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Salary Sacrifice for Pensions - advice needed

(8 Posts)
Kbear Sat 07-Jan-17 19:41:44

DH's company moving to a Salary Sacrifice scheme.

Over our heads even though I've read and looked online for examples and advice.

I think this is a good thing from what I've read. Have I missed something?

Kbear Mon 09-Jan-17 18:23:40

anyone?

Schoolchoicesucks Mon 09-Jan-17 18:31:41

Yes. Generally it is good as your dh will save tax and NI on the amounts being sacrificed. Tax is normally saved anyway on pension contributions (if he's higher rate thru tax return/tax code) but salary sacrifice helps with the NI at 12% or 2% extra saving.
If he's borderline for the child benefit tax then it could help duck under the threshold too.
It saves the employ er money too - 13.8% so they're not doing it out of goodness of their heart.
However, it is a contractual reducation in pay which could affect maternity/paternity/sick pay, tax credits, redundancy pay calculations, earnings for mortgage applications etc etc. So do check that the tax & NI savings are worth it if any of these may apply.
You can usually opt out of it once a year.

Kbear Mon 09-Jan-17 21:56:41

Thank you for the advice.

EnormousTiger Mon 09-Jan-17 22:13:17

As said above can be good although if you want every last penny just to survive for some people contributing to a pension is not the right thing to do.

3strikes Mon 09-Jan-17 22:20:06

The main benefit is that you do not pay tax on the amount contributed.

However as the whole contribution is classed as an employer contribution you do not receive tax relief. For some, the extra income in the here and now Makes it worthwhile. For others it may be worth not doing salary sacrifice and getting tax relief, therefore getting more investment into their pension and potentially more investment growth.

Depends on what's your individual circumstances are really.

Kbear Tue 10-Jan-17 15:40:09

thanks

vinoandbrie Fri 13-Jan-17 19:32:09

Something else to note is that it genuinely is a sacrifice of your salary. This is important if you were applying for a mortgage in the near future.

Example:
At present your DH earns £50k. In looking at his salary for mortgage purposes, the bank will use that £50k figure.

Fast forward a few months, your husband has joined the salary sacrifice scheme, and the amount sacrificed is say £2,500. Applying for that very same mortgage your husband's salary will be taken to be £47,500, and not £50k. This is likely not to be relevant to you, but it can be very relevant for some!

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