Is salary sacrifice worth it for pension scheme?

xylophone

As others have observed, many employers will provide "preserved salary" figure when asked, which is unaffected by the various forms of salary sacrifice which exist.

https://www.york.ac.uk/admin/hr/resources/forms/rewards_extra/rewards_extra_faqs.pdf

The OP should ask his employer for a booklet like the one above from University of York?

Thrugelmir

Lokolo wrote: »

Same can be said for DB pensions in the public sector, but I can't see them going anytime soon.

Maybe not. Though the schemes have gone/are undergoing fundamental change. Not least that contribution rates have been increased.

Southend1

Are you on a permanent contract? How long are you planning to stay in the sector?

If you salary sacrifice and leave uss within 2 years, my understanding is that you will leave with nothing as the service is too short to defer the pension but you haven't contributed anything yourself to qualify for a refund of contributions because the employer makes all the pension contributions.

Perhaps someone more knowledgeable can confirm whether I am correct?

xylophone

If you salary sacrifice and leave uss within 2 years,

See link in my post above which covers such points as reference salary/ early leaving etc. (Nos 22 and 23)

FatherAbraham

kidmugsy wrote: »

Use salary sacrifice while it's still available. It's an absurd charge on the taxpayer which surely ought to be abolished on public interest grounds.

No it isn't. Indeed, it is absurd that normal (non-salary-exchange) pension contributions aren't deductible from National Insurance calculations.

In any case, explicit salary sacrifice is the same thing as the implicit salary sacrifice enjoyed by civil servants, teachers and other state employees, who receive large, undefined contributions to the their pension benefits from their employers. If salary sacrifice is to be stopped for private-sector employees in defined-contribution schemes, then it must, for fairness sake, also be stopped for public-sector employees in defined-benefit schemes.

Why should some employer contributions be sacrosanct, and protected from National Insurance levies, while others are not?

Warmest regards,
FA

FatherAbraham

Southend1 wrote: »

Are you on a permanent contract? How long are you planning to stay in the sector?

If you salary sacrifice and leave uss within 2 years, my understanding is that you will leave with nothing as the service is too short to defer the pension but you haven't contributed anything yourself to qualify for a refund of contributions because the employer makes all the pension contributions.

Perhaps someone more knowledgeable can confirm whether I am correct?

Perhaps you could've bothered to do the research before posting scare-mongering rumours?

Warmest regards,
FA

FatherAbraham

kissinger wrote: »

As I'm just getting started in the job and have quite a few outgoings, I was thinking about taking this up, but I wondered what the downsides might be.

Salary exchange (-sacrifice) involves a contractual modification. In order to be accepted as genuine by HMRC, there are usually restrictions on how often one may change the contract -- sometimes just once a year, unless a "life-event" occurs (things such as death of a spouse, or a spouse's redundancy).

This means that salary-exchange arrangements tend to be less flexible than non-salex contrib arrangements -- the employer has less statutory flexibility for you to drop out of the scheme -- or for you to increase contribs -- than otherwise.

This loss of flexibility should be considered.

Warmest regards,
FA

arbster

FatherAbraham wrote: »

In order to be accepted as genuine by HMRC, there are usually restrictions on how often one may change the contract -- sometimes just once a year, unless a "life-event" occurs (things such as death of a spouse, or a spouse's redundancy).

Indeed. In my company scheme I can increase my contributions as often as I want, but can only reduce them once per year, unless I have a "life event". So, make sure you are comfortable contributing at the same level for the rest of the tax year before committing, as it'd be a shame to have to get divorced simply to be able to reduce your pension contributions...

kidmugsy

FatherAbraham wrote: »

If salary sacrifice is to be stopped for private-sector employees in defined-contribution schemes, then it must, for fairness sake, also be stopped for public-sector employees in defined-benefit schemes.

Well of course. Government employees should be shifted to Nest.

Southend1

FatherAbraham wrote: »

Perhaps you could've bothered to do the research before posting scare-mongering rumours?

Warmest regards,
FA

Perhaps you could recognise that not everyone is as knowledgeable as yourself on this subject and actually provide useful answers before making condescending but otherwise pointless posts?