PENSION SCHEME CONTRIBUTIONS


L

Lulu

mu husband is about to join his new employers pension scheme, employee
contributions are 3.4%, employers are 2.5%. The info says that this
scheme attracts full tax relief on contributions, I take that to mean
that the contributions are deducted BEFORE tax is calculated on his
monthly salary - am I correct in thinking this please? and also am I
right in thinking that the 11% NI is calculated on the full monthly
salary amount before pension contributions are deducted?
Hope that makes sense!

Cheers!

Lu
 
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P

phantos02

Lulu said:
mu husband is about to join his new employers pension scheme, employee
contributions are 3.4%, employers are 2.5%. The info says that this
scheme attracts full tax relief on contributions, I take that to mean
that the contributions are deducted BEFORE tax is calculated on his
monthly salary - am I correct in thinking this please? and also am I
right in thinking that the 11% NI is calculated on the full monthly
salary amount before pension contributions are deducted?
Hope that makes sense!

Cheers!

Lu
Hi Lulu

If the info say full tax relief then that means, as you say, that the
contributions are deducted from his gross pay, the the rest is classed
as taxable.

As for the NI, yes, it is calculated before the pension deduction,
however, you should check whether the scheme is contracted in or out of
the state pension sheme (S2P, formerly known as SERPS). If it is
contracted out he will pay a lower percentage of NI because he will not
be building up extra state pension.
 

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