Employer scheme or my own - for best tax efficiency
Posted: November 17th, 2020, 7:41 pm
Hi All
So i recently started working for a new employer who shall remain nameless but suffice to say they don't seem to know their backside from their elbow when it comes to the pension scheme they offer. I know that they SHOULD help / explain what the scheme is and how it works etc but they don't seem capable......
With a lot of digging i've determined that sadly it is not a shared cost/salary sacrifice scheme. It offers me the option to pay AVCs which are then sent to their designated pension provider. It also seems to operate with the relief at source as defined nicely here:
https://www.nowpensions.com/help-centre ... -at-source
So i don't think i save on NICs and I have the hassles of having to claim higher rate relief back from self assessment/hmrc come year end.
Tax and NI savings being equal I'd rather have my pension contributions hitting my existing pension.
My tentative conclusion is that
-I would be best to enroll into the scheme for the auto enrollment benefit of the employers 3% contribution.
-There is no point in making AVCs above the auto enrollment level since I don't believe this would save any tax etc over just taking the pay and paying it into an existing pension scheme that I have. (i'm thinking this will result in the same ultimate tax cost and take home pay)??
Can somebody please advise if this is sound thinking or if i've got this all completely wrong?
So i recently started working for a new employer who shall remain nameless but suffice to say they don't seem to know their backside from their elbow when it comes to the pension scheme they offer. I know that they SHOULD help / explain what the scheme is and how it works etc but they don't seem capable......
With a lot of digging i've determined that sadly it is not a shared cost/salary sacrifice scheme. It offers me the option to pay AVCs which are then sent to their designated pension provider. It also seems to operate with the relief at source as defined nicely here:
https://www.nowpensions.com/help-centre ... -at-source
So i don't think i save on NICs and I have the hassles of having to claim higher rate relief back from self assessment/hmrc come year end.
Tax and NI savings being equal I'd rather have my pension contributions hitting my existing pension.
My tentative conclusion is that
-I would be best to enroll into the scheme for the auto enrollment benefit of the employers 3% contribution.
-There is no point in making AVCs above the auto enrollment level since I don't believe this would save any tax etc over just taking the pay and paying it into an existing pension scheme that I have. (i'm thinking this will result in the same ultimate tax cost and take home pay)??
Can somebody please advise if this is sound thinking or if i've got this all completely wrong?