Salary sacrifice to be taxed

Re
The triple lock

Why the constant obsession with just one benefit on these threads

What about the increase in others for example in 2026 the increases will be

UC increase of 6.2%
PIP increase of 3.8%

The 2025 increase on pensions was 4.1% and as yet not disclosed for 2026 but is projected to be 4.8%

So you were there then, were you?
For the x numbers of ordinary families growing up the 70s and 80 who hadn’t a lot of spare after bills, your comments are insulting!
look beyond your f’ing AI data etc and maybe actually listen and talk to people who were there……..yes, like every generation there were those well off….but most ordinary working class were not living in luxury and often had to decide whether to clothe kids, eat or heat, or which bill they could clear that month etc……
you have no fucking idea.

Aren’t you a fun sponge.
Due to his hard work since the age of 17 and working in dangerous locations, he has pensions in many funds and places. This spreads the risks and he will be able to draw down different ones at the best times….He has pensions in US dollars which have outperformed our plodding stock market….
i imagine Rachel Reeves will change the goal posts for many.

There’s no “of course” about it. UK pensions can be invested in shares etc. in any country around the world. Very little at all of my pension portfolio is invested in the UK. Again: this is an issue about your husband’s financial mismanagement. Investing in appropriate asset classes sensibly can make a DC pension fund 2 or 3 times the size by retirement so I find it completely implausible that any transfer fees payable to move his funds to a SIPP could possibly be of that magnitude. If they were then the FCA would have shut down his pension provider by now.

This thread has been like bashing one’s head on a wall. Threads like this evidence so clearly the economic illiteracy and lack of basic numeracy in the population. It’s even more concerning given that those responding to such threads about tax and fiscal policy presumably are among the more informed members of the electorate. It does rather explain why such inccompetent politicians keep being elected.

It seems that saying about a country getting the Government that it deserves is validated. However, it’s a shame that the consequences of this level of economic illiteracy in much of the population have to be inflicted on the rest of us continually.

There would be charges and it’s doing OK.
He has a variety of pensions from different jobs and locations. Of course his US one is outperforming his UK ones, as is his 401k

Some people are beyond help…

Exactly what I’d explained to her twice now.

So he transfers the funds into a SIPP. That’s what I do and I have a huge choice of funds, the exact same ones as for my stocks and shares ISA because they are with the same provider, Fidelity. As an extra Brucey Bonus, I transfer the funds in whenever Fidelity have a cash back offer. I have got up to £500 free cash doing this.

He can move his contributions out of that scheme and into a SIPP (while keeping that occupational scheme open for ongoing contributions from him and his employer) and then invest the funds in whatever he chooses. As I said, his “issue” is down to his own mismanagement of his finances, not some problem with the pensions framework.

No, they have not. This is a completely false equivalence trotted out again and again by people apparently incapable of understanding basic graphs. The working lives of current pensioners spanned the period of most stability, economic growth and growth in real-terms earnings and asset values in recorded history, just by sheer luck.

It is not remotely comparable to what is happening now where there has been practically zero growth in salaries or living standards in the last two decades, with ever-rising real-terms living costs and taxation. These are simple, evidenced facts backed up by enormous amounts of economic data and it’s extremely tiresome that there are still people who are determined to assert the opposite.

They offer 3 funds.
he would have to invest by himself.
I as a school nurse outperform most pension funds.

Exactly, those moaning on here don’t realise that pensioners and those nearing it have already been through all this decades ago……
when they were bringing up their own kids and paying for either own house, renting, or just entering the workplace…..all of us struggled then - as does the newer generations starting out. FFS, we only managed to improve our situation as we got further on in life, with better paying jobs etc…those that come with experience etc……

No, not really. Pensions come with much higher risks than ISAs which is why there have to be significant tax incentives to encourage people to invest in them at all. For DC pensions there is the inherent market risk. There is then interest rate risk, inflation risk, the immense risk involved in making your funds inaccessible for many decades. There is tax risk because the pension will be taxed upon withdrawal at whatever the prevailing tax rates are at the time which are not possible to predict in advance but the direction of travel is clear, so the majority may end up paying higher taxes upon withdrawal than they received relief for at the point of contribution. To make this significant combined level of risk worthwhile for people there has to be financial incentive hence the tax free lump sum, the NI exemption as well as income tax relief.

If you add to this ongoing political risk i.e. politicians repeatedly raiding people’s lifetime savings, changing the rules so that people cannot plan for the long term as is required for an investment spanning decades with the money inaccessible, and treating these personal savings as if they are somehow Government property to be used as they see fit, then clearly the balance of risk/ reward is tipped too far towards risk and sensible people will rightly decide that it is not worthwhile. They will focus on ISAs instead despite lower tax incentives (because the tax incentives on those are more proportionate to the level of risk involved) and many will also cut their working hours or emigrate (many of whom are in skills-shortage areas and our most productive taxpayers upon whom the UK tax system is very heavily reliant in comparison to our international peers because our system is so top heavy already).

