LGPS - salary sacrifice AVC’s

seans_elysees

I’ve been in LGPS for nearly 7 years now and have been adding separate AVCs to our SIPP partner for the past few years. 

I have been aware that there’s a salary sacrifice option for the AVC’s that can save me on NIC contributions. I haven’t went down that path yet as I’ll prob have a mortgage change to come at some point. 

However … trying to plan ahead … 

My question is - would the NIC savings be taken from the rate at highest point in salary I assume?  

I earn roughly £55k, so earnings tip into the 2% NIC rate. 

ColdIron

SS reduces your salary so the NI saved would be from the salary you have sacrificed, so 2% first then 10%

seans_elysees

ColdIron said:

SS reduces your salary so the NI saved would be from the salary you have sacrificed, so 2% first then 10%

As I thought. Exact same as the way tax works with pension contributions. 

Thanks for confirming. 

Kernowshep

It's also worth noting that some of the LGPS AVC salary sacrifice schemes add the employer NI saving to yours, so add an extra 13.8% benefit.  Also with the LGPS you can take the whole AVC pot tax fee (up to set limits), if taken at the same time as the main pension, which is another additional benefit vs a stand alone product.
https://home.avcwise.co.uk/
https://www.lgpsmember.org/

Dazed_and_C0nfused

seans_elysees said:

ColdIron said:

SS reduces your salary so the NI saved would be from the salary you have sacrificed, so 2% first then 10%

As I thought. Exact same as the way tax works with pension contributions. 

Thanks for confirming. 

Only net pay ones, not relief at source.