Overview
- From April 2029, employee pension contributions made via salary sacrifice above £2,000 a year will be treated as ordinary contributions and charged National Insurance for both employees and employers.
- The Office for Budget Responsibility estimates the change will raise about £4.7bn in 2029–30, with yield uncertain due to how employers and workers may adjust.
- Industry groups including the ABI and Society of Pensions Professionals warn the cap will reduce pension saving and increase employer costs, risking less generous workplace schemes.
- Businesses expect to pass most of the extra cost to staff through lower pay and contributions, with the OBR assuming roughly three‑quarters of the burden is shifted to employees.
- The OBR apologised after its economic outlook was posted online early ahead of the Budget, revealing the policy details before Rachel Reeves’s Commons speech.