What is salary sacrifice in SAP PA-BN-FB - Flexible Benefits?

SAP Term: salary sacrifice

• Component: PA-BN-FB

• Component Name: Flexible Benefits

• Description: An agreement between an employer and an employee within Benefits Administration, where an employee agrees to give up a certain portion of salary in return for a benefit in kind. In general, salary sacrifice in benefits administration refers to a benefit where an employee is able to give up certain part of his salary in return for a non-cash benefit provided by the employer through this benefit plan. The most common form of salary sacrifice plans are pension plans, in which employees opt to sacrifice a portion of salary. In return, the employer agrees to pay an equivalent percentage or fixed amount into the employees' pension plans on their behalf. Within for Great Britain GB FlexBens, salary sacrifice is relevant only for pension plans, where is applied to existing pension plan options. &EXAMPLE& When a pension benefits plan option is assigned as a salary sacrifice option, an employee enrolling in this pension plan option chooses to sacrifice a portion of salar

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• Key Concepts: 
  Salary sacrifice is a type of employee benefit offered by SAP’s PA-BN-FB Flexible Benefits module. It allows employees to give up part of their salary in exchange for a non-cash benefit, such as additional vacation days or health insurance. The amount of salary sacrificed is deducted from the employee’s gross salary before taxes are calculated, resulting in a lower taxable income and potentially lower taxes. 
  
  How to use it: 
  To use salary sacrifice, employers must first set up the PA-BN-FB Flexible Benefits module in SAP. Once the module is set up, employers can configure the salary sacrifice options available to their employees. Employees can then select the benefits they would like to receive in exchange for sacrificing part of their salary. 
  
  Tips & Tricks: 
  Employers should be aware that salary sacrifice may have an impact on other benefits, such as pension contributions or Social Security payments. Employers should also be aware that salary sacrifice may not be available in all countries due to local laws and regulations. 
  
  Related Information: 
  For more information about SAP’s PA-BN-FB Flexible Benefits module, please visit the SAP website at https://www.sap.com/products/pa-bn-fb-flexible-benefits.html.