An arrangement employers may make available to employees where the employee agrees to reduce their earnings by an amount equivalent to the employee’s pension contributions. The employer then agrees to pay the total pension contributions on behalf of the employee, including any contributions due from the employer. Any contributions paid to the pension provider will therefore be paid only by the employer.
Read our ‘Salary sacrifice – Workplace pensions’ webpage for more information.
Information: From April 2029, the National Insurance exemption on pension contributions made through salary sacrifice will be capped at £2,000 per year. Any amount above this will attract employer and employee NICs.
Learn more about these changes in the Autumn Budget 2025.