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Bonus Waiver into Pension query

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
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  • QrizB
    QrizB Forumite Posts: 11,429
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    edited 14 July at 12:29PM
    Welcome to the forum.
    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.
    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.

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  • HappyHarry
    HappyHarry Forumite Posts: 1,451
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    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.
    I am an Independent Financial Adviser. Any comments I make here are intended for information / discussion only. Nothing I post here should be construed as advice. If you are looking for individual financial advice, please contact a local Independent Financial Adviser.
  • MeteredOut
    MeteredOut Forumite Posts: 273
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    edited 14 July at 12:33PM
    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
    thomasfitzgerald369 Forumite Posts: 3
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    Thanks all for your replies, MeteredOut and HappyHarry, if I have misunderstood what could be the 'equivalent amount' statement do you think? Thanks
  • HappyHarry
    HappyHarry Forumite Posts: 1,451
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    They are reducing your pay and putting an equivalent amount into your pension.
    I am an Independent Financial Adviser. Any comments I make here are intended for information / discussion only. Nothing I post here should be construed as advice. If you are looking for individual financial advice, please contact a local Independent Financial Adviser.
  • FIREDreamer
    FIREDreamer Forumite Posts: 93
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    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
    thomasfitzgerald369 Forumite Posts: 3
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    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
    molerat Forumite Posts: 30,495
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    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
    HappyHarry Forumite Posts: 1,451
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    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)
    I am an Independent Financial Adviser. Any comments I make here are intended for information / discussion only. Nothing I post here should be construed as advice. If you are looking for individual financial advice, please contact a local Independent Financial Adviser.
  • Pat38493
    Pat38493 Forumite Posts: 1,873
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    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.
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