Pensions professionals pushing back on plans to scrap salary sacrifice NIC Relief

The majority (90%) of UK pensions professionals do not support the government’s potential plan to remove or cap the employer and/or employee National Insurance contribution (NIC) exemptions for salary sacrifice pension contributions, according to a survey by Aptia – a leading provider of pension administration services.

The survey was carried out amongst 52 pension professionals including Professional Independent Trustees, in-house Pension Managers and Scheme Sponsors at Aptia’s client event at Tower Bridge on 20^th November.

Aptia found that just 2% of pensions professionals were in support of Rachel Reeves’ rumoured plans ahead of the Budget, while 8% were unsure.

Most responders (80%) were in unity in believing that the Government should legislate that no future Budget should remove or restrict accrued tax-free lump sum entitlements. Just 10% felt this was not necessary – whereas 8% again were unsure.

The surveyed pension professionals were split regarding UK watchdog The Pensions Regulator (TPR)’s Defined Benefit (DB) Pension Funding Code – as 38% believed the code improves the valuation process but 23% disagreed with this sentiment.

Some 38% were unsure whether the funding code has had any impact.

Lastly, three-quarters (75%) of pensions professionals surveyed support increased accessibility to occupational scheme investment by allowing loans to members thereby solving immediate life needs.

Just over one in 10 (13%) of those surveyed would not be in support of this initiative, with the same number saying they were unsure.

Malcolm Reynolds, Aptia’s UK President, said: 

“It is clear that pensions professionals are deeply concerned that removing or capping NI exemptions on salary sacrifice pension contributions would undermine a well-established system that incentivises retirement saving.

“Salary sacrifice is not a loophole – it is a proven mechanism that helps employees build financial security and allows employers to offer competitive benefits without escalating costs. Restricting this relief risks discouraging pension contributions at a time when the UK needs to strengthen – not weaken – long-term savings habits.”