By bizn_fun 
About a third of private sector employees and a tenth of public sector workers use a salary sacrifice scheme for their pension savings. Analysis by HM Revenues & Customs suggested about 7.7 million employees used it in 2024.
Former pensions minister Steve Webb, now partner at LCP, said that the time until National Insurance payments are due on salary sacrifice, more than three years away, means it is unlikely the chancellor will raise the £4.7bn the OBR estimates.
“The decision not to implement this change until 2029 creates a huge opportunity for firms to restructure the way that they offer pay and pensions in order to mitigate or eliminate this new charge,” Mr Webb said.
“There is a high probability that this policy will only raise a fraction of the amount expected by the chancellor.”
Baroness Ros Altmann, also a former pensions minister, said the current salary sacrifice system was “opaque” because it is based on agreements between individual companies and workers to each reduce their tax liability, but the proposed changes “will add to that”.
“There’ll be extra National Insurance costs for employers, lower take-home salaries potentially and then there’s the administration costs of any change in pension policy.
“Employers may just think the administration costs of changing this isn’t worth it and scrap the whole thing,” she added.
“Overall, I’d say this is a net-negative in terms of getting the UK saving more.”