Question about pension between different employers
Discussion
I've recently started a new job at a large company and today received an email re the pension scheme. It's currently sat at the min 3% contribution from myself however I intend on upping this to 7% and my employer will contribute 10%.
It's all done through an online portal and at the end there's a box to tick to agree to the salary exchange (salary sacrifice) in order to make the change.
I'm not overly familiar with this type of arrangement however looking at the pay slip from my previous employer i'm wondering what the difference is?
From doing a bit of research online i'm assuming the only difference is that with salary sacrifice the Tax and NI amounts taken will be slightly less as they will be based on a reduced monthly Gross?
It's all done through an online portal and at the end there's a box to tick to agree to the salary exchange (salary sacrifice) in order to make the change.
I'm not overly familiar with this type of arrangement however looking at the pay slip from my previous employer i'm wondering what the difference is?
From doing a bit of research online i'm assuming the only difference is that with salary sacrifice the Tax and NI amounts taken will be slightly less as they will be based on a reduced monthly Gross?
Orchid1 said:
I've recently started a new job at a large company and today received an email re the pension scheme. It's currently sat at the min 3% contribution from myself however I intend on upping this to 7% and my employer will contribute 10%.
It's all done through an online portal and at the end there's a box to tick to agree to the salary exchange (salary sacrifice) in order to make the change.
I'm not overly familiar with this type of arrangement however looking at the pay slip from my previous employer i'm wondering what the difference is?
From doing a bit of research online i'm assuming the only difference is that with salary sacrifice the Tax and NI amounts taken will be slightly less as they will be based on a reduced monthly Gross?
You'll have been on a similar scheme with your previous employer (although the percentage contributions may be different) as it is a legal requirement (unless you opted out)It's all done through an online portal and at the end there's a box to tick to agree to the salary exchange (salary sacrifice) in order to make the change.
I'm not overly familiar with this type of arrangement however looking at the pay slip from my previous employer i'm wondering what the difference is?
From doing a bit of research online i'm assuming the only difference is that with salary sacrifice the Tax and NI amounts taken will be slightly less as they will be based on a reduced monthly Gross?
boyse7en said:
Orchid1 said:
I've recently started a new job at a large company and today received an email re the pension scheme. It's currently sat at the min 3% contribution from myself however I intend on upping this to 7% and my employer will contribute 10%.
It's all done through an online portal and at the end there's a box to tick to agree to the salary exchange (salary sacrifice) in order to make the change.
I'm not overly familiar with this type of arrangement however looking at the pay slip from my previous employer i'm wondering what the difference is?
From doing a bit of research online i'm assuming the only difference is that with salary sacrifice the Tax and NI amounts taken will be slightly less as they will be based on a reduced monthly Gross?
You'll have been on a similar scheme with your previous employer (although the percentage contributions may be different) as it is a legal requirement (unless you opted out)It's all done through an online portal and at the end there's a box to tick to agree to the salary exchange (salary sacrifice) in order to make the change.
I'm not overly familiar with this type of arrangement however looking at the pay slip from my previous employer i'm wondering what the difference is?
From doing a bit of research online i'm assuming the only difference is that with salary sacrifice the Tax and NI amounts taken will be slightly less as they will be based on a reduced monthly Gross?
In your previous scheme it sounds like the contribution was coming out of post tax pay, and then the pension would claim the 25% tax relief and add it to your pension.
(If you were a 40% tax rate pay you could also have claimed 25% of what was paid out of 40% taxed income.)
With salary sacrifice it is contributed out of your gross pay, and there is no tax relief for the pension or you to claim. But because it is taken out of gross pay, you pay no tax or NI on it (neither does you employer) so you get to keep the tax and NI, but your pension has less in it.
If you are 40 or 45% tax rate payer, you don't need to make the extra claim as the money is already in your pocket.
(If you were a 40% tax rate pay you could also have claimed 25% of what was paid out of 40% taxed income.)
With salary sacrifice it is contributed out of your gross pay, and there is no tax relief for the pension or you to claim. But because it is taken out of gross pay, you pay no tax or NI on it (neither does you employer) so you get to keep the tax and NI, but your pension has less in it.
If you are 40 or 45% tax rate payer, you don't need to make the extra claim as the money is already in your pocket.
Orchid1 said:
I've recently started a new job at a large company and today received an email re the pension scheme. It's currently sat at the min 3% contribution from myself however I intend on upping this to 7% and my employer will contribute 10%.
It's all done through an online portal and at the end there's a box to tick to agree to the salary exchange (salary sacrifice) in order to make the change.
I'm not overly familiar with this type of arrangement however looking at the pay slip from my previous employer i'm wondering what the difference is?
From doing a bit of research online i'm assuming the only difference is that with salary sacrifice the Tax and NI amounts taken will be slightly less as they will be based on a reduced monthly Gross?
With salary sacrifice, you pay less NI (and SLC if applicable). It’s also much easier to get your higher rate relief, if a higher rate taxpayer (in SS it’s automatic. If relief at source you need to contact HMRC. If net pay it’s automatic). It's all done through an online portal and at the end there's a box to tick to agree to the salary exchange (salary sacrifice) in order to make the change.
I'm not overly familiar with this type of arrangement however looking at the pay slip from my previous employer i'm wondering what the difference is?
From doing a bit of research online i'm assuming the only difference is that with salary sacrifice the Tax and NI amounts taken will be slightly less as they will be based on a reduced monthly Gross?
Go on salary calculator and compare two equivalent salaries where the only difference is that one salary is an SS pension, the other is not.
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