SALARY EXCHANGE
NPA offers a Group Personal Pension plan with Royal London, contributing 6% of your salary, with a further 5% contributed by you. NPA enables you to enhance your saving potential by contributing via a Salary Exchange scheme. This initiative is designed to empower you to actively contribute to your financial future while taking advantage of employer contributions and the tax savings achieved through a Salary Exchange arrangement.
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 NPA.
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 pay rises, bonuses & other workplace benefits.
How does contributing to your pension via Salary Exchange benefit you?
You pay less Income Tax & National Insurance Contributions than if contributing via relief at source arrangements.
NPA saves money on employer National Insurance contributions as your taxable salary is reduced. The company will use these savings to increase their Employer Contribution to your pension.
Higher rate taxpayer? Contribute via Salary Exchange and you do not need to claim for additional tax relief.
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) and may affect your entitlement to state benefits.
Salary Exchange essentially reduces your salary, take care not to exchange too much!
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.
Please note the information on this page is for your information only and does not constitute formal advice.
