Salary exchange
Post Author:
Angie Harvey
Date Posted:
November 19, 2018
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This is the fifth blog in our pension series, which considers the benefits of entering into a salary exchange agreement with your employer.
Typically, an employer pension scheme requires contributions from both the employee and the employer. A salary exchange agreement normally means that the employee stops making personal contributions and instead reduces their salary in exchange for a higher pension contribution by their employer. The employer and employee then pass on all tax and national insurance savings into the pension scheme by way of additional contributions.
The objective here is for both the employer and employee to remain in the same net position as before. Careful calculations are therefore required, but we can help with these.
It is important to consider how an agreement like this could impact on an employee looking to buy a new house or re-mortgage and therefore it might be necessary to drop in and out of a salary exchange arrangement in certain cases.
Pension Tax Charges and ‘Scheme Pays’
Already in pension drawdown and want to continue contributing
