In the Autumn Budget today (November 26) The Chancellor to the Exchequer, Rachel Reeves announced that salary sacrifice on pensions will be capped at £2,000 from 2029.
Responding to this change, Patrick Heath-Lay, Chief Executive Officer of People’s Partnership, provider of People’s Pension to seven million savers, said: “Like many, we had hoped salary sacrifice would not be touched in the Budget: this will have a significant impact on some savers and on business.
“However, even with salary sacrifice capped at £2,000 from 2029, pensions remain strongly tax advantaged. Tax relief on pension contributions added £70.8bn to saver’s pension pots last year. Restricting salary sacrifice will make the pensions tax regime less generous but the tax raised will be a small portion of available tax breaks: likely to be less than 5% of total tax relief in 2029.
“We would urge pension savers not to mistake this change for a fundamental overhaul of the pension tax system: these changes should not dent confidence in pension saving.”
ENDS