Are there any disadvantages of salary sacrifice?

You need to consider the following possible downsides of salary sacrifice:

  • Lower life cover (this is because employers generally work out the entitlement as a multiple of salary and salary sacrifice makes that salary lower).
  • Lower borrowing available on mortgages (as per life cover the borrowing level is determined by a multiple of a lower salary).
  • Entitlement to state benefits eg Statutory Maternity Pay and the State Pension may be affected if your salary falls below the level at which you pay National Insurance contributions.

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