Salary Sacrifice - A no brainer?
Comments
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My current employer does sal sac but it looks like I'm going to be TUPEd mid year to a company that doesn't. Effectively a pay cut for me. :mad:
Do you have a contractual right to salary sacrifice without employer power to vary or withdraw the benefit? If so you may have a case for the salary sacrifice to continue with the new employer or to be given a suitable allowance as compensation.
Alex.0 -
My current employer does sal sac but it looks like I'm going to be TUPEd mid year to a company that doesn't. Effectively a pay cut for me. :mad:Do you have a contractual right to salary sacrifice without employer power to vary or withdraw the benefit? If so you may have a case for the salary sacrifice to continue with the new employer or to be given a suitable allowance as compensation.
Alex.
I think my contract only refers to employer contributions.0 -
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I think my contract only refers to employer contributions.
Unfortunately non-contractual "perks" are not obligatory.
However you should have a consultation and representatives, so this process should be used.
I've recently been through this and we obtained an extra 3 "personal" days leave via the tupe process as we made it very clear there was a lot of unhappiness about losing these even though they weren't contractual.
If it has a massive effect on you then clearly you need to consider your position, but do't rule out consulting your new employer first - they may not have appreciated this especially if they are not familiar with the UK system.0 -
Whilst I think that generally contributing as much as possible into your pension is the most efficient way to save for retirement from a tax point of view there are a couple of circumstances where it may not be the preferred way of making additional savings.
The main one for me is if you have a desire to retire early or have a change of career where your earnings may change significantly before you are 55.
The main concern I have is that I may well have sufficient monies saved within my pension for my retirement however if I wish to retire before I can access them then putting more money into the pension is not going to allow me to retire any earlier. Saving into accessible "post tax" accounts is the only way to do this even if its less efficient.
I've been thinking about this a lot over the last year or so and have decided that as I'm 36 and contributing around 25% of my salary into my pension any further savings would be best made elsewhere. I'd like to retire before the age of 55 and will need a reasonable amount of accessible savings to draw upon to bridge the gap as it were. If in another 10 years I think I may work until retirement age I will hopefully be able to back-fill my pension with the post tax investments and reap the tax advantage then. Obviously I'll miss out on the growth of the gross amount rather than the net but that's a small price to pay for the upside of the flexibility in my opinion.
On top of that there is possibility that either the higher rate relief may be taken away but also the possibility that minimum age of 55 will be increased.
It's a balancing act for me.
NB For you at 49 years old the minimum age is much less of a risk and I'd think that putting as much as you can into your pension, provided you have sufficient accessible savings, would be the best route.0 -
but also the possibility that minimum age of 55 will be increased.
I don't think this will be done for people who are "close" to 55.
Agree totally that one has to balance the benefit/flexibility.0 -
I don't think this will be done for people who are "close" to 55.
Agree totally that one has to balance the benefit/flexibility.
I agree its unlikely to effect anyone in their 50's but for someone who has 15-20 years until they are able to access pension savings its much more of a risk.0 -
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Anonymous101 wrote: »I agree its unlikely to effect anyone in their 50's but for someone who has 15-20 years until they are able to access pension savings its much more of a risk.
Agreed. It’s a much greater risk in general for someone younger. All sorts of things could happen around health, relationships, work, offspring.0 -
Anonymous101 wrote: »Whilst I think that generally contributing as much as possible into your pension is the most efficient way to save for retirement from a tax point of view there are a couple of circumstances where it may not be the preferred way of making additional savings.
The main one for me is if you have a desire to retire early or have a change of career where your earnings may change significantly before you are 55.
The main concern I have is that I may well have sufficient monies saved within my pension for my retirement however if I wish to retire before I can access them then putting more money into the pension is not going to allow me to retire any earlier. Saving into accessible "post tax" accounts is the only way to do this even if its less efficient.
I've been thinking about this a lot over the last year or so and have decided that as I'm 36 and contributing around 25% of my salary into my pension any further savings would be best made elsewhere. I'd like to retire before the age of 55 and will need a reasonable amount of accessible savings to draw upon to bridge the gap as it were. If in another 10 years I think I may work until retirement age I will hopefully be able to back-fill my pension with the post tax investments and reap the tax advantage then. Obviously I'll miss out on the growth of the gross amount rather than the net but that's a small price to pay for the upside of the flexibility in my opinion.
On top of that there is possibility that either the higher rate relief may be taken away but also the possibility that minimum age of 55 will be increased.
It's a balancing act for me.
NB For you at 49 years old the minimum age is much less of a risk and I'd think that putting as much as you can into your pension, provided you have sufficient accessible savings, would be the best route.
I'm aged in the middle (44) so and have the same concerns regarding short term cash.- I'm currently using my pension (via salary sacrifice) as the majority of my long term (10 years+) investments.
- I have a few shares held outside the pension for medium term (5-10 years) investments.
- I have kept my offset mortgage reserve accounts open for most of my cash savings for short term liquidity (0-5 years).
My current plan when retirement approaches (i'm aiming for 58 and providing I am still working) would be to "draw down" the offset mortgage reserve and use it for daily spending which will allow me to simultaneously sacrifice almost my entire salary into my pension (with a resultant tax saving, 8% employer contribution and 13.8% employer NI bonus.
When retirement arrives I will then use the lump sum from the pension to settle any resultant mortgage reserve shortfall and bag the rest.
• The rich buy assets.
• The poor only have expenses.
• The middle class buy liabilities they think are assets.
Robert T. Kiyosaki0 - I'm currently using my pension (via salary sacrifice) as the majority of my long term (10 years+) investments.
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