Pension advice

[Mountain9]

Looking for advice reg pension contribution please for a relative

salary 120k

is it better to do salary sacrifice of 20k a year so it is deducted from salary in payslip or is it better to increase employer contributions. company has increase employer’s contribution and reduce salary to 100k?

Makes no difference.

Employer contributions won't reduce the salary unless it's a typo.

Salary sacrifice is normally the most effective way with the NI saving also unless it's a particularly terrible workplace scheme with high charges where a SIPP may be cheaper along with self assessment but it's more effort also

Thank you. The salary is now 100k and the employer has increased the contributions to compensate for the 20k. I would like to believe there is no difference but confused reg the NIC.

It’s the same whether employers or employee puts 20k in the pension and reduces pay by 20k.

Thank you , thats very helpful; was wondering whether there was any additional benefits by doing the salary sacrifice but it seems there aren’t.

You are correct there is an NI benefit, if employee earns £120k and puts £20k into pension then they pay NI on £120k but tax only on £100k.

If employer pays them £100k and puts £20k into pension then they pay tax and NI on £100k.

The saving is NI of 2% on £20k = £400.
Their employer will save 13.8% = £2,760
Unlikely but there may be some negotiation on sharing this additional saving