If a client is looking to pay a personal pension contribution or receiving a bonus, then they may consider establishing a salary / bonus sacrifice arrangement so that the employer pays the pension contribution on their behalf.
If a salary sacrifice arrangement is to be set up, there is the option within the calculator to choose either;
a. The same salary & higher pension contribution, or
b. Higher salary & the same level of pension contribution
If the client is to receive a bonus, they can input the amount of bonus they wish to ‘sacrifice’.
For all options, the percentage of Employers NI saving to pension that is input can range from 0% to 100%.
Employer National Insurance
From 6th April 2015, Employers do not pay Class 1 National Insurance on earnings paid up to the Upper Earnings Limit to employees under age 21.
From 6th April 2016, this also applies to apprentices under the age of 25. Therefore as no NICs are paid, this can not be re-directed to the pension plan. To cater for this, the calculator asks whether employer National Insurance is payable.