Overview
- From April 2029, pension contributions made via salary sacrifice above £2,000 a year will attract both employer and employee National Insurance at standard rates of 8% below £50,270 and 2% above that level.
- OBR documents confirming the policy went live early by mistake before the Budget speech, prompting an apology and an investigation by the watchdog.
- Business groups including the British Chambers of Commerce and the CBI warn employer NI bills will rise and say firms may cut pension contributions or hold down pay increases.
- Pensions industry voices caution the cap will discourage saving and shrink future retirement pots, with published analyses showing sizable losses for higher earners under the new rules.
- The 2029 start date allows time for employers to redesign pay and benefits, and analysts say such behavioral changes could reduce the measure’s eventual tax yield.