Pension Salary Exchange

[Whitebootman]

My employer wants to introduce a pension Salary exchange, offering higher take home pay without any loss of pension benefits. On the principal that anything too good to be true is probably too good to be true, does anyone have any experience of this scheme?

Sounds like a scam to me. Any thoughts.

 

[roydo]

My employer wants to introduce a pension Salary exchange, offering higher take home pay without any loss of pension benefits. On the principal that anything too good to be true is probably too good to be true, does anyone have any experience of this scheme?

Sounds like a scam to me. Any thoughts.

Your take home shouldnt go up, it should stay the same. It isnt a scam, perhaps the employer said they will pay more into your pension if you do it though?

Oh, assuming you are in the UK as well.

edit. Or the employer will actually pay you the NI saving they make by doing it; odd way to do it, never seen that, and done dozens of them.

 

[Woolly Blue]

Normally done for tax reasons, it's legit

@roydo is a pensions advisor though, and for £300, he can give you a much lengthier answer.

edit : 'sake. He was quick in there.

 

[roydo]

Damn. Forgot the £300 bit off.

*mutters*

 

[Whitebootman]

That is why I am suspicious I'm told my take home will go up.

Yes I am a UK employee.

 

[roydo]

That is why I am suspicious I'm told my take home will go up.

Yes I am a UK employee.

Well it can in theory; it depends on all sorts though. Cant recall ever seeing it in practice though. But I have never seen one where take home has gone down, although again, in theory, it can do.

Your employer will be able to show you the sums based on your exact circumstances. And ask him what they plan on doing with the NI savings they make. Most pay it into the pension for you, but they dont have to.

 

[roydo]

That is why I am suspicious I'm told my take home will go up.

Yes I am a UK employee.

Just found this.

http://www.pensionsadvisoryservice.org.uk/about-pensions/saving-into-a-pension/salary-sacrifice

Can I count on your vote in next months election?

 

[Pat's Van]

if your employer said he was going to pay you in magic beans instead of money would you agree to that ?

no of course you wouldn't

it's a scam and you should run like hell from scheisters such as these

 

[evertony]

Are you sure it's not salary sacrifice where you can pay gross money into your pension instead of receiving it net as salary? The lump you put into your pension doesn't get taxed and hence your overall package is higher and your take home pay stays the same.

 

[Tramps_mate]

Normally done for tax reasons, it's legit

@roydo is a pensions advisor though, and for £300, he can give you a much lengthier answer.

edit : 'sake. He was quick in there.

@roydo hmmmm that's handy to know! Iv been trying to get some answers recently to a few questions..

 

[roydo]

@roydo hmmmm that's handy to know! Iv been trying to get some answers recently to a few questions..

PM me mate. No fee!

 

[Billy Dean]

Glad I read this thread. Gonna tell my employer where they can shove their magic bean offer when I get in tomorrow

 

[peteblue]

if your employer said he was going to pay you in magic beans instead of money would you agree to that ?

no of course you wouldn't

it's a scam and you should run like hell from scheisters such as these

I am currently being paid in magic beans and I find that this has worked well for me. Should I now say that I would prefer some form of cash based pension............

 

[Woolly Blue]

Glad I read this thread. Gonna tell my employer where they can shove their magic bean offer when I get in tomorrow

Bit off-topic I know, but every time I see your username I think of Michael Jackson rather than Dixie.

Billy Dean is not my lover ...



Hopefully other people will now suffer from the same affliction

 

[peteblue]

My employer wants to introduce a pension Salary exchange, offering higher take home pay without any loss of pension benefits. On the principal that anything too good to be true is probably too good to be true, does anyone have any experience of this scheme?

Sounds like a scam to me. Any thoughts.

From Scottish Widows......



SALARY EXCHANGE
What is Salary Exchange?
Salary Exchange is an agreement between you and your employer. You agree to exchange part of your gross (before tax) salary in return for a non-cash benefit, like a pension contribution.

How does it work?
Firstly your employer must be offering Salary Exchange through your pension scheme. Then, if you decide to take advantage of the salary exchange agreement, this involves an amend to your terms and conditions of employment. You may be required to actively sign-up to salary exchange or your employer may set a date for salary exchange to automatically apply. With this kind of arrangement, you must tell your employer if you don't want to participate. You will choose an amount of money to exchange and your gross salary is then reduced by this amount.

For example, if an employee earns £25,000 each year and chooses to exchange £2,500, their salary would become £22,500. The exchanged amount, is then paid direct to their pension plan as an employer contribution.

What this could mean for you
By making pension contributions through Salary Exchange rather than directly you would effectively reduce the amount of National Insurance contributions that you pay. This can result in two scenarios:

Keeping your take-home pay the same and increase the amount paid into your pension plan.
Or

Keeping your pension contributions the same and increase your take-home pay
Things to consider
As Salary Exchange is a change to your contract of employment, it is a legally binding agreement and you should ensure that it’s the right thing for you to do before agreeing to it. Some of the things that you should think about which may be impacted if you choose to exchange some of your salary in this way.

Benefits which are directly related to your salary, for example, life cover
State benefits which are impacted by the National Insurance contributions that you pay
Mortgage providers usually use multiples of the borrower’s salary to calculate the amount they will lend
You can’t allow your take-home earnings to fall below the National Minimum wage as a result of salary exchange.

TL;DR ?

Ask @roydo