![\"Martin](\"https:\/\/www.europesays.com\/uk\/wp-content\/uploads\/2026\/05\/0_martin2121PNG.png\")
<\/p>\nChanges introduced by the government have put doubt in people\u2019s minds<\/p>\n
Martin Lewis was asked if a person should opt out of their workplace pension after government changes(Image: ITV)<\/p>\n
Martin Lewis has said that anyone who is in a job should take action or face missing out on a benefit. Speaking on his ITV<\/a> show, the personal finance expert spoke out because there have been changes introduced by the government – which have put doubt in people\u2019s minds.<\/p>\n An audience member, Keith, asked if it was still worth putting money into their work scheme or opening a private pension. This came because the Government targeted the savings from salary sacrifice that millions of employees currently take advantage of to lower the cost of saving for their retirement.<\/p>\n From April 2029, both employer and employee National Insurance Contributions (NICs) will apply to salary-sacrificed pension contributions above \u00a32,000 per year. This change ends the long-standing NIC exemption that made salary sacrifice one of the most efficient ways to save for retirement, accountancy firm Grant Thornton has said<\/a>.<\/p>\n However Mr Lewis said in no uncertain terms that workplace pensions mean people get far more from their employers – and that is a \u2018super power\u2019 of pensions. He said: \u201cThis is the basic situation. I didn\u2019t mention earlier because it complicates it, but when you\u2019re putting all that money into your pension, into your workplace pension, we\u2019re focused on here. You will still pay 8% national insurance of basic rate taxpayer. So you get put your \u00a3100 in, but you\u2019re still paying 8% national insurance. And that goes 2% at the higher rate if you\u2019re in that level and then at the top rate under salary sacrifice.<\/p>\n \u201cYour employer has to offer it. If they don\u2019t offer it, you can\u2019t do it. What effectively happens is your employer says, \u2018We will pay your pension contributions for you, but we will take it off your salary.\u2019 So you\u2019re paying in \u00a3200 a month. We\u2019ll reduce your salary by \u00a3200 a month that the net effect is exactly the same for you. But if they do that, this is what happens. There\u2019s no national insurance. So while it may not be in your pension, you effectively get a national insurance gain.<\/p>\n \u201dSo in a way of thinking about it is you pay \u00a380 from your pay packet, you\u2019re now getting \u00a3168 or \u00a3162 at the higher or top rate. So that\u2019s the benefit of salary sacrifice. And some employers will also give you their national insurance saving too that can work well. So what\u2019s changing that Keith talked about? Here we are. It\u2019s the kryptonite for this particular superpower. In the budget 2025, it was announced that from the 6th of April 2029, salary sacrifice national insurance relief will be capped on the first \u00a32,000 a year employee pension contribution.<\/p>\n Content cannot be displayed without consent<\/p>\n “So for someone at the standard auto-enrollment rates above \u00a346,000 of earnings. You will no longer get a salary sacrifice gain. You\u2019ll still get it below that, but you will only get it up to that point. But remember, it\u2019s only on the national insurance game, Keith. You\u2019re still going to get your tax gain. You\u2019re still going to get your auto-enrollment payment. You\u2019re still going to get some of the super duper gain because it\u2019s only above the threshold that you lose it.<\/p>\n “Massively overegged. People talking about ending get putting money into workplace pensions because of this. It\u2019s just a bit the end, isn\u2019t it? It\u2019s just a little bit on top. Keep going as you were.\u201d<\/p>\n A called asked if they would be better off opting out of their workplace pension and starting a private one instead. Martin was absolutely unequivocal on that. He said: \u201cLet me give you the short answer. No. This is about auto-enrolment. This is for employees only. This is you in your workplace pension, assuming it\u2019s that type of pension.<\/p>\n \u201cSo, generally most people who are employees, if you\u2019re putting into your pension automatically, your employer has to add money to at the basic level. That means for the \u00a3100 you put in that only cost you \u00a380, your employer has to add \u00a360 on top. So, as a basic 20% rate taxpayer, it only cost you \u00a380.<\/p>\n “You\u2019re getting \u00a3160 worth of investment. In a private pension, you get a \u00a3100 worth of investment. So, there\u2019s a massive lift to you, assuming you\u2019re within your limits and you\u2019re not going over the maximum you can put in your workplace pension of opting out of that workplace pension. And the same happens at each high rate tax level, the \u00a360 is added on top.\u201d<\/p>\n Who is autoenrolled?<\/p>\n Mr Lewis explained: \u201cWell, if you earn over \u00a310,000 a year and you\u2019re age 22 up to state pension age, currently 66, you will automatically be put into your employer\u2019s pension. You don\u2019t have to do anything. You have a choice to go out of it. But if you do nothing, you are put into it. Now, if you\u2019re opted in, the minimum contribution is 8% of your income on earnings up to \u00a350,270<\/p>\n “Employers can continue to do it if you earn more, but that\u2019s the minimum that they have to do because they have to match three percentage points of this. So, they\u2019re doing three, you\u2019re doing eight. So, it\u2019s that 3 percentage points that you would be giving away if you opted out of your workplace pension. And in fact, some employers will give you more than that. And this is so important. It\u2019s actually worth noting that while that\u2019s when you\u2019re opted in, look at all these other categories.<\/p>\n \u201cIf you earn between just over \u00a36,000 up to 10 grand, and if you\u2019re age 16 to 21 and earn over 10 grand, or age state pension age to 74 and earn over 10 grand, you have a right to opt in. And if you opt in, they must still do the matching contributions onto this basis. So if you\u2019re a younger person living at home and you got a bit of spare cash, even if you\u2019re on a low income or if you\u2019re on a little bit more, it\u2019s a great time to put money in your pension because your employer\u2019s going to match it. If you\u2019re working once you\u2019ve got to state pension age, well, you might want a little bit more to be putting in because you\u2019re getting all those benefits of that super duper power. We\u2019ve done super. This is super duper power.\u201d<\/p>\n Grant Thornton said that currently, employees and employers enjoy full NIC relief on any amount sacrificed into pensions (subject to any annual allowance and National Minimum Wage restrictions).<\/p>\n From April 2029, based on current NIC rates and thresholds:<\/p>\n This measure is expected to raise \u00a34.7 billion in 2029-30 and \u00a32.6 billion in 2030-31, according to the Office for Budget Responsibility (OBR)<\/a>, although given the time until its introduction, some commentators have questioned these assumptions, on the basis that employers can change their strategy now in order to avoid some of the additional costs.<\/p>\n\n