Stipend Exchange FAQs

The Clergy pension scheme is a non-contributory scheme. That is, the Church makes contributions on your behalf. A great way to top up your pension, and give your pension a healthy boost, is by saving Additional Voluntary Contributions (AVCs). Your AVCs are paid back to you as a lump sum rather than an annual pension. But we can usually pay all or most of your lump sum back to you tax-free, meaning you don’t pay tax on the way in, and hopefully no, or very little tax on that way out. 

You receive tax relief on these contributions because income tax is calculated on your stipend after your AVCs have been taken off. This means you pay less income tax. 

However, National Insurance Contributions are calculated on your full stipend before AVCs are taken off, so both you and your Responsible Body pay National Insurance Contributions on your AVCs.

Stipend Exchange is an arrangement where you agree to give up part of your stipend in exchange for a payment into your pension i.e. an AVC. This way you still receive tax relief, and as your AVC is deducted from your Stipend, you will not pay National Insurance Contributions on any AVCs either.

In the Stipend Exchange Scheme, the amount you currently save as AVCs will be deducted from your gross stipend. This reduces your gross stipend, meaning you save on income tax and National Insurance.

Signing up to the Stipend Exchange Scheme will mean a change to your terms and conditions of service.
 

Yes.

Yes, many other employers in the UK use this method for AVCs, including the National Church Institutions (NCIs), through what is commonly known as a ‘salary exchange’ or ‘salary sacrifice’ scheme.

No. If you decide not to be part of the Stipend Exchange Scheme, you can still save AVCs in the usual way.

To opt-out of the Stipend Exchange Scheme, simply email [email protected]. 

If you do nothing, your AVCs will be automatically converted to the Stipend Exchange Scheme when the scheme opens for your pension scheme.

The Church of England manages pensions for clergy, church workers, and church administrators. The scheme will open to members of the Church Workers’ Pension Fund in July 2026.

Yes, your organisation or 'employer' will save Employers’ NI contributions on the amount of stipend you exchange.

The NCIs will review the arrangement from time to time, especially if there are any future changes to tax, National Insurance, or pension legislation. Any proposed changes to the scheme will be communicated to you.

If you currently save AVCs, these will automatically switch to the Stipend Exchange Scheme when it opens, unless you choose to opt out.

To opt-out of the Stipend Exchange Scheme email [email protected].

You can opt-out or back in again at any stage. 

Yes, you can decide to opt out at any time. If you opt out, either from the start or later, you can opt back in. If you opt out, you will not receive the National Insurance relief, but you will still receive tax relief on your AVCs. 

To opt-out (or back in), simply email [email protected].

That depends on the amount you are saving into your pension. Here are some examples, based on a stipend of £31,558 (the national stipend benchmark from 1 April 2025):

• Pension contributions of £100 per month: Increase in net pay / year = £96.00
• Pension contributions of £300 per month: Increase in net pay / year = £288.00*

*It is worth noting that following the announcement in the Autumn 2025 Budget, this example would trigger the payment of National Insurance on anything you save over £2,000 per annum, from April 2029.

Yes. As the amount of NI you pay will reduce (see the middle column of your pay statement / payslip) your net stipend will go up slightly. Giving up part of your stipend in exchange for a payment into your pension you will result in a small reduction in your gross stipend. (See the FAQ Is the Stipend Exchange Scheme suitable for all clergy? below).
 

No, the same amount will continue to go into your AVCs.

No. As you already receive tax relief on your AVCs from your stipend you won't get any extra tax relief.

Yes, a benefit of Stipend Exchange is the National Insurance (NI) saving. NI is calculated on your gross stipend. Your stipend will reduce by the amount you ‘exchange’ so you will not pay NI on this amount. If you save more, the NI saving will increase.
 

Yes, you can change your AVCs at any time through the Church of England Pensions Board's PensionsOnline portal.

Changes will take effect from the next month’s payroll run, subject to processing times. If you change how much you ‘exchange’, this will mean a change to your terms and conditions of employment.

