Pension Question - Salary Conversion

They reduce your salary in return for increased pension - the advantage is it saves NI (for the company too) as you say.

There are some disadvantages, although the main one mostly disappears next April, which is the various limits on pension contributions and maximum pension allowed is linked to your actual (lower) salary.

The other disadvantage is that any salary related NI benefits would be slightly lower, and things like statutory redundancy etc. But these are probably not worth worrying about - the saving in NI is usually worth it.

Check that your company is not using the lower salary for things like overtime rates, company redundancy and pension accural etc. They should use a "reference salary" for these things which is your salary before the pension sacrifice.