Overview
- New IFS analysis published Wednesday says the planned cap would affect 4.7 million employees from April 2029.
- Salary sacrifice lets workers swap gross pay for employer pension payments, which cuts National Insurance bills for staff and firms.
- The change would charge National Insurance on pension saving above £2,000 done through salary sacrifice, reducing take‑home pay for higher contributors.
- The IFS estimates about one million households would lose around £888 a year on average, with average losses of about £540 for those affected.
- Private‑sector workers face a larger hit than public‑sector staff, the Treasury disputes the figures and targets about £2.6bn in extra revenue by the early 2030s, and experts warn some employers could drop these schemes or curb pay rises.