[UK] Commons rejects salary sacrifice cap change and exemptions

In the UK, the House of Commons has rejected amendments to the National Insurance Contributions Bill that would have raised the proposed salary sacrifice cap from £2,000 to £5,000 and introduced exemptions, Pensions Expert reports.

In a March 23 debate, the government used its strong majority to vote down the changes, despite support from Conservative and Liberal Democrat MPs for retaining them.

Peers in the House of Lords backed amendments raising the cap and exempting low earners, small business and charities earlier this month. Opponents of the cap say that these groups will be unfairly impacted by the government’s plan.

Pensions minister Torsten Bell, however, reportedly repeated his argument that other tax incentives were more important because they were more inclusive. Mr Bell stated that the annual cost of salary sacrifice for pension contributions was equivalent to the annual cost of the Royal Air Force.

“On this basis, the status quo is indefensible,” he said. “Change was inevitable, but we have chosen to take a pragmatic approach, with no change until 2029, and a £2,000 cap to allow pension contributions via salary sacrifice to continue.”

Mark Garnier - the shadow parliamentary under secretary for work and pensions - accused the government of having “singled out pensions” and “attacking one of the most important things that people should be saving towards”.

In addition to raising costs for businesses and affecting low earners and people paying off student loans, Mr Garnier reportedly stated that the salary sacrifice cap would “harm pensions adequacy and force more people to rely on the state, pushing more costs on to the next generation”.

Source: Pensions Expert

(Quotes via original reporting)

In the UK, the House of Commons has rejected amendments to the National Insurance Contributions Bill that would have raised the proposed salary sacrifice cap from £2,000 to £5,000 and introduced exemptions, Pensions Expert reports.

In a March 23 debate, the government used its strong majority to vote down the changes, despite support from Conservative and Liberal Democrat MPs for retaining them.

Peers in the House of Lords backed amendments raising the cap and exempting low earners, small business and charities earlier this month. Opponents of the cap say that these groups will be unfairly impacted by the government’s plan.

Pensions minister Torsten Bell, however, reportedly repeated his argument that other tax incentives were more important because they were more inclusive. Mr Bell stated that the annual cost of salary sacrifice for pension contributions was equivalent to the annual cost of the Royal Air Force.

“On this basis, the status quo is indefensible,” he said. “Change was inevitable, but we have chosen to take a pragmatic approach, with no change until 2029, and a £2,000 cap to allow pension contributions via salary sacrifice to continue.”

Mark Garnier - the shadow parliamentary under secretary for work and pensions - accused the government of having “singled out pensions” and “attacking one of the most important things that people should be saving towards”.

In addition to raising costs for businesses and affecting low earners and people paying off student loans, Mr Garnier reportedly stated that the salary sacrifice cap would “harm pensions adequacy and force more people to rely on the state, pushing more costs on to the next generation”.

Source: Pensions Expert

(Quotes via original reporting)