New National Insurance rules for workers could result in bosses 'refusing'

UK households could be "refused" a pension increase under a National Insurance hike. Labour Party Chancellor Rachel Reeves's rumoured hike to National Insurance could result in bosses "refusing to increase pension contributions" on their workers, according to analysts. According to think tank the Resolution Foundation, charging National Insurance on employer contributions at a flat 13.

8 per cent rate would raise up to £18billion every year by the end of the decade. Helen Morrisey, the head of Retirement Analysis at Hargreaves Lansdown, said: "This has been less talked about in the press but we could also see employer national insurance being levied on workplace pension contributions. "As it stands employers pay national insurance contributions of 13.



8 per cent on all earnings above £175 per week, not including pension contributions. But this employer incentive looks to be firmly in the Chancellor’s sights. READ MORE State pensioners waking up to free £150 payment that's 'automatic' "However, a move like this comes with drawbacks.

It would push up employer costs and the concern is that they could look to recoup this cash either in the form of smaller pay rises or refusing to increase pension contributions. "Given the ongoing debate around adequacy and how we can help people better prepare for retirement, this could be a backward step." A UK Government spokesman said: "We do not comment on speculation around tax changes outside of fiscal events.

" She said: "We’ve seen tax-free cash tinkered with before – it was reduced to a maximum of £268,275 by the last Government. This has prompted speculation that it would be eroded further in future. These rumours haven’t helped even people whose tax-free cash entitlement is well below the limit from wondering what the future holds and potentially making decisions they might come to regret.

"Taking money out of a pension now might deprive it of future investment growth and leave it subject to a whole host of taxes like inheritance, capital gains and dividend tax.".