Workplace Pension
Discussion
I assume it's possible, but what are the implications of paying 100% of my salary into workplace pension?
I'm going part time in April, three days a week, so my salary will drop below £60,000 p.a. - I'm PAYE.
I'm assuming tax and NI will be saved, but is there anything else to consider?
I'm going part time in April, three days a week, so my salary will drop below £60,000 p.a. - I'm PAYE.
I'm assuming tax and NI will be saved, but is there anything else to consider?
I'm honestly not sure about the rules around sacrificing 100%, or staying above minimum wage However, why would you ever want to sacrifice all of it? At the very least, you'd want to be paid the £12,570 tax free personal allowance, which you could always stick in a stocks and shares ISA if you still want it invested.
When I tried that my employer said I still needed to be paid at least the minimum wage which was a pain. I accepted what they told me but it may be one of those open to interpretation things.
Also don’t forget to use your £12.5k personal allowance which you may do anyway through non paye income.
Also don’t forget to use your £12.5k personal allowance which you may do anyway through non paye income.
Pierre2k said:
I'm honestly not sure about the rules around sacrificing 100%, or staying above minimum wage However, why would you ever want to sacrifice all of it? At the very least, you'd want to be paid the £12,570 tax free personal allowance, which you could always stick in a stocks and shares ISA if you still want it invested.
This. And I’m not sure I’d want to sacrifice in the lower band of tax - 40% sure - but unless you’re confident you’ll get the 25% tax free lump sum benefit from the lower rate contributions I reckon it’s better paying the tax on it and putting it in an ISA or under the bed as gold coins. Anyway, minimum wage is definitely the limit as I’ve just tried to do 100% of my salary into my pension for a few months and they made me stick to minimum wage.
My employer does not offer salary sacrifice so not an option.
I don't know the proper term for it, but my pension contributions are deducted before tax and go straight to People's Pension.
I'll be living off an inheritance recently received, so no other earnings as such so no income tax to save.
I don't know the proper term for it, but my pension contributions are deducted before tax and go straight to People's Pension.
I'll be living off an inheritance recently received, so no other earnings as such so no income tax to save.
SteveSlowboy said:
My understanding, you can't earn less than minimum wage so if it's salary-sacrifice you wouldn't be able to put it all in.
Don't think there's anything stopping you puttng the lot in so long as it's less than the £60k/year limit.
Pretty sure this is the case.Don't think there's anything stopping you puttng the lot in so long as it's less than the £60k/year limit.
If it's all taxed earned "salary" income I thought you could just fill your boots up to the £60K limit.
For Salary Sacrifice the minimum wage thing applies.
LordGrover said:
My employer does not offer salary sacrifice so not an option.
I don't know the proper term for it, but my pension contributions are deducted before tax and go straight to People's Pension.
I'll be living off an inheritance recently received, so no other earnings as such so no income tax to save.
Peoples Pension is an occupational pension scheme - a Master Trust.I don't know the proper term for it, but my pension contributions are deducted before tax and go straight to People's Pension.
I'll be living off an inheritance recently received, so no other earnings as such so no income tax to save.
Ask them if they facilitate AVC's.
As an alternative you could establish an alternative personal pension, maybe a SIPP if you want to be investment active, and make a personal contribution to that instead.
Rufus Stone said:
Peoples Pension is an occupational pension scheme - a Master Trust.
Ask them if they facilitate AVC's.
As an alternative you could establish an alternative personal pension, maybe a SIPP if you want to be investment active, and make a personal contribution to that instead.
I've been making AVC £2,000 month for the last few years, to top up employer's (minumum) contribution and my statutory 5%.Ask them if they facilitate AVC's.
As an alternative you could establish an alternative personal pension, maybe a SIPP if you want to be investment active, and make a personal contribution to that instead.
I could take the lump sum I have and invest in a separate SIPP, but it would mean claiming the tax relief, plus I'd be paying NI on income.
