Salary Sacrifice - can someone explain

[MarthaGinyard]

I've recently joined a new company who operate a salary sacrifice scheme. I (think) I understand the tax/pension advantages from my point of view. But the amount my employer is paying into my pension seems huge. I've just got my first payslip so wonder if there could be an error.

Anyone know about this scheme?

You'd need to give more detail. Salary sacrifice is a generic term for any kind of arrangement where you exchange your £££ salary for some other benefit

Pension schemes all have different rules too, there are minimum contribution levels but as long as those are met the employer can choose their own %age for contributions.

Read your contract or pension details. That should tell you what the employer and employee contributions are.

Salary sacrifice just means the conts come out of your salary, then tax is calculated on whatever remains. No one here knows the details of your pension!

Some employers are generous though, esp in the public sector (my employer pays 20%).

Thanks.

My gross is approx £5,400 per month

I'm putting £1,250 per month into pension via salary sacrifice. According to payslip, my employer has put £1,450 into pension.

I started in Feb and don't have contract yet. Just offer letter. Private sector.

I think it’s not uncommon for the employer contribution to be higher than the employee one. I know that’s the case in mine (teacher pension) - my contribution is 9.6% if I remember rightly but the employer one is in the teens.

When you're in a salary sacrifice scheme it's common for the total contribution made into the pension (employee and employer together) to be recorded as employer contribution. Reason being that you are sacrificing salary as opposed to making a contribution ie your employer is paying you less, and putting the difference plus the employer contribution into the scheme on your behalf. I'd prob assume that the £1450 includes the £1250 from you, unless the payslip seems to indicate otherwise.

@MarthaGinyard

Thanks.

My gross is approx £5,400 per month

I'm putting £1,250 per month into pension via salary sacrifice. According to payslip, my employer has put £1,450 into pension.

Without knowing the rules of the scheme it's impossible to make any comment on those figures

How much is the minimum employee %age? What is the employer contribution? What are the rules of the salary sacrifice scheme?

You are asking a piece of string question

Those are very high contributions though, is that definitely correct?

Oh fuck helplesshopeless - I think you're right

So my employer's contribution is only £200 That seems measly! Can't even work out what % that is!

The employer needs to put a minimum of 3% under auto enrolment rules.

for salary sacrifice it is all described as "employer" contributions because it is pre tax.

£3k per month into your pension sounds a huge amount, even on a salary of 60k etc.

@MarthaGinyard

Oh fuck helplesshopeless - I think you're right

So my employer's contribution is only £200 That seems measly! Can't even work out what % that is!

It meets the autoenrolment minimum percentage. 200/5400=3.7%

Thanks user for calculation - that makes sense.

Just been for a coffee with new colleague. I casually mentioned pension and she said the company pay minimum for first 6 months during probationary period, then 8% after.

Thank god I ran this past you lot then I didn't look like a total idiot in real life

You really should know the features and rules of a pension scheme that you're contributing so much to.

Did you choose such a large percentage OP?

Yes. To avoid paying 40% tax.

I've been a contractor for a long time and usually do a tax return and do my taxes that way.