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  2. Salary Sacrifice Pension

Why should employers opt for salary sacrifice pension?

Employers spend a lot of money on National Insurance Contributions (NICs) - 13.8% of nearly all
of your payroll costs. The higher the salary of your employee, the more you have to pay.

In return for accepting a lower salary, the employee no longer makes their own contributions into
the pension scheme. Instead, the employer makes contributions into the scheme that are equal
to the amount of the contributions that the employee was previously making, resulting in it not
being subject to NICs. As you can see, although it’s called salary sacrifice, it’s really just
exchanging the pension they are already contributing for lower pre-tax pay.

Ultimately, implementing salary sacrifice across a large workforce can achieve substantial