Bonus Waiver into Pension query

thomasfitzgerald369

Hi, I opted to waive 100% of my bonus this year into my pension under salary sacrifice. The form I completed said : "In return, I understand that my  employer will make a pension contribution of an equivalent amount to the workplace pension scheme" Having just received my payslip and checking the payment made into my pension the numbers don't add up. My question relates to the statement above which I understood to mean if my bonus was £1,000 then my employer would contribute an equivalent amount e.g. an additional £1,000 so the total paid into my pension would be £2,000. Just wanted to check my understanding on this, any help much appreciated. Thanks

QrizB

Welcome to the forum.

thomasfitzgerald369 said:

Hi, I opted to waive 100% of my bonus this year into my pension under salary sacrifice. The form I completed said : "In return, I understand that my  employer will make a pension contribution of an equivalent amount to the workplace pension scheme"

Yes, that is how salary sacrifice works. You give up £X of salary and your employer contributes £X to another scheme on your behalf.

thomasfitzgerald369 said:

My question relates to the statement above which I understood to mean if my bonus was £1,000 then my employer would contribute an equivalent amount e.g. an additional £1,000 so the total paid into my pension would be £2,000.

If you sacrifice £1000, they will contribute £1000. Not £2000.

HappyHarry

I think you have misunderstood. 

If you are salary sacrificing 100% of your bonus, then your employer will not pay you that money and instead make a contribution equivalent of that sacrificed value into your pension. It seems unlikely that they will be offering to double your bonus if they put it into your pension.

MeteredOut

As above, your employer won't be matching your payment into your pension, so the £1,000 total is correct. The saving you're making is not paying tax/NI on that £1,000.

thomasfitzgerald369

Thanks all for your replies, MeteredOut and HappyHarry, if I have misunderstood what could be the 'equivalent amount' statement do you think? Thanks

HappyHarry

They are reducing your pay and putting an equivalent amount into your pension.

FIREDreamer

thomasfitzgerald369 said:

Thanks all for your replies, MeteredOut and HappyHarry, if I have misunderstood what could be the 'equivalent amount' statement do you think? Thanks

You waive the £1,000 (or whatever) and they pay the £1,000 (or whatever) into your pension instead.

Pretty common wording and standard procedure in the private sector. They wouldn’t pay double the bonus into your pension and the wording doesn’t imply they would, in my opinion.

thomasfitzgerald369

HappyHarry said:

They are reducing your pay and putting an equivalent amount into your pension.

Thanks happyHarry, I understand as this part of my bonus, but what is meant be "in return and equivalent amount" Are you saying that the "equivalent amount" is my bonus and no other payment is due from them? Thanks

molerat

thomasfitzgerald369 said:

HappyHarry said:

They are reducing your pay and putting an equivalent amount into your pension.

Thanks happyHarry, I understand as this part of my bonus, but what is meant be "in return and equivalent amount" Are you saying that the "equivalent amount" is my bonus and no other payment is due from them? Thanks

Correct.  Unless of course they are willing to pay some of their employer NI saving in as well.

HappyHarry

thomasfitzgerald369 said:

HappyHarry said:

They are reducing your pay and putting an equivalent amount into your pension.

Thanks happyHarry, I understand as this part of my bonus, but what is meant be "in return and equivalent amount" Are you saying that the "equivalent amount" is my bonus and no other payment is due from them? Thanks

Yes
(filler)

Pat38493

HappyHarry said:

thomasfitzgerald369 said:

HappyHarry said:

They are reducing your pay and putting an equivalent amount into your pension.

Thanks happyHarry, I understand as this part of my bonus, but what is meant be "in return and equivalent amount" Are you saying that the "equivalent amount" is my bonus and no other payment is due from them? Thanks

Yes
(filler)

Interesting thread as I guess the wording could be misunderstood, whereas that the employer is actually saying is that just like normal in salary sacrifice, you are waiving your right to the salary (or bonus) in exchange for the employer paying the same amount into your pension.  

The other thing about it though is that if it was as the OP understood, the employer would be doubling the OPs bonus just because they were paying it into their pension, which seems too good to be true and therefore couldn't be the case.