Salary sacrifice and the 2029 NIC cap: UK benchmark 2026

About the data

This paper reports how UK employers answered lumi's questions on salary sacrifice and the 2029 NIC cap. The lumi reward benchmark covers 269 UK organisations across 14 sectors and five size bands. Data was collected in the 2026 H1 collection window. Each figure gives its base (n): the number of organisations that answered that question. Percentages are rounded to one decimal place, so a distribution can add up to 100.1%. Figures here are national. Sector and size comparisons are available to lumi members. See how lumi works for the method.

The legal context

lumi's questions describe a £2,000 NIC cap on pension salary sacrifice, starting in April 2029. This paper uses that description and no other. The detail of the cap, including who and what it applies to, sits with GOV.UK rather than with this paper.

Automatic enrolment requires minimum total pension contributions of 8% of qualifying earnings, at least 3% from the employer. The choices this paper reports on are not set by statute: whether pension contributions go through salary sacrifice by default, whether employer NIC savings are shared with employees, and whether a salary sacrifice car scheme is EV-only, EV-led or fuel-neutral.

How many UK employers offer pension via salary sacrifice by default?

The benchmark asks: Is pension offered via salary sacrifice by default? (n = 269). 52.0% answered Yes, which is the common answer. 48.0% answered No, which is an alternative. Neither answer is rare.

For organisations answering Yes, salary sacrifice is the standard route for pension contributions. The 2029 cap therefore bears on the default design of their pension, not on an optional extra that some employees choose. For organisations answering No, the question does not show whether pension salary sacrifice is available as an option employees opt into, or not offered at all.

A second question looks at how far salary sacrifice reaches into the workforce: What proportion of employees participate in salary sacrifice arrangements? (n = 220). This question excludes "Not applicable" from its base; 48 organisations answered N/A.

The common band is 10–24%, at 31.4%. The <10% band (30.0%) and the 25–49% band (24.1%) are both alternatives. Participation of 50% or more is rare, at 14.5%. Taken together, 61.4% of organisations report participation below 25% (31.4% + 30.0%), and 38.6% report participation of 25% or more (24.1% + 14.5%).

This question covers salary sacrifice arrangements of every kind, not only pension. Participation describes how many employees a change to salary sacrifice would reach. Where it is low, a change affects a smaller group. Where it is high, a change reaches more of the workforce and becomes a wider communication task.

The two questions in this section have different bases (269 and 220) and ask different things: one about the default route for pension contributions, the other about participation in salary sacrifice of any type. They are not cross-tabulated here and do not describe the same set of organisations.

How many UK employers have assessed the cost of the 2029 NIC cap?

The benchmark asks: Have you assessed the workforce cost impact of the £2,000 NIC cap on pension salary sacrifice (April 2029)? (n = 222).

"Not yet" is the common answer, at 51.4%. "Yes modelled" is an alternative, at 32.9%. "High-level review" is rare, at 15.8%. In total, 48.7% of organisations have made some form of assessment (32.9% + 15.8%).

The answer options separate two kinds of assessment. A modelled assessment produces a costed figure for the workforce, which can be set against budgets and tested under different responses. A high-level review gives a sense of scale without the same detail, and takes less effort.

The data was collected in the 2026 H1 window, and the cap starts in April 2029. Organisations answering "Not yet" may be waiting for the final detail of the cap, or may have other priorities first. The data does not say which.

The timing of an assessment carries its own trade-off. Modelling early uses current workforce and contribution data, which may change before the cap applies. Modelling later uses data closer to April 2029, but leaves less time to plan, consult on and explain any change to the scheme.

What do UK employers intend to do about the 2029 cap?

The benchmark asks: What do you intend to do about the £2,000 cap on pension salary sacrifice starting April 2029? (n = 212). This question excludes "Not applicable" from its base; 7 organisations answered N/A.

"Maintain scheme unchanged" is the common intention, at 71.2%. Each of the other three answers is rare. 23.1% of organisations intend to change the scheme, either by restructuring it or by withdrawing salary sacrifice (15.1% + 8.0%). 5.7% are undecided.

Each response carries a different set of consequences for someone designing reward:

• Maintaining the scheme unchanged keeps the arrangement employees already know, with no redesign to explain. It accepts whatever change in cost the cap brings under the final rules.
• Restructuring changes how pension value is delivered. The answer gives employer contributions as an example. This keeps a pension offer in place but changes its form, which employees will see and which takes time to design and explain.
• Withdrawing salary sacrifice ends the arrangement for pension. It removes the administration of salary sacrifice and any employer NIC saving attached to it, and changes how employees' pension contributions are made.
• Undecided leaves the choice open, which keeps options available while the detail of the cap is confirmed.

This question and the assessment question have different bases (212 and 222), and the answers are not cross-tabulated in this paper. The data here does not show whether the organisations intending to keep their scheme unchanged are the ones that have modelled the cost, or the ones that have not yet assessed it.

Do UK employers share employer NIC savings with employees?

The benchmark asks: Do you currently share employer NIC savings from pension salary sacrifice with employees (e.g. as contribution top-ups)? (n = 194). This question excludes "Not applicable" from its base; 74 organisations answered N/A.

