Page 16 | Salary sacrifice to be taxed

SomethingInTheAirToday · 2025-11-08T19:02:22+00:00

[[https://x.com/politlcsuk/status/1986914552093745592?s=46 https://x.com/politlcsuk/status/1986914552093745592?s=46]] not only are my generation not going to have a state pension or private healthcare, but we also can’t save into our own pensions because we need to fund the current generation. this makes me so angry

222days · 09/11/2025 15:35

Teebow · 09/11/2025 15:15

How far are you @222days off retirement? Because some of your posts - like this one - make you seem about 12.

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Ah, I see. You have no answer to the economic points I’ve made so it’s now time for personal insults, is it?

Thisiswhathings · 09/11/2025 15:37

WildLimePoet · 09/11/2025 15:23

The fact that you think it’s no big deal that thickos are being voted in (by thickos) to vote on issues they don’t have the first clue about, at a time when they country is in serious trouble, says everything.

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My originally reply was removed for some reason , however your reply is worryingly true...

222days · 09/11/2025 15:39

Bruisername · 09/11/2025 15:15

That’s irrelevant to the point - we can harp on about the past and hate the world for it but we need to look forward and the situation we are in

europe is on the down and current policies aren’t helping. We’re not the superpower anymore and we need to stop acting like we are

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That’s exactly the point that I’ve been making, hence the need for fiscal policy to change and state pension welfare and healthcare to be entirely reformed because these are BY FAR our two largest expenses. Other than paying the interest on the national debt that the Boomers ran up, of course.

Sadly, nobody is prepared to engage with the solutions that have to happen in order for the UK to be restored to a fiscally viable position.

222days · 09/11/2025 15:43

Thisiswhathings · 09/11/2025 15:35

How do you know they haven't spoken to the experts before?
Where is the evidence she is having basic lessons, maybe Sam coates is in the same room as well. I don't believe everything the press writes.

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Well, if they did speak to any expert with even a basic grasp of economics previously then they certainly didn’t listen to them.

The IFS and many other organisations - every credible economist - has been telling them and the public that their economic plans didn’t stack up and would not work since before the general election.

I don’t want to out myself but in my role I meet with Ministers sometimes - in both this and previous Governments - and I know many others who do also. I can tell you categorically that they are not listening. As should be abundantly clear from the decisions that they have made.

Do you see any evidence of them listening?

WildLimePoet · 09/11/2025 15:45

222days · 09/11/2025 15:43

Well, if they did speak to any expert with even a basic grasp of economics previously then they certainly didn’t listen to them.

The IFS and many other organisations - every credible economist - has been telling them and the public that their economic plans didn’t stack up and would not work since before the general election.

I don’t want to out myself but in my role I meet with Ministers sometimes - in both this and previous Governments - and I know many others who do also. I can tell you categorically that they are not listening. As should be abundantly clear from the decisions that they have made.

Do you see any evidence of them listening?

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Please accept my sympathies. You must have nerves of steel and patience of a saint to deal with people who have to pass the single communal brain cell around for sharing whenever they need to speak or do anything.

Thisiswhathings · 09/11/2025 15:55

222days · 09/11/2025 15:43

Well, if they did speak to any expert with even a basic grasp of economics previously then they certainly didn’t listen to them.

The IFS and many other organisations - every credible economist - has been telling them and the public that their economic plans didn’t stack up and would not work since before the general election.

I don’t want to out myself but in my role I meet with Ministers sometimes - in both this and previous Governments - and I know many others who do also. I can tell you categorically that they are not listening. As should be abundantly clear from the decisions that they have made.

Do you see any evidence of them listening?

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I'm sure they listen, if they do anything about it we all will find out at the budget.

222days · 09/11/2025 15:57

WildLimePoet · 09/11/2025 15:45

Please accept my sympathies. You must have nerves of steel and patience of a saint to deal with people who have to pass the single communal brain cell around for sharing whenever they need to speak or do anything.

