Salary sacrifice – Know the facts

We’ve been receiving enquiries in relation to salary sacrifice for school fees. The Teachers’ Pension Scheme regulations don’t prevent this but the contributions must be paid on the post sacrificed salary i.e. the amount of the salary sacrificed is excluded from contributable salary.

If a teacher is paying the school fees by deduction from their salary this can’t count as contributable salary. In these circumstances the reduced salary is the contributable salary and must be recorded on all service returns. It’s the reduced salary that would be used should this period of employment fall in the person’s average salary period.

Any benefits paid to the member or their beneficiaries would be based on the post sacrificed salary.

The salary sacrifice arrangements stated in the Pay and Conditions Document that are accepted under the Teachers’ Pensions regulations are: child care vouchers, a cycle or cyclist’s safety equipment, or a mobile phone scheme. In these cases, the amount equal to the salary sacrifice is included in the definition of contributable salary.

Last Updated: 09/07/2019 13:50