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    • crisp
    • By crisp 10th Jul 18, 2:41 PM
    • 429Posts
    • 57Thanks
    Salary Sacrifice and company pension scheme
    • #1
    • 10th Jul 18, 2:41 PM
    Salary Sacrifice and company pension scheme 10th Jul 18 at 2:41 PM
    Hi, I am 46 and without a pension. I am single with no dependants.

    I joined a company in June. its a small company with just an unpaid director. I currently earn 2,500 per month.

    I understand that my salary now obliges the company to offer a pension and it has 3-months to implement this.

    The director has asked me to look into the options for a company pension and speak with our payroll company.

    Before I do that, I am interested in my broad options.

    Can I set up my SIPP and make contributions from net pay, get my employer to contribute and reclaim 20% tax or must this be via some company scheme and a payroll company?

    June has gone, but can a contribution be backdated?

    I am keen to start one and get it right after years of proscrination.
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    • MallyGirl
    • By MallyGirl 10th Jul 18, 3:04 PM
    • 3,368 Posts
    • 8,580 Thanks
    • #2
    • 10th Jul 18, 3:04 PM
    • #2
    • 10th Jul 18, 3:04 PM
    I'd avoid the term salary sacrifice as that has a very specific meaning.

    Your employer might be prepared to contribute to a SIPP but you might lose out on any matching.
    • lisyloo
    • By lisyloo 10th Jul 18, 3:11 PM
    • 23,269 Posts
    • 11,801 Thanks
    • #3
    • 10th Jul 18, 3:11 PM
    • #3
    • 10th Jul 18, 3:11 PM
    Salary sacrifice is a great way of doing things.
    If your employer will agree to this, then there is at least one advantage and potentially a second.
    The first advantage is that you won't pay employee NI on your payments to your pension. For a basic rate tax payer this is 12%.
    The employer also normally has to pay 13.8% employers NI.
    My employers passes this on to my pension in full which is great.

    My last employer split the saving with me 50/50 which is still good.

    So simple example.
    Employer pays you 100.
    If you take this as income employer pays 113.80, you pay 20 income tax and 12 national insurance and receive 68 in your pay packet.
    If you pay pension payments from net pay and put 68 in your pension then the 20 income tax will also get put into your pension.
    With salary sacrifice then somewhere between 100 and 113.80 will go into your pension.
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