Getting Bonus paid to pension

M

Mark_jmc

Registered User
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86
Hi,
If I have a 10% annual performance related bonus - can I ask my company to pay this into my DC pension as an additional employer's contribution or is this not above board?
I already pay 25% (my max contributions) and my employer pays 5% on an annual basis.

Also if I earn €75K and also get a car allowance of €10k & bonus of €7,500
are my max pension contributions 25% of €75k or 25% of (75k+10K+7.5k)
Many thanks,
Mark
 
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Mark_jmc said:
Hi,
If I have a 10% annual performance related bonus - can I ask my company to pay this into my DC pension as an additional employer's contribution or is this not above board?
I already pay 25% (my max contributions) and my employer pays 5% on an annual basis.
Click to expand...

Yes you can do this, provided that the bonus payment is not contractual.

Mark_jmc said:
Also if I earn €75K and also get a car allowance of €10k & bonus of €7,500
are my max pension contributions 25% of €75k or 25% of (75k+10K+7.5k)
Many thanks,
Mark
Click to expand...

The car allowance is a Benefit In Kind and a BIK is pensionable. The bonus is subject to full taxation and is also possible to make a pension contribution against it. So it's the second of your examples.

Regards,

Liam
http://ferga.com
 
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If the bonus is contractual your first proposal would be considered salary sacrifice and not allowable
 
LDFerguson said:
Yes you can do this.



The car allowance is a Benefit In Kind and a BIK is pensionable. The bonus is subject to full taxation and is also possible to make a pension contribution against it. So it's the second of your examples.

Regards,

Liam
http://ferga.com
Click to expand...

No, you cannot do the first thing...it’s blatant salary sacrifice.

And yes, it’s 25% of the total including bonus and car allowance.
 
It being a specific bonus means it isn't allowable as it is salary sacrifice. If it was a discretionary bonus, it would (but then your employer has more scope to get out of paying it).

Steven
www.bluewaterfp.ie
 
My employer pays bonus into DC scheme, it is then an opt-out to receive it in salary. There is a specific addendum to the bonus plan which details this, and for any eligible people of the plan, the same rules apply.
 
thos said:
My employer pays bonus into DC scheme, it is then an opt-out to receive it in salary. There is a specific addendum to the bonus plan which details this, and for any eligible people of the plan, the same rules apply.
Click to expand...

I am not a solicitor so I can't say with 100% certainty but salary sacrifice is about contract law. If your employment contract says you are entitled to something and your forgo it to get something else, that is salary sacrifice and not allowed.

If you contract says your bonus may be paid into your pension, you are not forgoing anything and the terms of your contract are being fulfilled.


Steven
www.bluewaterfp.ie
 
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