Salary sacrifice can I stop paying?

Babbacheez
Babbacheez Posts: 5 Forumite
First Anniversary
in Pensions, annuities & retirement planning
I was recently given advice by my area union rep to stop my salary sacrifice payment with my employer, my final salary pension is being frozen and I am having to start contributing to a DC pension, i currently pay £150 through salary sacrifice.

Is this correct advice, can I do this and will it affect me in any way if I do?

Apologies if this question has been previously posted, this is my first post on here, I did search but nothing of that topic came up.

Thank you
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Comments

  • JoeCrystal
    JoeCrystal Posts: 3,013 Forumite
    Name Dropper First Anniversary First Post
    You can still contribute into a DC pension by salary sacrifice I believe.
  • greatkingrat
    greatkingrat Posts: 325 Forumite
    First Anniversary First Post
    Do you mean you will still be paying £150, just not via salary sacrifice? Or that you are stopping paying completely?

    Either way, it is almost certainly bad advice, unless you like paying more Tax/NI than you have to.
  • Berkshire_Beancounter
    Berkshire_Beancounter Posts: 72 Forumite
    First Anniversary Combo Breaker
    If the salary sacrifice of £150 per month is currently going into the DB scheme, that is being frozen and you have the option of continuing the £150 per month into the new DC scheme...

    You'd get tax relief on the £150 per month (assuming you're under the lifetime and annual allowances) so that shouldn't make a difference.

    The 'benefit' of salary sacrifice is that it reduces the National Insurance cost for both the employee and the employer. How much is saved by the employee depends on their overall salary and how much NI they pay (for higher earners, the NI saved on salary sacrifice is lower).

    If you stopped paying through salary sacrifice (but still paid £150 as a deduction from your salary) then you'd get the same tax relief but would be paying more national insurance.

    Did the union rep say why you should stop paying?
  • Thrugelmir
    Thrugelmir Posts: 89,546 Forumite
    Name Dropper Photogenic First Anniversary First Post
    Babbacheez wrote: »
    I was recently given advice by my area union rep to stop my salary sacrifice payment with my employer,

    Are they qualified to give advice? Or merely expressing a personal opinion.
  • FatherAbraham
    FatherAbraham Posts: 1,024 Forumite
    First Post First Anniversary Combo Breaker
    Babbacheez wrote: »
    I was recently given advice by my area union rep to stop my salary sacrifice payment with my employer, my final salary pension is being frozen and I am having to start contributing to a DC pension, i currently pay £150 through salary sacrifice.

    Is this correct advice, can I do this and will it affect me in any way if I do?

    Apologies if this question has been previously posted, this is my first post on here, I did search but nothing of that topic came up.

    Thank you

    As reported, it's crazy advice.

    Your defined-benefit pension isn't being frozen. Freezing was made illegal decades ago. You're becoming a deferred member.

    If your future contributions are going into a money-purchase pension, then what on Earth is your Union rep doing, telling you to stop paying the pension? If you do that, you'll be losing the employer's contributions. You'll be poorer in retirement.

    Finally, since defined-contribution pension plans are always less generous than the defined-benefit plans they replace, you should think about doubling or tripling your contribution, if you want to avoid poverty in retirement.
    Thus the old Gentleman ended his Harangue. The People heard it, and approved the Doctrine, and immediately practised the Contrary, just as if it had been a common Sermon; for the Vendue opened ...
    THE WAY TO WEALTH, Benjamin Franklin, 1758 AD
  • Paul_Herring
    Paul_Herring Posts: 7,481 Forumite
    Name Dropper Photogenic First Post First Anniversary
    Babbacheez wrote: »
    I was recently given advice by my area union rep

    Unless your union rep is moonlighting as an Independent Financial Advisor, I'd take anything he's saying as a personal opinion of his, rather than 'advice,' since on the face of your original post, he's either wrong, or you've misunderstood what he's trying to say.
    Conjugating the verb 'to be":
    -o I am humble -o You are attention seeking -o She is Nadine Dorries
  • Muscle750
    Muscle750 Posts: 1,075 Forumite
    Your employer will pay into your new scheme which in effect is free money which if you opt out then they wont
  • Babbacheez
    Babbacheez Posts: 5 Forumite
    First Anniversary
    Won’t be taking my union reps advice, will be speaking to my financial advisor, year end to understand why he would of suggested this,
    Thanks for all of your input.
  • kidmugsy
    kidmugsy Posts: 12,709 Forumite
    First Anniversary Name Dropper First Post Combo Breaker
    I've always said that my union was ruddy awful on pension matters but your story takes the biscuit. Why in God's name would you want to cut part of your own pay?
    Free the dunston one next time too.
  • roysterer
    roysterer Posts: 127 Forumite
    Could it be that the union are fighting against the closure of the DB scheme??
    Hence that is why they are encouraging people not to buy into the new scheme at this point in time.
    The union should register a failure to agree if this should happen to be the case.
    Then the status quo should apply until a final decision has come to a conclusion.
    Most of these private employers are fighting tooth and nail to close the DB Schemes.

    Only a matter of time until the same will happen to public employee schemes.
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