Impact of salary sacrifice on pension arrangements

Pension benefits

Death benefits

The salary sacrifice scheme will also affect death benefits payable including the death in service grant, as the pay used to calculate the benefits would also be the post-sacrificed amount.

Benefits accrued before 1 April 2014 in the final salary scheme

Benefits under the final salary scheme would be based on the reduced pensionable pay figure, after the salary sacrifice had been deducted.

Final pay is normally based on the pensionable pay earned in the final year of leaving, so if you leave during the period that pay is reduced, or within 12 months of cessation of the salary sacrifice, your pension benefits could potentially be affected. However, if the final pay figure would be higher using either two of the immediately preceding years prior to leaving, that year can be used. It is not possible to use the best average 3 in 13 years protection in this circumstance.