Salary Sacrifice to below Minimum Wage by Employer

Retireasap

I increased my pension deductions from my salary to over 70% a couple of years ago and only pick up gross about £900 for a 37 hour week. I have lately read that I should not be allowed salary sacrifice if it takes me below National Minimum Wage which in my case would be approx. £1,255 per month. I work for a large employer so surprised they haven't advised me that I couldn't contribute this much.
Can the money I have previously contributed to my pension be taken from my pension scheme.
This arrangement suits me as I would like to retire in the next couple of years, so trying to put in as much as possible.
Not sure if the onus is on me to advise my employer of the rules

ffacoffipawb

Retireasap wrote: »

I increased my pension deductions from my salary to over 70% a couple of years ago and only pick up gross about £900 for a 37 hour week. I have lately read that I should not be allowed salary sacrifice if it takes me below National Minimum Wage which in my case would be approx. £1,255 per month. I work for a large employer so surprised they haven't advised me that I couldn't contribute this much.
Can the money I have previously contributed to my pension be taken from my pension scheme.
This arrangement suits me as I would like to retire in the next couple of years, so trying to put in as much as possible.
Not sure if the onus is on me to advise my employer of the rules

Presume you meant £900 per month. Personal allowance is approx £1000 per month so you are missing out on tax relief on about £100 per month. Of course you still gain the NI relief.

Agree shouldn't be able to below minimum wage. However once the mone6 is in the pension I think it can stay there and cannot be taken out before, currently, age 55.

Retireasap

Thanks ffacoffipawb. I have changed it to state £900 per month.
Just hoping I don't lose what I have already paid in from my pension.

Albermarle

I can not see how the money can be returned from a pension. In my opinion the fault is with the employer . I would think at some point HMRC will notice and in theory they could maybe be prosecuted for paying below the minimum wage ?
Personally I would talk to my employer and reduce the salsac so you get the minimum wage in future . Hopefully what has gone before may never be picked up.

camelopardis

This was my experience:


https://forums.moneysavingexpert.com/showpost.php?p=73341972&postcount=19

michaels

Depending on what happens to employers NI you may be better off sal sac down to basic rate threshold and putting the rest into your pension as an additional contribution as you will get tax relief on this even though you didn't actually pay any tax.

Your employer is responsible for making sure they pay all employees minimum wage and it is probably an offence (for them) not to so I suggest you ask them to make up the difference to you and you will be generous and not mention it to HMRC.....

zagfles

Yup - as above it's down to the employer to ensure they comply with NMW legislation - if they allow you to sal sac below NMW then they could be obliged to back pay you for paying you too little! I doubt they could do anything about reclaiming the extra pension contributions.

It's their choice to allow sal sac, it's basically a device which saves them (and you) NI, if they use it they need to understand the rules.

Dox

michaels wrote: »

Your employer is responsible for making sure they pay all employees minimum wage and it is probably an offence (for them) not to so I suggest you ask them to make up the difference to you and you will be generous and not mention it to HMRC.....

Absolutely splendid idea if you are keen on getting a P45 sooner than anticipated. This sort of paper tigerism is as daft as it comes.

michaels

Dox wrote: »

Absolutely splendid idea if you are keen on getting a P45 sooner than anticipated. This sort of paper tigerism is as daft as it comes.

Apologies, I should have added a wink smiley - however it is probably also worth reading camelopardis link as well