NHS Fleet solutions - Very cheap tesla deals!

[nickname_esco]

Posting as i saw an interesting post on reddit. NHS fleet solutions are offering the tesla model 3's (from the next tax year) with insurance, servicing and tyres included at:

White exterior + black interior SR+ = £344.41
White exterior + black interior LR AWD = £437.42
White exterior + black interior Performance = £443.34

No deposit required. Incredible deal using salary sacrifice. Has anyone used this company?

My worry is with the salary sacrifice this will reduce pension contributions, which will be very damaging over the long term as the NHS pension is one of the best out.

 

[gangzoom]

Unless your at the pension cap and been hit with the additional tax for going over the £40k/year pension contribution limit stay away from that amount of salary sacrifice.

NHS employer contribution rate is currently 20.6% and max employee rate is 14%, so every £1.40 you put into your pension the NHS adds £2.06 into the pot, thats before longterm compound interest is added.

Rent a P Model 3 via salary sacrifice and your throwing away upto £973/month of pension contribution into your pension pot....

Its utter maddness to even consider the salary sacrifice car scheme unless your trying to reduce your pension contributions.

My very crude calculation suggests a reduction in you pension pot by £63k+ assuming 3% growth over 20 years - so just inflation matched growth, for renting a P Model 3 for 3 years now......Doesn't look so cheap now does it!!

I suspect the total loss is even more than £63k, as the final amount is career average earnings, so an equivalent reduction of nearly £12k in salary over a year for taking on a P Model 3 will hit your final average quite badly. Thats the equivalent of nearly a 10% pay drop for even senior clinicians.

Absolutely values are hard to calculate but no car is worth throwing away the best financial reward the NHS provides.

 

[MrBadger]

My worry is with the salary sacrifice this will reduce pension contributions, which will be very damaging over the long term as the NHS pension is one of the best out.

Is pension contribution not worked out on base salary? Don't know details of NHS pension, but can you do matched top-up payments to offset if any is lost?

 

[gangzoom]

Is pension contribution not worked out on base salary? Don't know details of NHS pension, but can you do matched top-up payments to offset if any is lost?

Employee and Employer pension contributions are worked out using pre-defined limits. You cannot top up anything, and not that you need to with Employer contribution at 20.6% and most Employee contributions at 7%.

The 2015 scheme is also now career averaged rather than final salary.

Salary sacrifice is very good for employers at it really reduces their current and future liability. But unless your at the £40/k per year pension limit and £1 million limit its not a good scheme for employees.

Most staff in the NHS have no idea how good their pension scheme is. Can you imagine Tesco giving all their staff 20% monthly pension contributions in return for an individual contribution of as low as 5% and max 14%??

Thats not a typo, the NHS pays all staff 20% of their monthly salary into their pension pot even if you only pay 5% into the pension. If it was an investment product thats a minimum 400% guaranteed interest rate with 0% risk......am always amazed any working in the NHS even considers salary sacrifice or occasionally talk about opting out!!!

 

[MrBadger]

Employee and Employer pension contributions are worked out using pre-defined limits. You cannot top up anything, and not that you need to with Employer contribution at 20.6% and most Employee contributions at 7%.

Presumably you are talking NHS specifics here?

As where I use to work, not NHS, you had a base salary that pension was worked out from, and anything salary sacrifice didn't affect pension contributions as they were worked out on base salary. They did have limit on how much salary sacrifice could be taken though, but that was only if it affected minimum wage and NI status. So you got exactly the same pension contributions based on 50k whether you were on 50k, or 40k and 10k of salary sacrifice deductions. I think the only people that may have been affected by this was those who didn't pay any self contributions and were then forced to make minimal % self contributions - don't know if this % was based on base or net. But anyone paying higher than this, such as 7% above, was definitely done against their base salary. Base in our case was not same as gross in some circumstances.

 

[gangzoom]

Rent a P Model 3 via salary sacrifice and your throwing away upto £973/month of pension contribution into your pension pot....

Made a mistake on % contribution amount rather than absolute amount.

On £100k annual salary, the NHS employer contribution is £1666 per month, £1125 per month employee contribution - so £2791/month into the pension pot.

A £440/month drop in gross salary will equate to £1577 per month employer contribution, £1060 per month employee contribution so £2637/month into the pension pot - so £154/month less into the pension pot, which is still not an insubstantial amount.

Am actually projected to be over the £40K personal allowance limit this year, which might make reducing my overall contribution by £154/month sensible .

 

[Rooster6655]

Sounds a good option for those not interested in having a pension!

 

[H0nestB0b]

As far as I’m aware, the NHS pension value each year (2015 scheme) is based on ‘pensionable pay’ not ‘contributions’. Salary sacrifice will reduce the base amount for calculating the ‘pot’ for that year (1/54th) which will then be compounded by a rebasing calculation (roughly 3%) per year through to retirement. I haven’t done the calculation, but I suspect the impact of salary sacrifice on the final pension will be much less than in a ‘normal’ pension, plus there are the tax and NI benefits to offset this.

An important consideration however is that when leaving the salary sacrifice scheme, pensionable pay will appear to make a significant jump back up, potentially leading to a large tax charge if breaching the £40k Annual Allowance. I could see this easily outweighing any tax benefits gained during the scheme...

 

[SimonTe]

This is probably the best quality thread in the entire internet, ever! Well done everyone!

 

[say33d]

The prices posted seem incredibly cheap. Especially considering it includes insurance, maintenance and no deposit!

I have just been looking thought the NHS fleet solutions website and found out there is a way to pay using your net pay in certain circumstances. I'm sure if you contacted them and asked them to take the monthly from your net pay they would.

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