Salary Sacrifice Changes Could Hit Millions More Britons, Pensions Expert Says - Beritaja

Millions much workers could beryllium indirectly affected by changes to the net sacrifice strategy announced successful the November budget, a erstwhile pensions curate has warned.

Chancellor Rachel Reeves announced that from April 2029 only the first £2,000 of pension contributions made done net sacrifice will beryllium exempt from National Insurance.

Contributions supra £2,000 will, from that date, beryllium taxable to employer and worker National Insurance.

HMRC estimates that 7.7 cardinal labor usage net sacrifice to make pension contributions - 3.3 cardinal of whom sacrifice much than £2,000.

But Steve Webb, a erstwhile pensions curate and a partner astatine LCP, says the number of group affected could acold transcend 3.3 million.

He pointed to caller OBR analysis which highlights the "highly uncertain" measurement that employers could respond.

Webb told the Money blog that to woody pinch the costs, employers whitethorn return whole-workplace approaches which impact moreover those who aren't paying much than the threshold.

Or, the OBR archive said, "employers could summation contributions successful spot of costs maturation aliases lowering contractual salary".

£2,000 net sacrifice headdress explained - and what you should do now

Webb told the Money blog: "This alteration is simply a multi-billion lb deed connected employers who will not return it lying down.

"They will consequence by squeezing wages, cutting backmost connected pensions aliases giving up connected net sacrifice altogether. In each these cases, the effect will not beryllium restricted to the 3.3 cardinal group who sacrifice much than £2,000 per twelvemonth - arsenic claimed by the authorities - but could dispersed to millions much labor successful those workplaces who could each suffer.

"Many of these will beryllium group connected humble incomes who the authorities claims to beryllium protecting."

In a statement, a spokesperson for the Treasury told Money: "This isn't caller accusation - the costing statement published astatine fund included the behavioural impacts of the measure.

"Our reforms protect 95% of workers earning nether £30,000 who usage net sacrifice, while tackling costs that were group to treble to £8bn arsenic high‑earners piled successful bonuses tax‑free."