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Penfold urges workers to check pension setup to improve take-home pay

Chris Eastwood, CEO at Penfold, said: “No budgeting hack will ever come close to the long-term impact of making sure your pension is properly set up."

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Penfold urges workers to check pension setup to improve take-home pay
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Employees could improve their take-home pay by checking how their workplace pension contributions are structured, according to Penfold.

The digital workplace pension provider said salary sacrifice arrangements remain an underused workplace benefit despite offering eligible employees the opportunity to reduce the amount of National Insurance (NI) they pay.

Under salary sacrifice arrangements, employees agree to reduce their gross salary in exchange for an employer pension contribution of the same value.

As contributions are made before NI is calculated, some workers may be able to increase take-home pay or boost pension contributions without increasing their monthly costs.

Penfold said the arrangement could become increasingly relevant as workers continue to face cost of living pressures and frozen tax thresholds.

The company noted that the £12,570 personal allowance remains frozen while the main employee NI rate is currently set at 8% on qualifying earnings between £12,570 and £50,270.

According to Penfold, salary sacrifice can also reduce employers’ NI liabilities, with some businesses choosing to pass savings back to employees through higher pension contributions.

Chris Eastwood, CEO at Penfold, said: “No budgeting hack will ever come close to the long-term impact of making sure your pension is properly set up.

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“Many employees assume the only way to increase their monthly income is through a promotion or pay rise. For workers whose employers offer salary sacrifice, there may already be an opportunity to keep more of what they earn simply by changing how their pension contributions are made.”

Eastwood said salary sacrifice arrangements are often overlooked because they sit within payroll or HR systems.

He added: “Salary sacrifice can feel like a hidden benefit because it often sits quietly inside payroll or HR systems. Once properly understood, it can make an immediate difference to their monthly budget and their long-term retirement savings.”

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Penfold also said pension engagement is expected to become increasingly important ahead of the pensions dashboards connection deadline on 31st October 2026.

Eastwood said: “Millions of workers are saving into workplace pensions through auto-enrolment, but many still have limited visibility over how much they are contributing, how their pension is structured, and whether they are making the most of the options available to them.

“Visibility is expected to improve as pension schemes and providers connect to the pensions dashboards ecosystem ahead of the 31 October 2026 connection deadline.

“Once pensions dashboards become available to the public, savers should have a clearer view of their pension pots in one place, making it even more important that employees understand how their workplace pension is set up today.”

He added: “The new tax year is a genuine opportunity to build better money habits. Checking whether your employer offers salary sacrifice and understanding how your pension contributions are made is a simple but powerful step.

“It may only take a short conversation with HR or payroll, but it could improve your take-home pay and strengthen your pension savings, reducing financial stress later in life.

“Pensions are often treated as something to think about in the future, but the way they are set up can make a real difference right now.”

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