48% of employers are offsetting national insurance costs with salary sacrifice - Employee Benefits

By Zoe Wickens2025-04-01T10:58:00+01:00

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Almost half (48%) of employers are offsetting national insurance (NI) costs with salary sacrifice, according to research by Towergate Employee Benefits.
Its survey of 500 UK HR decision makers ahead of increases in NI contributions for employers that are due to take effect from 6 April also found that less than half (48%) of respondents offer salary sacrifice on their pension provision.
The likelihood of respondents offering salary sacrifice on their pension provision increases with the size of organisation; just over a third (38%) of respondents with 20 employees or less offer a salary sacrifice arrangement. In comparison, 49% of respondents with 21-249 employees and 67% of those with 250+ employees offer a salary sacrifice arrangement.
Among respondents that offer salary sacrifice on pension contributions, 33% give all of the employer NI savings back to their employees, 27% share some of the employer NI savings with staff, and 21% keep the employer NI savings within the organisation. In addition, 12% use the employer NI savings to fund other benefits and 3% use the employer NI savings to fund their benefits platform.
Sorangi Shah, client director at Towergate Employee Benefits, said: “Towergate Employee Benefits is surprised that more businesses are not utilising salary sacrifice. Employers not currently utilising salary sacrifice for pensions are potentially missing out on savings for their business and their employees. Utilising it could be a very efficient way for them to make significant savings, particularly following the cost increases that have now come into force with the new NI contribution levels.
“The most surprising thing we found is that a third of employers give back all of the employer NI savings to the employees, and only a fifth of staff retain the savings. This may well change over time, given the tighter budgets employers are likely to have going forward. We may well see a trend of more employers wishing to retain the NI savings.”

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