Setting up salary sacrifice pension

hyposmurf

My employer offers a salary sacrifice pension.They will put all their NI savings back into ta salary sacrifice pension. Spoken to a financial adviser who is related to my employer.They will charge me hundreds just to set the salary sacrifice pension up, but said I could also set it up myself.Think my employer isn't that familiar with setting this up, so would like to help try to set this up and providing enough info for my employer to make the set up for them easier..My current pension that I fund is a personal stakeholder pension.So I'm looking to go now take advantage of th salary sacrifice pension on offer.

How do I go about setting this up?Obviously my employer would also need to set their payroll up for this to.

Things I can imagine would be:
Check that my current pension allows contributions from salary sacrifice
Calculating the contributions from employer/employe etc
Provide pension details to my employer
Employer sets up payroll or my salary sacrifice

Is there also application paperwork involved?What else is involved?

xylophone

http://www.hmrc.gov.uk/specialist/salary_sacrifice.htm
http://www.out-law.com/page-10285
https://www.pensionsadvisoryservice.org.uk/saving-into-a-pension/salary-sacrifice
http://www.scottishwidows.co.uk/Extranet/Literature/Doc/FP0084

Lokolo

Not sure how you actually go about setting it up but my employer will pay my salary sacrifice (+ employer contributions) into a Hargreaves Lansdown SIPP.

If you have a personal stakeholder pension currently, I would find out from the HR department what they require for the contributions to be paid into it.

hyposmurf

Thanks Lokolo I realise that I don't actually set it up myself, but want to have as much information ready for my employer to make it so easy for them they don't come back to me and say go through our financial adviser.

dunstonh

If you have a stakeholder pension, it may actually be cheaper by a long way to use the financial adviser.

hyposmurf

Just contacted my pension provider and they send me a form for my employer to fill out and require a company headed letter stating I will be forgoing salary for salary sacrifice.Seems to be relatively simple.

hyposmurf

dunstonh wrote: »

If you have a stakeholder pension, it may actually be cheaper by a long way to use the financial adviser.

Hi dunstonh, why would it be cheaper?I'm not after financial advice at the moment, just want to have he salary sacrifice pension scheme set up.

dunstonh

hyposmurf wrote: »

Hi dunstonh, why would it be cheaper?I'm not after financial advice at the moment, just want to have he salary sacrifice pension scheme set up.

A stakeholder pension includes the cost of advice. Often whether you have it or not. The adviser can set up pensions with an annual cost as low as 0.4%. A stakeholder pension can be 1.5% for first 10 years and then 1% thereafter.

Stakeholders are largely out-of-date now and suitable for a niche market.

To put it in context, I did a pension this week on transactional basis (initial fee only) and the pension I recommended with the fee deducted from the pension, was cheaper than the stakeholder within 2 years and £23,000 cheaper over the term of the pension.

You could be looking to save a couple of hundred quid now but end up costing yourself tens of thousands over the term.

hyposmurf

OK thanks for the info.That's well worth considering dunstonh. What worries me is that I'd go to a FA they could either say yes your current pension seems fine or offer me a similar pension and I'd have paid money for the advice with no financial gain to my pension. The FA was charging £200 to set the salary sacrifice pension up and £600 to set up & for financial advice on my pension. I currently have a L&G UK Equity Index Fund stakeholder pension.Current annual charge is at 1% and then goes down after £25000.

dunstonh

What worries me is that I'd go to a FA they could either say yes your current pension seems fine or offer me a similar pension

They cant offer you a similar pension as stakeholder is not compliant with the RDR (rules changes in Jan 2013).

The FA was charging £200 to set the salary sacrifice pension up and £600 to set up & for financial advice on my pension. I currently have a L&G UK Equity Index Fund stakeholder pension.Current annual charge is at 1% and then goes down after £25000.

In which case, unless you are within about 4 years of retirement, then using that FA would be the cheaper option than DIY into that stakeholder.

hyposmurf

dunstonh wrote: »

They cant offer you a similar pension as stakeholder is not compliant with the RDR (rules changes in Jan 2013).



In which case, unless you are within about 4 years of retirement, then using that FA would be the cheaper option than DIY into that stakeholder.

I meant they could offer me another pension with similar charges/performance, so no change for my pension at retirement and down for the cost of the advice.
Dunstonh how do you know that the FA would be able to offer me a better deal, than the stakeholder I currently have?Is it a case that my current stakeholder (or stake holders in general) isn't/aren't that great and there are a number of better products on the market?Are you able to at least tell me what other types of pension products might be better?Or how they compare on average with their charges?This is just to give me an idea of whether it would be worth going to a FA?
The only reason I'm questioning your responses is that I want to get a better understanding myself, not intending in the slightest to sound confrontational. I've got 27 years until retirement and over £14K in my pension. Was focusing my finances on purchasing a property earlier on and now want to start to focus more on my pension and making regular contributions to ISA funds. Thanks for your responses so far.