Salary Sacrifice - Only allowed to change in the case of a 'life event'. What does it really mean?

C4rlos12345678

Hello Ladies and Gentlemen.
Been lurking on this wonderful site for a while now and now I have a question pls. 

I am still confused about he "Life Event" rule regarding Salary Sacrifice from GOVT.UK: 
"Normally, an employee cannot switch freely out of most salary sacrifice schemes unless there is a life event.

And also:

"It may be necessary to change the terms of a salary sacrifice arrangement where a lifestyle change significantly alters an employee’s financial circumstances.

This may include:

• changes to circumstances directly arising as a result of coronavirus (COVID-19)
• marriage
• divorce
• partner becoming redundant or pregnant

Salary sacrifice arrangements can allow opting in or out in the event of lifestyle changes like these".

"change the terms of a salary sacrifice arrangement" . Is that Opting in or out ? Or changing the amounts? or suspending? etc

From reading discussions on various boards, there is the view that changing the amount you salary sacrifice every month might be breaking these rules. Or that you might be breaking the rules if you change it more than once a year. Others say it depends on the type of Salary Sacrifice? And is ok for some and NOT for others? All confusing !!! Lol

My Salary sacrifice is just part of my Gross to go into a SIPP and as I work through an umbrella company, the amount I sacrifice might change every month. All they ask is I tell them well in advance. I just want to get the opinions of other people who might be in a similar situation that I am not breaking any rules. Many thanks in adavance

westv

The info you saw is out of date. There is no such rule now and hasn't been for several years. However, your employer may have their own restrictions.

El_Torro

When it comes to pensions some employers might let you change your salary sacrifice contributions every month, others might only let you do it at set times (e.g. once a year). This is more to do with how much admin they're willing to take on rather than a legal requirement. 

Other salary sacrifice arrangements (e.g. an electric car lease scheme) are probably more restrictive. Not something I'm familiar with myself, though I imagine pension contributions are more flexible (legally speaking) than other types of salary sacrifice. 

Grumpy_chap

C4rlos12345678 said:

Hello Ladies and Gentlemen.
Been lurking on this wonderful site for a while now and now I have a question pls. 

I am still confused about he "Life Event" rule regarding Salary Sacrifice from GOVT.UK: 
"Normally, an employee cannot switch freely out of most salary sacrifice schemes unless there is a life event.

And also:

"It may be necessary to change the terms of a salary sacrifice arrangement where a lifestyle change significantly alters an employee’s financial circumstances.

This may include:

• changes to circumstances directly arising as a result of coronavirus (COVID-19)
• marriage
• divorce
• partner becoming redundant or pregnant

Salary sacrifice arrangements can allow opting in or out in the event of lifestyle changes like these".

"change the terms of a salary sacrifice arrangement" . Is that Opting in or out ? Or changing the amounts? or suspending? etc

From reading discussions on various boards, there is the view that changing the amount you salary sacrifice every month might be breaking these rules. Or that you might be breaking the rules if you change it more than once a year. Others say it depends on the type of Salary Sacrifice? And is ok for some and NOT for others? All confusing !!! Lol

My Salary sacrifice is just part of my Gross to go into a SIPP and as I work through an umbrella company, the amount I sacrifice might change every month. All they ask is I tell them well in advance. I just want to get the opinions of other people who might be in a similar situation that I am not breaking any rules. Many thanks in adavance

Given you have posted in the "pensions, annuities and retirement planning" board, I will assume that your query is in relation to SS pension contributions.

The rules you state above are applicable to all SS situations other than pension contributions where the tax rules offer more flexibility and permit pension contributions to be varied with every pay period.
(I will try to find a link.)

Your employer may have stricter rules to only allow changes in / out of SS pension or changes to the SS percentage once per year to reduce the administrative burden.

C4rlos12345678

Excellent !! Cheers Westv, El_Torro and Grumpy_Chap for your prompt replies.
It seems I was worrying unnecessarily !

Yes my question relates to my SS pension contributions,
My employer says I can change the amount as much as I want as long as I give them notice so I think I'd stop worrying now.  

@Grumpy_Chap Please feel free to post the link if you find it.

Many thanks all once again

Grumpy_chap

C4rlos12345678 said:

Excellent !! Cheers Westv, El_Torro and Grumpy_Chap for your prompt replies.
It seems I was worrying unnecessarily !

Yes my question relates to my SS pension contributions,
My employer says I can change the amount as much as I want as long as I give them notice so I think I'd stop worrying now.  

@Grumpy_Chap Please feel free to post the link if you find it.

Many thanks all once again

Thanks @C4rlos12345678
I have looked for the link but cannot find it.  Quite irritating as I had to obtain this from my Accountant and provide to an employer in the past couple of years.  Unfortunately, I can't locate either where the Accountant sent me the information or where I forwarded it to the employer even though both must still exist in the email account somewhere...

C4rlos12345678

@Grumpy_Chap No worries, Thanks for looking anyway

C4rlos12345678

Brilliant! Thanks a lot [Deleted User] 😁👍

jamesd

The reason for the change was auto enrollment. The rules for that require prompt responses to starting or stopping and would have outlawed the use of salary sacrifice pension schemes for complying with the auto enrollment pension requirement. So in the summer before that took effect HMRC withdrew the life event requirement for pensions.

C4rlos12345678

Good Morning jamesd and thanks for that added explanation. Much appreciated 👍