Pensions - Articles - Two thirds unaware of planned salary sacrifice restrictions

 For many younger workers and lower earners, salary sacrifice is a straightforward way to boost contributions early in their careers, when even small amounts invested can have the biggest impact over time.

“That said, introducing a cap at any level still risks adding unnecessary complexity for employers and confusion for savers. Our research shows that nearly two thirds of employees weren’t even aware a restriction was planned, despite more than half already using salary sacrifice today. With many employers also seeing the system as complicated to operate, policymakers should ask whether the additional administrative burden of a cap and the uncertainty it creates is really worthwhile.

“Salary sacrifice has been an effective mechanism for encouraging retirement saving while helping employers manage costs. A good system should make pension saving accessible to all – including smaller businesses and their workers – but also be simple enough for employers to run and employees to understand. Policies that support employers in maintaining strong pension provision ultimately benefit employees and the wider economy too.”