Salary Sacrifice schemes – The Hidden Cost.
In the past salary sacrifice schemes were unlikely to be of benefit to those on low pay who paid little or no tax. Or staff close to retirement, or likely go on maternity leave who could lose more in pensions or maternity pay than they saved in the scheme. But now everybody’s final pension could be affected. The new 2015 NHS Pension Scheme, which came in in April this year, is a Career Average Revaluation Earnings (CARE) scheme rather than final pay at retirement or an average of your last few years.
Under the CARE scheme each year’s earnings become equally important in calculating your pension, so any time period you participate in a salary sacrifice scheme reduces your pensionable pay: your pension will be smaller than it would have been had you not joined a scheme.
Please click on link for a .pdf file with more information.