Salary Sacrifice good or not.

bhjm

LilElvis wrote: »

Speak to whoever administers your company scheme and ask them to explain it to you.

how helpful !

LilElvis

bhjm wrote: »

how helpful !

As a former pension scheme administrator I was always more than happy to explain things to staff who didn't understand how it was operated and the tax implications. Some schemes will also have rules governing with what frequency employees can change their contributions.

ReadingTim

bhjm wrote: »

how helpful !

You'd be surprised at the number of people on this site who think of asking a completely random bunch of [STRIKE]loonies[/STRIKE] strangers off an internet forum before asking the actual provider of the product or service concerned....

Manxman_in_exile

bhjm wrote: »

how helpful !

My first job in the NHS was as a temporary superannuation clerk. Later in my NHS career staff would often ask me pension questions because they were aware that I knew more than most other people.


I always advised them to speak to the pension scheme administrator (or in our case, pension scheme liaison officer).


It's the most useful advice you've had here (with due respect to other posters)

bhjm

ReadingTim wrote: »

The only question for the employee/OP is whether they believe that entirely legal tax avoidance measures such as salary sacrifice, or (for example) having an ISA is morally right, given they are avoiding paying tax, which is used to pay for schools, hospitals, unemployment benefits etc.

to use a from the Gov promoted system/way to reduce your tax is morally right

bhjm

LilElvis wrote: »

As a former pension scheme administrator I was always more than happy to explain things to staff who didn't understand how it was operated and the tax implications. Some schemes will also have rules governing with what frequency employees can change their contributions.

our HR department isn`t locally anymore and they are not that approachable as they should

Kynthia

There are three methods of contributing to a workplace pension.

1. Salary sacrifice. Your salary is reduced and your employer pays the extra into your pension scheme. This saves you the tax and the NI you would have paid on the amount you sacrificed.

2. Gross tax basis. Your deductions are made before tax but after NI is calculated. As with salary sacrifice there is no need for the pension scheme to add back the tax relief as no tax was deducted from your contribution. You still end up with more in the pension than would have been in your take-home pay.

3. Net tax basis/relief at source. This is where the contributions are taken after tax and NI are deducted. The scheme will then claim back the basic 20% tax relief. If you are a higher rate tax payer you will need to claim back the 20% higher rate relief direct from the HMRC. This method is similar to how contributions to private pension schemes work as long as you stick within the allowed limits.

Method 1 saves taxpayers the most. If you don't earn enough to pay tax then method 3 results in the most going into your pension. You don't usually get to choose what method your employer uses but it is handy to know. It can help you decide whether any additional contributions, over the minimum needed to get the employers contributions, would be better off in a private pension rather than in your employers scheme or to know whether you should be claiming the higher rate relief from the HMRC.