Salary sacrifice to be taxed

But it is what it is. Always winners and losers in life. You could drive yourself insane by comparing decade on decade of how much better or worse off each generation has it. The state pension is a topic which needs to be addressed, however unpalatable it is going to be. I think possibly the younger generation are going to have to prepare themselves for the demise of the NHS too, or at least know that the government are going to have to park any sentimentality for the NHS and make some very difficult decisions, even if to partially privatise.

It won't have any impact on your tax return, because you don't report NI on your tax return.

Well, that's quite a leap isn't it?

I was merely using it as an example of the fact many schemes are not sal sac. Loads of others are not, the majority in fact. Yours probably isn't.

But if you can't handle the truth, that's not my problem.

That’s one example. The statutory minimum for employer contributions is 3%. Many do not offer more than that. The average across all sectors is 4.8% for men and 4.6% for women. If private sector defined contribution pensions were so good, public sector employees would have no problem in changing to them…

It's not going to help inflation either - the biggest hit will be to retail, the same as last year budget, they will most surely pass on the extra cost to consumers.
And the job market is dead already, it's going to be really bad next few years.

You have misunderstood. I meant that the use of salary sacrifice was a win win for employers and employees, not its reduction.

I have to disagree. DH earns far more in the private sector than I do in the public sector. His employer matches his contributions up to a certain level which means he is receives the same monetary contribution as I do, has a larger take home salary now and will get the same pension as I will. Obviously, if you invest 3%, you won't.

You described it as a win win - but I'm not convinced it will actually net the Treasury as much as they think it will, because a lot of employers will just say okay no problem we can't afford to have X employees any more, some have to go.

I agree it doesn't make a huge difference to employees other than the faff of doing a tax return for higher rate tax payers (which carries an admin burden for HMRC). But employers already took a NIC increase last year, another one is not going to help the job market.

I am not misunderstanding anything. The reduction in the benefit of salary sacrifice will impact both employers and employees. I haven’t said otherwise.

It's still more than 3.5 years left of this horror 😡

May I remind you that there are almost no final salary or career average pensions available now for those in the private sector. They were ended under the last Labour government. Yes, public sector pensions have got worse, but private sector pensions have got a lot, lot worse.

I think you are misunderstanding how businesses operate. They don't say oh look, the extra NIC last year is £250k less profit, hey ho. And now we can't save NIC on salary sacrifice, another £250k, ah well it is what it is.

They say we budgeted to make £X amount of profit this year, looks like we are going to have to make a few people redundant. No extra money for the Treasury.

Where on earth did I say that? It was commented that the state pension was half of the living wage, I explained the reason for that.

That's the public sector whose contribution rates have increased by 50% since the turn of the century whilst the benefits have decreased. You're right, no impact at all.

Public sector workers are having their taxes increased too. If you want one of these ‘amazing’ public sector pensions then perhaps try a public sector job with their shit hours, shit conditions and shit pay. Nope, didn’t think so

I haven't asked for the living wage. I am just sick of being blamed for all society's ills. Do you want us all to die so we aren't a drain on society anymore.
I don't expect to be better off than someone working but I don't want vilifying for wanting a worry free retirement.

But what’s the point then? You’d be far better off just saving to an isa, etc if there’s no tax break. No one’s going to pay into a pension if they have to pay tax on the way in, then on the way out too, and not be able to access it till they retire (suspect the lump sum will be removed too before I retire).

You just sound bitter and moany

What exactly do you want or expect to happen?

Pensioners aren’t to blame for government mismanagement. They worked too to fund the pensioners of their day.

Off topic I know, but surely when working out whether or not someone is a net contributor over their lifetime, you factor in their own schooling, not their children’s?

Well that’s fine then isn’t it, as long as it doesn’t impact the public sector, it’s all OK. And you wonder why Labour are so unpopular…

You were suggesting that you were worse off than people on the living wage. I pointed out that they often have mortgage/rent, childcare and travel costs. Do you genuinely believe that you are worse off than all people on the living wage? 80% of pensioners own their own homes, very few have childcare or daily commuting costs. That’s why the pension is at at a lower level. Clearly you are struggling and I don’t know what has happened in your life that has meant you have got into this position. But we cannot pay pensions the equivalent of a living wage when they don’t have the same outgoings as those on a living wage. There is no magic money tree.

No, everyone's pension is not set up that way. Under 40% are. Almost no public sector are.

Do you actually know what salary sacrifice is?

I'm in HR, and since I work interim and freelance roles, I see a LOT of pension scenes. Very few use salary sacrifice. In fact, I have introduced it in two places.

Most final salary type schemes can't use it, so that takes most of the public sector out of this issue.

I've set up Nest-type schemes three times now, on the auto enrol system, and they don't use it.

Yes, your employer will take your pension from your salary, but that itself is not what salary sacrifice means.

As some posters have said, the employer saves the NI as well as the employee (I suspect more have started to look at it now NI has increased for employers). And some employers gift it back to the employee, into their pension, as once it is set up that way there is no real cost to the employer (there's a bit of admin because you do need some specific contract terms around it, and changes to payments etc are more restricted), or some gift half back and keep half.

If it's only after the first £2k a year, that also takes out a lot of lower earners from the issue.

And salary sacrifice cannot be used for anyone who is on or earns not much over minimum wage. That takes another raft of people put of this.

So, it's another of those things that will impact the employer more, and better paid employees (of which I am sort of one, but my employer scheme is not sal sac, though it was on my list to look into bringing in). The latter I can get behind. I'm starting to feel that employers are getting the brunt of things right now.

How can anyone live in luxury on 12k a year? Please, can you explain how a pensioner on 12k a year lives in luxury?

A smoothed earnings link similar to what they have Australia , because of the cost of the state pension triple lock is massively expensive.