Guide
Salary sacrifice and student loans
Why salary sacrifice can reduce student loan repayments and how that changes the effective cost of pension contributions.
The key interaction
Student loan repayments are based on earnings above a threshold. If salary sacrifice reduces the earnings counted in the model, repayments can fall too.
Why that matters
A lower student loan deduction makes the effective cost of salary sacrifice smaller. This can make pension saving look more attractive in take-home terms.
Important nuance
That does not automatically mean you are better off over a lifetime. Lower repayments can leave the balance outstanding for longer, depending on your plan and earnings path.
Best use of the calculator
Compare the tax saving, NIC saving, and student loan saving together so you can see the full short-term impact.