On the face of it, the main benefit to me is saving NI, which is worth having.
LordGrover said:
I've been making AVC £2,000 month for the last few years, to top up employer's (minumum) contribution and my statutory 5%.
I could take the lump sum I have and invest in a separate SIPP, but it would mean claiming the tax relief, plus I'd be paying NI on income.
On the face of it, the main benefit to me is saving NI, which is worth having.
If your employer won't offer salary sacrifice you will be unable to avoid the NI.I could take the lump sum I have and invest in a separate SIPP, but it would mean claiming the tax relief, plus I'd be paying NI on income.
On the face of it, the main benefit to me is saving NI, which is worth having.
LordGrover said:
My employer does not offer salary sacrifice so not an option.
I don't know the proper term for it, but my pension contributions are deducted before tax and go straight to People's Pension.
The term for it is....salary sacrifice. If they won't allow you to salary sacrifice more than that, you can always pay it in yourself out of taxed income, and if you're a 20% taxpayer, the pension provider will automatically top it up by the amount of tax you paid and get the money back from HMRC. I don't know the proper term for it, but my pension contributions are deducted before tax and go straight to People's Pension.
TwigtheWonderkid said:
LordGrover said:
My employer does not offer salary sacrifice so not an option.
I don't know the proper term for it, but my pension contributions are deducted before tax and go straight to People's Pension.
The term for it is....salary sacrifice. If they won't allow you to salary sacrifice more than that, you can always pay it in yourself out of taxed income, and if you're a 20% taxpayer, the pension provider will automatically top it up by the amount of tax you paid and get the money back from HMRC. I don't know the proper term for it, but my pension contributions are deducted before tax and go straight to People's Pension.
Employers can also deduct the pension contribution from your salary which is paid gross of income tax but NI is still deducted.
It sounds like LordGrover is referring to the latter.
TwigtheWonderkid said:
LordGrover said:
My employer does not offer salary sacrifice so not an option.
I don't know the proper term for it, but my pension contributions are deducted before tax and go straight to People's Pension.
The term for it is....salary sacrifice. If they won't allow you to salary sacrifice more than that, you can always pay it in yourself out of taxed income, and if you're a 20% taxpayer, the pension provider will automatically top it up by the amount of tax you paid and get the money back from HMRC. I don't know the proper term for it, but my pension contributions are deducted before tax and go straight to People's Pension.
Whereby the employee will have a gross salary and then a gross salary for tax (after pension contributions are made).
LordGrover said:
I assume it's possible, but what are the implications of paying 100% of my salary into workplace pension?
I'm going part time in April, three days a week, so my salary will drop below £60,000 p.a. - I'm PAYE.
I'm assuming tax and NI will be saved, but is there anything else to consider?
Main implication is wasting tax allowances.I'm going part time in April, three days a week, so my salary will drop below £60,000 p.a. - I'm PAYE.
I'm assuming tax and NI will be saved, but is there anything else to consider?
You should never, ever put your £12,570 tax free allowance into your pension. It’s idiotic.
(Maybe apart from helping a married tax allowance opportunity, but that would be a bit odd).
oyster said:
LordGrover said:
I assume it's possible, but what are the implications of paying 100% of my salary into workplace pension?
I'm going part time in April, three days a week, so my salary will drop below £60,000 p.a. - I'm PAYE.
I'm assuming tax and NI will be saved, but is there anything else to consider?
Main implication is wasting tax allowances.I'm going part time in April, three days a week, so my salary will drop below £60,000 p.a. - I'm PAYE.
I'm assuming tax and NI will be saved, but is there anything else to consider?
You should never, ever put your £12,570 tax free allowance into your pension. It s idiotic.
(Maybe apart from helping a married tax allowance opportunity, but that would be a bit odd).
Likely a moot point anyway, if he can't go below minimum wage, but another point would be to earn enough to get NI credits if needed for full state pension.
Gassing Station | Finance | Top of Page | What's New | My Stuff