Employers can reap cost savings from pension salary sacrifice in under a year if the employee contributions are in excess of £500,000 per year, Watson Wyatt says.
The consultant said companies should not be put off by initial implementation costs.
Head of flexible benefits consulting Kim Honess said: "As long as the total value of employee contributions is high enough, the bottom line savings should come through within twelve months."
Watson Wyatt said the £500,000 figure came from a review of 50 clients salary sacrifice arrangements put in place over the past two years.
It said the tipping point where salary sacrifice provides almost immediate savings does not relate to the number of employees but to the value of employee contributions.
Honess said: "There is a certain critical mass at which implementing pension salary sacrifice is a no-brainer given the savings it delivers. Most schemes will be able to recover the set up costs fairly quickly.
"For schemes with over £0.5 million in employee contributions - typically 300 to 400 employees - our experience is that the break-even point will come through before the end of the first year. For larger employers or with higher pension contribution rates, the pay back period is even shorter, sometimes just a few months."IFAonline
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