Companies are increasingly building a salary sacrifice option into their employee benefits packages as an extra way of rewarding and retaining staff.

The Jelf Group says more than 75% of the group personal pension schemes it set up for clients last year were established on this basis.

For many employees the option is a no-brainer; they avoid paying 11% national insurance on their pension contributions and, if the employer rebates its full 12.8% NI saving, they receive a 31% uplift to their pension funding.

The numbers stack up but, given the lack of trust about pensions, it is important to communicate the benefits and ensure it is not seen as a corporate cost-cutting exercise, says James Biggs, an associate director at Jelf. ‘If the company shares some or all of their NI rebate it will be much better received and leaves no room for cynicism,’ he says.

Jelf recommends that clients share at least half of their NI saving but says some pass on the full amount.

Jarrod Parker, employee benefits director at Alexander Forbes, agrees companies should use at least part of their saving to improve their employee benefits packages.

‘A lot are passing on the full 12.8% but we are also seeing companies using some of the saving to fund other benefits, such as improving the terms of any life assurance attached to the scheme or setting up private medical insurance,’ he notes.

Alexander Forbes has offered its employees salary sacrifice for more than 10 years and staff take-up is in excess of 80%. ‘If, as an adviser, you promote anything around employee benefits it sends a powerful message to clients if you can demonstrate that you believe in it and offer it yourselves,’ he adds.