More than three quarters (76 per cent) of employers offer alternative cash benefits to high earners in lieu of pension contributions, although many are expected to reduce the cash value on offer due to rising upcoming costs, research from WTW has found.

The WTW Annual Allowance (AA) and Other Pension Taxes Survey 2025, found that employers allow maximum flexibility for high earners, who may be restricted by the AA, with most restricted contribution options starting at £10,000.

Despite the abolition of the pensions lifetime allowance (LTA), many employers also continued to offer high earners the chance to opt out of pension provision altogether.

However, employers also offered flexibility for high earners to increase pension savings through regular contributions and/or bonus sacrifice, allowing high earners to pay up to their personal annual allowance and make use of any carry forward allowances.

Where employers choose to offer alternatives to pensions, cash was the most popular form, according to the survey, with 91 per cent of these employers offering cash as an alternative to defined contribution (DC) pension contributions and 72 per cent of these employers offering cash instead of defined benefit (DB) arrangements.

However, more than half of these employers are expected to reduce cash payments to cover the cost of employer National Insurance Contributions (NIC).

This trend was more pronounced among DC employers with 55 per cent making adjustments, compared to 27 per cent of DB employers.

"With employer NICs increasing to 15 per cent from April 2025, many employers plan to cut the cash top-up further to allow for this," WTW head of financial planning UK, Helen Perrin, explained.

"For example, an employer might offer the choice between a 10 per cent pension contribution or an 8.7 per cent cash allowance from April 2025."

This was not the only area employers were reviewing in light of recent government announcements, as WTW found that 87 per cent of employers plan to review their death in service arrangements in preparation for the upcoming changes to inheritance tax on pension death benefits from April 2027.

More broadly, WTW found that most employers also provide some form of support to employees to help them manage their pension contributions and understand their options for saving towards retirement using alternative tax-efficient vehicles.

This support ranges from fact sheets (72 per cent) and webinars (36 per cent) to access to individual guidance (23 per cent) and individual financial advice (11 per cent).

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