Salary sacrifice vs net pay pension: what's the difference?
Updated 9 November 2026 · Rates checked against the official sources below
Both take your pension contribution before income tax. Salary sacrifice also takes it before National Insurance, so the same pension contribution costs you less in take-home pay.
Example: £45,000 salary, 5% pension
| Net pay arrangement | Salary sacrifice | |
|---|---|---|
| Take-home per month | £2,843.30 | £2,858.30 |
| Take-home per year | £34,119.60 | £34,299.60 |
The difference, £180.00 a year, is the 8% National Insurance saved on the £2,250 contribution.
Things to check
- Salary sacrifice lowers your contractual salary, which can affect things based on salary, such as some mortgage applications or statutory pay.
- It can't take your pay below the National Minimum Wage.
- Not every employer offers it.
Try it with your numbers:
Sources
General information, not tax or legal advice. Rules can change; check gov.uk or ask a conveyancer, accountant or Acas before you rely on it.