Any views on NEST?

LV_426

Albermarle said:

The terminology can be confusing .

Relief at source - means your contributions are taken from your pay after tax . The pension provider will add back in tax relief at 20% . If you are due some higher rate tax relief then you have to claim this back from HMRC and any rebate comes back to you directly . 

I think a previous employer was operating this scheme, but I was clueless, and didn't reclaim the higher rate tax. Can I claim it retrospectively if I ask HMRC nicely?

Thrugelmir

ajfielden said:

So would you say it is still beneficial for me to make extra contributions (say 12%) into this pension scheme?

Probably not due to the 1.8% contribution charge. Though interestingly transfers in are free. Worth accumulating money elsewhere perhaps then moving across a later date. 

jamesd

ajfielden said:

And btw, I really don't know why this has to be so complicated. 

ajfielden said:

So would you say it is still beneficial for me to make extra contributions (say 12%) into this pension scheme?

Lots of history of different ways of doing things that gradually get improved. There are probably a lot of people who think that you need 35 years for a maximum state pension when that's only true except by chance for those who first started NI or NI credits in 2016.

Not worth it when this scheme isn't salary sacrifice. SS is good enough to make paying in and occasional transfers out worthwhile, else just keep it at what gets a match.

Alexland

Malthusian said:

Alexland said:

Some even go the extra mile and also pass on the employer NI saving but that seems to be pretty rare.

Mine claims that saving goes into the extra costs of running the sal sac admin. Hmm.

It's a reasonable thing to say because employers that offer salary sacrifice have to make sure that employees are aware of the potential unintended consequences (e.g. eligibility for mortgages, reduced benefit for Income Protection insurance) and that they don't break minimum wage law. It can't be automated as easily as a standard net pay arrangement.

Ultimately whether they pay in the employer NI saving is part of the deal between employer and employee, same as the pension contribution rates and your salary package.

I agree it sounds a reasonable thing to say but for those of us contributing at around the annual allowance I am left wondering if it really costs thousands of pounds each year to administer my pension contribution payroll. Most people at the employer are pretty well paid so the unshared 13.8% employer NI saving is likely to be substantial.

Marcon

ajfielden said:

Albermarle said:

The terminology can be confusing .

Relief at source - means your contributions are taken from your pay after tax . The pension provider will add back in tax relief at 20% . If you are due some higher rate tax relief then you have to claim this back from HMRC and any rebate comes back to you directly . 

I think a previous employer was operating this scheme, but I was clueless, and didn't reclaim the higher rate tax. Can I claim it retrospectively if I ask HMRC nicely?

You can claim back up to four years after the end of the tax year to which your claim relates. Either do so on your self assessment tax return, or ring HMRC (good luck with that!). 

Dazed_and_C0nfused

ajfielden said:

Albermarle said:

The terminology can be confusing .

Relief at source - means your contributions are taken from your pay after tax . The pension provider will add back in tax relief at 20% . If you are due some higher rate tax relief then you have to claim this back from HMRC and any rebate comes back to you directly . 

I think a previous employer was operating this scheme, but I was clueless, and didn't reclaim the higher rate tax. Can I claim it retrospectively if I ask HMRC nicely?

Yes but the process for doing so varies quite a bit depending on your circumstances.

If you filed Self Assessment returns them the time limit for amending the 2017:18 and 2018:19 has passed so your only option is to make a claim for overpayment relief.

You have missed the boat now for anything prior to 2017:18.

https://www.gov.uk/self-assessment-tax-returns/corrections

Thrugelmir

Alexland said:

Malthusian said:

Alexland said:

Some even go the extra mile and also pass on the employer NI saving but that seems to be pretty rare.

Mine claims that saving goes into the extra costs of running the sal sac admin. Hmm.

It's a reasonable thing to say because employers that offer salary sacrifice have to make sure that employees are aware of the potential unintended consequences (e.g. eligibility for mortgages, reduced benefit for Income Protection insurance) and that they don't break minimum wage law. It can't be automated as easily as a standard net pay arrangement.

Ultimately whether they pay in the employer NI saving is part of the deal between employer and employee, same as the pension contribution rates and your salary package.

I agree it sounds a reasonable thing to say but for those of us contributing at around the annual allowance I am left wondering if it really costs thousands of pounds each year to administer my pension contribution payroll. Most people at the employer are pretty well paid so the unshared 13.8% employer NI saving is likely to be substantial.

The employer gets no cut of your NIC saving though.  Are you prepared to pool it and take a 50/50 share of the overall net saving once the employer covers the full administrative cost of employing someone ? 

bostonerimus

NEST is expensive, but it's better than nothing.

Alexland

Thrugelmir said:

The employer gets no cut of your NIC saving though.  Are you prepared to pool it and take a 50/50 share of the overall net saving once the employer covers the full administrative cost of employing someone ?

The cost of employing soneone should be covered by the business activity that justified the role being created and maintained not by keeping a share of the benefits of an employee arranging their affairs to be more tax efficient.

LV_426

bostonerimus said:

NEST is expensive, but it's better than nothing.

Yeah agreed. However I don't have nothing, with 6 other pension pots behind me. This is just another one to add to the pile