Is salary sacrifice worth it for pension scheme?

Southend1

xylophone wrote: »

See link in my post above which covers such points as reference salary/ early leaving etc. (Nos 22 and 23)

Thanks but it still isn't clear to me.

Currently, if you leave with less than two years’ and more than three months’ pensionable service you have the option of a transfer value or a refund of your own contributions (less statutory deductions). Under Pensions Extra you will no longer make employee contributions and therefore you will not be able to receive a refund of any additional employer contributions made. Instead, you will be able to receive a deferred benefit. If you are a member of USS, this deferred benefit would be based on the value of your own contributions only.

If you are using salary sacrifice then you wouldn't have made any contributions so there would be nothing to provide a deferred benefit? I can't quite get my head round that.

xylophone

If you are using salary sacrifice then you wouldn't have made any contributions so there would be nothing to provide a deferred benefit? I can't quite get my head round that.

See also http://www.uss.co.uk/Factsheet%20List/Factsheet%2026-%20Salary%20Sacrifice%20FS.pdf

"Refund restriction
When a member, who has been in a salary sacrifice
arrangement for ordinary USS contributions, leaves USS
with less than two years’ qualifying service, any refund
payable would not include those contributions paid by
the employer under the salary sacrifice arrangement.
In practice that may result in a very small refund being
available or none at all.
Members should take this restriction into account when
deciding upon whether to participate in a salary sacrifice
arrangement if they may leave USS after a short period and
would like the option of a refund. However, if a refund is
not required, the alternative is deferred benefits based on
the contributions paid by the employer under the salary
sacrifice arrangement (plus any contributions paid by the
member before entering into the arrangement). The value
of these deferred benefits could be transferred to another
pension scheme. The amount transferable, which would
not be less than the contributions used to calculate the
deferred pension, would be calculated using the member’s
pensionable salary and pensionable service, which usually
provides an amount in excess of the contributions."

And check with your employer's pension administrator to confirm your own situation.

Southend1

So does that mean that the deferred benefit would be based solely on the amount salary sacrificed by the employee? And that there would be no refund available?

If so, I was almost right with what I thought originally. I just didn't realise you could get any deferred benefit.