PensionAdvice #SalarySacrifice #AutoEnrolment #RetirementPlanning
Hey everyone! 👋 Need some advice on pension calculations between Salary Sacrifice and Auto Enrolment. Just started a new job with a salary of 45k and trying to figure out the best option for my pension contributions. Here’s what I’ve worked out:
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Salary Sacrifice
- Employee pays £112.50
- Employer pays £187.50
- Total: £300
- Take home: around £2910
- Auto Enrolment
- Employee pays £161.50
- Employer pays £96.90
- Tax Relief: £32.50
- Total: £290.70
- Take home: around £2865
Seems like salary sacrifice results in more in the pension and a higher take-home pay. 😮 Am I calculating this correctly? It looks like salary sacrifice is the way to go unless needing a higher salary for things like mortgages. Any thoughts or advice on the best option for basic rate taxpayers like me?
I’ve heard that salary sacrifice can be more beneficial even for basic rate taxpayers, especially considering potential tax savings. Any suggestions or tips on how to maximize pension contributions effectively? Let’s discuss and share some insights! 💡💰#PensionPlanning #TaxSavings #FinancialWellness
Salary sacrifice always wins as you save on NI too (another 8% for basic rate).
Even better, pay the same 5% by SS and get your employer 5% on top.
>Understand Salary sacrifice is much better as you become a higher rate tax payer just didnt think it made much difference as a basic tax payer.
Tax relief is exactly the same on autoenrolment and SS as basic and higher rate payers. The only difference between the two is NI, which is a bigger advantage as a basic rate payer (8%) compared to higher rate (2%)
Check whether the auto enrolment scheme is calculated on ‘qualifying earnings’ that put on upper and lower limit on the salary considered for the percentages.
Salary sacrifice based on a percentage of whole salary will work out better for anyone above national minimum wage.