The upcoming increase in employer National Insurance contributions (NIC) has sparked a surge of interest in salary sacrifice, with analysis from Penfold revealing that interest in switching to its salary sacrifice pension solution jumped by 800 per cent year-on-year.

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.

However, industry experts suggested that there were ways employers could mitigate these costs, encouraging employers 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.

Many employers appear to be responding to these calls for action, as Penfold revealed that employer enquiries into its salary sacrifice pension solution surged by 175 per cent year-on-year (Q1 2025 vs Q1 2024).

In addition to this, it revealed that there was a 688 per cent increase in employer's interested in switching to its salary sacrifice pension solution since the last quarter.

As well as renewed interest, contributions to Penfold pensions via salary sacrifice grew by 160 per cent year-on-year and 53 per cent quarter-on-quarter, marking the sharpest quarterly growth since early 2022.

The sharp increase in enquiries to Penfold echoes broader changes in the market, as figures from the CIPD revealed that 85 per cent of very large employers and 61 per cent of large companies now offer salary sacrifice pensions.

“Since the Budget, we’ve seen an unprecedented level of inbound interest from employers who are now facing much higher employment costs,” said Penfold founder and CEO, Chris Eastwood.

"Salary sacrifice pensions have gone from being a ‘nice-to-have’ to a strategic priority.

“We’ve onboarded more employers using salary sacrifice in Q1 2025 than in the whole of 2023 combined. This isn’t just curiosity - businesses are taking decisive action to protect their bottom line."

However, Penfold warned there is still some confusion in the market around how to offer a workplace pension.

Given this, Penfold also published new guidance to help employers cut through the confusion, providing case studies from businesses already benefiting from salary sacrifice, and simple explanations of how salary sacrifice works in practice.

“With National Insurance increases now a reality, businesses of all sizes are recognising the value of salary sacrifice. Our guide gives them the clarity they’ve been asking for," Eastwood said.

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