Will Royal Mail cap Salary sacrifice after 2029?

[sweepster70]

With what I pay into my basic pension, lump sum booster and avc's, after April 2029 it will cost me £452 a year at today's rate. More importantly with the added 15% employer NI, it will cost Royal Mail £849.34 taking into account the first £2000 is exempt. This is not affordable. The Labour government really does detest anyone who has the ability to save money.

[NWpostie]

Everything Labour touches turns into a smelly pile of poo, they don't think things through, they just tax it.

Take Tenants rights act that has actually done more harm than good, landlords have left the rental market and sold up, leaving fewer rental properties available and rents have gone up even more due to scarcity.

[sweepster70]

Have looked more into this and even if Royal Mail opt out of salary sacrifice above £2000, I would still benefit with 20% tax relief on the remaining amount. Even though my gross wage would go above the tax threshold, it would still be reduced to the same amount it is now, so only paying 20% tax. I would still pay 8% on anything over £2000, but that's a small price.
If all employers opt out of salary sacrifice above £2000, it would be a kick in the teeth for this greedy government. They seem to want you poor, so they can control you. Labour for the working man........don't make me laugh.

[RobertT]

There will be no ability to opt out.
The legislation has already gone through parliament and the £2,000 limit will apply to all workplace pension schemes that use salary sacrifice.

Sal sac(RM call it PSE) has always been a saving on NIC's, and this limit will reduce the savings that can be made for anyone contributing more than £2,000.
All pension payments will continue to benefit from tax relief(as long as you're not saving more than you earn).

[sweepster70]

There will be no ability to opt out.
The legislation has already gone through parliament and the £2,000 limit will apply to all workplace pension schemes that use salary sacrifice.

Sal sac(RM call it PSE) has always been a saving on NIC's, and this limit will reduce the savings that can be made for anyone contributing more than £2,000.
All pension payments will continue to benefit from tax relief(as long as you're not saving more than you earn).

Sorry, opt out was the wrong word to use. I thought Royal Mail could just close the scheme as the likely cost to the business is expected to be over 15 million a year, having to pay the extra 15%. Or they could just cap it at £2000 as salary sacrifice, with the rest being a standard pension deduction benefiting from 20% relief but having to pay 8% national insurance on anything over £2000.
I know there are many senior Postmen and Women putting a lot into this as retirement looms fast.
How would this work out with the new pension?
I am trying to learn as much as possible, but it is quite complicated and I will get things wrong.
Thanks.

[RobertT]

Salary sacrifice is a way for businesses and workers to save NIC's.

The £2,000 cap reduces the savings made in relation to anyone paying more than that per year into their pension. But not offering a sal sac scheme at all will mean no savings being made, and both employers and employees paying the full rate of NIC's on all relevant earnings.

It's possible smaller companies might see the cap as more hassle and not worth it, but with RM employing over 100,000 people, I'd imagine it still represents a decent amount of money saved – just not as much as now.
So I wouldn't have thought they'd close it.

How it will work in relation to the RMCPP will depend on the individual to some degree, due to differences in pensionable pay, etc.

The golden rule of workplace pensions is to always join and always pay in whatever it takes to get the maximum employer contributions. In the case of the RMCPP, that means paying into the booster as well as the main scheme.

It's possible just the standard 6% contribution could take some people over the £2,000, but the booster is still worth it because the extra 1% from RM will more than make up for what you'll lose in extra NIC's.

The main question is whether AVC's are worth it!

If you're likely to be over £2,000 with standard and booster payments, there's no difference from a tax point of view between paying into AVC's or a SIPP.
So it's important to consider how and when you want to access that money, as that can affect how much you actually get in your pocket.
For example: It may be possible to take all AVC's tax free with your RMCPP benefits, but with a SIPP only 25% is guaranteed to be tax free, with the rest classed as income and taxed accordingly.
Also consider charges and investment growth, etc.

As ever with pensions, particularly those from RM, there's lots of different options and scenarios and there's never one single answer that suits everybody.

[milly]

Labour are pulling every lever possible to stop you from retiring early.
Their record on tinkering with pensions is shocking, Gordon Brown's dividend tax raid greatly contributed to the end of final salary pensions.
Brown has cost me tens of thousands in cash that I've had to contribute to make up the shortfall from losing my final salary pension.
Anyone under 50 needs to think twice before putting decent amounts of money into a pension, as Labour will keep increasing the age you can access it.
They really do hate the working class.