Salary sacrifice pension calculator
See how much salary sacrifice saves you compared with a normal workplace pension, and what each £1 in your pension really costs.
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An estimate from the figures you entered. It is not financial advice.
Salary sacrifice compared with a normal workplace pension
With a normal net pay pension, your contribution comes out of your pay before income tax, so you get tax relief straight away, but you still pay National Insurance on it. With salary sacrifice you agree to a lower salary and your employer pays the difference into your pension. As you're never paid that money, there's no income tax and no NI on it.
The difference is the NI. For most people that's 8p in every pound sacrificed. Above £50,270 it's 2p. Your employer saves 15p too, which is why some pass part of it on.
How this is calculated
The calculator works out your take-home pay three ways: with no pension, with the same contribution through a net pay scheme, and through salary sacrifice. The cost of each option is how much less you take home than with no pension. If your employer passes on some of its 15% NI saving, that's added to the sacrifice figure going into your pension. It also checks your pay after the sacrifice against the £12.71 hourly National Living Wage for your hours.
Worked example: 8% of £45,000
Sam earns £45,000 in Cardiff and puts in 8%, which is £3,600 a year.
- Take-home with no pension: £35,919.60
- Through a net pay pension: £33,039.60, so £3,600 in the pension costs £2,880
- Through salary sacrifice: £33,327.60, so the same £3,600 costs £2,592
Salary sacrifice saves Sam £288 a year in NI. If the employer passed on half of its £540 saving, another £270 would go into the pension.
The 2029 change
The government has announced that from April 2029 only the first £2,000 a year of pension salary sacrifice will be free of National Insurance. Until then the whole amount is. The income tax side of salary sacrifice won't change.
Questions people ask
How much does salary sacrifice save?
You save income tax at your top rate, as you would with any workplace pension, plus National Insurance: 8% on earnings between £12,570 and £50,270 and 2% above that. A basic rate taxpayer sacrificing £2,000 saves £400 tax and £160 NI.
What is the £2,000 salary sacrifice cap from 2029?
The government has announced that from 6 April 2029 only the first £2,000 a year of pension salary sacrifice will be free of National Insurance. Anything above that will be charged employee and employer NI as normal. Income tax relief is not affected.
Can salary sacrifice take me below the minimum wage?
No. Your cash pay after the sacrifice must not fall below the National Minimum Wage or National Living Wage for your hours. In 2026/27 that is £12.71 an hour if you are 21 or over.
Does salary sacrifice affect my mortgage or maternity pay?
It can. Your contractual salary is lower, which some lenders use for affordability, and Statutory Maternity Pay is based on the lower pay. Many employers base occupational maternity pay and life cover on your pre-sacrifice salary, so check your scheme rules.
Do employers pass on their NI saving?
Some do. Your employer saves 15% NI on the amount you sacrifice, and some add part or all of that to your pension. Ask your HR or payroll team.
Sources
- Salary sacrifice for employers (GOV.UK)
- National Insurance rates and categories (GOV.UK)
- Income Tax rates and Personal Allowances (GOV.UK)
- Scottish Income Tax rates and bands 2026 to 2027 (Scottish Government)
- Rates and thresholds for employers 2026 to 2027 (GOV.UK)
Rates and review
Uses rates for the 2026/27 tax year. Figures last checked against the sources on 25 October 2026.
Written by author to be named. Reviewed by qualified reviewer to be named.
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