Overview
- HMRC figures published late May 2026 show about 2.9 million workers are likely to reduce pension contributions when the rule takes effect in April 2029, including roughly 666,000 basic‑rate taxpayers.
- Ministers say the change will raise roughly £4–5 billion for the Treasury, with the Office for Budget Responsibility estimating about £4.8 billion in 2029–30 and around £3 billion falling on employers through higher employer National Insurance.
- A Confederation of British Industry survey reported that two‑thirds of firms expect to respond by cutting jobs, offshoring roles, or slowing investment as employers face higher National Insurance bills.
- Former pensions minister Sir Steve Webb and retirement experts warn the policy will weaken pension saving for middle earners and younger workers, while the Treasury says it protects most low earners who use salary sacrifice.
- The change arrives as official reviews show broad under‑saving for retirement, and analysts warn employers may offset extra costs with lower pay growth, smaller pension contributions, or reduced hiring, which could further reduce retirement adequacy.