Salary sacrifice is an arrangement where employees agree to reduce their earnings by an amount equal to their pension contributions – so they, and their employers, save on National Insurance contributions. Employers can choose to offer salary sacrifice and not all employers may offer it.
If your employer offers salary sacrifice, you agree to give up (sacrifice) part of your salary equal to your pension contributions. Your employer reduces your salary by this amount then pays it into your retirement savings, along with their contributions.
As you’re receiving a lower salary, you and your employer pay lower National Insurance contributions. As a result, your take-home pay may be a little higher than it would be without salary sacrifice.
If your employer offers a salary sacrifice arrangement, they’ll be able to explain more about how it works.