Keeping up company pension contributions

[expat]

Like most, I am employed by a Ltd Co that I happen to own. When I find myself on a contract somewhere that doesn't allow me to work this way, the Ltd Co remains active but just doesn't happen to be doing any business for the moment. During those periods the Ltd Co suspends payment of my salary, by mutual verbal agreement between the employee and the director.

Now, the Ltd Co also contributes to a pension for the employee, by salary sacrifice. My question is, would it be appropiate for the Ltd Co to continue to pay the pension even while the salary is suspended? Would it even be better so?

[Cheshire Cat]

sorry to hijack the thread, but do most contractors suspend payment of salary when on the bench? I was benched for the best part of three months this summer, and I continued paying salary (low anyway so no risk of eating into working capital) but is there any tax / IR35 / other reasons for suspending vs continuing salary payments?

[expat]

sorry to hijack the thread, but do most contractors suspend payment of salary when on the bench? I was benched for the best part of three months this summer, and I continued paying salary (low anyway so no risk of eating into working capital) but is there any tax / IR35 / other reasons for suspending vs continuing salary payments?

Well, you could have started a new thread

I know of no reason except for not having the funds. Certainly my Ltd Co remains technically trading, and I remain an employee; there is no reason why I could not be paid salary. You don't have to be making money for your employer to get paid, ask any investment banker.

Meanwhile back on my thread, ISTM much better top continue paying into the pension, since an essential point about salary sacrifice is that the employee has sacrificed the right to decide how the money will be used.

[pmeswani]

Well, you could have started a new thread

I know of no reason except for not having the funds. Certainly my Ltd Co remains technically trading, and I remain an employee; there is no reason why I could not be paid salary. You don't have to be making money for your employer to get paid, ask any investment banker.

Meanwhile back on my thread, ISTM much better top continue paying into the pension, since an essential point about salary sacrifice is that the employee has sacrificed the right to decide how the money will be used.

Why not just make employer contributions (finance permitting) instead?

[expat]

Why not just make employer contributions (finance permitting) instead?

That is indeed what I am talking about, as in "the Ltd Co also contributes to a pension". Instead of what?

[pmeswani]

That is indeed what I am talking about, as in "the Ltd Co also contributes to a pension". Instead of what?

Sorry, I may have misread your original post. :/. I thought you said (in-between the lines) that your company made employee contributions rather than employer contributions. If you are making both types of contributions, it maybe wise to drop the employee contributions and make just the employer contributions. Sorry if I have mis-read the post.

[expat]

Sorry, I may have misread your original post. :/. I thought you said (in-between the lines) that your company made employee contributions rather than employer contributions. If you are making both types of contributions, it maybe wise to drop the employee contributions and make just the employer contributions. Sorry if I have mis-read the post.

Well, I'm not sure that the distinction is meaningful here, except to say that what might be regarded as employee contributions are in fact not discretionary (and that is of the essence), that is, the Ltd Co contributes a sum which has 2 (identifiable) parts:
1. a sum which was previously paid as salary to me as employee, but which is no longer paid in salary, after a written agreed change to employment contract terms whereby I the employee have given up the right to receive this as salary or dispose of it as I like, and
2. a sum added to this by the Ltd Co and paid to the same pension.

My original point was that, while I the employee had every right to accept a suspension of salary while the Ltd Co was not earning, I should perhaps not accept a suspension of pension contributions, on the grounds that that would compromise the requirement that the employee can no longer decide what to do with that money.

[ASB]

Well, I'm not sure that the distinction is meaningful here, except to say that what might be regarded as employee contributions are in fact not discretionary (and that is of the essence), that is, the Ltd Co contributes a sum which has 2 (identifiable) parts:
1. a sum which was previously paid as salary to me as employee, but which is no longer paid in salary, after a written agreed change to employment contract terms whereby I the employee have given up the right to receive this as salary or dispose of it as I like, and
2. a sum added to this by the Ltd Co and paid to the same pension.

My original point was that, while I the employee had every right to accept a suspension of salary while the Ltd Co was not earning, I should perhaps not accept a suspension of pension contributions, on the grounds that that would compromise the requirement that the employee can no longer decide what to do with that money.

I'm not sure if you want the company to continue paying the contributions or not. Ultimately the only difference here becomes the size of your pot. However:-

If you wish the company to carry on paying then in details the company is proposing to you make it clear that the only salary being suspended is that which is actually paid to you, the sacrificed salary will continue to be paid into the pension (i.e the level of suspension is x of your contracted salary y)

If you do not wish the company to carry on paying pension then ask the employee to drop the agreed salary sacrifice and ask them to accept a temporary reduction is salary from y to 0.

Salary sacrifice agreements can be stopped.

I guess your real question become in the event of the second course of action was the salary sacrifice ever really a salary sacrifice. I believe it to be since they don't have to be permanent.

[A number of my permie benefits are paid by salary sacrifice, these are fixed for a year unless the is a significant lifestyle event (hr speak ). I cn elect to continue or suspend them various points.