Salary Sacrifice Pension Calculator - Workplace Pensions Direct
Salary Sacrifice Pension Calculator - Workplace Pensions Direct

Salary Sacrifice Pensions

Reduce your companies NI contributions
increase your employees pension pot

Salary Sacrifice - How to reduce pension costs

A business in the UK with 200 employees on average earnings of £30,420 could save around £40,000 every year by using salary sacrifice for their workplace pension. Not only would the business save money but the pension scheme members could also see an increase in their take home pay or benefit from higher pension contributions.

Sounds too good to be true?

WPD Group have been helping employers introduce salary sacrifice schemes for many years. Use our calculator to get a rough idea of how much you could save.

What is Salary Sacrifice?

Salary Sacrifice Pensions (sometimes called salary exchange) is a method used by employers to reduce national insurance liability for them and their employees.

Salary Sacrifice - How much can you save?

The Benefit of using Salary Sacrifice

It saves the employer and the employee money, and it’s legal!

What's it used for

  • Childcare Vouchers (closed to new entrants since October 2018)
  • Cycle to Work schemes
  • Pensions (including advice)

How it works with pensions

The employee has their salary reduced by the same percentage of earnings as would normally be deducted for their pension. The employer pays the same amount into the employee’s pension.

No time to digest this now?

Don't worry! We have produced 'The Ultimate Guide to Rolling out Salary Sacrifice for Pension Contributions!'

What could you do with the savings?

Increase employees' take home pay

Increase employers' pension contributions

Better staff benefits, such as life cover or health cover

Directors pension contributions

You could be saving NI and making your employee benefits more attractive. 

How to implement a Salary Sacrifice Pension Scheme?

The scheme can normally be set up using your existing pension scheme.


With this method the employer provides employees with the option of using salary sacrifice and implements specific processes to ensure compliance


Pension scheme members are automatically enrolled into the salary sacrifice scheme. They can, if they wish, opt-out of using salary sacrifice.

Different procedures are used for each of the above methods.

Consultation Period

In certain circumstances, employers have to consult with their employees, or their employees’ representative, before certain changes can be made to their pension scheme. The requirement to consult covers changes to occupational and personal pension schemes. Note – the purpose of the consultation is not to obtain the consent of those consulted, but to inform them and give them the opportunity to provide feedback to the employer on the proposed change(s).

Communication / Education

Employers need to communicate carefully the introduction of a salary sacrifice scheme.

  • Clear and concise personalised letters with full details of how the changes will impact on the individual
  • Group presentations explaining how it all works and the implications
  • Individual meetings to discuss an individual’s own situation

A salary sacrifice scheme will amount to a change to employees’ terms and conditions of employment. For a scheme to be effective (and supported by HMRC), employers will need to ensure employees have effectively agreed to a variation of their individual employment contracts.

We can put you in touch with dedicated employment lawyers to ensure that your HR documentation complies with the necessary formalities

Be Aware Of!


Due to the complexities of salary sacrifice it is of paramount importance your payroll processor fully understand how it works and is able to make amendments each payroll run if required.

Earnings Related Benefits

Salary sacrifice can affect an employee's entitlement to earnings related benefits such as Maternity Allowance and Additional State Pension.

Minimum Wage

A salary sacrifice arrangement can't reduce an employee's earnings below the national minimum wage rates. This means that payroll needs to be able to monitor this constantly

Contribution Based Benefits

Salary sacrifice may affect an employee's entitlement to contribution based benefits such as Universal Credit and State Pension. It may reduce the cash earnings on which National Insurance contributions are charged.

Your quote
£excl. VAT WPD Fees
£ Available Cost Savings
£excl. VATper month WPD fees
£per annum Available Cost Savings

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We’ve sent you a bespoke auto enrolment Project Plan by email to help you understand your auto enrolment duties and how Workplace Pensions Direct can help you get compliant, and stay compliant.


*Monthly fee initial 24 month contract: See Fees for details

Assumptions: 2016/2017 tax year – £26,500 average pay – 15% average staff turnover. Available ongoing cost savings are from salary exchange, earnings definition, postponement for new starters, employee charges, employee lost investment return, and employer charges.

Please, contact us

Because of the size of your company, we can generate a bespoke quote based on 50 or more employees. Please get in touch with us by contacting us through the button below, and we’ll return with a bespoke quote and fee breakdown the same day.

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