Penfold<\/a>, warned: \u201cSalary sacrifice has been a win-win for employers and employees for years – lowering National Insurance costs while strengthening retirement savings.”\n<\/p>\n\n Under the new rules:\n<\/p>\n
Only the first \u00a32,000 of pension contributions via salary sacrifice will remain NI-free<\/p>\n
Contributions above that will attract both employee and employer NI<\/p>\n
\n Income tax relief remains unchanged\n<\/p>\n
3.3 million workers could lose out<\/p>\n
\n According to HM Revenue and Customs, around 7.7 million employees use salary sacrifice for pensions.\n<\/p>\n
\n Of those, 3.3 million contribute more than \u00a32,000 annually \u2014 and are likely to feel the impact directly.\n<\/p>\n
\n Eastwood said: \u201cAnyone contributing more than \u00a32,000 a year through salary sacrifice will lose NI savings on the excess, and employers will see their NI costs rise accordingly.\u201d\n<\/p>\n
\n For someone contributing \u00a35,000 annually, NI savings on \u00a33,000 would disappear after 2029.\n<\/p>\n
\n Over years of saving, that reduction compounds.\n<\/p>\n
Employers told to act now<\/p>\n
\n The warning isn\u2019t just for workers.\n<\/p>\n
\n Employers will face higher NI bills on pension contributions above the cap and may need to overhaul payroll systems and contribution structures well ahead of implementation.\n<\/p>\n
\n Eastwood added: \u201cBusinesses need to start modelling the financial impact now and ensure they communicate clearly with staff well ahead of implementation.\u201d\n<\/p>\n
\n The three-year window\n<\/p>\n
\n While April 2029 may seem distant, experts say delay could be costly.\n<\/p>\n
\n Eastwood stressed: \u201cBusinesses do still have a three-year window before the changes take effect.\n<\/p>\n
\n “For employers not yet using salary sacrifice, there remains a significant opportunity to capture NI savings before 2029.\u201d\n<\/p>\n
\n That window allows companies and employees to:\n<\/p>\n
Maximise NI efficiencies under current rules<\/p>\n
Review contribution strategies<\/p>\n
Adjust long-term pension planning<\/p>\n
\n Salary sacrifice has been one of the most efficient pension tools available for over a decade.\n<\/p>\n
\n Recommended reading:\n<\/p>\n
\n From 2029, it still works \u2014 but not in the same way.\n<\/p>\n
\n Higher earners, those making additional voluntary contributions, and employers offering enhanced schemes are most exposed.\n<\/p>\n
\n The reform represents one of the biggest shifts in workplace pension tax treatment in years.\n<\/p>\n
\n And once the cap arrives, the full NI advantage disappears above \u00a32,000.\n<\/p>\n