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Are your employees getting the pension contributions they deserve?



How do you give your employees bigger pension contributions, without it costing your company £££, Jack Ferguson, Senior Consultant at MIplc tells employers how.


Salary exchange (also known as salary sacrifice) is where employees agree to exchange part of their salary in exchange for a non-cash benefit, which is usually a pension contribution from their employer.


What are the advantages?


  • Employer National Insurance Savings – for example, a company with 20 employees with average salary of £35,000 would save an estimated £5,682.40 every year.

  • Employee National Insurance Savings – for example, an employee paid £35,000 would save £247.06 every year which will boost their pension.

  • Higher rate taxpayers/ additional rate taxpayers receive full tax relief at source.


How will your business use the National Insurance savings?


  1. Give your employees’ pension a boost.

  2. Mitigate your auto-enrolment costs.

  3. Introduce a new employee benefit.


Salary Exchange Example

  • Employee earns £35,000 p.a.

  • Employer and employee both pay 5% pension contribution p.a.

  • Employee and Employer N.I. savings are paid into pension (option 1)

  • An additional £592.94 will be paid into the employee’s pension plan with no reduction in take home pay and no extra cost to the employer.



Melville Independent Plc help?


It is important to get the right advice to ensure salary exchange meets the needs of your business, avoids unnecessary confusion for your employees and ensure it complies with HMRC guidelines.

Melville Independent Plc can help to guide you through this process:


  • We will calculate your salary exchange savings for the business and produce a calculation form each employee.

  • We can recommend a salary exchange structure and discuss how best to use salary exchange savings.

  • We can draft, design, and agree employee communications and meet with employees for group presentation to explain salary exchange.


To find out more about how we can help, please get in touch with Jack Ferguson, Senior Consultant.




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