The basics when it comes to contributing to your pension via Salary Sacrifice
referred to as a self-invested personal pension).
The idea behind salary sacrifice pension is simple - you exchange part of your gross
income to be paid as pension contributions instead. Salary sacrifice pension
contributions are generally more tax efficient than the personal contributions you'd
ordinarily pay into your pension from your net pay.
When you make a payment to your personal pension plan from your net income
(your take-home-pay), your pension provider will claim 20% tax relief from the
government and pay it to your account. However, you will already have paid
national insurance contributions on the income being used to make the
contribution, and these cannot be reclaimed.
When you make the same contribution via a salary sacrifice agreement with Nasa
Umbrella, this is not the case. You wont pay any PAYE income tax or national
insurance on the value of the income you are exchanging for pension contributions.
The result? More tax savings at source, so overall a more efficient way of saving for
your pension.
Is joining salary sacrifice scheme right for me?
Whilst there are many advantages to entering into a salary sacrifice agreement,
there are also some considerations. Given that salary sacrifice involves reducing
your taxable income, it is worth noting that it may affect salary-related matters
such as the level of statutory entitlements you are eligible for, or borrowing levels
on mortgages.
We recommend that you discuss your individual circumstances with your
pension advisor or financial planner as we are unable to offer this type of advice.
You'll also need to take into account that the amount you agree is fixed, unless something drastically changes your financial situation. More information can be found here.
Whilst Nasa are unable to advise you on retirement planning, help is available
from several free and impartial government services such as:
The Money Advice Service www.moneyadviceservice.org.uk
Citizens Advice Bureau www.citizensadvice.org.uk/debt-and-money/
pensions/
Pension Wise (part of the Money and Pensions Service)
www.pensionwise.gov.uk
The Pension Advisory Service www.gov.uk/pensions-advisory-service