surely it's not that simple??

Your friend's 'masterplan' is not worth the wasted breath he's used to tell it.
But as 'He is doing this as he is doing a lot of overtime so his wages are more than they have ever been', should his ex request a reassessment, he could be paying more CS than he bargained for.

From April 09, a Variation or a Departure direction can be granted on the diversion of income ground.

When an application for a Variation or Departure direction is made the CSA should check the pensions contributions to see if they exceed 15% of the NRP's net income, or in the old scheme, their assessable income.
If the 15% is being breached, the caseworker can increase the maintenance liability.

There are certain exceptions where it would be accepted that around 20% of the NRP's net weekly income is paid into a pension scheme.

chall