Pension Contribution from Secondary Employment

FudgeHouse

I currently have both a full time and part time employer.

My full time employment provides a gross income that places me firmly in the higher income tax bracket, and I reduce some of the 40% tax liability by making pension contributions to a couple of percent above the level that means my employer contributes at the maximum rater they offer.

My part time employer pays me around £8K per annum gross, and I pay 10% of this in to that employer's pension scheme, again with employer contributions at their maximum.

I am interested to know if I could/ should increase my part-time pension contributions to 100% of that £8K salary, thereby completely avoiding income tax on that employment?

It's been suggested to me that this may not be possible for a couple of reasons :

1. There is some requirement for an employer to pay a net minimum wage, and so cannot place 100% of gross earnings in to a pension - Can anyone confirm this and if so know what that minimum net amount is ?

2. I currently have a total pension pot from previous and current employers of just under £500K, and am aged 45, and the effect of contributing further on this part time employment could potentially push me well in to the Lifetime Allowance limits by my mid to late 50s, and that again the employer will look at this before agreeing to any increase. Surely however the LTA limits are for me to manage rather than the employer?

Does anyone have any experience of this that can offer any advice on the above, or any other thoughts?

I will of course engage an IFA too, but am interested in the experience of others

Marcon

FudgeHouse wrote: »

I am interested to know if I could/ should increase my part-time pension contributions to 100% of that £8K salary, thereby completely avoiding income tax on that employment?

It's been suggested to me that this may not be possible for a couple of reasons :

1. There is some requirement for an employer to pay a net minimum wage, and so cannot place 100% of gross earnings in to a pension - Can anyone confirm this and if so know what that minimum net amount is ? Employers are required to pay employees at least the National Minimum Wage. Ask whoever suggested the 'net' idea to clarify what they are on about - there is no such requirement. I wonder if they are confusing this with the concept of pension contributions made via salary sacrifice? They are certainly confused about something! Any personal contributions you make are just that: personal, so cannot affect your employer's liability to meet NMW levels.

2. I currently have a total pension pot from previous and current employers of just under £500K, and am aged 45, and the effect of contributing further on this part time employment could potentially push me well in to the Lifetime Allowance limits by my mid to late 50s, and that again the employer will look at this before agreeing to any increase. Surely however the LTA limits are for me to manage rather than the employer? Nothing to do with your employer. Who has suggested it is? Again, ask them to be explicit about what they say is required - and make sure they cite the relevant legislation (there isn't any!). How would one employer know what benefits you have from other employments, whether current or previous?

Does anyone have any experience of this that can offer any advice on the above, or any other thoughts?

I will of course engage an IFA too Why? There are simple answers to bot the questions you have asked, so if that's the only reason to pay an IFA, I suggest you don't. There may, of course, be other very good reasons to engage one, but not to counter the sort of nonsense someone has been spinning you, but am interested in the experience of others

Hope the above helps.

GunJack

you could get the effect you're after by leaving the pt job/pension alone, and increasing contributions in your main job/pension..