Employers Pension

ironballs

I have a salary of £39,806. My employer pays 5% into my pension and I also contribute 5% into my pension via a salary sacrifice scheme. My payment in from my wage slip is £165.86. On my pension statement the total being paid into my pension is £331.72. I had assumed the 5% would have been from my gross salary but clearly not based on these numbers it more like 5% of net pay. Is this correct?

MallyGirl

if it is salary sacrifice then your pension contribution is deducted from your salary and then tax/ni is calculated after that so it is 'gross'

Andrew31

5% gross is going into your pension. 39806 x 5% /12 = £165.86. Your employer is also paying 5%.

£165.86 x 2 = £331.72.

It is all perfectly correct.

Linton

The numbers look right to me:


£39806/year=£3317.17/month. So your employer pays 5% for its contribution and 5% for your contribution giving a total of 10%=£331.72

Albermarle

it more like 5% of net pay. Is this correct?

Suggest you have another go with the calculator.

MaxiRobriguez

Topic deviation: Sacrifice more than 5% if you can.

Brynsam

MallyGirl wrote: »

if it is salary sacrifice then your pension contribution is deducted from your salary and then tax/ni is calculated after that so it is 'gross'

No, with salary sacrifice arrangements your pension contribution isn't deducted from your salary. You have to sacrifice (give up) part of your salary and your employer makes the pension contribution. Employer pension contributions are always paid gross (and the employer then claims them against tax as a trading expense).

Dazed_and_confused

My payment

As Brynsam has explained the whole point of salary sacrifice is that you aren't contributing anything to the pension fund.

You are agreeing to give up some of your salary in return for your employer making a contribution.

That is the reason why salary sacrifice pension contributions do not attract any pension tax relief (for you). They are actually an employer contribution so no tax relief is due.

You benefit by having a lower salary on which you would normally be paying tax and National Insurance. For example if your "salary" was £50,000 and you sacrifice 5% your taxable salary, the amount which goes on your P60, would only be £47,500.