Following the UK Autumn Budget in November 2025, employers are now firmly on notice that salary sacrifice pension arrangements will fundamentally change from April 2029.

As we outlined in our earlier insight on the major reform to salary sacrifice pension arrangements, the government’s proposals will significantly restrict the extent to which employer National Insurance savings can be generated through pension salary sacrifice.

Over the past few months, further discussion around the proposed reforms has made it clear that the government intends to significantly restrict the extent to which employer National Insurance savings can be generated through pension salary sacrifice.

While 2029 may feel distant, the financial and behavioural impacts will be material, particularly for employers with generous pension structures, bonus sacrifice arrangements, or cost-sharing models.

The challenge for employers

For many organisations, salary sacrifice has become an embedded part of reward strategy – delivering:

The proposed reforms introduce several key uncertainties for employers:

With 2026 already underway, many businesses are now entering medium-term planning cycles that extend beyond 2029. Waiting until final legislation is confirmed risks leaving little time to adapt – particularly where long-term remuneration strategies, pay review cycles, or workforce budgeting are involved.

Waiting until legislation is finalised risks leaving employers with little time to adapt, particularly where long-term remuneration, pay review cycles or workforce budgeting are involved.

A proactive approach: modelling the cost now

To help employers get ahead of these changes, we have developed a Salary Sacrifice Cap Calculator designed to model the real financial impact of the proposed reforms.

The calculator allows employers to:

• Quantify the impact of the proposed salary sacrifice cap

• Model scenarios where the employer retains, shares or passes back current employer NIC savings

• Factor in bonus sacrifice arrangements, including partial or full bonus waivers

• Compare current versus post-reform costs at both employer and employee level

• Stress-test different approaches to reward strategy ahead of 2029

This enables finance, HR and reward teams to move from speculation to evidence-based decision making, something that is becoming increasingly important as organisations refine their 3-5 year financial plans.

Why this matters now, not in 2029

Although implementation is planned for April 2029, the decisions employers make over the next few years will shape how painful (or manageable) the transition is:

In our experience, employers who start planning now are better placed to:

How can we help?

Our Salary Sacrifice Cap Calculator is most powerful when combined with practical advisory support. We work with employers to:

• Interpret modelling outputs in the context of their wider reward strategy

• Explore alternative structures where salary sacrifice becomes less efficient

• Align finance, payroll and HR perspectives

• Communicate changes clearly and confidently to employees

Whether you are an employer looking to understand future cost exposure, or an adviser seeking clarity on how these reforms will affect your clients, now is the right time to start the conversation.