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Document Is Salary Sacrifice pensionable?

No, salary sacrifice is not pensionable. Salary sacrifice is effectively giving up part of your salary to pay for something that might be offered by your workplace (usually, but not always, on a subsidised basis). This will reduce your pensionable pay as the amount sacrificed or used to pay for the items is taken directly from your pay before pension contributions are calculated. As pension contributions are only paid on the remaining amount after the salary sacrifice amount has been deducted, the salary sacrifice amount is not pensionable.

Examples of salary sacrifice are:
  • Annual leave buy
     
  • Bike to work scheme
     
  • Car lease scheme
     
  • Childcare vouchers
For members of the 2015 Scheme, a reduction in gross pensionable pay will have a negative effect on the amount of pension built up in that year. The overall effect from participating in any salary sacrifice scheme would reduce the amount of final benefits earned.

For members of the 2008 Section, if salary sacrifice is carried out within the last 10 years of pensionable membership before retirement, this could affect the calculation of your pension.
 
For members of the 1995 Section, if salary sacrifice is carried out within the last three years of pensionable membership before retirement, this could affect the calculation of your pension.

Some NHS employers offer salary deduction schemes as an alternative to salary sacrifice. Usually with salary deduction the payments are taken from your salary after other deduction, such as pension contributions, are made. In these cases the payments would be pensionable as they would have been included in your pensionable pay when calculating your pension contributions. If you are unsure of whether the deductions have been made from your gross pay or the net pay after deductions please check with your payroll department.

 
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