With National Insurance contributions set to increase from 6 April, both employers and employees face mounting financial pressure. Yet surprising new research from Towergate Employee Benefits shows that just 48% of UK companies are using salary sacrifice arrangements for pension contributions – leaving the majority missing substantial savings opportunities at a critical time.

"Employers not currently utilising salary sacrifice for pensions are potentially missing out on savings for their business and their employees," explains Sorangi Shah, Client Director at Towergate Employee Benefits. "This approach could be a very efficient way to make significant savings, particularly following the cost increases with the new National Insurance contribution levels."

The research highlights a clear disparity based on company size. While 67% of larger corporations (250+ employees) have implemented salary sacrifice schemes, the figure drops dramatically to 49% among mid-sized businesses (21-249 employees) and just 38% for smaller companies with 20 or fewer staff.

Towergate’s analysis demonstrates the tangible benefits available. Their salary sacrifice calculator shows that for an employee earning £30,000 and making a 5% pension contribution, annual National Insurance savings would amount to £225 for the employer and £120 for the employee.

Perhaps most surprising is how employers who do offer salary sacrifice choose to allocate their savings. A third (33%) return all employer NI savings to employees, while 27% share some savings with staff. Only 21% retain the full savings within the business.

"The most surprising thing we found is that a third of employers give back all of the employer National Insurance savings to the employees," notes Shah. "This may well change over time, given the tighter budgets employers are likely to have going forward. We may see a trend of more employers wishing to retain the NI savings."

Even for organisations with existing salary sacrifice arrangements, the impending NI increases present an opportunity to review current schemes to ensure compliance and maximise value.

Shah concludes: "Salary sacrifice is also known as salary exchange, and this is perhaps a better term as neither the employer nor employee is actually sacrificing anything. In fact, they both gain from reduced National Insurance contributions and the employee will gain from tax efficiencies. With all this in mind, it is certainly something worth considering."