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What is Salary Sacrifice?

The idea behind salary sacrifice pension is simple - you exchange part of your gross income to be paid as pension contributions instead.

Instead of taking part of your salary as cash (and paying tax on it), you exchange it for pension contributions. Result? You save on both income tax AND National Insurance.
 

How it works 💡

The Old Way (Personal Contributions)

  1. You get paid your full salary
  2. You pay income tax + National Insurance on it
  3. You put money into your pension from what's left
  4. Your pension provider claims back 20% tax relief
  5. You can't get back the National Insurance you paid
 

The Smart Way (Salary Sacrifice via Nasa)

  1. You agree to take a smaller salary
  2. No tax or National Insurance on the sacrificed amount
  3. We pay that amount directly to your pension
  4. You save both income tax AND National Insurance!

 

Is it right for you? 🤔

The upsides:

  • More tax-efficient than personal contributions
  • More money goes to your pension

Things to consider:

  • Reduces your official salary - might affect mortgage applications or statutory benefits such as SMP
  • Amount is usually fixed unless major life changes happen (see our change policy)
 

Need advice? 

Whilst we can't give financial or retirement planning advice, these free government services can help:

Remember: Always consider your personal circumstances
and speak to a financial adviser if you're unsure!