[UK] House of Lords defeats government over pension salary sacrifice bill

In early March, the UK government was defeated five times in the House of Lords over the National Insurance Contributions (Employer Pensions Contributions) Bill, Corporate Adviser reports.

The Bill caps National Insurance (NI) relief on pension salary sacrifice at £2,000 a year.

The most significant development was reportedly in Amendment 5, which ensures contributions above the cap do not count towards student loan repayments. 

The change is intended to prevent higher repayments and avoid distortion of pension incentives.

Baroness Ros Altmann, posting on LinkedIn, said, “This Bill needs to be put on hold until the Government works out how it can possibly work in practice without adding significant new costs and complexity to the pension system, and reducing future pensions. What’s the rush – this isn’t due to start till 2029.”

Baroness Altmann has previously cautioned that proposals to limit salary sacrifice risk damaging longer-term retirement outcomes.

Other amendments exempt basic rate taxpayers, SMEs, charities and social enterprises, temporarily raise the contributions limit to £5,000 and require the majority of regulations to gain parliamentary approval.

Ministers confirmed that the £2,000 cap applies per job, allowing employees with multiple jobs to benefit in each role.

The Lords’ changes have reportedly left employers and advisers with further uncertainty about how the Bill will work before 2029.

Source: Corporate Adviser

(Quote via original reporting)

In early March, the UK government was defeated five times in the House of Lords over the National Insurance Contributions (Employer Pensions Contributions) Bill, Corporate Adviser reports.

The Bill caps National Insurance (NI) relief on pension salary sacrifice at £2,000 a year.

The most significant development was reportedly in Amendment 5, which ensures contributions above the cap do not count towards student loan repayments. 

The change is intended to prevent higher repayments and avoid distortion of pension incentives.

Baroness Ros Altmann, posting on LinkedIn, said, “This Bill needs to be put on hold until the Government works out how it can possibly work in practice without adding significant new costs and complexity to the pension system, and reducing future pensions. What’s the rush – this isn’t due to start till 2029.”

Baroness Altmann has previously cautioned that proposals to limit salary sacrifice risk damaging longer-term retirement outcomes.

Other amendments exempt basic rate taxpayers, SMEs, charities and social enterprises, temporarily raise the contributions limit to £5,000 and require the majority of regulations to gain parliamentary approval.

Ministers confirmed that the £2,000 cap applies per job, allowing employees with multiple jobs to benefit in each role.

The Lords’ changes have reportedly left employers and advisers with further uncertainty about how the Bill will work before 2029.

Source: Corporate Adviser

(Quote via original reporting)