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It is extremely tiresome and fortunately I don’t have to endure it very frequently, only every few months or so. But yes, it requires a lot of patience, my supply of which is pretty much exhausted. It was particularly bad during the Conservative government(s) when the various Ministers were changing every few months so they had no idea about their briefs or any of the subject matter.

I had hoped that perhaps there might be some improvement at least at the Exchequer with Reeves in office because she repeatedly talked about growth pre-election and is supposed to have some background in economics but she seems to have minimal grasp of the very basics.

It’s all very depressing if you do care about the UK’s future. The calibre of people in these roles is utterly shocking. Whatever the party colours, they simply aren’t capable of these roles and the calibre seems to be getting continually worse.

222days · 09/11/2025 16:01

Thisiswhathings · 09/11/2025 15:55

I'm sure they listen, if they do anything about it we all will find out at the budget.

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No. Many, many experts tell them the same and they absolutely do not listen, as can been seen very clearly by the decisions they have made.

Schoolchoicesucks · 09/11/2025 16:11

nietzscheanvibe · 08/11/2025 19:17

Surely you will still be able to pay extra into your pension? You simply won't be able to do it as a means of avoiding tax? 🤷

The reason that pensions have "tax breaks" is to encourage people to save into them so that they aren't totally reliant on the state in retirement AND because the money is taxed when it is taken out of the pension (annuity or drawdown) so taxing on the way in and out of the pension would be paying tax twice.

I don't think this will get anywhere - twiddling with a tax cap on pensions or the 25% tax free is one thing but removing tax incentives from (non super high earner) pensions would be detrimental in the long term.

Teebow · 09/11/2025 16:24

222days · 09/11/2025 15:35

Ah, I see. You have no answer to the economic points I’ve made so it’s now time for personal insults, is it?

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To be honest, it’s nowhere near the anti pensioner stuff that I’ve read from you. As someone nearing retirement, the sentiments against pensioners are unwelcome and actually feel personal too.

When I started work there was no company pension available to me from my (private sector) employer. I was well over 30 having worked since 17 full time before one was available. With paying what I could afford into a pension, I still NEED the state pension - but it won’t cover cruises and the like, not that I’d thank you for a cruise anyway.

You keep referring to the millionaire pensioners and their cruises and mansions - I just don’t think you realise how the majority of pensioners live.

And so from your extensive knowledge and expertise, what are your thoughts on merging NI and income tax, and taxing ALL forms of income fairly and equally? I mean, why should those a la Sunak pay less % tax than me when that income yes may have some risk, but doesn’t require a job as such. And CGT? And while I’m asking, bringing other passive “by luck of birth” income like IHT into it as well. Because I totally get that seeming unfairness causes a lot of the current division in society. And I also disagree that middle earners should keep on paying more when the mega rich seem untouchable.

EasternStandard · 09/11/2025 16:26

222days · 09/11/2025 15:27

Maybe they should have talked to such experts to design a viable policy prospectus before being elected?

Maybe after their catastrophic budget last year and the (entirely predictable and predicted) effect that it had on the UK economy they should have consulted some experts about how to fix this?

If you don’t think it’s concerning that the Chancellor of the Exchequer is having to be briefed on the very basics about economic cause and effect because she is still trying to work out what policies she should put in place just over two weeks before her annual budget (never mind thinking through the details properly and having a clear plan in place for implementation before announcing things, eh?) then I’m not sure what to say to you.

Do you think that indicates her being competent to run the UK economy and that she has a viable economic plan in place that has any prospect of working? Particularly given she’s leaking things like the topic of this thread to the media which is one of the most economically illiterate things I’ve ever heard?

Unfortunately, even if you do for some inexplicable reason believe this indicates competence or is remotely acceptable for someone in her role, I don’t think anybody in the markets will be in agreement with you.

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It’s ridiculous I agree. I think it’s evident.

EasternStandard · 09/11/2025 16:31

222days · 09/11/2025 15:00

It’s very simple. As I’ve said multiple times here and on other threads we don’t need to reinvent the wheel.

Australia used to have a pension system modelled on ours. Like us, they realised several decades ago that this ponzi scheme would be completely unsustainable due to demographic changes. Unlike us, they reformed it.

