Say no to payrise as it leaves me out of pocket?

[PensionQn1]

I am due a payrise of £1,900.

Unfortunately, this payrise will just sneak me into a higher % band of pension contributions.

The additional pension contributions alone will swallow up £1,150 of the payrise. There will also be additional tax, NI and student loan to pay, meaning that the payrise will actually leave me out of pocket!

Would it be weird to refuse the payrise and explain why? Is this even possible?

Is there not somrthing about putting it into your pension so you're still getting the benefit of it but not being taxed on it?

Sadly not as it’s defined benefit, so the amount I contribute doesn’t affect the amount I receive.

Are you on an incremental scale?

How old are you, those pension contributions will pay off in the long run?

Are you sure you’ve calculated the extra pension contributions correctly as that seems a very proportion of additional income (60%)?

Also if you are going to progress in your career, which presumably you studied for given your student loan repayments, then your salary is going to rise over time. Wont this increase put you in a stronger position to make the next step in your career?

It would look weird to turn it down. You are better off just not cash wise.
And assuming it's regular pay rises, the situation will improve in a year?

Course you could opt out of the pension but that would be silly!

Yes it would be very silly..do you not value a pension.

Are you NHS? I’m in the same position but will just accept in the short term as it puts me in a better position to go up a grade.

Surely the tax and NI costs will only be based on the increase after pension contributions have been taken? So they shouldn’t leave you worse off in terms of net pay received. Afraid I don’t know about student loans (too old!)

How is your pay ever going to increase then?

What does your pension contribution structure look like? Very odd to have the % based on salary. Age and service yea, but salary is a new one on me. Presumably the employer contribution also goes up?

I would never opt out of a defined benefit pension. The benefit you receive is directly linked to your pay so the higher it is the more pension you will receive. You will be better off with the pay rise and taking the short-term hit.

I've just had a very similar thing so my £10K pay rise has basically equated to around £20 a month. Real not worth it for all the extra hassle.

I suppose you could try and negotiate enhancements instead of money, eg an extra week of leave or something?

If you're planning on getting promoted further though, you'll have to suck up the minimal return at some point in order to get to the next level so you may as well do it now

That's not exactly what defined benefit means. Presumably by being a higher earner at retirement age, you will get more pension. It's not like every teacher gets the same pension no matter what their earnings and service length.

There is a fab group on Facebook called Meaningful Money Community- I would put this question to them and some whizz will come along and advise!

Bet you’re NHS - happened to a lot of junior doctors when they restructured their pay scale. Pay rise on paper but put them into a higher pension contribution band (and in some cases meant they couldn’t claim child benefit) so causing a pay drop in reality.
Unfortunately you just have to progress out of it.

It would be very short-sighted of you.

Happens in academia as well get up to a certain grade and your pension changes completely.

I just had similar (but private company, no banding), a small pay rise and I’m now £2/month worse off due to increased tax/NI/pension contributions! Left me a bit

I worked in HR, employees at that time in our company could not refuse pay rises. We used to get this as a query as it would take some over the benefit threshold and they wanted to refuse but could not. Would be worth checking the HR manual.

Are you NHS? The very same thing happened to me when I went up a band

@Notavegan

Yes it would be very silly..do you not value a pension.

She might not be able to afford her bills here and now

I’m local authority, so it sounds very similar to the NHS. I’m early 40s and I have worked here for one year. This is my first ever pension (terrible, I know) so I definitely won’t be opting out of it, as it’s literally all I have for my retirement.

I’ve re-done the calculations and in fact, out of a 1,900 payrise I will receive an extra £33 a month. Obviously I won’t turn it down, but you’d think there’d be some staggering between the contribution bands!

Oh so you won't actually be put of pocket?im that case there's no reason to refuse.

Yes 1900 annual payrise isn't actually that much for monthly salary once all deductions are made

Use some money to pay for extra pension and then it won’t be taxed so you will benefit from the pay rise.