Salary sacrifice allows employees to exchange a part of their salary for other benefits such as pension contributions. Salary sacrifice schemes can help reduce national insurance costs for employers and make benefits more affordable for employees.
UK businesses will pay £25 billion more per year from April 2025,1 following the increased employer National Insurance Contributions (NIC) announced in the Autumn Budget. The threshold at which NIC begins to apply will be cut almost in half, from £9,100 to £5,000 per year alongside employers NIC rate increasing from 13.8% to 15%.
As employers consider how to manage these higher costs, they are looking at their biggest single spend – salaries. However, in a tight talent market where many employees are concerned by the cost of living, lower wages may simply not be feasible.
One factor that remains unchanged is salary sacrifice. This may be the key to keeping workforce costs affordable, not just for pensions but for a whole host of benefits. However, it’s important to bust some myths around the nature of salary sacrifice, as well as ensure that the change in strategy is implemented with care to avoid unintended consequences.
There are several types of salary sacrifice, to fit with your family circumstances and lifestyle, including:
- Electric vehicle – help to buy a green car, saving money and the planet!
- Cycle to work scheme – help to by a bicycle and safety equipment, to reduce your carbon footprint while boosting your fitness
Find out more about Mercer Salary Sacrifice
Learn more about how Mercer can help you reduce national insurance costs for employers and make benefits more affordable for employees.
This is a marketing communication. The information contained herein is based on sources we believe reliable and should be understood to be general risk management and insurance information only. The information is not intended to be taken as advice with respect to any individual situation and cannot be relied upon as such. Statements concerning legal, tax or accounting matters should be understood to be general observations based solely on our experience as insurance brokers and risk consultants and should not be relied upon as legal, tax or accounting advice, which we are not authorised to provide.
This site and the materials made available on it are intended for general information only. They do not contain investment, financial, legal, tax or any other advice and should not be relied upon for this purpose. The materials are not tailored to your particular personal and/or financial position. If you require advice based on your specific circumstances, you should contact a professional adviser.
Mercer Marsh Benefits is a trading name used by Mercer Limited who are authorised and regulated by the Financial Conduct Authority (Firm Reference Number 121935). Mercer Limited is registered in England and Wales (Registration Number 984275). Registered Office: 1 Tower Place West, Tower Place, London, EC3R 5BU.
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