Salary exchange

Retirement can seem like a distant prospect, and it’s hard to communicate pension benefits when many employees, especially younger ones, see it as an unwanted expense.

Salary exchange, or salary sacrifice, is an arrangement that is growing in popularity with Defined Contribution schemes.

Salary exchange makes pension contributions more efficient and attractive. It offers National Insurance contribution savings to employees and employers alike, and can also give higher-rate taxpayers full tax relief without the need to claim it through their tax return.

Salary exchange can either reduce your costs, increase member benefits at no additional expense to the company, or a bit of both. And the costs of setting it up are usually paid back within a few years.