Paying lump sum into pension vs salary sacrifice?

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Wassa123
Wassa123 Posts: 393 Forumite
in Savings & investments
Hello,

I have a SAYE maturing and I want to sell and put some of it into an Aviva pension.
I'm a basic rate tax payer.

My employer offers salary sacrifice, and also gives us the NI saving they would have got. They contribute a set % of my salary anyway but don't offer any sort of matching.

A few questions:
1) Am I able to pay a lump sum into my work pension pot and benefit from tax savings? I know I can pay into a SIPP and have 25% added to it, but it's easier to have it in one place.

2) Would it be better to put this money in a high interest savings account and live off it and instead use salary sacrifice to pay like 95% of my earnings into my pension?

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  • eskbanker
    eskbanker Posts: 31,076 Forumite
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    Wassa123 wrote: »
    Would it be better to put this money in a high interest savings account
    What is this thing you speak of? ;)

    You'd need to check with your employer what they allow in terms of additional contributions into that same pension and if there are limits to what they'll use salary sacrifice for - for one thing the annual allowance for all contributions is capped at £40K if that came into play for example, although there are carry-forward provisions.
  • MallyGirl
    MallyGirl Posts: 6,627 Senior Ambassador
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    you cannot sal sac yourself below the minimum wage but beyond that it is down to the scheme as to what you can do (up to the £40k limit).
    I’m a Senior Forum Ambassador and I support the Forum Team on the Pensions, Annuities & Retirement Planning, Loans
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    All views are my own and not the official line of MoneySavingExpert.
  • Wassa123
    Wassa123 Posts: 393 Forumite
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    I hadn't even thought there was a limit of the minimum wage!
  • AlanP_2
    AlanP_2 Posts: 3,253 Forumite
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    Wassa123 wrote: »
    I hadn't even thought there was a limit of the minimum wage!

    As Sal Sac means your "pay" goes down due to your employer putting it into a pension in your name instead then yes it does as legally they must pay you at that minimum level or above.

    You could, if the scheme allows it, sacrifice down to the minimum to get the tax & NI benefit and still put your remaining salary into a SIPP or PP to get tax relief only and live off the capital.
  • kidmugsy
    kidmugsy Posts: 12,709 Forumite
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    AlanP wrote: »
    You could, if the scheme allows it, sacrifice down to the minimum to get the tax & NI benefit ... and live off the capital.

    To pursue that scheme for as many years as you can afford to, OP, is probably an excellent idea. The advantages of the sal sac are so enormous that you'd probably be best not to bother with conventional contributions to a SIPP.
    Free the dunston one next time too.
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