Salary sacrifice calculator

MortagageWannabe

Hello MSErs
Could someone please recommend a decent (and simple) calculator that I can use to determine whether my employer's salary sacrifice scheme is a better option than a "non-salary sacrifice" scheme.

I've found some online calculators by Aegon, Aviva etc but I still can't understand the results I'm getting  :-(

For the mathematically abled here are the numbers:
Gross pay 70,000 pa
Employer contribution 8%
Employee contribution 12%
Assumption: the 'non-salary sacrifice' scheme is a relief at source scheme

 (disclaimer: HMRC in case you are reading this, these are (mostly) fictitious figures.)

Many thanks,
MW

Dazed_and_C0nfused

Salary sacrifice will definitely be more tax (and NI) efficient on those figures. 

And less hassle as you never have to tell HMRC about it as there is no tax relief due to you (salary sacrifice actually meaning an employer pension contribution).

But relief at source will mean you have a larger pension fund, but from a less efficient tax relief perspective.

It can get complicated because you are to some degree comparing apples and pears.

Salary sacrifice = no pension tax relief so only a net amount into the pension

Relief at source gets 25% added by the pension company.  But most people would consider that to have come from already taxed pay.

MX5huggy

Salary Sacrifice is the simple answer. 

If you want the numbers do you pay Student Loan repayments and do you have children that you could get Child Benefits for (how many children).

Albermarle

There might be some special situations where salary sacrifice is not advantageous , But for the vast majority it is a benefit/tax loophole.

MortagageWannabe

Thanks @Dazed_and_confused, @MX5huggy and @Albermarle for the responses.
I don't have a student loan and don't collect child benefit (neither does my partner).
Thanks 

CookieMonster

I like this one.

https://finance.icalculator.info/salary-sacrifice-calculator/annual.html

MortagageWannabe

Thanks @CookieMonster. I was hoping for a comparative calculator that would show which scheme is more adavantegous at that income. 

QrizB

MortagageWannabe said:

Thanks @CookieMonster. I was hoping for a comparative calculator that would show which scheme is more adavantegous at that income. 

Qualitatively, that's easy; salary sacrifice is always advantageous.

CookieMonster

QrizB said:

MortagageWannabe said:

Thanks @CookieMonster. I was hoping for a comparative calculator that would show which scheme is more adavantegous at that income. 

Qualitatively, that's easy; salary sacrifice is always advantageous.

Agreed: it's better.
I'm currently sacrificing nearly 70% of my salary.
Some companies will add some of their saved NI contribution to the pension amount, making it more attractive. 

Grumpy_chap

Will @MortagageWannabe be impacted in future house purchase if that is still an aspiration for them and they used SS?  You would like to think that most lenders are competent enough to understand and take fair account of SS in determining lending limits but it does also affect affordability as that finance SS into pension is not available to meet current costs.  The OP may no longer want to get a mortgage, or may already have that resolved, but it is a consideration.  Most SS schemes can only be opted in / out once a year.

MortagageWannabe

Thanks for the helpful replies @QrizB @CookieMonster @Grumpy_chap.
I already have a mortgage therefore don't need to factor that in.

As you've rightly pointed out, I've can only opt-in once an year hence why I need to make the decision now.

I will go with salary sacrifice option for now. In the meantime, I will keep checking for comparative calculators and change my approach if necessary.

Thanks all.
MW