Reduced Nat Ins contributions

Shelle

My employer has advised me that they propose to reduce our nat ins contributions in order to fund their increased pension scheme contributions. They state that my existing pension benefits will remain and will actually increase my net take home pay.

Whilst I have not yet received the full details about this, I am concerned that this will in fact reduce my state pension by reducing the amount of nat ins I pay from my salary.

Should I be concerned? Only those who are in the pension scheme (not a very good one I might add as they only contribute 1% regardless of how much I put in) have been told this, so I am presuming that those not in the pension scheme do not get their nat ins reduced (and also do not get increased take home pay)???

I am trying to ensure that I am saving sufficiently. I have one pension frozen after being made redundant, and then the current one (only 18 months old).

Any thoughts?

LittleVoice

The reduction in NI comes from being contracted (out of the second state pension).

It is not only your, the employee's, NI contribution which is reduced but also the employer's. Are they increasing their contribution or is it just an attempt to save their costs, do you think?

Shelle

They have said that they want to do it to fund their increased costs in pension contributions.

Am supposed to be getting an info pack next week. Just wanted a head start as to whether this is legal and whether I would lose out significantly.

EdInvestor

This sounds like salary sacrifice.Check the thread at the top of this forum for more details.It will affect your state pension is this is what it is.

Shelle

I am not sure if it is salary sacrifice? My pay is increasing so does that mean it isnt salary sacrifice? Got a bit bamboozled reading the stuff on that thread!

Think I need to wait until I get all the paper stuff throough and then will get back to this forum!