Pump up that pension.
Byline: MARTIN LEWIS
Q Could you please explain to me what is meant by the term pension salary exchange/ sacrifice? Stuart Webster Martin says: It's when an employer allows you to voluntarily reduce your salary and increases its contribution into your pension by the same amount. As your salary is lower, both you and your employer pay less national insurance (some generous employers then pay the amount they save into your pension too).
On the surface it's a no brainer - you get the same or a bigger pension contribution but pay less National Insurance - so you get more in your pay packet. However, as technically it means your salary has been reduced, it can have knock-on effects on your entitlement to benefits, the 'income' mortgage lenders look at, and some death in service benefits. Don't let this put you off, just discuss the pros and cons with your employer/pension provider first.
QI am a retired basic-rate tax payer; my wife is also retired and just gets her State Pension. Can she transfer her tax allowance to me? Dave Martin says: Some of it. Since April, the marriage tax allowance has meant that if one spouse earns less than the personal allowance (currently PS10,600) and the other earns more but is still a basic 20% taxpayer, then up to PS1,060 of their unused allowance can be moved over.
Assuming your wife doesn't earn over the personal allowance, it's a goer. The gain on a PS1,060 transfer is PS212 a year.
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|Title Annotation:||Features; Opinion Column|
|Publication:||Sunday Mirror (London, England)|
|Date:||Jul 12, 2015|
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