They now have a means-tested system tapering the payment away for those who do not require it. Simultaneously, they mandated and gradually increased the levels of private pension savings (which was affordable for both employees and employers because they didn’t have to pay such high taxes to fund the state pension ponzi scheme anymore). The public there generally accepts that this is a good, robust and fair system and it works.

What we need to do is remove the opt-out from auto-enrolment so make pension saving for individuals mandatory (with a similar mandatory system for the self-employed unless they can demonstrate sufficient assets to self-fund their retirement already). This protects against future demographic changes (given the falling birthrate, this is essential: the problem with the ponzi scheme is not going to go away). Then mandatory contribution levels need to be raised, gradually, to ensure that the majority of people have sufficient funding for themselves.

Obviously it would have been far better if the Boomers who are now retired had implemented this decades ago when the problem was well-known and foreseen in advance, but they didn’t do so. They voted for tax cuts for themselves instead. So now the change will have to happen with a far less gradual pace but that’s entirely of their own making, frankly, and any gripes about that should be directed to the politicians of their own generation who failed to act at the appropriate time several decades ago.

This isn’t rocket science. Just like with healthcare, education, taxation, other parts of the welfare system, childcare provision, we know which systems work and which do not because there is copious evidence from decades and decades of them being implemented in other countries. We’re not feeling our way in the dark here, we have the evidence.

The problem is politicians in the UK refusing to implement evidence-based policy and instead wrecking the economy and deliberately making everyone poorer and poorer because they don’t have the backbone to articulate to the electorate the changes that need to be made. Primarily because, as we can see on this thread, a large proportion of the electorate don’t want to hear it and would rather stick their fingers in their ears and shout “Give me my cake! Otherwise it’s not faaaaaaaiiiiiirrrrr!”.

People in the UK seem to believe that things can’t get worse. They very much can. A lot worse. Over history the fortunes and prosperity of different countries have risen and fallen many times and there is no innate right for people here to have a higher standard of living than those in China, India, African countries, Afghanistan… we have this currently because of historic events. Other countries have Governments working extremely hard to ensure that they are the ones with higher living standards in the future. If we do not soon get a Government determined to and capable of doing the same then our living standards will drop like a stone in a pond and the UK public really needs to understand this fact before it is too late.

But it seems many pensioners don’t care and their view is “I’ll be dead by then and it won’t affect me so it doesn’t matter”. A disturbingly large proportion of them seem to have far less care for their children and grandchildren than any generation before or afterwards, a weird a supremely self-centred view on the world which has caused so much damage to our society and will continue to do so as long as their stranglehold on politics remains in place. Somebody needs to stand up to them finally and tell them enough is enough, but we have no politicians with the backbone to do so.

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Tbf I agree with your proposals. The time limited and contributions based benefits one too.

I absolutely agree with looking at other systems that work well. Australia has some better policies wrt economics. Not sure why but there it is.

Although they do have a housing issue and pension age tend to have a lot of wealth where younger people can’t afford to buy (maybe worse than here I haven’t looked).

Anyway I broadly agree with your take.

Schoolchoicesucks · 09/11/2025 16:41

I agree with rolling NI into the tax system. It levels the playing field between earned income and other sources of income.

cityanalyst678 · 09/11/2025 17:32

222days · 09/11/2025 13:55

Nobody was talking about overseas pension funds. This thread is about UK pension funds and UK fiscal policy. You stated that the money in your husbands UK pension savings couldn’t be invested in the same stocks and shares as your funds in a UK ISA which is categorically wrong because he can transfer them to a UK SIPP and invest them in whichever global assets he chooses to invest them in. Not having done so and therefore receiving lower returns is entirely his responsibility.

