Question for Robert

[FAB]

While it is easy to see on current pay slips how pension contributions are not taxed or have NI taken off them . But I found some old wage slips where the pension contributions and AVCs are in the deductions side along with the tax and NI deductions. So how was the tax not being taken from the pension etc accomplished? I realise that it hardly matters now but always curious exactly how they worked it out!

[RobertT]

Pension contributions have been on the left hand side of the payslips since RM introduced salary sacrifice(PSE), which I think was around October 2015 if I remember correctly.

Salary sacrifice is a way for both the company and the employees to save on National Insurance contributions.
It effectively means that RM are paying our pension contributions, including AVC's, instead of us.

All RM pension contributions are eligible for tax relief at source and have been for many years. All that happens with your RM wages, is for each £1 gross that's paid into your pension, 20p gets taken away from your income tax bill. Meaning a net cost to you of 80p.

The introduction of salary sacrifice means an extra saving of 12p, which is taken off your NIC's.

So overall each £1 gross only actually costs 68p net.

As long as your pension payments (and any other tax efficient savings you might be making like the P&M share scheme) don't take your basic pay below the national minimum wage, those payments should be on the left hand side of your payslip and you'll get the extra benefit of salary sacrifice.

If they go over that limit, those payments will revert to the right hand side and you won't get the benefit of salary sacrifice.

There is no additional saving on income tax over and above what we've always had.

[FAB]

Thanks Robert