A £2,000 salary sacrifice cap on pensions, announced in the Budget , is a “tax penalty on people trying to do the right thing”, a pension expert has said.

Here is a look at how salary sacrifice schemes work and how they will change under a shake-up unveiled in the Budget:

– What are salary sacrifice schemes?

They allow people to “give up” a chunk of their salary for a different benefit from their employer.

Employers may offer salary sacrifice as part of their pension scheme as a tax efficient way to help workers boost their pots.

When someone pays into a pension using salary sacrifice, the employer will pay the whole amount into the employee’s pension, including the employer’s contribution.

– What changes have been announced?

From April 2029, only the first £2,000 of employee pens

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