So if you’re wondering...
...well, you’re in the right place.
No – pension salary sacrifice is the ONLY scheme affected by the Budget announcement. And even then, there won’t be any changes until 2029!
All other salary sacrifice schemes are staying exactly the same. That’s great news for employees looking to keep more in their pockets and employers looking to do more with less budget next year.
Despite many rumours before the Budget, pension salary sacrifice isn’t going anywhere.
From April 2029, employee pension contributions above £2,000 a year made via salary sacrifice will be subject to National Insurance, just like other pension contributions.
No – employees will still be able to contribute as much as they like to their pension pots.
But the changes mean only the first £2,000 they contribute each year will be exempt from National Insurance.
If your employees choose to contribute more than £2,000 in a year, they simply won’t save any additional National Insurance – and neither will you.
Absolutely! There are still substantial savings to be made for both employees and employers.
In fact, the sooner you switch to pension salary sacrifice, the more you’ll save. The cap on savings doesn’t take effect until 2029, so you’ve got 3 years to fill your boots!
| Average salary | 2026 | 2027 | 2028 | 2029 (with cap) | Total 4 year savings |
| £35,000 | £25,250 | £25,250 | £25,250 | £25,250 | £105,000 |
| £50,000 | £37,500 | £37,500 | £37,500 | £30,000 | £142,500 |
These figures are for illustrative purposes only
Let’s run some numbers:
Imagine you have 100 employees, each earning an average salary of £50,000.
You could save your company £37,500 a year in National Insurance between 2026–2028. (Based on 5% contributions.)
To put it another way: every month you don’t switch to pension salary sacrifice, you’d miss out on £3,125.
Even when the cap starts in 2029, you could still save £300 per employee. That’s an annual saving of £30,000.
So yeah, we think it’s still worth it.
Communicate and optimise. Let your employees know about the upcoming changes and give them the tools they need to make their pensions work harder.
Make it easy for your employees to track and manage their pensions, help them track down lost pots from previous employers, and give them access to financial advice to make sure they’re getting the best return on their investments.
And remind your team they have 3 years to make use of the full National Insurance savings pension salary sacrifice has to offer. Savvy employees will want to maximise their savings while they can.
Yes – if you’re paying above the Real Living Wage (£13.45) then you’ll be able to apply a pension salary sacrifice deduction at 5% without taking your employees below the National Minimum Wage.
Let's crunch the numbers. See how much your business and your employees could save under a pension salary sacrifice scheme over the next four years with our bespoke calculator.
We think employers will be looking to do more with less budget in 2026 and beyond. That means choosing employee benefits with the biggest impact.
And it’s not about how often they log in to a benefits platform. It’s about having benefits that truly impact their lives – from fresh-faced grads, to your battle-hardened CEO.
A diverse range of salary sacrifice options can help your company save money and create more room in your benefits budget. There are substantial employee savings available on everything from childcare and pensions, to laptops and bikes.
Childcare, pension and cycle2work schemes remain the best options for employers looking to reduce their National Insurance bill.
Book a personalised consultation with one of our experts to understand how the Budget impacts your strategy for 2026 and beyond.