HR just moved me automatically into a non salary sacrifice scheme….

Miiade

So I get a letter from HR this morning saying that my monthly salary sacrifice contributions is taking me below the national living wage. As such they have moved me  from April 1st into a non salary sacrifice  pension scheme. They said my payments and the companies will remain the same.

My salary is £21248 per annum for a 37 hour working week and I have been paying £233.68 a month

As the new national wage is £9.5 per hour this means that for a year the annual amount is £18278. This taken of my salary leaves £2970 / £247 a month, above my contribution level.

Have I worked this out correctly or not? Am I missing something here.

 I have checked my end of April salary and I am paying more Ni and income tax, (around £70 in total) also I can see no pension deduction on my wage slip at all.

Any advice would be appreciated.

Dazed_and_C0nfused

Salary sacrifice benefits from an NI saving but if you are now contributing* you will start to get basic tax relief added in the pension fund

*salary sacrifice is where you don't contribute, your employer contributes more so no pension tax relief.

QrizB

Is this because you're paid monthly and so the number of working days per month varies? In a month with more-than-the-average number of working days your average hourly rate will be lower?

Exotoxin1

What percentage contributions do you make? Is £233 a net amount in some way? Grossed up it would be exactly 16.5%. And that would fall foul of min wage.

Miiade

QrizB said:

Is this because you're paid monthly and so the number of working days per month varies? In a month with more-than-the-average number of working days your average hourly rate will be lower?

Yes paid monthly.

Miiade

Dazed_and_C0nfused said:

Salary sacrifice benefits from an NI saving but if you are now contributing* you will start to get basic tax relief added in the pension fund

*salary sacrifice is where you don't contribute, your employer contributes more so no pension tax relief.

I understand I will get basic tax relief added, but am I worse off as I am now paying 12% more Ni on my £233 per month?

QrizB

Miiade said:

QrizB said:

Is this because you're paid monthly and so the number of working days per month varies? In a month with more-than-the-average number of working days your average hourly rate will be lower?

Yes paid monthly.

In which case, can you ask HR to tell you how much you would need to reduce your monthly contribution by in order to rejoin the salsac scheme?

Miiade

QrizB said:

Miiade said:

QrizB said:

Is this because you're paid monthly and so the number of working days per month varies? In a month with more-than-the-average number of working days your average hourly rate will be lower?

Yes paid monthly.

In which case, can you ask HR to tell you how much you would need to reduce your monthly contribution by in order to rejoin the salsac scheme?

Yes have emailed them this morning and also asked for them to re check their calculations. I didn’t like the way it was done by not offering me the chance to lower my contributions, if I was over the limit.

They also said that if this changes in the future we will write to you to let you know if you can re join the salary sacrifice scheme.

Secret2ndAccount

I think QrizB is correct.
The rules have to be applied to each pay packet, not annually. If a month is 31 days, you work, 31/7*37=163.86 hrs.  163.86*£9.5 = £1556.64.  You receive £21248/12 = £1770.67 per mth, leaving only £214.02 as max sal sac.
Suggest you ask them to reinstate sal-sac at £214. Maybe make an occasional lump sum contribution to work or personal pension to keep your total contributions at the same level.
Edit: Upon reflection, you might want to knock it down to £200 to be safe. It's possible you get 5-week and 4-week pay periods.

Grumpy_chap

I wonder whether the OP can request the employer to SS down to NMW and then leave it to the employer's computer to calculate the NMW salary and pension accordingly?

Thrugelmir

Grumpy_chap said:

I wonder whether the OP can request the employer to SS down to NMW and then leave it to the employer's computer to calculate the NMW salary and pension accordingly?

Perhaps the payroll team don't want the hassle and responsibility of monitoring one individual's pay. Far more important matters to do in their daily routine. The individual can work it out for themselves.