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But as I said. There will be an exit fee. And whilst being sold and waiting to be transferred, markets can change. And we are potentially facing a stock market down turn, so it’s fine where it is.
I imagine you have longer until you retire.
Because my ISAs are not my pension fund, I can take more risk. And whilst your pension pot will be subject to tax when you withdraw, based on your personal tax allowance, mine will be tax free. If you are a higher rate tax payer that will be 40% deduction.
I am trying to stay within the lower tax band. Having most of my investments in ISAs will give me more freedom. It’s likely Reeves will go for pension pots in some way, maybe the tax free lump sum. She may also reduce ISA allowance.

DdraigGoch · 09/11/2025 17:40

222days · 09/11/2025 04:16

It appeared that you were using the fact the NI is not currently paid on salary sacrifice or employer contributions to defined benefit pension schemes OR at the point where the pension income is received as an arguments to attempt to suggest that Reeves’ proposed policy is justified or reasonable.

It is not, because:

a) Levying NI on contributions rather than withdrawals/ pension income would yet again hit the younger generation, rather than pensioners, exacerbating generational wealth inequality;

b) Pensioners have paid nowhere near enough tax during their lifetimes as a cohort (a shortfall of £200k per person in real terms) to fund the services and welfare they have extracted from the state. By contrast, if we compare Millenials to the Boomers, Millenials are projected to pay on average £300k more in tax per person in real-terms than they receive in welfare and state services over their lifetimes, and this is before factoring in any further tax rises on those of working age;

c) Reeves’ proposal would lead to even more unfairness between (largely public sector) defined benefit schemes - which are already far more generous - and (largely private sector) defined contribution schemes. As well as DC schemes pushing all risk onto the individual the employer contributions are far lower. To then apply NI to those but NOT to the employer contributions to DB schemes would be completely unacceptable and create yet another distortion in the tax system leading to perverse incentives;

d) state pensions will not continue in their current form because this us mathematically impossible. Changes must be made to this now otherwise, again, it will further exacerbate generational unfairness (with those of working age being further impoverished to fund this unaffordable largesse to current pensioners, and then receiving no such provision themselves). This is always what the current pensioners try to argue for: “impoverish our descendents more but we should still get every advantage, you can’t change it for us”. It’s gone too far now and needs to stop. Therefore, incentivising saving (and generous employer contributions to personal pension savings above the legal minimum) is essential. This policy would achieve the precise opposite;

e) instead, the appropriate solution to resolve this issue of NI not being levied on pension contributions or withdrawals currently for either DB schemes and salary sacrifice DC schemes is quite clearly to levy NI on withdrawals/ pension income with immediate effect, for all pensioners regardless of their type of pension scheme. This will mean that income is taxed in the same way for everyone and current pensioners don’t get to have all of their contributions AND withdrawals free of NI while this is removed from those following them (but only in the private sector, of course!!) and there would be no (further, and even more unfair) discrepancy created between DC and DB schemes. It would also keep the underlying foundational and essential principles of the pension system in tact - which have been substantially undermined already by repeatedly attempts to raid pension savings by successive Governments, damaging trust in the system when the UK really needs people to save and provide for themselves - i.e. the principle that all contributions should be free of NI and income tax for everyone (FWIW I don’t think those in DB schemes should be paying NI on their “notional” employee contributions either, as many schemes have forced them to do in recent years - there should be parity): both employer and employee contributions should be completely tax free for all schemes and taxes should be levied upon withdrawal (the opposite and mirror image of the ISA system). This is simple for people to understand and is fair to all;

f) and as I noted in an earlier post, if implemented Reeves’ policy would cause huge economic problems both now and in the future because it will reduce pension savings; lead to yet more people in skills shortage areas cutting their working hours, retiring early or emigrating; increase the need for immigration (which the public don’t seem keen on); reduce business investment; lower productivity and obliterate any chance of growth: suppress any prospect of rising salaries or productivity or a recovery in the employment market; and discourage saving which would escalate the time bomb already created by the failure to reform the state pension and public sector ponzi schemes and put in place mandatory auto-enrollement at appropriate contribution levels for everyone (including the self-employed) over the last few decades.

