Overview
- From 2029, pension salary‑sacrifice will be capped at £2,000 a year, with National Insurance charged on amounts above that threshold.
- Government analysis indicates around 7.7 million employees use salary sacrifice and about 3.3 million currently exceed the new limit.
- CBI polling of businesses found 73% view the cap negatively, citing concerns about reduced saving and higher employer costs.
- The Treasury estimates the change will raise roughly £4.8–£5 billion in its first year as both employees and employers incur extra NICs on higher contributions.
- Analysts warn employers may scale back pension contributions, with CBI modelling showing a 1% employer cut could reduce a typical worker’s eventual pot by tens of thousands of pounds.