Salary sacrifice to be taxed

It’s got nothing to do with the doctors’ pension protest. You try again.

Yawn. Spot the person who doesn’t understand basic economics

So, @SomethingInTheAirToday , people do overpay into pensions to avoid paying tax.

I get bored of the comments about the tax payer funded state pension
i have worked in both the private and public sectors
wages in the public sector are lower, the pension benefit is higher. You can’t flip one without the other. It doesn’t matter who pays the bill it’s basic supply and demand
Those who whine that tax payers foot the bill would also whine if the public sector workers couldn’t be recruited as the remuneration ( including pension) wasn’t good enough
get a grip or do the job yourself

There seems to be a lot of confusion on this thread about what salary sacrifice actually is. To be clear - at the moment when you or your employer make contributions to any qualifying pension scheme, they get tax relief (for you or your employer). What happens with salary sacrifice is that instead of you paying contributions into the scheme you “sacrifice” some of your salary and the employer makes a pension contribution instead. Since your salary is lower, NI contributions are lower.

There has been a fair bit of speculation that this sort of salary sacrifice arrangement might be targeted in the budget. Not sure how they could actually do this though. And, as previous posters have said, it’s the NI savings that would be removed only.

Especially for basic rate tax payers, there is no suggestion that the current tax relief on pensions contributions is going to be taken away. There is always speculation that higher rate tax relief might go, and very high earners already have their pension tax relief limited to £10k per year.

I can’t read that because it’s paywalled, but my paper copy of The Times has a worked example consistent with my understanding. Removing income tax relief on pension contributions above 2k would save far more than is being touted, and realistically would remove the incentive for most people to save for a pension, which is a key policy objective of all governments to make people less reliant on the state pension.

PS I have many years experience in the pensions industry so do have a bit of relevant background.)

Why don't they close tax loopholes, wouldn't that make the most for the country? Get rid of those with offshore accounts that don't benefit us.

Yep apparently we’re supposed to be happy to fund them because teachers are stressed or some such.

Agree
Labour need to put forward the recommendations and findings of the Conservatives white paper again
I wouldn’t be surprised if tax rises are introduced in this budget
there will be such an outcry that getting PIP reassessed will be easier

That’s not what the FT is saying.

https://www.ft.com/content/556ba05c-6a30-4d8c-834d-7125856215e4

You really have no idea what pension @LBFseBrom had. It could be DB. You’re making an assumption.

The vast majority of taxes are paid by the private sector.

In the words of Ian Hislop, who doesn’t love a bit of pre-budg!!

No, salary sacrifice only affects the NI element. Even those who pay into a pension without the benefit of a salary sacrifice scheme at the moment get full tax relief on their contributions. That won’t change. Hence why your point 2 is currently wrong, and will continue to be wrong if the proposal is implemented.

Surely Rachel Reeves couldn’t be so stupid as to further negatively impact private sector pensions without addressing the elephant in the room - the exceptionally generous tax payer funded public sector pensions.

Full state pension is just that. There are no extra benefits in paying national insurance contributions

You meanwhile will be getting employer contributions to your private pension that @LBFseBrom wont have had the benefit of. These only became fully mandatory in 2018. Lucky you !

( that’s before we even touch on free childcare, mortgage interest help through unemployment, etc )

Thanks

It’s no going to be limited to people
who put obscene amounts in. It will also target people putting in £2000 per annum
in.

Full state pension means you won’t get pension credit
The bar is incredibly low

You received benefits to your pension that are being taken away from the current working people.

It’s absolutely not subject to income tax when you pay in. (Unless you are looking to put in ridiculous amounts well beyond the means of most people.)

Live in luxury?

You do realise that you are a fair bit better off than the average pensioner total income already? And that a third of pensioners live in fuel poverty. And that most started work at 14 or 15 meaning a 50 year working life of paying into the system with less than 5% having access to the higher levels of education?

You may know some well off pensioners but less that 10% have incomes high enough to pay the higher rate of tax. The double/triple lock was introduced because we had the poorest pensioners in Europe and huge numbers living in absolute poverty.

But facts seem to be optional when talking about this subject. Personally I’d love to know how all the pensioners known by mumsnetters seem to go on five cruises a year, have 15 bedroom houses and five cars when less than ten percent manage to hit the 40% tax bracket and they are mostly public sector senior roles.

If you did the sums you would see that even if this proposal is real, it will make very little difference to your pension contributions as its only on one bit of the salary sacrifice model.

The state spends far too much, we have a number of insane uncapped liabilities baked into our welfare and benefits system that means we’re spending the best part of £400bn on welfare, benefits and pensions alone.

These entitlements only worked in a country which achieved 2-3% growth a year, a goal which is completely unachievable if you keep ratcheting taxes up and strangling private enterprise in red tape.

Its growth or slowly going bust - the only two options.

Make it harder to get PIP.

It’s almost universally accepted now that it’s too easy to get PIP, especially after Covid since face to face interviews have stopped for many, so things like getting PIP for anxiety is easier.

My mum gets PIP, the process has changed massively.

That’s the point, people will just opt of paying into salary sacrifice. So yes, they can get pension credit.

My mum is mortgage free and gets benefits including pension credits. I’m happy for her, she lives very well on the state. I’m not happy for other people though. So I might as well join them.