Changes to salary sacrifice rules are prompting mounting concern across employers and savers, with separate research from Hymans Robertson and Standard Life highlighting fears of significant financial and strategic implications.

As part of the Budget, Chancellor, Rachel Reeves, confirmed plans to charge National Insurance on salary sacrifice pension contributions above £2,000, despite repeated warnings that doing so could undermine recent efforts to strengthen retirement saving.

A recent HMRC impact assessment revealed that up to 3.3 million workers currently sacrifice more than the £2,000 limit, while 7.7 million benefit from salary sacrifice for pensions.

Against this backdrop, Hymans Robertson warned that employers now face “critical decisions” on future reward and pension contribution structures.

A poll of the firm’s corporate clients found only 7 per cent expect the reforms to have minimal or no impact on their business, while a fifth anticipate a major impact.

Indeed, almost a third (30 per cent) of schemes currently pass some or all National Insurance contribution (NIC) savings on to employees, and 13 per cent said it is highly likely they will need to review contribution structures following the Budget.

Hymans Robertson head of defined contribution (DC) corporate consulting, Hannah English, stressed that employers should already be preparing for the financial and policy implications, warning that both employers and employees “are likely to be worse off under the revised rules”, increasing pressure on benefit structures and cost management.

However, she urged employers to take a “measured” approach that balances cost, compliance and member outcomes.

“There is a window of opportunity before the rules change in 2029, and both employers and employees should maximise the benefits of salary sacrifice usage available currently,” she said.

The transition period, she added, creates an opportunity to engage staff on the value of pension saving while the rules still operate in their current form.

“Looking ahead, employers have time to consider options such as paying more into pensions and less in salary," she continued.

"However, these decisions must reflect what employees value and consider the overall reward package."

English also suggested that the release of defined benefit (DB) surpluses could help offset an increase in pension costs.

She emphasised that employers with higher-earning workforces and more generous contribution designs are likely to see the most significant rise in costs, and stressed the need for early modelling to understand the uneven impact.

Concerns about the reforms are also feeding through to savers.

Standard Life’s immediate post-Budget survey found almost one in five consumers are “very concerned” about the changes, rising to a third among those earning £70,000 or more.

Of those worried, nearly half (46 per cent) fear the reforms will reduce their incentive to save for retirement, while half of higher earners are concerned about the impact on future pay rises or promotions.

One in five respondents said the changes may discourage people from accepting higher-paid roles.

Standard Life retirement savings director, Mike Ambery, said the Budget had “landed very differently depending on where people are in life”, with younger adults seeing more upside, while older generations reported deeper unease about long-term financial security.

He cautioned that salary sacrifice has been “one of the most reliable tools” for making pension saving affordable, warning that reforms risk undermining saver confidence at a time when many are already under-saving.

“If the system becomes more complicated and less rewarding, people may lose trust in pensions - which is a risk none of us can afford,” he said.

These concerns were reflected in further polling from Penfold, which found more than seven in 10 UK savers believe the government is not doing enough to support people preparing for retirement following the Budget.

The snap survey of 340 respondents revealed a marked drop in saver confidence in the immediate aftermath of the Chancellor’s announcements.

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