Workplace Pensions
What is a workplace pension?
A workplace pension is a way of saving for your retirement. You and your employer both contribute a percentage of your wages into your pension pot, which is then invested until you retire.
Do I have to join the pension scheme?
If you’re aged 22 or over, earn above the threshold (currently £10,000 per year), and work in the UK, your employer must automatically enrol you into the pension scheme. However, you can opt out if you choose.
How much will I contribute?
The standard minimum contributions are:
Employee: 5% of your qualifying earnings
Employer: 3% of your qualifying earnings
Some employers may contribute more. Your payslip will show your exact contribution.
Can I opt out of the scheme?
Yes, but we recommend thinking carefully before doing so. Opting out means you’ll miss out on employer contributions and tax relief. If you still wish to leave, you must do so within one month of being enrolled to receive a full refund.
Salary Sacrifice
What is salary sacrifice?
Salary sacrifice is an arrangement where you agree to give up part of your gross salary in exchange for a non-cash benefit—such as an additional pension contribution. It reduces the amount of tax and National Insurance (NI) you pay.
How does it affect my take-home pay?
Because your salary is reduced before tax and NI are calculated, you’ll usually pay less in both. That often means your take-home pay changes very little, even though more is going into your pension.
Is salary sacrifice the same as paying more into my pension?
Not quite. With salary sacrifice, you’re reducing your gross pay and having that money paid directly into your pension. It’s more tax-efficient than simply increasing your standard pension contributions.
Are there any downsides?
Salary sacrifice can affect:
– Statutory payments (e.g. maternity/paternity pay, sick pay)
– Mortgage applications (due to a lower gross salary being shown)
– Some state benefits
We can help mitigate against these potential downsides.
Your employer or HR team should let you know how it may affect you specifically.
Do I need to apply for salary sacrifice?
Yes, you’ll usually need to sign an agreement. Ask your employer or HR team how to opt in or out.
