National insurance rebate change could hit pensions
Criticism has been aimed at a move which will see national insurance rebates cut on pensions.
The rebate on defined benefit pension schemes currently allows employers to receive a rebate for contracting out of the state second pension, with a percentage of the national insurance paid being refunded.
The rebate, however, is to be reduced from 5.3 per cent to 4.8 per cent.
The employer rebate is to drop from 3.7 per cent to 3.4 per cent, and the employee rebate from 1.6 per cent to 1.4 per cent.
The National Association of Pension Funds (NAPF) attacked the decision, arguing it would hit the value of final salary pension funds.
NAPF’s chief executive, Joanne Segars said: “This is a stealth tax on people saving into a pension, and a further squeeze on the employers trying to help them. Cutting the value of the rebate will raise the operating costs of final salary schemes, and is likely to spur more employers to close these pensions to staff.
“The government should be supporting workplace pension schemes, not saddling them with extra costs.”
