Nest pension - additional contributions

alcachofa

I've recently changed jobs. The pension available in my previous job was through Scottish Widows, with my employer giving the minimum required contribution (3%?). Because I could afford to, I increased my personal contribution. I did this by asking my employer to increase my contributions, which were then deducted from my payslip before tax.

My new employer offers a Nest pension, again only paying the minimum required contribution. My plan was to do exactly the same as before - ask payroll to increase my contributions even if my employer won't match it. But then I spotted Nest have a direct debit contribution scheme as well. This seems ideal: they reclaim the tax paid and I can alter the amount whenever I like.

Am I missing something? As far as I can tell there's no difference between increasing my contributions with my employer or setting up a DD directly with Nest.

Marcon

alcachofa said:

I've recently changed jobs. The pension available in my previous job was through Scottish Widows, with my employer giving the minimum required contribution (3%?). Because I could afford to, I increased my personal contribution. I did this by asking my employer to increase my contributions, which were then deducted from my payslip before tax.

My new employer offers a Nest pension, again only paying the minimum required contribution. My plan was to do exactly the same as before - ask payroll to increase my contributions even if my employer won't match it. But then I spotted Nest have a direct debit contribution scheme as well. This seems ideal: they reclaim the tax paid and I can alter the amount whenever I like.

Am I missing something? As far as I can tell there's no difference between increasing my contributions with my employer or setting up a DD directly with Nest.

If you can pay contributions by salary sacrifice, doing that would get you an NI saving (and you'd still get tax relief - a lower salary means you have less taxable pay).

alcachofa

Ooh it hadn't occurred to me that it'd affect NI contributions too.

Isn't the tax the same though? Surely the amount of tax I'd save in salary sacrifice is the same as the amount I'd get in tax relief?

NI sounds likes a compelling reason to go for salary sacrifice though.

Marcon

alcachofa said:

Ooh it hadn't occurred to me that it'd affect NI contributions too.

Isn't the tax the same though? Surely the amount of tax I'd save in salary sacrifice is the same as the amount I'd get in tax relief?

NI sounds likes a compelling reason to go for salary sacrifice though.

Tax relief is indeed the same, but the NI saving is a bit of a carrot!