Topping up pensions

soupy600

Hi everyone,

Finally my company has agreed to a pay rise, were due one at the end of the month with the back pay and then one in November with out back pay, i think this is a good time up up my pension with out missing any money.

I was thinking come November were getting 3.4% so i was thinking of upping my pension contributions by the same..

I know the 3.4% rise will be on my current salary and the 3.4% I up my pension contributions will be on the new salary. But i'm I right in thinking I will end up with roughly the same take home. Or i'm i missing something?

QrizB

Say your current salary is £10000.

Add 3.4% and you get £10340.

Then take 3.4% off that and you're left with £9988. So you'll be 0.12% worse off than you currently are.

If instead you increase your pension contributions by 3.3%, it becomes £9998 and you're only 0.02% worse off.

Dazed_and_C0nfused

To some degree it depends on the method used to contribute.  Will this be

Net pay (taken before tax is calculated)

Relief at source (taken after tax and the pension company adds basic rate tax relief)

Salary sacrifice (you agree a reduced salary in return for increased employer contributions)

Linton

soupy600 said:

Hi everyone,

Finally my company has agreed to a pay rise, were due one at the end of the month with the back pay and then one in November with out back pay, i think this is a good time up up my pension with out missing any money.

I was thinking come November were getting 3.4% so i was thinking of upping my pension contributions by the same..

I know the 3.4% rise will be on my current salary and the 3.4% I up my pension contributions will be on the new salary. But i'm I right in thinking I will end up with roughly the same take home. Or i'm i missing something?

If you mean increasing your pension contribution from say 5% to 8.4%, yes you will get roughly the same take home pay.

soupy600

i've a salary sacrifice running

soupy600

QrizB said:

Say your current salary is £10000.

Add 3.4% and you get £10340.

Then take 3.4% off that and you're left with £9988. So you'll be 0.12% worse off than you currently are.

If instead you increase your pension contributions by 3.3%, it becomes £9998 and you're only 0.02% worse off.

Thanks, yeah maybe i haven't worried it right lol but yes i would be getting slightly less pay. But it was just more incase i was missing something. happy to take i slight hit and think it's a good time to do it without seeing much difference in pay.

what i never had i never missed kind of thing

MallyGirl

That is a great approach to take

soupy600

thanks @MallyGirl been thinking off topping up my pension for a while and think its the best time to do it with out really changing what your still getting paid.