Hammering again the same group of people who have been the ones funding the vast majority of the country’s costs is extremely unwise, as is imposing yet another cost on the private sector after last year’s budget (over 50% of our economy is small and medium-sized businesses who simply cannot absorb this, especially after the unnecessary harm inflicted by Brexit). Independent economic analysis has shown that further negative tax changes to the pensions system are likely to result in a significant collapse in pension saving and significantly harm economic growth. What makes you think you know better?

I really despair of how economically illiterate how many of the comments on this thread have been. Some people do seem determined to learn the hard way.

That would be double taxation and mean some people paid income tax on contributions AND withdrawals. No tax is levied twice on the same income anywhere in the tax system because that would be completely ridiculous. It would undermine the entire principle of the pensions system which is that everyone can contribute free of tax and everyone pays tax at the point of withdrawal, i.e. the mirror image of the ISA system. It is not really “tax relief” rather deferral.

If any Government was to attempt such double taxation the entire pensions industry (including the public sector DB schemes!) would collapse causing a major market disruption. And you’d have no doctors in your hospitals because the consultants would get hammered with an extra 20% tax bill on their pension contributions, with this tax due for payment this year despite the earnings that this tax was being applied to being inaccessible to them for decades to come. Good luck with that.

I've had salary sacrifice since they took away our final salary pension scheme and replaced it with career average (it was one of the sweeteners). It also effects my studnet loan payments as my pension contributions come out before tax and student loan. So if they stop it not only will my tax go up but so will my student loan payments and I'll be even worse off.

When I changed jobs and companies, I opted to pay higher contributions as it was salary sacrifice as well. I will stop paying the higher amount if this happens.

The hate and bitterness seems to be towards anyone in the private sector, mainly, particularly those who dare to be "rich" ie earning above £46K or whatever it as that somehow classifies them as non-workers.

Can you not see how unfair it feels to them that the entire burden of changed pension rules falls on their shoulders?

It’s not about protecting them from their own ignorance, I agree people need to take responsibility. It’s about predicting lower pension pots in the future at a time when the state pension will almost certainly need to be significantly changed, and that will be easier if people have bigger private pensions.

Do you think the employers are going to absorb the additional 15% cost? Especially after last year’s budget?

Delusional. It will all be paid by employees in lower salaries, lower employer pension contributions, fewer jobs, more redundancies, lower investment causing lower productivity and growth and therefore perpetuating the ongoing fall in living standards because the only way living standards can rise sustainably is for productivity to increase and everything she is doing is having to opposite effect, as she was told it would before she did it and as she is being told about this latest absurd policy proposal.

Before the election she (rightly) kept saying growth was the priority and pretty much every single measure she’s taken since taking office has been anti-growth, hence her new “black hole”.

She’ll be back with another one next year, probably even bigger, because of the economic effects of these idiotic anti-growth policies. Some people are slow learners.

So people need to take some responsibility to check essential facts instead of making critical financial decisions based on clickbait and social media.

Its not reasonable to say we can’t make any changes because the voting public are too lazy to check facts (even if its becoming truer every year).

Its not that difficult to restrict a benefit to basic rate, it has been done before with far less flexible payment systems.

I agree on the merging of NI/Tax but again this is something which needs a longer term plan and voters do not support long term planning.

I think you have to account for that, yes. People who will see a headline of “Reeves removes tax advantage for salary sacrifice” and don’t have the financial knowledge (through no fault of their own) to understand it.
Plus it will absolutely affect employer contributions if they’re not getting the NI savings, so that will reduce pots even if everyone makes the most sensible financial decisions they can.

Absolutely. This will be the last straw for many employers and employees, especially after the damage caused by last year’s budget. People will cut their hours or emigrate, employers have explicitly stated they can’t absorb this and will cut salaries and pension contributions, reduce investment, make redundancies. And that’s aside from the long-term costs when people will inevitably reach retirement age with even less money to support themselves because of this latest raid.

It is apparent that many of the posters here are utterly clueless about economics.

The full time tax paying private sector employees are the primary beneficiaries. It would be utter self destroying idiocy to throw away a tax subsidy simply because its slightly smaller than it was a few weeks beforehand.

Honestly to me this will make so little difference to most people. In my last job I was paying 15 percent as my employee contribution and just doing some push calculations this change would have cost me less than 20 a month and this would not have changed my take home pay but the pension contribution. If they did it on income tax that would have been a huge hit but national insurance is less than 5 percent for most people.