Salary exchange is a simple change in the way your employer deducts your pension contributions. It allows you to have more money in your take-home pay and pension pot, at no cost to your employer.
Nearly everyone has the right to salary exchange, but only a small percentage of people do because most employers find it too complicated to administer.
Let’s look at how you benefit – and why you should ask your employer to make this administrative change on your behalf.
Salary exchange is a simple, administrative change to how your company manages workplace pensions. It costs the business nothing, reduces your tax liability – and is an easy way to help staff boost their retirement savings.
Normally, your pension contributions come out of your net pay – that is, after income tax and National Insurance are deducted. With salary exchange, your pension contributions come out before tax. This means your taxable gross income is lower, so you pay less National Insurance – giving you more take-home pay. Your employer also pays less National Insurance, and they can put that savings into your pension.
The benefits of salary exchange – in figures
Let’s look at an example.
John’s gross annual salary is £30,000. He and his employer pay the legal minimum into his pension. This means that, each year, John contributes £1,188 and his employer contributes £712.8, for a total of £1,900.80.
When John switches to salary exchange, he gets:
And it didn’t cost his employer a penny.
With the Husky for Everyone app, it’s easy to see your potential savings from salary exchange.
The app makes pension management as easy as online banking, so you see exactly:
You get automatic access to Husky for Everyone when your employer uses Husky to set up salary exchange for you and your colleagues.
Your employer has to set up salary exchange for you. The Husky salary exchange service makes the whole process easy, taking care of all the admin so it’s seamless for you and your company.
It works this way because key features – like pulling in your contribution information, setting up salary exchange and helping you choose schemes and funds – require coordination with how your company administers the workplace pension. Your employer gets a whole host of benefits through the Husky platform, too, from cost savings and admin simplicity to essential compliance management.