Apologies if you were NOT trying to defend her policy. You comment seemed to me to be implying that because NI is not currently levelled on employer contributions to DB schemes or salary sacrifice DC schemes, or on pensioners’ income, therefore it would be acceptable and reasonable for NI be applied to employer contributions (but apparently per Reeves only to DC schemes in the private sector, of course), whereas the appropriate solution is clearly that the exemption from NI on pensioners’ income is removed and all contributions to pensions must be tax free.

This will not only raise far more in tax in real terms over both the long and short term (because the money grows tax free while in the pension scheme therefore there is far more to tax when it becomes taxable during retirement) but it is also necessary and fair that the current pensioners are the ones who make the additional contribution right now given their private pension incomes have not had any NI levelled on them, they are the wealthiest age cohort in society in terms of capital but also income (unheard of at any point in history previously, a direct result if their decimation of the state like a pack of piranhas), they are by far the highest users of state services (consuming almost 50% of public spending, the like of which they never provided to their own parents and grandparents even though there were far fewer of them proportionately to the population), and also because taxing existing pensioners more would have very minimal impact whatsoever on the economy whereas levying further taxes on working aged people or businesses will unequivocally mean that the economic doom loop continues, the UK’s fiscal position deteriorates further and everyone’s living standards continue to go down.

In short: it’s one of the most stupid and economically illiterate ideas I’ve heard her float, and that’s quite an achievement.

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I did state:
I'd prefer that they merge NI into income tax to close a few loopholes.

Teebow · 09/11/2025 17:49

Pandersmum · 09/11/2025 11:05

Consider the bigger picture … a salary sacrifice scheme is just one of the current schemes available to encourage people to proactively save more for their own retirement (& potentially make them less reliable on state support).

Take it away and less people save.
Less people help themselves to be self sufficient.
More reliance on the future state.

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I do see what you’re saying about encouraging people to save. But people can already benefit from “ordinary” relief on pension contributions and I imagine few reach the maximum they can contribute this way. As salary sacrifice schemes have to be created they are only really available for the few and (I think but am no expert) they tend to benefit higher earners more. It’s this legal falsification of salary that doesn’t feel right to me. Maybe somehow I could falsify a few other things to gain tax benefit - savings that aren’t really there or are somehow lower than they really are so the tax on interest could be saved perhaps.

I think making tax much simpler and equal across all incomes, earned from work or passively gained, would be good. I also think higher earners should see a benefit to their taxes, so I wouldn’t stop things like the child benefit or vouchers or whatever benefits you get from having kids to those on high wages, I think these things should actually be available for all, perhaps then there would be less desire to salary sacrifice to stay in a lower band of income tax.

222days · 09/11/2025 19:56

Teebow · 09/11/2025 16:24

To be honest, it’s nowhere near the anti pensioner stuff that I’ve read from you. As someone nearing retirement, the sentiments against pensioners are unwelcome and actually feel personal too.

When I started work there was no company pension available to me from my (private sector) employer. I was well over 30 having worked since 17 full time before one was available. With paying what I could afford into a pension, I still NEED the state pension - but it won’t cover cruises and the like, not that I’d thank you for a cruise anyway.

You keep referring to the millionaire pensioners and their cruises and mansions - I just don’t think you realise how the majority of pensioners live.

And so from your extensive knowledge and expertise, what are your thoughts on merging NI and income tax, and taxing ALL forms of income fairly and equally? I mean, why should those a la Sunak pay less % tax than me when that income yes may have some risk, but doesn’t require a job as such. And CGT? And while I’m asking, bringing other passive “by luck of birth” income like IHT into it as well. Because I totally get that seeming unfairness causes a lot of the current division in society. And I also disagree that middle earners should keep on paying more when the mega rich seem untouchable.

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Do you not understand the fact that means testing the state pension - by definition and as explained clearly in my posts - would have NO impact on pensioners who actually do require the state pension? I explained it extremely clearly and it would only involve removing it from people who have independent means for an income exceeding the net income of average UK full time working who earns £37,500 per year. If you are in the situation that you claim then presumably it would not apply to you and quite clearly - if you do need it - you would still receive it. So what is your objection?

nearlylovemyusername · 09/11/2025 20:36

222days · 09/11/2025 19:56

Do you not understand the fact that means testing the state pension - by definition and as explained clearly in my posts - would have NO impact on pensioners who actually do require the state pension? I explained it extremely clearly and it would only involve removing it from people who have independent means for an income exceeding the net income of average UK full time working who earns £37,500 per year. If you are in the situation that you claim then presumably it would not apply to you and quite clearly - if you do need it - you would still receive it. So what is your objection?

