Salary sacrifice limited to 20% of salary

Squint

Work limits employees to salary sacrificing pension to no more than 20% of salary.  I want to do more, will still be a higher rate tax payer even after that so it is not a minimum wage issue.  Do you know the likely reason for the limit?

NoMore

Could still be to avoid minimum wage, just because it doesn't affect you, it could affect other employee's. A blanket cap is easier to admin than on a case by case basis.

Have you tried asking them ? Everybody on here is only going to be speculation so not sure how that helps you.

Marcon

Squint said:

Work limits employees to salary sacrificing pension to no more than 20% of salary.  I want to do more, will still be a higher rate tax payer even after that so it is not a minimum wage issue.  Do you know the likely reason for the limit?

Ask them. Simplicity of administration would be the most likely answer. Nothing to stop you making personal contribuitons, even if you won't get the benefit of an NI saving on those.

fcjf

Best to ask again, I recently asked my HR department to calculate what max % I could contribute as salary sac contributions and they came back and said upto 100% which i knew was wrong due to NMW requirements so questioned it.

Squint

Thanks, planning to ask tomorrow, just thought there may be an obvious reason that I am missing.

Shimrod

Squint said:

Thanks, planning to ask tomorrow, just thought there may be an obvious reason that I am missing.

My company had a limit on salary sacrifice as well -when I queried it they increased it. It was just an arbitrary limit that they thought no one would want to go over.

You might need to ask the question of payroll rather than HR.

jimjames

The only hard limit is that you can't go below minimum wage, anything else is a company decision.

MallyGirl

I only found out that my company had a limit when I exceeded it. I was trying to maximise the benefits using lumpy contributions and it turned out that they had a ceiling of 70% of salary. Not documented anywhere as they didn't expect it to be reached - a clunky way of avoiding the NMW limit I suspect.

Squint

I found out the reason for this is that if I am sick the employer still has to pay employer contributions same for maternity/paternity pay.  My employer's pension advisers suggested the limit and they won't move on it. 

Cobbler_tone

A good employer ‘should’ allow employees to receive their pay and benefits in the most tax efficient way, especially if it is of no detriment and potential benefit to them and their employees. Can often come down to inefficiency, poor process or because no one has asked. 

I’d say I work for a good employer but there are still some things they don’t do because frankly…they can’t be bothered, which is their prerogative.