Salary Sacrifice Pension Calculator
See how salary sacrifice affects your take-home pay and pension pot. Salary sacrifice saves National Insurance on top of income tax relief.
How Salary Sacrifice Pension Calculator works
Why salary sacrifice beats personal contributions
Both methods give income tax relief. But salary sacrifice also saves employee NI (8% within the primary-to-upper threshold range), making it more efficient. For a basic-rate taxpayer: personal contribution nets £72 per £100 sacrificed after tax/NI; salary sacrifice costs only £72 after tax and NI saving.
Employer NI saving
Employers save 13.8% employer NI on sacrificed salary. Enlightened employers pass some or all of this saving on to the employee's pension. Ask your employer if they share the NI saving.
Impact on benefits
Salary sacrifice reduces your contractual salary, which can affect mortgage applications (show total remuneration), state benefits based on gross pay, and maternity/paternity pay. Weigh these considerations before committing to a large sacrifice.
Frequently asked questions
Is salary sacrifice worth it?
Yes for most employees. You save NI as well as income tax on contributions, reducing the net cost of pension saving. A £200/month sacrifice typically only reduces take-home pay by £144 (basic rate taxpayer) due to tax and NI savings.
Does salary sacrifice affect my mortgage?
It can. Lenders assess affordability based on your salary. A lower nominal salary from sacrifice may reduce the maximum mortgage offer. Mention total remuneration (including pension contributions) when applying for mortgages.
Can I stop salary sacrifice?
You can usually request to stop or change salary sacrifice at your employer's discretion. It is a contractual arrangement, so there may be a minimum notice period. Check your scheme rules.
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This calculator provides estimates for informational purposes only. It is not a substitute for personalised pension or financial advice. Speak to a regulated financial adviser before making pension decisions.