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Ok, so let's assume we start means testing state pensions.

Over life time the total impact on an average person would be around 325k (25 years x 13k pa). This is after decades of working, paying taxes and saving.

Don't you think this will incentivise people to quit work as soon as they can and not to save at all? Especially if you add self funded old age care into mix and 40% IHT.

I think means testing pensions can only work if you reduce working age taxes drastically in parallel with major cuts to working age benefits.

Bruisername · 09/11/2025 21:08

The other issue is that when would it apply? If you said it applied to everyone regardless of age you would be telling people who had been told they would get a state pension their whole lives that they won’t be. It would lead to even more distrust in the system than there already is

ultimately the books need balancing - that’s hard decisions on tax but also hard decisions on spending - we have to accept as a country we can’t keep on as we are and decide what priorities are

Teebow · 09/11/2025 21:15

222days · 09/11/2025 19:56

Do you not understand the fact that means testing the state pension - by definition and as explained clearly in my posts - would have NO impact on pensioners who actually do require the state pension? I explained it extremely clearly and it would only involve removing it from people who have independent means for an income exceeding the net income of average UK full time working who earns £37,500 per year. If you are in the situation that you claim then presumably it would not apply to you and quite clearly - if you do need it - you would still receive it. So what is your objection?

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Doesnt matter particularly about my personal situation, though a pension of 37k would be quite the miracle. I like to consider these discussions mainly from a non me angle.

The State Pension itself isn’t means tested. But because it is (quite obviously!) not a liveable wage on its own, the other benefits supplementing pensioners’ income ARE means tested, targeting support to those who need it. And pensioners pay tax if they exceed the personal allowance. You don’t need to get much over state pension to pay tax. If NI was scrapped and rolled into a single “all income” tax then those rich pensioners would pay accordingly, like everyone else.

Plantatreetoday · 09/11/2025 21:20

Bruisername · 09/11/2025 21:08

The other issue is that when would it apply? If you said it applied to everyone regardless of age you would be telling people who had been told they would get a state pension their whole lives that they won’t be. It would lead to even more distrust in the system than there already is

ultimately the books need balancing - that’s hard decisions on tax but also hard decisions on spending - we have to accept as a country we can’t keep on as we are and decide what priorities are

There are legal issues that make means testing the State Pension impossible for those who have paid into it. That’s not to say this could change legally for those starting out as workers now

It’s worth noting those on higher private pensions pay tax thereby giving back ( so to speak ) what they receive. So a private pension of £50k gives back just a little over the state pension

As an aside this issue of means testing was brought before Govn in January and here is the response

Government responded
This response was given on 27 January 2025
Our commitment to the Triple Lock throughout this Parliament will increase the State Pension by up to £1,900 a year by its end. The Government does not and will not means-test the State Pension.

Read the response in full

The Government is committed to supporting current and future generations of pensioners and giving them the dignity and security they deserve in retirement. There is no means test for the State Pension, and this Government will never introduce one.

We have made a commitment to the Triple Lock for the entirety of this Parliament which means spending on people’s State Pensions is forecast to rise by over £31 billion. Our commitment means millions of pensioners are set to see their State Pension rise by up to £1,900 a year by the end of this Parliament. Protecting the Triple Lock even in the current economic climate shows our steadfast commitment to pensioners.

Given the substantial pressures faced by the public finances, the Government has had to make difficult decisions to bring the public finances back under control. This includes the decision to target the Winter Fuel Payment on low-income pensioners who need it most.
It is because this Government has taken tough but fair decisions to put the public finances on a stable footing that it has been possible to invest an extra £22.6bn in day-to-day health spending in England over this financial year and next with consequential funding increases for the Welsh and Scottish Governments. We are committed to investing in and reforming the health service so that it delivers the care that older generations in particular deserve.

