NHS 2015 scheme and impact on salary sacrifice

resilie

I've been trying to work out the impact of a salary sacrifice that takes you from just over the Tier 4/5 threshold of pension contributions into the CARE NHS 2015 scheme to just under. In tier 4 you pay 9.5% of your salary and in tier 5 12.5%. Cut off point is 47kish.
Am I right to think that as this scheme is based on career average earnings and not actually on how much you pay in as a % that you would be better off if you earned 46999 than 47001 as your annual % contribution would be significantly lower but the income counted is still 47k (+/- a pound). Or am I interpreting this completely wrong?

Thank you for your help in advance

OldBeanz

I may be wrong but any Government salary sacrifice scheme that I know of while showing your pay as having diminished does not alter the NI you have to pay or effect the your salary based pension calculations. I would be very surprised if you could salary sacrifice to a lower pension contribution rate.

janed9388

This is my understanding of it, my child care sacrifice vouchers keep me under the 12.5% limit so I pay the lower pension percentage. I know a few people who have bought 1 days extra leave to take them under the limit and that works too.

crv1963

resilie wrote: »

Am I right to think that as this scheme is based on career average earnings and not actually on how much you pay in as a % that you would be better off if you earned 46999 than 47001 as your annual % contribution would be significantly lower but the income counted is still 47k (+/- a pound). Or am I interpreting this completely wrong?

Thank you for your help in advance

My understanding of the 2015 scheme is that you are correct- the pension at point of taking it is based on % of the annual salaries each year contributed from hence the warnings we have had to be careful about salary sacrifice for lease cars etc as these will have an impact of final pension received but in your case this may work in your favour.

resilie

Thank you all - yes it's a childcare voucher sacrifice and I am currently trying to work out if we would be better off continuing with it or switching to the Tax Free Childcare account where you pay in money (received after all deductions through PAYE) and the gov tops it up by 20%. On the face of it that would work out better for us but once you take into account the increase of pension contributions it's not that clear anymore...quite a few variables to consider there...