Employers have again been encouraged to maximise their pension contributions via salary sacrifice to help balance the additional costs they are set to face as a result of the increase in employer National Insurance contributions (NIC).

Chancellor, Rachel Reeves, previously announced plans to increase the rate of employer NIC from 13.8 per cent to 15 per cent, in a move that industry experts warned could represent a “major setback” to hopes of progress on Britain’s under-saving crisis.

In addition to this, Reeves announced that the threshold for employers paying NIC will reduce from £9,100 to £5,000, which, analysis from Royal London showed, will result in an increase in employer NICs of £615 per employee per annum.

However, analysis from Hymans Robertson showed that for every £100,000 of salary employees sacrifice into their pension, the saving in employer NICs will be £15,000 from 6 April.

Given this, it said that employers should seriously consider implementing this change which benefits both employers and staff, arguing that "huge savings" could be made for employers who take action now, whether this is putting a salary sacrifice scheme in place, or encouraging staff to maximise their pension contributions.

Hymans Robertson head of DC corporate consulting, Hannah English, said: “The savings employers could benefit from, by introducing a salary sacrifice system for employee pension contributions, should not be understated.

“By increasing default employee contribution levels annually and providing staff with meaningful retirement guidance and advice support, employers could offset their looming National Insurance costs while improving the retirement prospects of their employees.

"These simple changes could provide businesses a lifeline as the purse strings are tightened in the new financial year.”

Royal London also previously suggested that employers should consider making use of salary sacrifice to mitigate rising NIC costs, after its research found that some employers are considering cutting costs through recruitment freezes, reducing employer pension contributions or stopping any increases to their contributions.

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