Pension planning in early 40s - DB scheme changes

Southend1

My employer won't allow salary sacrifice on additional contributions above the match to investment builder


When I asked about it they said it isn't allowed because the employer isn't contributing? Presumably they are wrong if others do allow it.


Anyway I was paying +10% additional to investment builder but have now switched this contribution to a LISA as I understand it will work out better for me due to withdrawals being tax free.

MPLMPL

My employer won't allow salary sacrifice on additional contributions above the match to investment builder

From our local 'rules': "for employees who opt to pay the additional matched 1% contribution this will be automatically adjusted for salary sacrifice. However, under USS rules, any further contributions you make into the Investment Builder above the initial 1% match will only be subject to salary sacrifice if you request this."
From the USS guide to investing in the investment builder: "If your employer operates a salary sacrifice arrangement for standard pension contributions, it means that your employer pays your normal pension contribution for you. This is also available for additional contributions to the USS Investment Builder. "
My NI deduction is calculated on my gross pay after all the smart pension contributions have been deducted (8% DB, 1% match to IB, 24% additional to IB) plus childcare voucher. Hopefully it is not my employer that has misinterpreted the rules!

kidmugsy

Southend1 wrote: »

have now switched this contribution to a LISA as I understand it will work out better for me due to withdrawals being tax free.

Our OP is over 40 so unless she already has a LISA open it's too late for her.

I suspect that in general commenters here rather underestimate the attractions of a LISA for someone who has no access to sal sac nor to further accompanying employer contributions, pays basic rate tax now, and expects to pay basic rate tax in retirement.

They might also be attractive to someone who is limited in pension contributions by the tapered annual allowance.