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SALARY EXCHANGE

CFH Docmail Ltd proudly provides a Group Personal Pension plan with Aviva for employees. CFH currently contributes 4% to your pension, alongside your personal contribution of 5% or more. From March 2025, CFH invites you to enhance your saving potential by opting into a Salary Exchange scheme. This initiative is designed to empower you to actively contribute to your financial future while taking advantage of the tax savings achieved through a Salary Exchange arrangement.

Salary Exchange is a contractual agreement whereby you can opt-in to alter the way you contribute to your pension. At the moment, you personally contribute to your pension plan with Aviva and pay your contributions via a "Relief at Source" basis. Your pension contributions are deducted after tax, with Aviva reclaiming 20% basic rate tax from HMRC and adding it to your pension. Further tax relief is claimable for higher or additional rate tax payers through self assessment.

Under a Salary Exchange arrangement, you 'exchange' a portion of your salary (e.g. 5%) in return for an employer pension contribution. This means your exchanged contribution (or 5% of your salary using our example) is deducted from your salary before tax. This means you do not pay income tax or national insurance (NI) on this portion, and neither does your employer. This portion of your salary is paid into your pension by CFH in addition to their 4%.

When opting into a Salary Exchange agreement, your salary will be reduced by an amount equivalent to your pension contributions, but your reference salary will remain the same and be used for payrises, Life Assurance benefits, mortgage applications and more. By opting into Salary Exchange, you are not negatively impacting your entilement to other benefits or your salary, you are purely reshuffling the way your pension contributions are deducted to benefit from the tax advantages.

Recently, Bowmore Financial Planning Ltd ran an introductory presentation providing you with more information on how a Salary Exchange arrangement works and what this means for you. If you missed this or would like to re-watch it, a recording of the presentation is shown below.

Salary Exchange in Action:

Example of a member's pay and tax position before and after Salary Exchange on a £30,000 annual salary, using a 1257L tax code under the England/Wales tax structure.
Example of a member's pay and tax position before and after Salary Exchange on a £60,000 annual salary, using a 1257L tax code under the England/Wales tax structure.

How does contributing to your pension via Salary Exchange benefit you?

You pay less Income Tax & National Insurance Contributions.

CFH saves money on employer National Insurance contributions as your taxable salary is reduced.

Higher rate taxpayer? Contribute via Salary Exchange and you no longer need to claim for additional tax relief through self assessment. Tax relief directly through payroll instead.

Be Aware!

Salary Exchange is not suitable for everyone. Typically those on lower earnings do not benefit as it may take you below the National Living Wage (£12.21p/h from April 2025) and may affect your entitlement to state benefits.

People above State Pension Age (currently age 66 rising to 67 between 2026-2028) do not pay National Insurance anyway. This means you'll have less of a saving opportunity.

If you previously have not contributed anything to your pension and decide to now contribute to the scheme via Salary Exchange, your take-home pay will be less going forward. However, contributing via Salary Exchange is more tax-efficient for most when compared to Relief at Source payments (the previous method used). Salary Exchange is being implemented to encourage people to contribute to their financial future in retirement.

FAQ's 

Further questions on Salary Exchange? Download the FAQ document below
 
 
Download here

Interested in contributing via Salary Exchange?

If you are interested in contributing via Salary Exchange, you'll need to 'opt-in' by visiting Cascade. The window to opt-in is open from 11th - 21st February (effective from March 2025 payroll period) or each February thereafter (once a year). As this is a new arrangement, you will have another opportunity to opt-in via Cascade later in the year. If you have any questions on this, or if you wish to opt out of Salary Exchange at any point, please contact your HR department for more information. Once opted-in, you can amend your contribution amount as usual throughout the year.

Please note the information on this page is for your information only and does not constitute formal advice.