Salary Sacrifice Explained

1. THE MONEY FARM Salary Sacrifice Explained

2. Salary Sacrifice Explained Topping up your pension as much as you can THE MONEY FARM • In addition we recommend you make a personal contribution into your pension • Either directly by the employee from their salary or through salary sacrifice What is Salary Sacrifice? • Salary sacrifice is an arrangement between an employee and their employer • The employee agrees to give up part of their future earnings in exchange for an employer pension contribution. • Because you pay less tax and National Insurance (NI) with salary sacrifice, you can use it to increase your pension What this actually means? You gain a significant boost to your pension without having to increase your contributions and without having to give up give up more of your take home pay So how does it work? Someone earning £30,000 contributing £2400 per annum or £200 per month into their personal pension

3. Salary Sacrifice Explained • £813.17 Saving: THE MONEY FARM Employer Pension Contribution: • £2,400.00 Employer National Insurance: • £3,106.66 £30,000.00 Employer National Insurance: • £2,717.01 • £3,899.00 Income Tax: £27,176.48 Employee National Insurance : • £2,687.40 • £3814.30 Income Tax: Employee Pension Contribution: • £2,400.00 Employee National Insurance : • £2,348.58 • £21,013.60 Take Home: • £21,013.60 Take Home: Pension Pension Employer Contribution: • £3213.17 Total Contribution: • £2400.00 = Increase of £813.17 pa Total cost to Employer £33,106.66 Total cost to Employer £33,106.66 As your employer is paying you less, they have less Employer National Insurance to pay This increases your pension contribution by £813.17… …we ask your employer to make it on your behalf This saves your employer £813.17 With Salary Sacrifice we reduce your salary to £27,176.48… … as well as £2,687.40 in National Insurance This saving can then added to the Employer Pension contribution Earning £30,000 you would pay £3,899 of income tax… However, instead of you making a personal pension contribution… This reduces your income tax to £3,814.30… … making your overall cost to your employer £33,106.66 … as well as reducing your National Insurance to £2,248.58 After your pension contribution of £2,400 per annum… As a result your take home stays the same The example we use is someone earning £30,000 and contributing £2400 into their pension In addition your employer will have to pay employer National Insurance of £3,106.66… … gives you take home pay of £21,013.60 …while costing your employer the same amount

4. THE MONEY FARM William Voegt 07768 905 290 Nicholas John 07796 952 192