PAYE employment

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- Eric Shune
  
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posted
14 years ago

Fri, Dec 11, 2009 8:52 PM

Person A has been running his own business for 22 years and is selling up. He has been offered 5 years of (PAYE) work by an old customer. Person A considers this his final stint of employment and considers 60 years of age the right time to call it a day and retire.

Person A already has

1 existing personal pension fund at 110K. 1 existing company pension fund at 190K (where A is the trustee) Owns his house valued at 350K. (60K on mortgage covered by endowment to be finalised in 3 years) 30K in Premium Bonds. 130K in bank/building society deposits.

With this offer of employment person A is offered a higher salary with no pension contributions or lower salary with contributions into the company pension fund. Both obviously equating to approx the same figure.

Which is considered the better option.

thanks

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- Tim
  
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posted
14 years ago

Sat, Dec 12, 2009 12:09 PM

"Eric Shune" wrote

Better in what way?

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- tim....
  
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posted
14 years ago

Sat, Dec 12, 2009 1:15 PM

I think he'll have to pop off to ask teacher

tim

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- neverwas
  
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posted
14 years ago

Sat, Dec 12, 2009 1:19 PM

I rather think more precise figures are necessary.

For example. when you say "equating to approx the same figure" do you mean the same cost to the employer? If so that in turn depends on what the employer has to pay into the pension scheme under its rules or what the employer is required to assume for such purposes is the cost of the pension scheme. (The 2 are not necessarily the same.)

There are then many other possible factors such as whether the employer's scheme offers a good deal for ill-health retirement and if so how relevant that is to A. Ditto benefits for dependents. IIRC the real cost of an occupational scheme often includes a large element for health and dependents' benefits so, if those are not relevant and the employer is offering a good alternative, then the higher salary may well be better. But I do think the sums need to be worked through in detail.