Works Pension - Minimum wage

geraint85

I earn minimum wage, plus a £2 an hour skill bonus. I already have a pension with my work where I contribute 10% of my wage through salary sacrifice. I have asked my work if I can increase my contributions to £2 an hour (so all my skill bonus is used as a pension). They have told that they can not do this, because the skill bonus is not classed as part of my hourly wage, and any increase in my contributions would put me below minimum wage.



I'm confused, because by this logic, any1 on minimum wage is not entitled to a pension. And my already contributing 10% would put me below inimum wage (If my skill bonus isn't counted)..



Any advice would be appreciated.

molerat

You are not allowed to salary sacrifice below minimum wage by law. You can go below minimum wage by making non-sacrifice contributions but it is up to the scheme if they allow it.

Linton

The problem is that salary sacrifice means that your gross pay is decreased and the money used by the employer to provide you with a larger employer's contribution. So people on minimum wage cannot pay their pension contributions by SS as their gross pay cannot be reduced. Instead they should contribute through the payroll.


In your case, although the skill bonus is not classed as part of your pensionable pay it can still be used to pay the employer for them to make your employees contribution. Perhaps if your current contribution is not fully using the £2/hour bonus you could use the rest of it to increase your SS contribution to some extent, or perhaps your employer supports pension contributions taken through the payroll. Finally you could always take out a personal pension and pay any extra contributions into that.