Salary sacrifice (also known as salary exchange) is an agreement between the employer and their employees.
Employees can give up part of their future gross salary or bonus in return for a non-cash benefit, like a pension contribution. With the reduction of cash pay, both employers and employees can save on National Insurance (NI)contributions, becoming more tax-efficient.
Employees benefit from increased employer pension contributions and due to lower NI contributions, an ultimate increase in take-home pay. Furthermore, employers can choose to invest money saved in NI contributions back into their business, perhaps improving their employee benefits programme to better the overall wellbeing of their workforce as well as enhancing productivity.
In this handy salary sacrifice pension guide employers will find:
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