Potential capping of Salary Sacrifice (speculation)?

Cobbler_tone

af1963 said:

I've yet to see any argument put forward here (or elsewhere) that gives a good reason why someone using salary sacrifice for their pension should get a better deal than someone using relief at source.

I used salary sacrifice a lot when working for employers who provided it - but it's not universally available, and plenty of people manage to save towards their pension without using it. And low paid staff don't have the option at all.

Because it is part of a total package which attracts people to certain roles?
Granted, not justification for keeping it. After all, DB pensions have closed over the years etc.

westv

af1963 said:

I've yet to see any argument put forward here (or elsewhere) that gives a good reason why someone using salary sacrifice for their pension should get a better deal than someone using relief at source.

I used salary sacrifice a lot when working for employers who provided it - but it's not universally available, and plenty of people manage to save towards their pension without using it. And low paid staff don't have the option at all.

You could equally say why should someone with a DB pension get a better deal than someone with a DC pension. Just because one might be better than the other is no reason to criticise it.

MeteredOut

westv said:

af1963 said:

I've yet to see any argument put forward here (or elsewhere) that gives a good reason why someone using salary sacrifice for their pension should get a better deal than someone using relief at source.

I used salary sacrifice a lot when working for employers who provided it - but it's not universally available, and plenty of people manage to save towards their pension without using it. And low paid staff don't have the option at all.

You could equally say why should someone with a DB pension get a better deal than someone with a DC pension. Just because one might be better than the other is no reason to criticise it.

And you could equally say why should someone get paid more than someone else at a different company for very similar jobs.

It's part of the package offered to attract the employee.

Aretnap

MeteredOut said:

westv said:

af1963 said:

I've yet to see any argument put forward here (or elsewhere) that gives a good reason why someone using salary sacrifice for their pension should get a better deal than someone using relief at source.

I used salary sacrifice a lot when working for employers who provided it - but it's not universally available, and plenty of people manage to save towards their pension without using it. And low paid staff don't have the option at all.

You could equally say why should someone with a DB pension get a better deal than someone with a DC pension. Just because one might be better than the other is no reason to criticise it.

And you could equally say why should someone get paid more than someone else at a different company for very similar jobs.

It's part of the package offered to attract the employee.

That's a justification for why some employers might offer salary sacrifice while others don't. Not a justification for why the tax system should offer two different ways of doing the same thing, one of which attracts much better tax treatment than the other, in the first place. 

The correct answer of course is that someone spotted a loophole that allowed people to get a better tax break from pension contributions than was originally intended. I've done very well out of the loophole, but ultimately if it finally gets closed my response will be to shrug and say that it was good while it lasted, not howl about the fact that I am being persecuted be being asked to pay the same amount of tax as someone else who is being paid the same as me and making the same contributions as me.

Skylla2010

How would the NI-free cap of £2k on SS pension contributions work in practice? e.g. with a pension contribution of £52,000pa and 8 or 2% NI paid on £50k, the NI to be paid is anything between £4k and £1k, right, depending on amount of income over £50,270? (Correct for both England and Scotland i take it)

HedgehogRulez

Cobbler_tone said:

HedgehogRulez said:

After the 2% tax u turn it seems Sal sac changes are the way forward after all

Maybe curl up in a ball for the winter Hedgy. You are making stuff up on speculation on speculation. It can’t be good for your health.
Don’t worry about things you can’t change and make decisions based on things you can.

Even the good ship BBC are exasperated by her flip-flops. And they wouldn’t make stuff up…

 https://www.bbc.co.uk/news/articles/cx2yzj6619wo

MallyGirl

Skylla2010 said:

How would the NI-free cap of £2k on SS pension contributions work in practice? e.g. with a pension contribution of £52,000pa and 8 or 2% NI paid on £50k, the NI to be paid is anything between £4k and £1k, right, depending on amount of income over £50,270? (Correct for both England and Scotland i take it)

Throw in the lucky ones like my OH that currently get the employer NI as well

prowla

We've had many years of being told that the State Pension isn't sustainable and we should take out private pensions.

The previous Labour government did a tax raid on pensions, which simply stole money from people's futures.

Now there is speculation that the current government will further disincentivise people to pay into pensions.

If they put an NI limit on them, then there'll be no point in investing for the future via that route.

Another measure taking money out of the economy (I'd just use the difference to pay towards my mortgage).

prowla

The problem with all of these tax increase options is that they're fine if you think of tax as being an independent revenue stream.

But it doesn't work in isolation; it's part of an interlinked system where changes have a blast radius.

If your job is to focus on the government coffers, then you will have a blinkered view and probably won't have any regard for the effects.

Cobbler_tone

In practical terms how will the NI be taken? From the pension contribution or a charge on net pay? i.e. would less go into the pension, or would you need to reduce your contribution to get the same net pay?
Yes, I know nothing has happened yet but the net has to close in somewhere if they aren’t playing with basic IC/NI rates which now seems to be the case.
At least there is hopefully a window to max things before April, for those retiring next year.