Get free money from your employer

If your salary isn't up there with the City workers, make the most of what you have -- and that means grabbing every bit of free dosh your employer has to offer.

It's the end of the month and for most of us that means pay day. And if, like many, you constantly lament the meanness of your pay packet, you'd probably snap up the chance to increase your salary. But did you realise there are ways to boost your pay in addition to asking for a raise?

A number of companies offer benefits at reduced cost or even free, and taking up the ones relevant to you could save you (and your family) a fair amount of cash.

1. Pension

This is an obvious one, but one so many people fail to take advantage of. Most companies offer some form of pension, be it the all too rare final salary (defined benefit) scheme, or the more common defined contribution type. But did you realise that many employers offering the latter scheme will contribute money to your pension on your behalf?

Say your company offers a defined contribution scheme whereby it will match employees' contributions up to 5% of their salaries. So if you pay in 5% of your salary, taking into account tax relief, the actual contributions to your pension pot will be more than doubled! That can work out being worth thousands of pounds.

Be sure to have a read of Join Your Company Pension Scheme Today

Worth/year: Typically 5% of your salary

2. Childcare Vouchers

Anyone with children will know just how expensive childcare can be. And with many nurseries and childminders having increased their fees by more than a cost of living percentage this year (4% not being uncommon) every penny counts. So if your employer offers childcare vouchers, you should really snap them up.

Essentially, the scheme allows you to sacrifice some of your gross salary in return for vouchers that can be used to pay for childcare. Currently, the first £55 worth of vouchers can be bought per week (£243 per month) free of income tax and national insurance.

A basic rate taxpayer could therefore save up to £890 per year, and a higher rate taxpayer up to £1,170 per year -- and as both parents can sign up, two higher rate taxpayers could save more than £2,300 in childcare costs, per year!

However, it's worth noting that the scheme will be reformed from April, with a new limit of £28 per week of vouchers for higher rate taxpayers. So if you're planning to join up, make sure you do so before the end of the financial year!

What's more, as it typically works out to be cost neutral to employers (they also save on the national insurance contributions) if your company doesn't offer the vouchers, why not ask if it could sign up?

Worth/year: Basic Rate taxpayer <£890

3. Insurance

If your employer offers insurance as part of its benefits package, it can often be worth signing up. As companies tend to negotiate deals for large numbers of people, the premiums offered will often be much lower than you'll be able to find elsewhere, and some will even offer cover for your family, too. Even better, they could offer the cover for free.

Life Insurance/Death in service cover

This may not seem like a very interesting perk, but it is one that can save you a significant amount of money, if you have dependents. Many companies offer their employees free life insurance, typically worth around three or four times your annual salary. Someone earning £25,000 could therefore be entitled to free cover worth up to £100,000. And while it may not be enough to fully provide the amount of cover you need, it could certainly help. Plus, as life cover premiums tend to increase the older we get, this could be especially valuable to more senior employees.

Critical illness cover

Another type of insurance often offered by employers is critical illness cover. This pays out a tax-free lump sum in the event of you suffering from a serious illness, or if you have to undergo certain types of surgery. Premiums are typically more expensive than those for life insurance, and depend upon your age, sex and health.

However, many companies offer critical illness cover as part of their benefits package for far lower prices and in some cases, for free. What's more, some also allow you to include your partner and children for far less than you could pay elsewhere.

Income protection insurance

A number of companies offer income protection insurance for free, or at a reduced cost. Unlike critical illness, this will pay out if you are unable to work and premiums can be quite expensive, so you could save a fair bit compared to taking out a policy yourself. However, you do need to check the details carefully as not all policies are the same, to ensure it will pay out when you want it to.

Medical health insurance

Medical health insurance is often available as a taxable benefit which can save a fortune, when compared to the cost of taking out the cover yourself. And if you and your partner are both entitled to this cover, you can save even more by taking it out for both partners through the partner who is in the lower income tax bracket.

4. Other Perks

Finally, your company may also offer you the chance to participate in other schemes such as:

Sharesave

Essentially, the Sharesave scheme allows employees to save between £5 and £250 monthly for three or five years. When this time is up you will receive a tax-free bonus, and be given the choice to either take your cash and run, or buy shares in your company with it -- and depending on performance this means that you can potentially make some serious money, especially if your company offers a discount on the buying price, too.

Share Incentive Plan (SIP)

With a SIP, your employer offers you the chance to buy shares in the firm. For a full run down on how they work, have a read of A Splendid Savings Scheme - lovemoney.com

And finally, those working for larger companies tend to be offered more flexible packages of benefits -- so take some time to check what you're signed up for and make sure they're relevant!

Hopefully this will inspire you to check with HR department to find out what you're entitled to. And if you're one of the organised few that have their benefits package organised, why not boost that pay packet the old fashioned way, by asking for a raise!

This is a lovemoney.com classic article, originally published in March 2007 and updated.