Firm's warning over National Insurance shake-up in Budget
The Chancellor should steer clear of changes to pensions and National Insurance in this month's Budget, according to rural insurer and pensions and investment specialist, NFU Mutual.
“Changes to pensions are likely to be bad news for long-term retirement savings. People need stability when it comes to their pensions and moving the goalposts – even just a little bit – could further erode people’s faith in the system,” said Jo Oliver, agent at the firm, which has an office at Queen Square Place in Bath.
“Many predictions point to a possible introduction of National Insurance on employer pension contributions which could have a significant impact on salary exchange arrangements.
“At a time when millions of workers are being automatically enrolled onto workplace pension schemes, removing or diluting this generous incentive for employers to make contributions would be counter-productive.”
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Research conducted last year on behalf of NFU Mutual indicated more than a third of people working past retirement age did not believe they would ever give up work, more than half blaming a lack of savings.
These people - dubbed Retirement Rejecters - could also be in for a further blow to their finances if the Chancellor backtracks on promises not to levy National Insurance on people working past state pension age, as part of his plans to merge income tax and National Insurance.
“If it does come into force, it could have a damaging effect to the older workforce and would raise a huge question mark over the purpose of National Insurance,” Ms Oliver added.
“Simplification of a very complex tax system would be a welcome move but we would like to see the Chancellor either introduce more measures to encourage people and their employers to save for retirement or leave pensions alone.”