Employer Matches Into SIPP

The concept of "Salary Sacrifice" is quite well known now, and it also saves the employer the National Insurance they would otherwise pay, so any finance dept. with its eye on the bottom line should be leaping at the chance to implement it for all employees.

Your employer must contribute to a pension for you, but only at the minimum levels mandated by law. As you correctly observe, they don't have to match your contributions. Many employers do so, because they want to use the pension as a benefit they can use to attract and retain staff.

Realistically, the best way to get the finance team to agree to any level of contribution matching is to remind them that they have a pension and will benefit from any additional contribution that the company will make. Don't underestimate the value of self-interest in commercial decisions. I have retired aged 53 for the sole reason that in 1992 a new CEO took over at my company who wanted the best pension for himself. The Finance Director convinced him that he should put the same excellent pension in place for all employees, just as a matter of fairness. Everyone benefited from this change.

Clearly the senior management will also have to justify the cost to the shareholders, but this is usually accomplished by saying it is necessary to attract and retain the best staff. Some contribution matching over the mandated minimum contributions is so common that most shareholder groups won't bat an eyelid provided the amounts are not unduly generous. Contribution matching upto 10% is a good target to aim for. Remember, it won't cost the company 10% of the salary bill if they implement Salary Sacrifice, and they will get a more committed workforce.

duomoment wrote: »

I am wanting to ask my employer to set up Contribution Matching into a SIPP. I understand that they can do this, although they are not required to do so.

You need to spell out exactly what you need (don't assume finance teams automatically know) - and it certainly isn't clear what you are asking for, even though to you it is crystal clear!

You could be asking for contribution matching because your employer doesn't do that already; or you could be asking to have basic employer contributions paid to their current workplace scheme, but extra matched contributions paid to your own SIPP; or you could be asking your employer to let you have all contributions, employer and employee, paid to your SIPP....

Make very sure that you are absolutely clear in terms of what you request, because they won't be interested in thinking it through for themselves.

Then consider what's in it for your employer - why otherwise would they agree to do something which will cost them money with no commercial return? The days of everyone being in the same scheme, so everyone benefits from the directors looking after themselves, are long gone.

Salary sacrifice would save the company (and you) NI, but they can get that without any of the hassle of paying you more by way of matching contributions and/or paying to a scheme which isn't their usual workplace pension - although it would mean you don't have to claim any higher rate tax relief through your tax return.