The new State Pension was introduced in April 2016 with the aim of providing a clearer, sustainable foundation for private saving. The full rate of £221.20 per week (2024/25) was set above the Standard Minimum Guarantee level of Pension Credit, to remove disincentives to save.
Removing previous savings disincentives by reducing the interaction between private pension income and means-tested benefits for those with modest incomes, has enabled pensioners to see greater benefits from their retirement savings or income.

Together, the new State Pension and Automatic Enrolment to workplace savings provide a robust system for retirement provision for decades to come. Pension Credit will continue to provide an important safety net for those who need it.

From
Department for Work and Pensions

xSideshowAuntSallyXx · 09/11/2025 21:21

Teebow · 09/11/2025 17:49

I do see what you’re saying about encouraging people to save. But people can already benefit from “ordinary” relief on pension contributions and I imagine few reach the maximum they can contribute this way. As salary sacrifice schemes have to be created they are only really available for the few and (I think but am no expert) they tend to benefit higher earners more. It’s this legal falsification of salary that doesn’t feel right to me. Maybe somehow I could falsify a few other things to gain tax benefit - savings that aren’t really there or are somehow lower than they really are so the tax on interest could be saved perhaps.

I think making tax much simpler and equal across all incomes, earned from work or passively gained, would be good. I also think higher earners should see a benefit to their taxes, so I wouldn’t stop things like the child benefit or vouchers or whatever benefits you get from having kids to those on high wages, I think these things should actually be available for all, perhaps then there would be less desire to salary sacrifice to stay in a lower band of income tax.

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I'm not a high earner and I have salary sacrifice, I pay less tax, NI and student loan. Made the decision to pay higher pension contributions because of it. If it was removed I'd opt to pay the minimum amount instead and have less pension when I retire. I see it as I put the money I save in tax and student loan into my pension.

It's not just higher earners who benefit from this. I've worked in two companies that have salary sacrifice (my Dad also had it when he was working, my sister has it too), so it isn't just a few companies.

Teebow · 09/11/2025 21:35

xSideshowAuntSallyXx · 09/11/2025 21:21

I'm not a high earner and I have salary sacrifice, I pay less tax, NI and student loan. Made the decision to pay higher pension contributions because of it. If it was removed I'd opt to pay the minimum amount instead and have less pension when I retire. I see it as I put the money I save in tax and student loan into my pension.

It's not just higher earners who benefit from this. I've worked in two companies that have salary sacrifice (my Dad also had it when he was working, my sister has it too), so it isn't just a few companies.

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You could still choose to pay more into your pension and get tax relief on it. But yes I appreciate that you wouldn’t save so much tax and reduce your student loan by having the salary sacrifice “pretend” salary.

Plantatreetoday · 09/11/2025 21:43

Teebow · 09/11/2025 21:35

You could still choose to pay more into your pension and get tax relief on it. But yes I appreciate that you wouldn’t save so much tax and reduce your student loan by having the salary sacrifice “pretend” salary.

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I think the fact it’s not available to everyone makes it very contentious

OneAmberFinch · 09/11/2025 21:44

I would agree that you would probably need to cut back other benefits as well. There is a perception among high net taxpayers which is something like "I've been paying for other feckless people my whole life and never took a cent, this is just the state giving back a small fraction of what I gave them in the first place" which tbh I have some sympathy for.

On the whole I'd rather have a much smaller welfare state which didn't require me to pay for the feckless in the first place... but that's probably a pipe dream! Or alternatively, a welfare state like some in Europe where if you are unexpectedly out of work you get temporary financial help which is somewhat proportional to what you put in. I think things like this help people to not see it as just "I'm being milked dry but will never see any rewards of this".

(All this of course to say, there isn't a world where you cut a few mental health benefits and can therefore ignore doing anything about pensions. Even if everyone claiming PIP for mental health is a grifter, it doesn't touch the sides of the pension bill.)