Employers plan benefit cuts ahead of salary sacrifice changes, research reveals

A significant proportion of UK employers are preparing to scale back workplace benefits in response to upcoming changes to salary sacrifice rules, according to research from GRiD.

The findings revealed that 23% of employers expect to reduce the generosity of pension contributions, while 22% plan to cut back on other employee benefits.

A further 15% said it is too early to determine how they will respond.

The shift comes ahead of planned reforms from April 2029, which will see National Insurance (NI) applied to pension contributions made via salary sacrifice above £2,000 per employee per year.

Salary sacrifice arrangements, widely used to exchange part of an employee’s salary for benefits such as pensions or electric vehicles, have long been a cost-efficient way to enhance overall reward packages.

With the tax treatment set to change, many employers are reassessing the affordability and structure of their benefits offering.

The research suggests businesses will increasingly prioritise benefits that can demonstrate clear value, whether through improving employee health outcomes, reducing absence or supporting a faster return to work.

Katharine Moxham, spokesperson for GRiD, said: “This change to salary sacrifice is coming, and with three years to go, employers have time to prepare.