Why you should use a salary sacrifice scheme to save more into your pension

Salary sacrifice schemes can be a valuable perk when you are building up a pension, says David Prosser.

Boy swinging on playground bars
These schemes can apply to childcare vouchers too
(Image credit: © Getty Images)

Are you missing out on a valuable pensions tax perk that could save you hundreds of pounds? Research from Mercer, a consultant, suggests that a fifth of employees are failing to sign up for salary-sacrifice arrangements, even though these could be a more tax-efficient way to save for retirement.

In a traditional occupational-pension scheme, you make contributions to your savings out of your pay, claiming income-tax relief at your highest marginal rate of tax – up to 45% for the highest earners.

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David Prosser
Business Columnist

David Prosser is a regular MoneyWeek columnist, writing on small business and entrepreneurship, as well as pensions and other forms of tax-efficient savings and investments. David has been a financial journalist for almost 30 years, specialising initially in personal finance, and then in broader business coverage. He has worked for national newspaper groups including The Financial Times, The Guardian and Observer, Express Newspapers and, most recently, The Independent, where he served for more than three years as business editor.