Overview
- Treasury figures show about 7.7 million employees use pension salary sacrifice and roughly 3.3 million pay in above the new threshold, with first-year receipts estimated at £4.8 billion.
- A CBI survey reported 73% of respondents viewed the cap negatively, saying it will make schemes less attractive to staff and more expensive for employers.
- From 2029, employee NI will be charged on salary‑sacrifice pension amounts above £2,000 at 8% on earnings up to £50,268 and 2% above that, while employers will pay the full employer NI rate of 15%.
- Pension specialists, including Steve Webb and Steve Hitchiner, cautioned the policy could reduce take‑home pay for millions, hit middle earners, and prompt firms to pare back contributions.
- The change targets NI relief on salary‑sacrifice contributions only, with income‑tax relief on personal and post‑tax workplace pension payments unchanged and a multi‑year window to adjust before April 2029.