New job - offered option for salary sacrifice

NYorks_

Hello,

I could not find the answers to my questions below, so I started this post (apologies if I have missed other similar threads).

A new job position offers the option for the pension to be set up as a salary sacrifice. I understand all the benefits associated with this type of arrangements, however I still have a couple of questions I need answer to:

1) on the amount the employee pay towards the salary sacrifice pension scheme does HRMC add the 20% basic contribution still?

2) as I understand it, if joining the scheme I would be 'contracted out' - does this means that (although I will still pay NI albeit at a reduced amount than if not in a slary sacrifice scheme) that as long as I'm part of the scheme I will not acrrue any year of NI contribution? Perhaps I have this greatly misunderstood?

Thanks in advance

Dazed_and_C0nfused

1.  There is no pension tax relief with salary sacrifice as they are employer contributions.

2.  Contracting out ended several years ago.  If you earn over £10k* (after sacrifice) you will be ok

*check gov.uk for exact figures

MX5huggy

1) The employee does not pay anything towards the SS that’s the point you are giving up Salary. The money goes into the scheme and does not need the 20% added to it as it was never taken off. If you are a standard rate tax payer £100 into the scheme costs you £68 in take home if you pay student loan then that becomes £59. For a higher rate tax pay it’s £58 and £49. That’s before the employer may pay in all or some of the employers NI. Then come April there will be a further saving when NI goes up. 

2) No there’s no contracting out any more, as you will be paid after SS at least the National Minimum Wage you will be paying enough NI to be credited full years for it. 

Albermarle

on the amount the employee pay towards the salary sacrifice pension scheme does HRMC add the 20% basic contribution still?

This only happens if your pension contributions are made from after tax income.

With SS you have not paid the tax in the first place.

From a tax point of view there is no advantage or disadvantage with either method . However there are other advantages as detailed above.