This is generally a matter for your mortgage, loan or credit card provider to advise. Emphasis is likely to be placed on your take-home pay and available income rather than gross stipend. If you need the National Church Institutions to provide an employment reference to a finance company, we will show your ‘reference salary’, i.e. the amount before Stipend Exchange.

You continue to save AVCs through Stipend Exchange at the same rate as before your leave, but you can change this if you want to. If you wish to clarify the effect on your stipend during paid parental leave, please contact [email protected].

If you are on paid sick leave, pension contributions through Stipend Exchange will be based on your stipend during this absence. So, if your stipend goes down, your pension contributions will go down too.

Pension contributions stop during unpaid leave. Unpaid leave covers unpaid parental leave, unpaid sick leave (following expiry of SSP), active service in the Territorial Army or Reserves or voluntary public duties.

Stipend Exchange will reduce your gross stipend by the amount of AVCs you choose to make, however your non-cashable benefits e.g. life cover and stipend increases, will continue to be calculated based on  your pre-exchange stipend (i.e. your ‘Reference Salary’) ensuring you are not disadvantaged by joining the Stipend Exchange Scheme. If you wish to clarify the effect, if any, on your stipend-related benefits please email [email protected].

Entitlement to some State Benefits (for example, statutory sick pay) is related to the amount of NI you pay (or are deemed to have paid), and others are based on your earnings. Switching to Stipend Exchange may affect your current or future entitlement to State Benefits. Here are the main benefits that may be affected:

National Insurance based benefits: Your entitlement to some State Benefits (e.g. State Pension, Statutory Maternity Pay, Statutory Sick Pay, Employment and Support Allowance and Jobseeker’s Allowance) can depend on your NI record. If your stipend falls below £12,576 a year before tax (in the 2026/27 tax year), you will miss out on credits towards the State Pension. This is particularly important if you are paid on a part-time basis.  

Statutory Maternity, Paternity and Adoption Pay: Statutory Maternity Pay (SMP), Statutory Paternity Pay (SPP), and Statutory Adoption Pay (SAP) is based on your average weekly earnings (AWE) over a fixed period before you begin to receive it. AWE are actual gross earnings that are subject to class 1 NI. As stipend exchange will reduce your AWE, it can reduce the level of these payments. If your AWE in the relevant period falls below the NI lower earnings limit (currently £6,500 a year), you will not be entitled to SMP, SPP or SAP.

The Archbishops’ Council recommends that all full-time stipendiary clergy should receive enhanced maternity pay, paternity pay or adoption  pay whether or not they are eligible for SMP: Guidance to dioceses on policies to support clergy office holders who become parents.

You may wish to check with your diocese or 'employer' about its policy. 

SMP for the first six weeks of statutory maternity leave is 90% of AWE. If your earnings reduce, this will reduce your SMP for those six weeks. For the rest of your maternity leave, SMP is paid at a fixed rate, which will not be affected by salary exchange (assuming AWE did not drop below the lower earnings limited).

SPP is payable at a fixed weekly rate or 90% of your AWE, whichever is lower. SAP is paid at the same fixed rate of 90% of AWE, whichever is lower, but for 39 weeks.

This will only affect people who are not eligible for Occupational Maternity / Paternity / Adoption Pay. For those who are eligible for Occupational Maternity / Paternity and Adoption Pay, this will still be paid on your full stipend.

Universal Credit, Tax Credits and Child Benefit: If you receive Universal Credit, Tax Credits, or Child Benefit, it may be worth speaking to a financial advisor or your benefits office to explore whether a pension AVC stipend exchange arrangement could benefit you.

Student loans: Repaying your student loans depends on your stipend and can be affected by the Stipend Exchange Scheme. Your repayments may reduce, and the repayment period may increase.
 

No. You cannot switch to Stipend Exchange if switching takes your stipend below the National Minimum Wage / Living Wage.

No, you already receive full tax relief on your pension contributions.

If you have reached State Pension Age, you have already stopped paying National Insurance contributions.  Therefore, if you switch to Stipend Exchange, you will not see any National Insurance savings.