Salary Sacrifice and State Second Pension

myiguanodonThu 29/11/07 19:16

Hi,

I was wondering if there was anyone out there in OUTland who could help me. My employers have set up a salary sacrifice scheme, which will begin at the start of next year. If I do nothing my pension will automatically be opted into the scheme.

I've checked over all the small print and for the most part have satisfied myself that appropriate safeguards have been written into the changes with regards to the company pension I pay into, overtime payments, bonus payments (if we ever made enough for one), annual salary increases etc...

However what I can't seem to get a straight forward answer on from my employer, the state pension people or TPAS is to what extent it could affect my state second pension. I've also tried googling and while I have been able to confirm it would be likely to have some effect I cannot find anything to say how big this is likely to be.

As I see it my three options are:

• Opt out of the new scheme and stay under my current Ts&Cs - I'd not get NI relief on my pension payment but my state second pension would be unaffected.

• Be opted into the scheme and do nothing more - bugger my state second pension, who knows if it'll even be there by the time I retire.

• Be opted into the scheme and make AVC's with the money I get from not paying NI on my pension payments - in the hope that this outweighs any reduction in my state second pension amount.

Obviously I'm quite serious when it comes to my pension so the middle option does not appeal. But I feel unable to get the appropriate info to be able to make an informed decision between the first or last option.

So I was wondering if anyone had any experience with this and could offer any advice.

Thanks

bradpeetThu 29/11/07 19:46

This article may help http://www.fool.co.uk/news/retirement-pensions/2007/11/01/boost-your-pension-for-free.aspx

And I would encourage you to search that site for additional information. The discussion boards there usually attract some very knowledgeable people. And if your question has not already been answered, you can post it yourself there and watch the information come flooding in.

bbbracknellThu 29/11/07 19:55

What a shame - I used to work for the pension service and could have found out things for you but I left in July.

Independant financial advisers are normally very good at knowing the rules for this type of thing, although the independant bit does worry me somewhat.

laresThu 29/11/07 20:20

quoting > "My employers have set up a salary sacrifice scheme, which will begin at the start of next year. "

What's that?

quoting > "TPAS"

Who's that?

myiguanodonThu 29/11/07 20:35

quoting > "What's that?"

Basically it changes how my pension is paid, so that instead of me making my % contribution to my pension, they do. The outcome is that I don't pay national insurance on my pension payments, but my salary is reduced my my pension payment amount. They also save on the NI they would have paid on the contribution... as they are no longer paying me that amount it is not subject to NI. They're using the money to fund a flexible benefit scheme.

If they'd been paying the extra into my pension scheme I wouldn't have minded, but instead we get options for a load of stuff that isn't really relevant to my lifestyle.

quoting > ""TPAS"

Who's that?"

The Pension Advisory Service, or something like that. The government pension people said they may be able to help as the govt couldn't advise. But they referred me back to info I'd already googled that didn't really help.