Pensions  

How to maximise pension contributions during economic crisis

  • Describe how salary exchange works
  • Identify what the drawbacks might be
  • Explain how taxes are affected
CPD
Approx.30min

Although there is a lot to consider and a lot of additional admin, I would argue a salary exchange scheme is worth still it.

It will benefit both employers and employees without significantly increasing costs. And if the employer retains some of the NI savings from the scheme, they will cover any additional costs in the long run.   

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Richard Cooper is business development manager at the London Institute of Banking & Finance

CPD
Approx.30min

Please answer the six multiple choice questions below in order to bank your CPD. Multiple attempts are available until all questions are correctly answered.

  1. Bonus and salary exchange are more attractive propositions than making a direct pension contribution, according to the author, true or false?

  2. Neither the employee nor employer pay national insurance contributions on the exchanged amount, true or false?

  3. What is the main reason for using salary or bonus exchange?

  4. Employers cannot claim tax relief on the contribution as a business expense in the same way as if they had paid a salary, true or false?

  5. Which of the following is salary exchange suitable for?

  6. Which of the following is NOT a drawback of salary exchange?

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You should now know…

  • Describe how salary exchange works
  • Identify what the drawbacks might be
  • Explain how taxes are affected

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