Cash bonus is taxed at your top marginal rate plus full NI. Sacrificing it into pension keeps the lot, plus the employer NI saving. Both numbers, side by side.
Your annual salary and the gross bonus to compare against.
How much of the bonus to sacrifice, and the share of the employer NI saving they pass back to your pension.
Years until you draw on the pension, and the real return on the invested balance.
Sacrificing vs taking cash and investing the net
A ££20,000 bonus, sacrificing 100%: cash route nets £0; sacrifice route contributes £21,500 into pension. Uplift in retirement: £61,886 (+0%) after a 25% tax-free / 75% taxed-at-basic-rate withdrawal.
England/Wales/NI 2025/26 bands: PA £12,570 (tapered above £100k), basic rate 20% to £37,700 of taxable income, higher rate 40% to £125,140, additional rate 45% above. NI 8% (£12,570, £50,270) then 2% above. Employer NI 15% above £5,000 secondary threshold. Pension withdrawal modelled as 25% tax-free + 75% at basic rate. Not advice.
Worth runs this maths against your real salary, your real bonus, and the company's specific employer-NI rebate policy. Join the waitlist.
Yes, if your employer offers it (most do via flex benefits or one-off pension uplift). Watch the annual allowance: the standard £60k limit applies across the tax year, including employer contributions. If your bonus plus regular contributions exceed this, look at carry-forward or take part of the bonus as cash.
Do not sacrifice it. Pension money is locked until 57 (rising in line with state pension). If you have near-term goals, a house deposit, a life event, take the cash. The arithmetic only works if you do not need the money before age 57.
Tapered annual allowance. Above £260k of 'adjusted income' (salary plus employer pension contributions), the £60k allowance drops by £1 for every £2 over the taper, down to a £10k floor. A chunky bonus can push you over the taper threshold by itself, model carefully if you are in that band.