How does salary sacrifice work for automatic enrolment?
Salary sacrifice is an arrangement between you and your staff where you both agree to reduce your staff’s gross salary in exchange for an equivalent or increased contribution to their pension scheme.
When writing to your staff about using salary sacrifice, you should take care to separate this information from anything else about automatic enrolment. You may send salary sacrifice and automatic enrolment information together but must avoid giving the impression that your member of staff will only be enrolled if they agree to salary sacrifice.
From April 2029, the salary sacrifice annual allowance for pension contributions will be changing. The amount that is exempt from National Insurance contributions will be capped at £2,000 a year for staff contributions made via salary sacrifice.
For more information on salary sacrifice for employers including salary sacrifice and sick pay visit GOV UK’s guidance.