Articles on: Salary Sacrifice/Exchange

Are there any disadvantages to applying a Salary Exchange/Sacrifice pension scheme?

As the employee's gross pay is lowered by way of the sacrificed amount, their post pension salary will be lower. This could impact the following:

Any benefits provided by the employer (such as life cover).
Lower statutory payments, or non-eligibility to statutory payments such as maternity pay, sick pay, redundancy pay and shared parental pay.
Some employees will be unable to join the new scheme as the sacrifice takes them below the minimum wage.
Some mortgage/loan providers will only take into account the post pension salary amount.

Updated on: 15/02/2022

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