Zarah ChoudharyThe removal of National Insurance Contribution (NIC) pension relief could be a hit to employers, particularly those contributing more than the minimum auto-enrolment (AE) requirement, according to Hymans Robertson.
It could cost a company an additional £442 a year for a 5% contribution to an employee being paid £32,000.
This assumes an employee and employer pension contribution rate of 5% each under a salary sacrifice payment system.
For a small business employing only 10 people at that salary, it could cost nearly £5,000.
Even a more modest change of NI relief to a 6% rate rather than the full 13.8% would still add a bill of £192 a year for the employer of that same employee.
Hannan English, head of DC corporate consulting at Hymans Robertson, said: “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.”
