Salary sacrifice
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Grumpysally
Posts: 790 Forumite
I noticed Martin mentioning salary sacrifice in this weeks newsletter regarding childcare vouchers. Coincidentaly this week our employer sent out details of a home computer lease scheme which was paid for by salary sacrifice.
What I want to know is does this have an implication in the long term on state pension, as, as I understand it, the payments come out before tax therefore your taxable income will be less and you will have a slightly lower NI contribution. Also if you are paying a company pension which is a percentage of your wage will that be affected?
Hope this makes sense.
Alison
What I want to know is does this have an implication in the long term on state pension, as, as I understand it, the payments come out before tax therefore your taxable income will be less and you will have a slightly lower NI contribution. Also if you are paying a company pension which is a percentage of your wage will that be affected?
Hope this makes sense.
Alison
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Comments
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There will be some implications on the Additional State Pension Scheme, the Basic Pension wouldn't be affected unless your sacrifice took you below £4264 p/a.
If you pay in to an Occupational Pension Scheme, them the amount of Additional Pension you accrue is very minimal (sometimes nothing at all) and so should shouldn't really make any difference to your pension.
It will make a bigger impact on your State Pension if you are not contracted in , but again unless it is a major salary decrease, you shouldn't see too much drop in the additional state pension you accrue, in fact if you drop in to a lower band for Additional Pension , you could actually be better off, as its more generous to lower paid people.I no longer work in Council Tax Recovery but instead work as a specialist Council Tax paralegal assisting landlords and Council Tax payers with council tax disputes and valuation tribunals. My views are my own reading of the law and you should always check with the local authority in question.0
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