minimising 40% tax liability by pension contribution

jamesd

I've seen it before this.

The salary sacrifice pension schemes I've seen have been associated with flexible workplace benefits schemes and such schemes have many advantages for employers other than cost. One is that they let employees choose the best balance for themselves so they are likely to increase overall employee satisfaction and retention compared to spending the same amount of money on less flexible setups.

For an employer one advantage and potential cost saving of a salary sacrifice scheme is that there are limited opportunities to change selections, aside from the pension portion, due to HMRC requirements. That can reduce the total number of employee interactions and facilitate communications campaigns at set times as well as the required hours of such things as consulting or part time support for the system.

Employers routinely are out of pocket more than strictly required by law, this happens whenever they provide non-mandatory employee benefits, such as greater than the auto-enrolment minimum pension contributions.

rotarymazda

Spidernick wrote: »

JamesD,

It is highly unlikely that an employer will give the employee the full 13.8% Er NI saving - I've certainly never heard of that and what would be the incentive to the employer for opting for a Smart pension scheme if they did

My current employer and previous employer both passed on the full NI savings. (small companies ~30 employees).

When I discovered my effective marginal tax rate was 65%, I made use of salary sacrifice to keep income just below the child benefit withdrawal band.

When withdrawing pension, my effective marginal rate will be 15%. That is quite a saving.

nearlyrich

Spidernick wrote: »

I'm still not convinced. I did challenge him on this, but he hasn't replied on that specific element. My point was that the main benefit of Smart as opposed to standard employer pensions is the NI saving. I would imagine that Smart pensions cost more to administer (but may be wrong in that regard) hence my comment. An employer wouldn't be out of pocket voluntarily.

Sorry not seen that I do get the NI saving that my employer doesn't have to pay, they also pay their contribution based on my basic plus 50% of OTE even if I don't achieve target they still pay..

I have a spread sheet on my work PC that the pension manager sent to help me work out my best contribution strategy.


Oh and I am not a he ...