CFG is undertaking a short survey to understand how charities currently use salary sacrifice arrangements, particularly for pension contributions.
This information is critically important because there are strong indications that the Chancellor may announce a cap of £2,000 per year on salary sacrifice contributions for pensions in the upcoming Autumn Budget.
You can complete the survey here
What is a salary sacrifice scheme?
Salary sacrifice schemes allow employees to give up part of their pre-tax salary in exchange for non-cash benefits, most commonly pension contributions. Under these arrangements, both the employee and employer save on National Insurance contributions because the sacrificed amount is not subject to NICs.
For charities operating on tight margins, these schemes have been a valuable way to support staff while achieving meaningful savings on Employer National Insurance contributions (ERNICs). They help organisations stretch limited resources further while enabling employees to build better pension provision at a lower cost than making contributions from post-tax income.
Why does this matter?
The potential £2,000 annual cap on pension salary sacrifice would represent a significant policy shift with far-reaching implications. For employees currently sacrificing more than this threshold, it would mean higher tax and NIC bills, effectively reducing their take-home pay or pension savings. For charities, the loss of NIC savings could add hundreds of thousands of pounds to annual employment costs.
This comes at an already difficult time for the sector. As our survey in March showed, charities are already grappling with increased employment costs as a result of the rise in ERNICs, with 81% of reporting that the rise will have a negative impact on their ability to offer competitive benefits to staff. Furthermore, nearly 7 in 10 stated they had already started to reduce headcount, or would likely do so in the near future. Additional cost pressures from the removal of salary sacrifice benefits could compound an already challenging financial situation.
What we're asking for
The survey should take no more than 5-10 minutes to complete and will help us to understand:
- How many charities currently offer salary sacrifice arrangements for pensions
- The extent to which employees are using these schemes, particularly those sacrificing more than the proposed £2,000 threshold
- The typical amounts being sacrificed by employees
- The value of employer NIC savings that charities currently achieve through these arrangements
- How charities would respond if the tax and NIC advantages were reduced or removed - whether through reducing benefits, adjusting pay, reviewing staffing levels, or other measures
This detailed information will enable us to quantify the sector-wide impact and build a robust evidence base for our advocacy work.
How we'll use your data
By sharing your data, you will help us represent the sector's interests and engage effectively with policymakers ahead of the Autumn Budget. Your responses will be treated confidentially and used only in aggregate form to demonstrate the collective impact on the charity sector.
Understanding both the financial implications for organisations and the potential effects on employees' pensions will be crucial in making the case for exemptions or alternative approaches that recognise the unique financial pressures facing charities.
Please complete the survey here
Thank you for your time and support in helping us advocate for charities during this critical period.