Employee SIPP
Pay Exchange
Contributions into the SIPP are made for you under a ‘Pay Exchange’ arrangement. This means that pension contributions would not be deducted from your pay.
Under the Pay Exchange arrangement your pay is reduced by an amount equivalent to your pension contributions and the Company makes the contributions to the SIPP for you.
The reduction to your pay means you pay lower National Insurance (NI) contributions, because these are based on a lower level of pay.
As you pay less NI, you should see an increase in your take home pay.
Further information about Pay Exchange can be found in the Pay Exchange FAQs.
To see the effect of Pay Exchange on your take-home pay at contribution rates of 3% and 5% see the following examples: