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8 changes: 4 additions & 4 deletions app/src/data/posts/articles/uk-salary-sacrifice-cap.md
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Expand Up @@ -64,23 +64,23 @@ PolicyEngine's microsimulation estimates that 4.9 million people make pension co

Under baseline policy, total salary sacrifice contributions amount to £22.7 billion. With the cap in place, £13.8 billion in excess contributions would shift to regular employee pension contributions.

The policy is scheduled to take effect from April 2029. PolicyEngine estimates the cap would raise **£3.3 billion** in 2029-30 under our baseline assumptions (employers spread costs, employees maintain pension contributions), compared to the OBR's estimate of £4.9 billion (static) or £4.7 billion (post-behavioural). Revenue estimates vary significantly based on behavioural assumptions:
The policy is scheduled to take effect from April 2029. PolicyEngine estimates the cap would raise **£4.2 billion** in 2029-30 under our baseline assumptions (employers spread costs, employees maintain pension contributions), compared to the OBR's estimate of £4.9 billion (static) or £4.7 billion (post-behavioural). Revenue estimates vary significantly based on behavioural assumptions:

<iframe src="https://policyengine.github.io/uk-salary-sacrifice-analysis/revenue-by-year.html" width="100%" height="550" frameborder="0"></iframe>

PolicyEngine's baseline estimate of £3.3 billion is 32% below the OBR's static estimate of £4.9 billion. This reflects differences in behavioural assumptions: PolicyEngine's baseline assumes employees maintain their pension contributions (shifting excess to regular schemes) and employers spread costs across all workers, while the OBR's post-behavioural estimate of £4.7 billion may assume greater take-up of taxable cash.
PolicyEngine's baseline estimate of £4.2 billion is 14% below the OBR's static estimate of £4.9 billion. This reflects differences in behavioural assumptions: PolicyEngine's baseline assumes employees maintain their pension contributions (shifting excess to regular schemes) and employers spread costs across all workers, while the OBR's post-behavioural estimate of £4.7 billion may assume greater take-up of taxable cash.

## Distributional analysis

The cap is progressive: lower-income households are largely unaffected while higher earners bear the burden. This reflects both the concentration of salary sacrifice usage among higher earners and the tendency for high earners to contribute amounts exceeding the £2,000 cap.

<iframe src="https://policyengine.github.io/uk-salary-sacrifice-analysis/distributional-impact.html" width="100%" height="550" frameborder="0"></iframe>

Under the baseline scenario (employers spread costs, employees maintain pension contributions), the top income decile experiences an average 0.65% reduction in disposable income (£200/year), while lower deciles see minimal impact. Toggle between scenarios to see how different behavioural assumptions affect the distributional pattern.
Under the baseline scenario (employers spread costs, employees maintain pension contributions), the top income decile experiences an average reduction in disposable income of approximately £1,900/year, while lower deciles see minimal impact. Toggle between scenarios to see how different behavioural assumptions affect the distributional pattern.

## Conclusion

The cap would raise approximately £3.3 billion annually when it takes effect in April 2029, affecting 3.3 million workers who currently contribute above £2,000. This compares to the OBR's estimates of £4.9 billion (static) or £4.7 billion (post-behavioural).
The cap would raise approximately £4.2-7.8 billion annually when it takes effect in April 2029 depending on behavioural responses, affecting 3.3 million workers who currently contribute above £2,000. This compares to the OBR's estimates of £4.9 billion (static) or £4.7 billion (post-behavioural).

The impact is progressive: higher earners experience larger reductions while lower-income households are largely unaffected.

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2 changes: 1 addition & 1 deletion app/src/data/posts/posts.json
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Expand Up @@ -138,7 +138,7 @@
},
{
"title": "How a £2,000 salary sacrifice cap would affect workers",
"description": "Capping salary sacrifice pension contributions at £2,000 would raise £3.3-7.6 billion in 2029-30 depending on behavioural responses, with impacts concentrated on higher earners.",
"description": "Capping salary sacrifice pension contributions at £2,000 would raise £4.2-7.8 billion in 2029-30 depending on behavioural responses, with impacts concentrated on higher earners.",
"date": "2025-11-27",
"tags": ["uk", "policy"],
"authors": ["max-ghenis", "vahid-ahmadi"],
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4 changes: 2 additions & 2 deletions changelog_entry.yaml
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- bump: patch
changes:
changed:
- Move ads dashboard route into StaticLayout (shows PE header)
fixed:
- Update UK salary sacrifice cap blog post figures to match chart data (4.2-7.8bn range, 1,900/year top decile impact)