Salary Sacrifice contribution cap?

sterlingstash

For those of you who's firms allow you to make pension contributions via salary sacrifice - do they put a cap on the amount you put in (either absolute or a percentage) other than the requirement not to go below national minimum wage.

We have a 10% limit and I'm wondering if I could make the case to increase it, as with little in the way of employer contributions on top, this seems low for adequate retirement planning and may be discouraging sensible contribution levels.

GRM

No cap on our contributions and an employer contribution of 7%.

richbeth

OHs company allow 15% max, mine don't even do a pension yet :-(

MEM62

No limit at my company - in fact I see no reason for having one.

StephenM_2

No cap here. I pay 9% into a final salary scheme and am currently considering making additional contributions into a defined contributions scheme.

sterlingstash

MEM62 wrote: »

No limit at my company - in fact I see no reason for having one.

Yes, that would have been my view. However, I think the reasoning behind the limit was to minimize the risk of employees falling too heavily into the pitfalls of salary sacrifice eg maternity pay, NI contributions and other benefits like life assurance.

It is useful to hear that a cap isn;t the norm

StephenM_2

sterlingstash wrote: »

Yes, that would have been my view. However, I think the reasoning behind the limit was to minimize the risk of employees falling too heavily into the pitfalls of salary sacrifice eg maternity pay, NI contributions and other benefits like life assurance.

It is useful to hear that a cap this the norm

At my company, benefits like life assurance are based on the pre-salary sacrifice salary.

jamesd

Mine's half of pay. Might be individual exceptions, no harm to ask. It might be due to a worry that an employee could leave themselves short of income.

Life assurance shouldn't be a factor. That would normally be calculated on the scheme salary, the one before sacrifice.

Maternity can be strongly to the advantage of the employee because the employer is required to pay the full sacrifice amount into the pension, though the SMP would be lower than without sacrifice.

sterlingstash

jamesd wrote: »

Maternity can be strongly to the advantage of the employee because the employer is required to pay the full sacrifice amount into the pension, though the SMP would be lower than without sacrifice.

Ah, so it could be very costly for the company to offer uncapped contributions to everyone then. That might well be it!

jamesd

Yes. One trick that can be used is to start a large sacrifice just before taking maternity leave...

zagfles

sterlingstash wrote: »

For those of you who's firms allow you to make pension contributions via salary sacrifice - do they put a cap on the amount you put in (either absolute or a percentage) other than the requirement not to go below national minimum wage.

We have a 10% limit and I'm wondering if I could make the case to increase it, as with little in the way of employer contributions on top, this seems low for adequate retirement planning and may be discouraging sensible contribution levels.

Ours is NMW, or the NI LEL if lower for part-timers.