Salary sacrifice query

michaelahutchinson

Hi, I am looking into salary sacrifice as I have just found out I can do this at my firm. My question is do I still need to pay a minimum amount in auto-enrolment post tax as I am currently doing or can all of the pension I save be salary sacrifice pre-tax ? i am guessing I need to pay the minimum amount post tax to get the employer contribution ?

Nevergonnaretire

I'm not sure if this is employer specific, but I pay all my contributions via SS and get the full employer contribution as well. I assumed this was normal.

Exodi

The latter, no need to pay a minimum into some random pension for the sake of it - and I also share the employers NI saving which is not uncommon, some employees can negotiate all of the NI saving (but as @Nevergonnaretire suggests, Salary Sacrifice is a very 'manual' process, speak to your employer).

For example, if you earn £2000 a month and your employer matches your contributions, up to 5%, and you put in 5%, your salary sacrifice could look like:

Base Gross Pay: £2000
Salary Sacrifice: 5%
Taxable Gross Pay: £1900
---
Employer Contribution: £100
Employee Contribution: £100 (taken from your wages above)
Employer NI Saving: (13.8% of £100 = £13.80, shared would be £6.90)
Pension Payment: £206.90

Albermarle

Exodi said:

The latter, no need to pay a minimum into some random pension for the sake of it - and I also share the employers NI saving which is not uncommon, some employees can negotiate all of the NI saving (but as @Nevergonnaretire suggests, Salary Sacrifice is a very 'manual' process, speak to your employer).

For example, if you earn £2000 a month and your employer matches your contributions, up to 5%, and you put in 5%, your salary sacrifice could look like:

Base Gross Pay: £2000
Salary Sacrifice: 5%
Taxable Gross Pay: £1900
---
Employer Contribution: £100
Employee Contribution: £100 (taken from your wages above)
Employer NI Saving: (13.8% of £100 = £13.80, shared would be £6.90)
Pension Payment: £206.90

OP, Just to be clear when a salary sacrifice scheme is in place and you look at your pension providers website, you only see employer contributions and no employee contribution. In the above case the employer would contribute £200 + any of their NI savings they decide to pass on. 

In my case I worked for a large multinational for a few years, and they never passed on a penny of their NI savings. Then again the way they normally operated everybody would have been pretty shocked by any such signs of generosity !

MallyGirl

I am the same - no employer NI savings come my way whereas my husband gets the full 13.8%

michaelahutchinson

Thanks all. Regarding the random pension comment, I was talking about the same pension. Sounds like it's common to allow all contributions as salary sacrifice but the firm will presumably continue to only match up to their usual %. I would be amazed if my firm pays back the NIC savings but I will ask anyway.

eastcorkram

michaelahutchinson said:

Thanks all. Regarding the random pension comment, I was talking about the same pension. Sounds like it's common to allow all contributions as salary sacrifice but the firm will presumably continue to only match up to their usual %. I would be amazed if my firm pays back the NIC savings but I will ask anyway.

I asked mine. Just got a straight No. 
No harm in asking though!