Increased pension contribution vs pay rise

Treacle_Toes

Hello,

I hope you can offer some help.

My husband has been offered a pay rise. He said to his employer he'd rather have increased contributions into his workplace pension.

He earns £54k and his employer only recently started the work place pension at the end of last year and currently only puts in the minimum % that he has to, which is currently 1%.

My husband also has a private pension that he has been paying into for years at about £100 per month.

We know it's not much, which is why he enquired about an increase into his new pension rather than a pay rise as we believe it to be more tax efficient.

I think the pay rise would have been £2 - £5k per year.

Is there a maximum that his employer can contribute? We know that my husband's contributions will also increase.

Do you think that asking for an increase in pension vs a pay rise was a silly idea? We don't need the extra money each month and would prefer it to go to our future.

Is there anything else we should know/ask? It won't happen until after April.

Thanks for reading.

TT

PeacefulWaters

Taking the pay rise and shoving it into a pension yourself seems rather less complicated.

zagfles

No it's a good idea - you can point out to the employer that they'd be saving employer's NI for instance if he got a £2000 payrise, the employer would need to pay an extra £276 in employer's NI and your OH would pay an extra £40 in employee NI.

So instead of a £2000 payrise he could ask for £2200 into the pension and that would be cheaper for the employer.

Just be careful in case he gets any salary related payments, eg overtime, bonus, as a lower salary might result in lower payments of these things.

However - the rules might change completely in the budget in a couple of weeks...

Treacle_Toes

Thanks,

He doesn't ever get any other overtime/bonuses. The NI was not something we had considered.

TT