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Any salary sacrifice above the £2,000 cap will be treated as earnings. If a young graduate originally sacrificed £5,000, under the proposed new cap, £3,000 of that would be subject to student loan repayment contributions, as well as national insurance contributions. The effect of that will be severe: that graduate would now pay an extra £240 in national insurance contributions and an extra £270 in student loans. In total, that graduate would be worse off by £430 a year, as well as having a smaller pension pot.