"No" is the common answer, at 83.0%. "Yes fully" is rare, at 9.3%, and "Yes partially" is rare, at 7.7%. In total, 17.0% of organisations share some or all of the saving with employees (9.3% + 7.7%).

Sharing turns part or all of the employer's saving into value for employees, for example as a pension contribution top-up. Full sharing passes the whole saving on; partial sharing keeps some of it. Where the saving is not shared, the employer keeps it; this paper does not show how it is used.

The sharing question links directly to the cap. A sharing arrangement depends on the size of the employer NIC saving, and the £2,000 cap from April 2029 applies to NIC on pension salary sacrifice. For the 17.0% of organisations that share, a change to the saving raises the question of what happens to the top-up that employees receive. For the 83.0% that do not share, there is no top-up to revisit.

Are salary sacrifice car schemes EV-only or EV-led?

The benchmark asks: If a salary sacrifice car scheme is offered, is it EV-only or EV-led? (n = 98). This question excludes "Not applicable" from its base; 171 organisations answered N/A.

"EV-led (EV prioritised)" is the common answer, at 68.4%. "EV-only" is an alternative, at 23.5%. "Fuel-neutral" is rare, at 8.2%. In total, 91.9% of organisations answering run their scheme as EV-led or EV-only (68.4% + 23.5%). The three figures add to 100.1% because of rounding.

lumi's questions on the 2029 cap refer to pension salary sacrifice. They do not refer to car schemes. This question is included as the other salary sacrifice arrangement lumi asks about.

The three designs set employee choice against the organisation's own aims for the scheme. An EV-only scheme limits the choice to electric vehicles. An EV-led scheme keeps other vehicles available while giving electric vehicles priority. A fuel-neutral scheme leaves the choice of vehicle to the employee.

What the data means for reward decisions

Read as separate answers, the data shows a set of common positions: pension salary sacrifice by default, not yet having assessed the cost of the 2029 cap, intending to keep the scheme unchanged, and not sharing employer NIC savings. These answers come from different bases and are not cross-tabulated, so they describe the spread of positions, not one typical employer.

The rare answers are choices held by fewer organisations, not errors. Withdrawing salary sacrifice (8.0%), restructuring through employer contributions (15.1%) and sharing the full saving with employees (9.3%) each reflect a different view of how pension value is delivered and who benefits from any saving.

The trade-offs sit in four places:

• Default or optional. A default arrangement reaches more employees, so any change to it has a wider effect. An optional arrangement reaches only those who choose it.
• Assess early or later. Early modelling gives time to plan, on data that may change. Later modelling uses closer data, with less time to act.
• Keep, restructure or withdraw. Keeping the scheme avoids disruption and accepts the cost change. Restructuring or withdrawing brings design and communication work.
• Share or retain the saving. Sharing passes value to employees but ties part of the pension offer to a saving the cap concerns. Retaining it keeps the employee offer independent of the saving.

The questions a reward team might ask include:

• How many of our employees sacrifice pension contributions, and how would the £2,000 cap, as finally set out, apply to them?
• What is the change in cost under each response: keeping the scheme, restructuring it or withdrawing it?
• If we share NIC savings, is the top-up written as a fixed amount or as a share of the saving, and what happens to it if the saving changes?
• How much time do we need to consult, change contracts where needed and explain any change before April 2029?
• Would a costed model change our current intention, whichever response we have in mind?
• Is our car scheme reviewed on its own terms, separately from the pension decision?

Related

• How to prepare your scheme for the 2029 cap — the practical steps to take before April 2029.
• Workplace pension design — how UK employers set contributions and pension structure.
• Allowances, company cars and benefits governance — where car schemes sit in the wider benefits picture.

Notes

• Base, "Not applicable" handling and rounding are as described in "About the data". Percentages are not re-normalised.
• "Not applicable" answers are excluded from the base for four questions: the intended response to the 2029 cap (n = 212, 7 answered N/A); sharing employer NIC savings (n = 194, 74 answered N/A); participation in salary sacrifice arrangements (n = 220, 48 answered N/A); and salary sacrifice car schemes (n = 98, 171 answered N/A).
• The car scheme distribution adds to 100.1% because of rounding.
• Figures from different questions have different bases and are not cross-tabulated in this paper.
• The £2,000 NIC cap on pension salary sacrifice from April 2029 is described as lumi's questions describe it. The detail of the cap sits at GOV.UK.

Data appendix

Every question on this page, with its base and full distribution, as a spreadsheet: download the CSV.

All national figures used in this paper, as recorded in the lumi reward benchmark (collection window 2026 H1).

Is pension offered via salary sacrifice by default?
Base: 269 organisations

Have you assessed the workforce cost impact of the £2,000 NIC cap on pension salary sacrifice (April 2029)?
Base: 222 organisations

What do you intend to do about the £2,000 cap on pension salary sacrifice starting April 2029?
Base: 212 organisations · "Not applicable" excluded from base

Do you currently share employer NIC savings from pension salary sacrifice with employees (e.g. as contribution top-ups)?
Base: 194 organisations · "Not applicable" excluded from base

What proportion of employees participate in salary sacrifice arrangements?
Base: 220 organisations · "Not applicable" excluded from base

If a salary sacrifice car scheme is offered, is it EV-only or EV-led?
Base: 98 organisations · "Not applicable" excluded from base

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