Workplace DC I think employer is wrong

penners324

Nothing to do with that BDO link. Smart pensions are a company that offer auto enrolment pensions.

MallyGirl

My salary sacrifice pension is referred to as a smart pension on my pay slip.
the only time mine jumped across to the other side of the page was when I upped my contribution to 80% which exposed a hidden cap of 70% which they claimed was related to retaining min wage (but wasn't)

trevjl

Looking at the available payslip info it looks like salary sacrifice to me, not net pay.

I can assure you that it is net pay. I am hourly paid and have never had salary sacrifice in my working life. The parts that are missing are the various income payments. January pay was much more as I was overseas for much of December which I get paid a lot more for, but still hourly paid.

I guess it comes down to the question - Does Net Pay system have the same minimum wage barrier to contributions as SS ??

If it does then they are correct, if it does not then they are incorrect

Dazed_and_C0nfused

trevjl said:

Looking at the available payslip info it looks like salary sacrifice to me, not net pay.

I can assure you that it is net pay. I am hourly paid and have never had salary sacrifice in my working life. The parts that are missing are the various income payments. January pay was much more as I was overseas for much of December which I get paid a lot more for, but still hourly paid.

I guess it comes down to the question - Does Net Pay system have the same minimum wage barrier to contributions as SS ??

If it does then they are correct, if it does not then they are incorrect

No, NMW rules apply where salary sacrifice is in place not net pay.

If they applied to net pay schemes them all civil servants etc on NMW would fall could of them as they contribute using net pay.

The NI paid that is correct for the "taxable" earnings and that only happens if salary sacrifice (or RAS) is being used.  If it was net pay then the taxable amount would be less than the NIC'ble amount.

ewaste

Just to add, Save Money And Reduce Tax (SMART) is a common acronym for Salary Sacrifice. My own payslip uses the reference "SMART reduction" under the payments side of the payslip.

The same SMART reduction reference is used regardless of which pension scheme an employee is a member of. Often leading to a huge amount of confusion because everyone just says they're in the SMART pension 🤦 there are 3 schemes. 

zagfles

trevjl said:

January 24

February 24

The Jan payslip is sal sac

The Feb payslip is net pay

If you get a negative in the payment column for pension, this is generally sal sac, and a positive in the deduction column is usually net pay but could be RAS.

You can work it out for certain by working out what you're being taxed and NI'ed on. Sal sac gets NI relief as well as tax relief, net pay just gets tax relief. RAS gets no tax or NI relief in the payslip.

Jan: payments column total after pension conts deducted is 6278.35. NI on this should be (6278.35-4189)*0.02 + (4189-1048)*0.1 = 355.89. Tada, perfect match. So Jan is definitely sal sac. NI relief is given.

Feb: payments column total (without deducting pension conts) is 1785.20. NI on this should be (1785.20-1048)*0.1 = 73.72. Again, correct to the penny. Therefore Feb is definitely not sal sac. No NI relief on pension conts. 

But is it net pay or RAS? Look at how the "taxable pay YTD" changes between Jan and Feb. It's gone up by 865.45. This equals the Feb pay minus the pension cont 1785.20-919.75. Therefore Feb is definitely net pay.

(Be careful of the "taxable pay this pay period", I have seen payslips where they don't deduct net pay conts from this - safest to check how taxable YTD changes one month to next as that should definitely be correct as it's used for PAYE calculation. In this case it's correct).

trevjl

Thanks very much for that.
very interesting as, as I have said, I have never been on SS so seems they have made a right !!!!!! up somewhere along the line. Spoken to my local manager about it and he has never heard of anyone in the company being on SS.
It is a very large international company but the UK head office don't seem to have a clue 
I would just add that the minus in the payments column has always appeared there ever since we went net pay some years ago

zagfles

trevjl said:

Thanks very much for that.
very interesting as, as I have said, I have never been on SS so seems they have made a right !!!!!! up somewhere along the line. Spoken to my local manager about it and he has never heard of anyone in the company being on SS.
It is a very large international company but the UK head office don't seem to have a clue 
I would just add that the minus in the payments column has always appeared there ever since we went net pay some years ago

It's probably just a terminology thing - a lot of companies don't like the term "salary sacrifice" as it doesn't sound very good to be "sacrificing" salary so they use terms like "smart pension" or "salary exchange" but they are the same thing - an agreement to be paid a lower salary in exchange for higher employer pension contributions.

trevjl

I'm sure that is the case, but the fact remains that I am not and have never been on SS or whatever they like to call it. The research I have done says that I must agree to it and the contract would have to be changed. That has not happened. In fact we had new T & C's and new contracts in March 2022 and there is nothing whatsoever in there regarding SS.
Hopefully tomorrow will bring the answers if they deem me important enough to reply to. Yes they really are that bad. 

zagfles

trevjl said:

I'm sure that is the case, but the fact remains that I am not and have never been on SS or whatever they like to call it. The research I have done says that I must agree to it and the contract would have to be changed. That has not happened. In fact we had new T & C's and new contracts in March 2022 and there is nothing whatsoever in there regarding SS.
Hopefully tomorrow will bring the answers if they deem me important enough to reply to. Yes they really are that bad. 

Presumably you agreed to them taking the £919 out of your pay and putting it into your pension at some stage in the past? That agreement will have been or should have been a change to your contract. I'm not sure of the exact wording required but it doesn't mean you have to sign a new employment contract, you just agree to a change to it. I agree a change to mine several times a year when I change my % sal sac, all done on the online system.

I'm not sure what your issue is though, the fact that you've been in a sal sac arrangement, even without your knowledge, has saved you NI and very unlikely to have cost you anything in lost benefits etc. And you are now no longer in it as your pension conts are being taken by net pay now.

A large company perhaps in conjunction with their pension provider will almost certainly have jumped through the right legal hoops to set up a sal sac arrangement even if they call it something different. And if they haven't, you (and they) may be saddled with a big NI bill so not sure it's worth pursuing it! Other than to educate whoever told you it's not sal sac!