Employers, especially those who contribute above the minimal auto-enrolment amounts, may be greatly impacted if National Insurance Contribution (NIC) pension assistance is removed, according to Hymans Robertson.
According to Hymans Robertson, a £32,000 wage would require an extra £442 in annual expenses for a 5 per cent pension contribution. For a small company with ten workers, this could translate into an extra £5,000 per year.
Hymans Robertson cautions against lowering pension payments and compensation increases due to rising employer costs. It says that NIC relief would still increase by £192 for each employee, even if it were only reduced to 6 per cent.
Hymans Robertson head of DC corporate consulting Hannan English says: “As we approach the budget with less than two weeks to go, the question of how the Chancellor will balance the books has never been more prominent. Rumours of cuts to National Insurance relief are headline news and the implication for employers is vast.
“Our concern is the impact this may have, where the current national insurance saving is used to top up pension contributions. Without this saving the top-up is under threat. Abolishing such a saving would impact future pension pots at a time when pension savings, pensioner poverty and future-proofing is at a record low.
“Our paper explores the wide range of speculation around tax and pensions that could be announced by the Government in the budget and what this means for individuals and employers.”
