Private sector workers are particularly affected by new pension rules – but saving is still better than not saving
The government has capped the amount that employers can save towards their pensions through a salary sacrifice scheme without having to pay national insurance at £2,000.
Money live reporter Jess Sharp declares around a third of the private sector utilize a salary sacrifice scheme – compared to just 10% of the public sector.
“So there is a chance that private sector workers will be affected by it more than public sector workers,” she declares.
The new threshold is notably also quite low, declares personal finance expert Iona Bain.
“In particular, if you are earning just above one of those tax thresholds, then £2,000 could potentially create all the difference,” she declares.
“It could mean that you are able to go into a lower tax band or not.”
It certainly is going to affect people’s ability to save into pensions, adds chartered financial planner Kirsty Stone.
But she declares savers should not be discouraged from saving into a pension.
“What you’re losing by not doing salary sacrifice is far greater,” she declares.
“You can still put the same amount of money into a pension, but you might not receive the national insurance relief that you would be receiveting from a salary sacrifice arrangement.
“But it’s still hugely tax advantageous to be able to put money into a pension.”
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