Normally, employee pension contributions come out of net pay – that is, after their income tax and National Insurance are deducted. With salary exchange, pension contributions come out before tax, reducing taxable income. As a result, your employer’s National Insurance contributions are lower.
Staff also pay less tax and National Insurance, giving them more take-home pay (without increasing their salary). And you can re-invest all or part of your savings into their pension, providing an even better benefit that positions you as an employer of choice – at no cost to you.
We make the entire process seamless, so it’s simple to offer employees this valuable benefit.
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.
Let’s look at an example of how salary exchange benefits the business and staff.
John’s gross annual salary is £30,000. You, as his employer, pay the legal minimum into his pension – as does he. This means that, each year, John contributes £1,188 and you contribute £712.8, for a total of £1,900.80.
With the switch to salary exchange:
And it doesn’t cost you a penny.
Salary exchange delivers value to the business and staff, but the admin can be complex depending how your workplace pension scheme was set up. With Husky, it’s easy to make this win-win tweak.
We’re proud to be a recognised leader in the pension technology space. With our cloud-based workplace pension platform and employee app, the entire salary exchange process is seamless.