I have reduced my hours and I was putting about 11% extra into the current Collective plan via salary sacrifice( or PSE I believe). into the Sottish widows AVC and the extra 1%.
However I got my new payslip and I have dropped out of PSE and all my pension contributions are now on the right side of the payslip (i.e. Tax taken before pension contributors)
All contributions before, were taken before tax. So I dont know why it should be any different because I have reduced my hours. On a pro-rata basis I would still be above the minimum wage, as before.
Hopefully Robert T may clear this up. Do I have to now reduce my contribution to get back to how it was before?
Also, can I claim back the tax paid from HMRC at a later date.(I have fallen out of PSE on a few occasions now, so I figure they may owe me £50 -100)
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Reduced hours lead to dropping out of PSE
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Flashman_
- Posts: 360
- Joined: 05 Jan 2010, 00:08
- Gender: Male
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RobertT
- EX ROYAL MAIL
- Posts: 6622
- Joined: 09 Sep 2007, 14:26
- Gender: Male
Re: Reduced hours lead to dropping out of PSE
There are people on here with more experience of PSE limits than me, but my method for working out the max AVC payment is:
RM hourly rate – national minimum wage x hours worked = max AVC's
So reducing your hours will lower the maximum you can pay into AVC's while staying within PSE.
The booster payments should automatically reduce as they're 1% of pay, but as I understand it, the AVC's can be set to either a percentage or a flat rate. If it's the latter, you'll have to lower it manually(via the people app?)
Your pay also has to stay above £13,200 per year to stay within PSE.
I'm not sure where it comes from, but there's an explanation of why you might fall out of PSE here which suggests OT might come into it aswell.
Someone else with more recent knowledge might be along to provide more answers?
RM hourly rate – national minimum wage x hours worked = max AVC's
So reducing your hours will lower the maximum you can pay into AVC's while staying within PSE.
The booster payments should automatically reduce as they're 1% of pay, but as I understand it, the AVC's can be set to either a percentage or a flat rate. If it's the latter, you'll have to lower it manually(via the people app?)
Your pay also has to stay above £13,200 per year to stay within PSE.
I'm not sure where it comes from, but there's an explanation of why you might fall out of PSE here which suggests OT might come into it aswell.
Someone else with more recent knowledge might be along to provide more answers?
Links to all RM pension related websites are here
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Flashman_
- Posts: 360
- Joined: 05 Jan 2010, 00:08
- Gender: Male
Re: Reduced hours lead to dropping out of PSE
Thanks Robert,
my AVC was set using the % method so it should have stayed in PSE.
It looks like it may have dropped out because on its own,( i.e.only the new hours for a year) the drop in pay would put me below £13200 (not this year however as I have already gone way over that) But Assume they work on a weekly or monthly basis.
If that is the case I will be better off stopping all my pension payments and open a personal pension to get the tax back in the form of pension tax relief. Seems I sodding ridiculous system.
Thanks Robert. I may ask HR to confirm this situation before i do anything.
my AVC was set using the % method so it should have stayed in PSE.
It looks like it may have dropped out because on its own,( i.e.only the new hours for a year) the drop in pay would put me below £13200 (not this year however as I have already gone way over that) But Assume they work on a weekly or monthly basis.
If that is the case I will be better off stopping all my pension payments and open a personal pension to get the tax back in the form of pension tax relief. Seems I sodding ridiculous system.
Thanks Robert. I may ask HR to confirm this situation before i do anything.