What else does it affect?
Final salary benefits
Benefits you built up before 1 April 2014 are based on your final pensionable pay. As salary sacrifice lowers your pensionable pay, these benefits will be lower too.
Example
Membership in scheme:
1 April 1989 – 31 March 2008: 19 years on 1/80th
1 April 2008 – 31 March 2014: 6 years on 1/60th
Pay: £30,000
Salary sacrifice: £5,000
Pensionable pay: £25,000
Pension built up:
19/000 x 1/80th of £25,000 = £5,937.50
06/000 x 1/60th of £25,000 = £2,500.00
Total pension = £8,437.50
Without salary sacrifice:
19/000 x 1/80th of £30,000 = £7,125.00
06/000 x 1/60th of £30,000 = £3,000.00
Total pension = £10,125.00
Difference:
£1,687.50 less pension each year
Death grant
If you die while paying into the LGPS, the lump sum death grant would also be lower.
This is because it’s based on your pensionable pay after the salary sacrifice amount has been taken off.
Example
Pay: £17,000
Salary sacrifice: £3,000
Pensionable pay: £14,000
Death grant:
£14,000 x 3 = £42,000
Without salary sacrifice:
£17,000 x 3 = £51,000
Difference:
£9,000
