Salary sacrifice (which is also known as salary sacrifice) cuts your salary by the amount of your pension contributions. Instead of you paying those pension contributions, your employer pays them instead. The result? You save money thanks to lower national insurance contributions.

Although your salary may look smaller on paper (that's where the 'sacrifice' comes in), your take home pay is actually more even though your pension contributions are the same. So that's more money in your back pocket because you're paying lower national insurance contributions, and so does your employer.

In deciding whether salary exchange is right for you, there are a few things we want you to be aware of.

• First off, if your employer provides life cover, it's usually based on your salary. That means that if you choose salary exchange, your life cover might be a bit less than before.
• Secondly, your lower salary might have an impact on the amount you can borrow for a mortgage.
• And lastly, your entitlement to certain State benefits, like Statuary Maternity Pay, might be affected too.

It's all about balancing the pros and cons to find the right solution for you. If you're unsure, talking to a financial adviser can help.

The benefit of salary sacrifice only applies if you pay national insurance, so if you don't pay this then salary sacrifice is not likely to benefit you.