Company work pension and SIPP

Mickygg

Hi all

I am your typical pay into work pension guy and not look at it, until now. I am indentifying new funds for new contributions. The issue I have is that Aegon charges are ridiculous. A typical Braille Gifford or JPM costs up to 2% annual charge.

I would like to create a SIPP throug HL but it appears they only accept pension when deducted from net salary and not salary sacrifice.

I am going to up my salary sacrifice so does anyone know any pension SIPP that will allow me to have my employer pay all my pension into including salary sacrifice? I don't want to do a tax return.

Thanks

AlanP_2

You are asking the wrong question I think; and the wrong people.

You need to ask your employer if they will pay for the setting up and administration of a one off scheme for you and pay their contributions in for you.

Salary sacrifice contributions are employer not employee whereas a SIPP is Self Invested. Some SIPP providers e.g. Cavendish / Fidelity accept employer contributions and I doubt if they care whether salary sacrifice has been used or not.

Most employers won't be interested in changing providers or setting up bespoke arrangements for each member of staff.

Mickygg

Hi Alan

Thanks for your reply

My employer has confirmed they are happy to pay by dd to any pension provider but it needs to be total including SS. One of the Directors I know does this but I don't want to ask them about.

From what you are saying is it only employers pension that can accept pension payment including SS?

cloud_dog

Mickygg wrote: »

From what you are saying is it only employers pension that can accept pension payment including SS?

Hi

You are still a little confused over the process, or at least the terminology.

Deductions for pension contributions under a SS arrangement will affect your take home pay, in a positive way. The reason SS is beneficial to you is that (assuming you are a HRT) you will save an additional 2% deduction from your salary that would normally go in to your NI deductions. If you are a LRT payer then the NI reduction is even more positive (12%, I believe).

SS does not increase the amount that goes in to a pension it reduces the nett cost of your contribution. So, if you are a HRT for example, a £250 payment in to your pension (via SS) would only reduce your take home pay by approx £150. If LRT the reduction in take home pay would be approx £175.

You can make even larger savings on the NI component if you sacrifice within a single (or multiple single) months, as opposed to monthly. The reason for this is that NI calculations are made based on the payment being received whilst tax is based on a whole year projection. You cannot sacrifice more than the minimum wage.

Mickygg

Thanks cloud dog for the explanation.

Yes I see exactly what you mean, I was not explaining myself well at all!

So what I really need to know is are there any SIPPS that allow employer and employee gross pension amounts paid into them directly from the employer?
HL lets it be paid but only on a net basis where they will claim 20% tax relief through Hmrc and then remaining 20% as I'm HR tax payer through tax return. I don't want to do a tax return.

Thanks

NoMore

Mickygg wrote: »

HL lets it be paid but only on a net basis where they will claim 20% tax relief through Hmrc and then remaining 20% as I'm HR tax payer through tax return. I don't want to do a tax return.

Thanks

Separate to your original enquiry, but it does not necessarily involve a tax return, I just did an online chat with the tax office about my personal contributions to my Sipp and they adjusted my tax code to give me my 20% HRT back. The 20% LRT is credited directly to the SiPP itself.

MallyGirl

An alternative approach might be to see if your company pension will allow a partial transfer out. So you leave things as they are with all the benefits of SS and then periodically transfer the bulk of the company pension to a SIPP

LHW99

II has allowed me to pay (Ltd) company subscriptions in to my SIPP as well as personal, there was a separate section on their form to tell them what type it was.
Not sure (yet) if that's still the case, now they've taken over TD.
If you are considering them, look at some of the threads on here. The customer service can be problematic particulaly if you are trying to transfer.
That said, I haven't had a problem over the transfer, but I have not paid in / drawn out / transferred or contacted them during the changeover.

cloud_dog

LHW99 wrote: »

II has allowed me to pay (Ltd) company subscriptions in to my SIPP as well as personal, there was a separate section on their form to tell them what type it was.
Not sure (yet) if that's still the case, now they've taken over TD.
If you are considering them, look at some of the threads on here. The customer service can be problematic particulaly if you are trying to transfer.
That said, I haven't had a problem over the transfer, but I have not paid in / drawn out / transferred or contacted them during the changeover.

Just for info, OP, I have gone through a process of opening up a SIPP account with both YouInvest and Fidelity and on both occurrences I had to confirm if it was a personal, company, or I think there was the LTD company option as well (not sure if the last two are any different tbh).

redpete

Mickygg wrote: »

HL lets it be paid but only on a net basis where they will claim 20% tax relief through Hmrc and then remaining 20% as I'm HR tax payer through tax return.
Thanks

Not true, I have a SIPP with HL that is funded from pre-tax contributions from my salary directly transferred from my employer.

I don't know how my employer arranged this with HL but it can obviously be done.

BTW, I would be surprised if HL charges are cheaper than Aegon.

Mickygg

Thanks everyone for all your responses. All very helpful.

No more - I will contact Hmrc and see, thanks
Mallygirl - ooh yes I'll find this out.
Redpete - based on this I will call HL again as that sounds exactly what I would like! In terms of the charges HL seem considerably cheaper.
The annual fund charges are all under 1% but Aegon the equivalent are 2% or more. Aegons own funds are around 1% but seeing as my current Aegon fund has not grown much I want to stick to those I have been able to review and be happier with.
I hear it is down to the employer to agree favourable rates for company schemes but that certainly hasn't happened with my work company.

Thanks again