Workers can boost their pension savings by as much as \u00a341,200 \u2013 more than a year\u2019s annual salary \u2013 by making just one change.<\/p>\n
Pension experts<\/a> at Scottish Widows say average salary workers who take home \u00a337,430 annually can boost their take home pay by \u00a3150 per year simply by opting into their employer\u2019s salary exchange scheme<\/a>. If the extra cash is then redirected into their pension, alongside the savings the employer makes through reduced National Insurance contributions<\/a>, their pension savings<\/a> would be boosted by \u00a3528 per year.<\/p>\n For a worker aged 30 and retiring at age 67, this would add a whopping \u00a341,200 to their pension savings, assuming a 5% investment growth, according to the firm. But it\u2019s never too late to opt into a salary exchange scheme as those who join a decade later at age 40 would still get a \u00a324,500 boost to their pension pot.<\/p>\n Scottish Widows research found that only 35% of UK workers are enrolled in their company\u2019s salary exchange scheme, while 20% weren\u2019t even aware their employer offers such a scheme, meaning millions are currently missing out on huge savings for their retirement.<\/p>\n Salary exchange, which is also sometimes referred to as salary sacrifice, is an arrangement where workers exchange part of their salary in return for a pension contribution from their employer.<\/p>\n As the salary is being exchanged rather than paid directly, it benefits both workers and the employer as neither has to pay National Insurance contributions on the amount.<\/p>\n The exchanged money can then be paid into a worker\u2019s pension plan as an employer contribution, creating savings for both while also boosting a worker\u2019s retirement savings.<\/p>\n