Salary Sacrifice with Nest Pension

mickeywaffle

Last month me/my employer agreed to have a portion of my salary sacrificed and added straight to my pension.

I noticed that I didn't have any savings to my National Insurance when I looked at my payslip.

After doing some digging, the person in charge of sorting this told me that this was due to Nest being Relief At Source only and that salary sacrifice couldn't be done.

Is this true of Nest and pensions that only operate by Relief At Source? Because this article on Nest indicates that salary sacrifice can still be done by entering the pension amount as an employer contribution:
https://www.nestpensions.org.uk/schemeweb/helpcentre/contributions/calculating-contributions/salary-sacrifice.html

Many thanks for any help!

Dazed_and_C0nfused

Salary sacrifice can only be done though NEST with the employers agreement.  And if involves the employer making changes at their end to ensure you no longer relief any pension tax relief.

Has your employer somehow operated "net pay" this month?

Can you post full details from your payslip?

mickeywaffle

Thanks for your reply. There was an agreement but it's a small company and I don't believe that anyone has attempted a salary sacrifice before.

So it was the first time that the company was attempting to sort it for anyone.

Here are some details:

TOTALS - THIS PAY PERIOD

Taxable gross pay

£4,695.88

Employer National Insurance

£546.33

Net pay

£3,276.10

DEDUCTIONS

Tax

£729.60

National Insurance

£417.18

Student Loan deductions

£273.00

NEST

£1,199.91

----------------

So the Nest pension payment came out of my contributions and there was no difference to my National Insurance/Student Loan compared to last month when I hadn't asked for the salary sacrifice. 

I was told (after I pointed out to my employer that my NI was the same as last month) that a proper salary sacrifice that would reduce national insurance wasn't possible through Nest due to them operating Relief at Source. But the Nest website makes it sound like salary sacrifice can be set up.

george4064

First of all, student loan repayments are not affected anyway so they wouldn’t change if you changed your pension conts.

NI should be lower if your pension conts have increased, however that is a saving to your employer and may or may not be shared with you.

Also, it’s most likely an issue with payroll at your company since NEST simply invest the monthly payments they receive from the various employers who use Nest into whichever fund(s) each member has opted for. They wouldnt have anything to do with tax.

Ed-1

george4064 said:

First of all, student loan repayments are not affected anyway so they wouldn’t change if you changed your pension conts.

NI should be lower if your pension conts have increased, however that is a saving to your employer and may or may not be shared with you.

Student loan repayments are taken out of NICable income. So the same income is used to determine student loan repayments as national Insurance contributions.

xylophone

According to  NEST's

 Guide to earnings bases and contribution levels 

Guidance for employers 

Salary sacrifice 

If you have a salary sacrifice agreement with your worker, you need to ensure you’ve set the correct levels of contributions for each worker in the group. These contribution levels need to be based on post-sacrifice pay. The contributions need to be set up as ‘All employer contributions’. 

george4064

Ed-1 said:

george4064 said:

First of all, student loan repayments are not affected anyway so they wouldn’t change if you changed your pension conts.

NI should be lower if your pension conts have increased, however that is a saving to your employer and may or may not be shared with you.

Student loan repayments are taken out of NICable income. So the same income is used to determine student loan repayments as national Insurance contributions.

Not sure that’s right, since sacrificing part of your salary to your pension reduces your taxable income and reduces the amount of NI you and your employer has to pay. Yet student loan repayments are unaffected as they run off a different criteria.

So NI contributions are affected whilst student loan repayments remain the same.

Ed-1

george4064 said:

Ed-1 said:

george4064 said:

First of all, student loan repayments are not affected anyway so they wouldn’t change if you changed your pension conts.

NI should be lower if your pension conts have increased, however that is a saving to your employer and may or may not be shared with you.

Student loan repayments are taken out of NICable income. So the same income is used to determine student loan repayments as national Insurance contributions.

Not sure that’s right, since sacrificing part of your salary to your pension reduces your taxable income and reduces the amount of NI you and your employer has to pay. Yet student loan repayments are unaffected as they run off a different criteria.

So NI contributions are affected whilst student loan repayments remain the same.

Income contingent student loans are calculated as 9% or 6% of NICable earnings over the relevant threshold (so income out of a pension for example is not liable for student loan repayments).

You should work out the correct figure of employee earnings on which student loan and PGL deductions are due. Use the same gross pay amount that you would use to work out your employer’s secondary Class 1 National Insurance contributions.
https://www.gov.uk/guidance/special-rules-for-student-loans

For those in self-assessment, unearned income over £2,000 is also taken into account (but pension income is excluded).

MX5huggy

Sees to me you just need to provide these links to whoever is administrating the payments for the company. Has it been agreed if you are to receive the employers NI saved? 

My SS reduces Student Loan repayments. 

mickeywaffle

MX5huggy said:

Sees to me you just need to provide these links to whoever is administrating the payments for the company. Has it been agreed if you are to receive the employers NI saved? 

My SS reduces Student Loan repayments. 

I thought that my NI contributions would be lower as well as the employer. Are you saying that it would only be the employer that would have the saving on NI with salary sacrifice?

Dazed_and_C0nfused

No, the employee and employer both save NI and sometimes the employer agrees to put some (or all) of their saving into the pension as well as their normal contributions.