When not to use salary sacrifice


If you don't pay National Insurance Contributions

If you don’t pay National Insurance Contributions (NIC) because you've reached state pension age, or you earn less than the Lower Earnings Limit, you will not benefit from salary sacrifice (because it’s designed to save you NIC).


But if you do participate, you won’t be any worse off – as long as your other entitlements are not affected. Telefónica would also then save on NIC.


If you receive state benefits

If you receive state benefits these may be affected if you choose salary sacrifice. That’s because you will be reducing your declared earnings and NIC that are used to calculate some state benefits.


Most contribution-based state benefits (benefits based on National Insurance) are calculated on the period for which you pay NIC and not specifically your level of earnings or actual NIC paid. So long as you continue to regularly pay NIC you will continue to accrue rights to state benefits.


For more information on NIC click here.


More questions answered


Does salary sacrifice affect my final salary figure?

No. Salary sacrifice doesn't affect the salary figure that’s used for other calculations, like your mortgage or other pay elements (such as bonuses). Nor will it impact the calculation of any of your pension benefits (apart from refunds if you leave the Plan early).


What if I leave the Plan early?

When you make pension contributions using salary sacrifice, they do not count towards the early leavers’ refund.

If you leave within 30 days of joining the Plan, you will receive no refund of your contributions.


How do I opt-out?

If you choose not to use salary sacrifice and still want to contribute to the Plan, you can opt-out by changing your preferences on Telefónica Rewards.


How do I know what’s best?

Telefónica cannot give you financial advice. If you are unsure about any aspects of salary sacrifice, talk to an Independent Financial Adviser (IFA) or visit the HM Revenue & Customs website.


To find an IFA in your area, go to www.unbiased.co.uk or phone 0800 085 3250.