Recently, I have read several articles indicating that a recent change in legislation introduced by Rachel Reeves will result in the death of salary sacrifice as a means of making pension contributions. I do not believe this to be a reason for members of workplace pension schemes to stop making these contributions to boost their pension savings.
After April 2029, if an employee contributes to his or her pension plan in this manner, the contributor will still be eligible for instant tax relief on the whole contribution (as long as it falls within the annual allowances). The reduction will be that there will no longer be the ability to secure a saving in National Insurance once contributions exceed £2,000 per calendar year. This is, of course, a reduction in the overall relief, but it is certainly not a reason to abandon additional saving to increase your retirement pot.
The country is facing a pension crisis. All of us need – as far as possible – to save more, not less. It will now be slightly less attractive, but please do not throw the baby out with the bathwater!
If you find yourself faced with a quandary as to whether to continue with salary sacrifice, do please get in touch with us.