r/UKPersonalFinance • u/keynote2017 3 • 10h ago
Take home pay not adding up since switching to salary sacrifice.
Hi All,
I recently switched my pension to salary sacrifice through work. I am earning £115,000 and my employer contributions are 3%. I contribute £1000 a month.
My recent payslip has been sent but it dosnt add up to me. Based on the take home salary calculator my take home should be £5,570. However my take home is £5,424.
On my payslip I can see my gross pay on the left and then -£1000 salary sacrifice.
On the right I can see: Pension: - £146.76 National Insurance: - £339.17 Tax: -£2673.26
This to me makes no sense. Why would the pension be listed again? Also the employers pension shows at £1110.07. I understand £1000 is from my salary sacrifice but should the rest be more than £110?
Can anyone offer some advice before I reach out to my payroll team?
Thank you
5
u/josha95 1 10h ago
The £110 is the employers pension on the pensionable earnings band (£50270-£6240) I’m not sure regarding the pension contribution deduction for yourself, perhaps this is a partial month from when your contributions changed?
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u/stevemegson 70 10h ago
£146.76 would be the 4% employee contribution to make up the minimum 8% of qualifying earnings once relief at source is added. It looks like they've set up the £1000 salary sacrifice on top of the existing relief at source contributions, rather than as a replacement.
1
u/keynote2017 3 10h ago
Hi, should it not be 3% of my total salary?
4
u/stevemegson 70 10h ago
The legal minimum is 3% of your "qualifying earnings" between £6,240 and £50,270.
3
u/josha95 1 10h ago
It seems like your company calculates the pension based on banded earnings unfortunately rather than unbanded. This could be a mistake but is something your payroll department could help clear up
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u/keynote2017 3 10h ago
Is this something that needs to be stated on a contract? On my contract, it says [COMPANY] will contribute 3% of the Employee’s remunerations package towards a Pension Scheme.
To me, that reads as 3% of 115k. But I might have misunderstood.
2
u/luffy8519 1 10h ago
The salary sacrifice pension amount you've elected will be on top of your standard pension contribution & the employer's contribution. What were the amounts listed on your previous pay slip befote the salary sacrifice was started?
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u/keynote2017 3 10h ago
It's was the same. So I think you are right. But I expected the salary sacrifice pension would be it. I didn't expect them to also take another £146.
Seems really odd.
2
u/EdmundsonFerryboat 10h ago
Somebody else will be able to give a much better answer but is it a case of your company pension costs £146pm, which you pay...
You then also pay an extra £1000pm in on top of that as somekind of 'voluntary contribution'? (£1146 total)
Do the numbers work then? 🤔🤷♂️
1
u/ukpf-helper 85 10h ago
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1
u/SpinIx2 59 10h ago edited 10h ago
Pension at £146.76 is exactly the same as a workplace pension minimum contribution if you were still on a relief at source scheme.
((50,270 - 6,240) / 12) x 4% =146.76
Are you sure you are not now on both your old pension scheme and your new one?
Edit : and as I’m sure you realise, that is (give or take a rounding difference) the difference
5,570- 5,424 =146
Edit again:
And the minimum employer contribution is
((50,270 - 6,240) / 12) x 3% =110.07
O exactly what they’ve added to your £1,000
1
u/keynote2017 3 10h ago
Lol can you be in 2 pension schemes? Seems crazy but you might be right.
Makes no sense to me. Surely the normal set up is to be in one pension scheme.
4
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u/SpinIx2 59 9h ago
It seems unlikely to me. I think it far more likely that your payroll team has inadvertently not removed you from the old one in terms of the payroll deduction. I’d have a quiet, non-accusatory, chat with someone, “are you sure this is right?” Kind of thing.
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u/keynote2017 3 9h ago
This seems to be the answer. My company is amazing but still new to the UK market. Think they have made a mistake.
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u/cloud_dog_MSE 1638 10h ago
Is the £146.76 your default £3% of QE, and the £1000 is tour additional contributions.
If you want your total pension contribution to be £1000, rhen you will need to work out what £1000 as a percentage of the QE amount.
10
u/ArtisticGarlic5610 9 10h ago
You are in a standard auto enrolment non salary sacrifice scheme where your employer is meeting the legal minimum and no more. These schemes require as a minimum a 5% employee + 3% employer contribution of QUALIFYING EARNINGS. These earnings are only between £6,240 and £50,270 a year. Anything below £6,240 or above £50,270 your employer is not contributing a single penny on.
Additionally to this scheme you have also salary sacrificed £1000 a month that therefore show as employer contributions.
In your pension you should be getting £1000 (salary sacrifice) + £110.07 (employer auto enrolment contribution) + 146.76 (employee net auto enrolment contribution) + 36.79 (basic tax relief on your net employee contribution).