How Do Employer National Insurance (NI) Savings from Salary Sacrifice Work?

Article author
Kelvin Steve Igbodo
  • Updated

When you participate in a salary sacrifice scheme, you agree to reduce your salary in exchange for certain benefits, like higher pension contributions. This reduction in salary means your company pays less in National Insurance (NI) because NI is calculated based on your reduced salary.

At Remote, we share 50% of the National Insurance savings your company make with employees. Instead of keeping the full saving, your company contributes half of the NI saving directly into your pension fund as an additional employer pension contribution.

How It Works

Here’s how the employer NI savings are applied:

  1. You choose to participate in a salary sacrifice scheme, reducing your salary in return for benefits (e.g., higher pension contributions).
  2. Because your salary is lower, the company pays less National Insurance on your earnings.
  3. 50% of the NI savings that the company gains from your reduced salary is added to your pension as an extra employer contribution.

Example

Let’s say your company saves £100 in NI contributions because of your salary sacrifice. Half of that saving—£50—will be added to your pension fund on top of your regular pension contributions.

Why It’s Beneficial

This approach not only helps the company save on costs, but it also gives you a boost to your pension savings. By participating, you’re increasing the value of your pension without any extra cost to you.

 

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