Question 1

What is salary sacrifice?

Accepted Answer

Salary sacrifice lets employees exchange part of their salary for an employer pension contribution.

Because their salary is lower, both you and your employees can save on National Insurance contributions. The money still goes into their pension, just in a different way.

Question 2

How much can my business save with salary sacrifice?

Accepted Answer

Your business could save up to 15% in employer National Insurance on eligible salary sacrificed into pensions, depending on the rules and your employees’ circumstances.

For example, if 50 employees each sacrifice £3,000 a year, your business could save up to £22,500 annually under current rules.

You can keep these savings or put some back into your employees’ pensions to help them save more for retirement.

Use our calculator above to estimate how much your business could save.

Question 3

Does salary sacrifice reduce employees’ take-home pay?

Accepted Answer

Not necessarily. If employees switch their existing pension contributions to salary sacrifice, they could take home more pay thanks to National Insurance savings.

Their pension contributions stay the same, but they may pay less National Insurance.

The exact savings depend on their salary, pension contributions and individual circumstances.

Question 4

Are there any downsides to salary sacrifice?

Accepted Answer

Salary sacrifice can be a great way to save, but there are a few things to consider.

Reducing an employee’s contractual salary could affect certain benefits and payments, including statutory payments and mortgage applications.

Employees also can’t use salary sacrifice if it would reduce their pay below the National Minimum Wage.

It’s important to understand how salary sacrifice could affect your team before getting started.

Question 5

Can all employees take part in salary sacrifice?

Accepted Answer

Most employees can take part, but salary sacrifice won’t be suitable for everyone.

For example, employees can’t sacrifice salary if it would take their pay below the National Minimum Wage.

Some employees may also be better off keeping their existing pension arrangements, depending on their circumstances.

Penfold can help you understand what to consider when introducing salary sacrifice to your team.

Question 6

How will salary sacrifice change in April 2029?

Accepted Answer

From April 2029, the government plans to limit the National Insurance savings available through pension salary sacrifice.

Under the announced changes, only the first £2,000 of an employee’s annual pension contributions made through salary sacrifice will be exempt from National Insurance. Contributions above this amount will be subject to employer and employee National Insurance.

Salary sacrifice will still offer potential savings, but the amount could be lower for some businesses and employees.

Use our calculator to compare your estimated savings under today’s rules and the planned changes.

Question 7

How long does it take to set up salary sacrifice with Penfold?

Accepted Answer

Most businesses can get started within 4–6 weeks, from the initial consultation to launching salary sacrifice.

We’ll guide you through the process, including setting up your scheme, making any necessary changes and explaining salary sacrifice to your employees.

Our team will help you make the switch as smoothly as possible.

Question 8

Do I need to change my payroll to offer salary sacrifice?

Accepted Answer

Yes, you’ll need to make some changes to how you process payroll.

Salary sacrifice changes how pension contributions are paid, so your payroll needs to reflect employees’ reduced salaries and the corresponding employer pension contributions.

We’ll provide guidance to help you understand the changes and get everything set up correctly.

Question 9

How does Penfold help with salary sacrifice?

Accepted Answer

Penfold makes it simple to introduce salary sacrifice as part of your workplace pension.

We’ll help you get set up, provide the documents you need and support you in explaining the changes to your team.

You’ll also get an easy-to-use platform to manage your workplace pension, with ongoing support whenever you need it.

Question 10

How much does it cost to set up salary sacrifice with Penfold?

Accepted Answer

There’s no setup fee to introduce salary sacrifice with Penfold.

We’ll help you get started and guide you through the process, so you can focus on making the most of your potential savings.

Question 11

Is there a minimum number of employees for salary sacrifice?

Accepted Answer

No. Salary sacrifice can be suitable for businesses of all sizes, whether you have a team of three or 3,000.

The amount you could save depends on your employees’ salaries, pension contributions and eligibility.

Use our free calculator above to see what salary sacrifice could mean for your business.

Calculate your salary sacrifice savings

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