All contributions to the Fund (including any additional voluntary contributions (AVCs)) automatically receive tax relief as they’re deducted from your salary before your tax is calculated.
This means that every £1 that goes towards your pension only costs you 80p if you’re a basic-rate taxpayer.
However, you can save even more by making contributions through salary sacrifice.
Here's how it works:
- You stop making pension contributions and instead, Nestlé pays your contributions (including AVCs) directly to your account on your behalf
- In return, you agree to reduce your monthly pay by the value of your pension contributions
- Nestlé still makes the same employer contributions to your account as well
- As your pay is reduced by the amount of your pension contributions, you make national insurance savings as well as tax savings
- Nestlé also makes national insurance savings as your pay is lower.
Working out how much you pay in
To help us work out how much you and Nestlé pay into your pension savings account each month, we use something called your ‘pensionable earnings’. This is used to calculate how much you pay in and generally includes your base salary and things such as overtime and shift allowances.
How this affects your other salary-related benefits
So that your other salary-related benefits aren’t affected by you taking part in salary sacrifice, we keep a note of your salary before it is reduced by the value of your pension contributions. This is known as your ‘reference salary’.
Your reference salary is used to calculate all salary-related employment benefits such as pay increases, bonuses, holiday pay, life assurance, sick pay, maternity pay and overtime.
This means that none of these benefits will be affected if you make contributions by salary sacrifice.
How to make contributions through salary sacrifice
Unless you tell us otherwise, you will automatically make pension contributions through salary sacrifice once you’ve been a member of the Fund for one month.
Salary sacrifice isn't right for everyone
If you receive tax credits, you earn less than the national living wage or you receive state benefits, please take some time to read What should I consider? to make sure that salary sacrifice is right for you. If you don’t want to make your pension contributions by salary sacrifice, you can opt out – see What if…
If you're employed by Galderma or Osem, or if you are working and being paid overseas, you cannot currently make contributions through salary sacrifice.