salary sacrificeThere are many incentives around to encourage us all to save for our retirement but one that gets regularly overlooked is salary sacrifice.

More beneficial than tax relief

Many people may feel uncomfortable at the mere mention of “sacrificing” some of their salary or bonuses but, if used correctly, it can be more beneficial than tax relief.

Salary sacrifice or salary exchange as it’s often referred to, has been around for many years.  It’s a government approved initiative which takes advantage of savings in National Insurance (NI) to increase the amount going into your pension without any additional cost to you or your employer.  So how does it work?

Normally you would make any personal contribution to your pension from your net pay (after tax and employee national insurance).  That contribution would be paid net of 20% tax relief and, if you were a higher rate tax payer, an additional 20% relief could be claimed via your self-assessment tax return.

Your employer makes the pension contribution for you

With salary sac