Salary Exchange Calculator

This calculator lets you demonstrate that a client who is employed and considering making a payment to a company pension can actually have a larger amount paid into their pension by using salary exchange.

You can explain to your client that instead of making the payment themselves, they can agree with their employer to take a reduction in their salary. The employer would then pay into the pension on their behalf.

The level of payment made by the employer could be that which the employee was considering making themselves. However, it’s more common for some or all of the savings made by the employer and employee, as a result of reduced salary, to be contributed as well. The possible savings are:

  • Savings the employee makes in Income Tax and Employee National Insurance (NI)
  • Savings the employer makes in Employer NI.

The calculator shows that if some or all of the savings are passed on to the employee, then:

  • The employee has the same net disposable income, with increased payments into their pension; or
  • The employee has increased net disposable income whilst payments into their pension are maintained at the current level.