Salary Sacrifice or Net Pay?
The pension contribution can be identical while the cash outcome differs.
Use a fictional £60,000 full-year salary in England, Wales or Northern Ireland, paid monthly, with a 5% employee contribution on full salary and a Plan 2 student loan. Add a 3% employer pension contribution. The example compares arrangements, not pension products. To reproduce it, choose custom percentages rather than the auto-enrolment preset.
| Over the Year | Salary Sacrifice | Net Pay |
|---|---|---|
| Employee-funded pension | £3,000 | £3,000 |
| Employer addition | £1,800 | £1,800 |
| Income Tax | £10,232 | £10,232 |
| National Insurance | £3,150 | £3,210 |
| Plan 2 repayments | £2,484 | £2,748 |
| Take-home cash | £41,134 | £40,810 |
Read the Two Bases
Both arrangements reduce taxable employment income by the contribution in this model. Salary sacrifice also reduces the cash earnings used for National Insurance and loan deductions. Net pay does not reduce those two earnings bases. The arithmetic here gives £324 more annual cash under sacrifice, while both pension totals are £4,800.
Lower Loan Deductions Are Not Necessarily a Lifetime Saving
The table shows what is deducted now. It does not calculate interest, future earnings, remaining balance or eventual write-off. A smaller repayment today can change later repayments, so do not treat the difference as a guaranteed reduction in the total cost of your loan.
Choose the Right Contribution Base
The custom option applies your percentages to full reference salary, as in the example above. The auto-enrolment preset instead applies 5% employee-funded and 3% employer contributions to monthly qualifying earnings between £520 and £4,189 for 2026/27. It does not assess your age, eligibility or whether you must be automatically enrolled.
The calculator starts with no pension included so you can choose the matching arrangement. This is not advice to opt out. Check your scheme’s contribution base and rates: a 5% full-salary contribution is not the same amount as 5% of qualifying earnings.
Check How Tax Relief Works
Net pay is the starting tax-treatment selection; salary sacrifice is available separately. Choose the method your employer actually uses. Auto-enrolment does not by itself tell you which method applies. Relief-at-source pensions, where a pension provider adds basic-rate tax relief, are not supported by this calculator. Do not select net pay as a substitute.
Salary sacrifice requires an employer agreement and must meet applicable earnings rules, including minimum-wage requirements. Pension tax charges, annual-allowance taper, money purchase annual allowance and other pension savings can also change the outcome. The calculator does not assess those matters or whether a contribution is suitable or affordable.
Check the Sources
- GOV.UK: how workplace pension contributions receive tax relief
- The Pensions Regulator: 2026/27 qualifying-earnings thresholds
- HMRC: salary-sacrifice rules
- GOV.UK: student-loan repayment rules
Figures checked for 2026/27. This is an independent estimate, not an HMRC service.
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