The Society of Pension Professionals (SPP) has sent MPs an explanatory note about the impact it says restricting salary sacrifice will have.
As part of the UK Government's Budget in November the Chancellor announced that salary sacrifice for pensions will be restricted from April 2029.
The note is designed for use when considering the issue in Parliament but also to help MPs explain the changes to their constituents, the SPP said.
The paper explains what salary sacrifice is, who the restrictions will impact, the effect on employers, employees and the economy.
The briefing also advises on next steps, suggesting that employees and employers should carry on taking advantage of salary sacrifice given these changes do not take effect until April 2029, adding that “…once the restrictions come into force, salary sacrifice will still be worthwhile as savings can still be made. They will simply be less generous than they currently are for those with personal pension contributions above £2,000 per annum”.
Steve Hitchiner, Chair of the Society of Pension Professionals Tax Group, said:
“The decision to restrict salary sacrifice for pensions will result in higher costs to employees and employers, along with less saving in pensions when more saving is needed. The additional revenue raised by the Exchequer will both diminish and is uncertain.
“Nevertheless, employers and employees should continue to use salary sacrifice where possible and pension saving remains the most effective means of saving for later life.”
