Tax-efficient savings

Paying into your retirement savings is a tax-efficient way of saving for your future, and you can see why below.

If you pay through the Salary Exchange scheme then you and your employer pay less National Insurance, and so you actually receive more of your net salary. Your employer also saves on National Insurance contributions, and half of this saving is returned to you by being paid into your retirement savings so you are saving even more.

Salary Exchange is the default way of contributing if you're automatically enrolled into the Plan. If you're opted out but are now interested in contributing through Salary Exchange then you can get in touch directly with your payroll to switch.

If you save for your retirement through salary deduction (so not through Salary Exchange) then your contributions are deducted from your salary once you’ve paid National Insurance contributions. You’ll still qualify for tax relief on your contributions through the PAYE system. 

So, for example:

If you pay: £100

And the Company also pays: £100


It means that a total of £200 is going into your retirement savings for your £100 contribution, but your take-home pay is only reduced by £80 (or £60 if you’re a higher-rate tax payer). 

However, there are certain limits to these tax incentives – these are the Annual Allowance and Lifetime Allowance. If you have built up a lot of savings, or you have a high income, it’s worth looking at the Annual and Lifetime Allowance page.

You can find out more about tax and your pension on the following sites:

If you need more help, please use the help and information page. You can also login to find out more about how much you’ve saved and how much you’re paying in to your retirement savings through the Plan to see if you are likely to reach any of the Government tax limits.