[UK] Majority of workers unaware of salary sacrifice changes

In the UK, new research has revealed that, despite nearly two-thirds of workers currently using salary sacrifice, the majority are unaware that this will be restricted from 2029, Corporate Adviser reports.

According to the professional services consultancy Barnett Waddingham, many UK workers remain unclear about how salary sacrifice works, even though it is one of the most widely used workplace benefits.

Its research reportedly found that almost one in 10 workers do not know what salary sacrifice is, and almost two-thirds are unaware of proposed changes to limit the amount of national insurance that can be saved. The proposed rule changes are currently being debated in Parliament.

The findings show common misconceptions around salary sacrifice, with one in five (20 per cent) of respondents wrongly believing it can only be used for pension contributions. In fact, salary sacrifice can be used for other benefits, including childcare support and company car schemes.

Mark Futcher - Barnett Waddingham Partner and Head of DC pensions - said, “For a benefit so widely used, most people are still using salary sacrifice on autopilot without knowing what’s going on under the bonnet. For something that can make a big difference to people’s long-term savings, that gap really matters.

“Adding a cap, regardless of the amount, adds another layer of fine print to a system that already feels a bit opaque for most people. And when the rules become harder to understand, people are more likely to step back than engage – a risk we can’t really afford to take at a time when retirement adequacy is already under pressure.

“There’s a balance to strike here. Salary sacrifice works best when it’s simple for workers to understand and easy for employers to run. If that balance tips too far towards complexity, there’s a risk a well-used and effective benefit becomes less accessible than it should be.”

Source: Corporate Adviser

(Quotes via original reporting)

In the UK, new research has revealed that, despite nearly two-thirds of workers currently using salary sacrifice, the majority are unaware that this will be restricted from 2029, Corporate Adviser reports.

According to the professional services consultancy Barnett Waddingham, many UK workers remain unclear about how salary sacrifice works, even though it is one of the most widely used workplace benefits.

Its research reportedly found that almost one in 10 workers do not know what salary sacrifice is, and almost two-thirds are unaware of proposed changes to limit the amount of national insurance that can be saved. The proposed rule changes are currently being debated in Parliament.

The findings show common misconceptions around salary sacrifice, with one in five (20 per cent) of respondents wrongly believing it can only be used for pension contributions. In fact, salary sacrifice can be used for other benefits, including childcare support and company car schemes.

Mark Futcher - Barnett Waddingham Partner and Head of DC pensions - said, “For a benefit so widely used, most people are still using salary sacrifice on autopilot without knowing what’s going on under the bonnet. For something that can make a big difference to people’s long-term savings, that gap really matters.

“Adding a cap, regardless of the amount, adds another layer of fine print to a system that already feels a bit opaque for most people. And when the rules become harder to understand, people are more likely to step back than engage – a risk we can’t really afford to take at a time when retirement adequacy is already under pressure.

“There’s a balance to strike here. Salary sacrifice works best when it’s simple for workers to understand and easy for employers to run. If that balance tips too far towards complexity, there’s a risk a well-used and effective benefit becomes less accessible than it should be.”

Source: Corporate Adviser

(Quotes via original reporting)