What changes for salary sacrifice?

HedgehogRulez

Amusingly it impacts basic rate earners a lot more than those on higher salaries

DavidT67

BlackKnightMonty said:That says (some) NI relief is still available from April 2028 though.

£2k of relief.

as opposed to the current £60k of relief.

A 97% reduction in relief. 

There's currently no upper limit on ER and EE NI relief for pension contributions via salary sacrifice.  

£60K is the default annual allowance for pension contributions above which an income tax charge liability might arise, if you don't have available carry forward of unutilised prior years allowances.

onomatopoeia99

HedgehogRulez said:

Amusingly it impacts basic rate earners a lot more than those on higher salaries

And previously it benefited basic rate earners a lot more, if they were able to take advantage of salary sacrifice, which an awful lot couldn't. At least now the playing field will be a lot closer to level irrespective of the contribution method.  SS still has a small advantage but not the significant advantage it had.

GunJack

Cobbler_tone said:

Or the obvious sweet spot. Hammer it now and retire before 2029. Takes it out of the equation.
I know, that’s not helping.

I'm going to get caught with 8 months of this, I'm planning to go in December 2029 so it will impact as I should be putting around 50% of salary (plus employer's 15%) in for that last 8 months....unless the company change their contributions because of the NI....

Cobbler_tone

GunJack said:

Cobbler_tone said:

Or the obvious sweet spot. Hammer it now and retire before 2029. Takes it out of the equation.
I know, that’s not helping.

I'm going to get caught with 8 months of this, I'm planning to go in December 2029 so it will impact as I should be putting around 50% of salary (plus employer's 15%) in for that last 8 months....unless the company change their contributions because of the NI....

Good for you GunJack, do whatever you can practically afford IMO.

You’d think it will focus the attention of many but not all. One of my team chooses not to join the pension, the scary thing is that he has 28 years service in his mid 40’s. He has 3 properties that will be his ‘retirement income’. So the tax on his rental income is increasing and he will pay CGT if/when he sells them, unless he wants to manage them into old age. Then what does he do with the proceeds? Buy a pension or pay more tax on his savings.

I gave him a spreadsheet to show that £144 net a month gets him £600 into the pension but I may as well talk to the wall, so I only mentioned it once and not my place to advise people. I’m sure he’ll navigate through life but free money really, subject to the pension performance.

I have contributed 62% for the past 12 months now I can afford to do so. My OH finishes at 54 next July and I’ll be 57, with core requirements covered by DB’s and she has severance to see her through a couple of years. I could finish now really but don’t have a set date. Maybe next July, maybe at the end of next year. In the meantime I will continue to take advantage of the generous saving. It is a tough mindset to shift from £130k per year household income to around £40k, plus 3 to 4 years capital. I'm sure many wrestle with it. But when you boil down what you actually live on and spend it is not that scary. We will certainly have more money coming in and accessible than we use today. Over half of our income currently goes into pensions, plus NI of course. It’s a weight lifted when you know you don’t really need to work, it puts a different perspective on things and suddenly health, wellness and elderly parents shift into focus.

 Anyway, make the most of SS in its current guise if you are fortunate to be able to.

techno12

This will hit me to the tune of £7400 a year, as I currently sacrifice down to just above the minimum wage. The company I work for pays their 15% NI saving of the amount sacrificed into my pension. I use this as a way to increase their pension contribution, as it's just the statutory minimum of 3%.

I find I can live just fine on that amount, multiple trips abroad yearly etc. My flat is paid off however, which makes sacrificing such a large percentage possible. I'm using this as a guide to what I'll need to draw down when I retire (tho I want to ditch the flat and get a house, but don't want to be saddled with another mortgage, so I guess a chunk of my 'pot' will be used for that. The more I can save via sal sac while the sun shines the better, as it is very generous I'll admit)

I recently turned 55 and will have retired long before 2029, so I was relieved when she said something like "to give employers time....April 2029". Bullet dodged.

Grumpy_chap

One of the unspoken changes that might arise from this change to the SS rules is that any employer not offering SS currently is possibly now less likely to introduce an SS scheme (if indeed they had been considering doing so).  If no new employers offer SS pension, then the number already doing so will reduce as an overall proportion and the long term outcome might well be that SS pension dies off.

Cobbler_tone

techno12 said:

This will hit me to the tune of £7400 a year, as I currently sacrifice down to just above the minimum wage. The company I work for pays their 15% NI saving of the amount sacrificed into my pension. I use this as a way to increase their pension contribution, as it's just the statutory minimum of 3%.

I find I can live just fine on that amount, multiple trips abroad yearly etc. My flat is paid off however, which makes sacrificing such a large percentage possible. I'm using this as a guide to what I'll need to draw down when I retire (tho I want to ditch the flat and get a house, but don't want to be saddled with another mortgage, so I guess a chunk of my 'pot' will be used for that. The more I can save via sal sac while the sun shines the better, as it is very generous I'll admit)

I recently turned 55 and will have retired long before 2029, so I was relieved when she said something like "to give employers time....April 2029". Bullet dodged.

What is the calculation you’ve used to get to 2p/8p in the pound costing you £7,400 a year out of interest?

Dazed_and_C0nfused

Cobbler_tone said:

techno12 said:

This will hit me to the tune of £7400 a year, as I currently sacrifice down to just above the minimum wage. The company I work for pays their 15% NI saving of the amount sacrificed into my pension. I use this as a way to increase their pension contribution, as it's just the statutory minimum of 3%.

I find I can live just fine on that amount, multiple trips abroad yearly etc. My flat is paid off however, which makes sacrificing such a large percentage possible. I'm using this as a guide to what I'll need to draw down when I retire (tho I want to ditch the flat and get a house, but don't want to be saddled with another mortgage, so I guess a chunk of my 'pot' will be used for that. The more I can save via sal sac while the sun shines the better, as it is very generous I'll admit)

I recently turned 55 and will have retired long before 2029, so I was relieved when she said something like "to give employers time....April 2029". Bullet dodged.

What is the calculation you’ve used to get to 2p/8p in the pound costing you £7,400 a year out of interest?

I suspect this did most of the work,

The company I work for pays their 15% NI saving of the amount sacrificed into my pension. 

artyboy

Cobbler_tone said:

Or the obvious sweet spot. Hammer it now and retire before 2029. Takes it out of the equation.
I know, that’s not helping.

Basically what Mrs Arty is doing...