Employer costs could rise dramatically if the government goes ahead with proposals to remove national insurance contribution pension relief, data analysis has found.
Employers could face a £500 bill per employee if NI pensions relief is cut, the analysis showed.
Generous businesses that contribute more than the minimum auto-enrolment (AE) payment, in a bid to bump up staff pension pots, will be particularly affected, consultants Hymans Robertson said.
Figures from the firm showed that it would cost a company an extra £442 a year for a 5 percent contribution to an employee being paid £32,000 (assuming employee and employer pension contribution rates of 5 percent each under a salary sacrifice scheme).
At the same salary level, the cost for small firms, with 10 people or less, would be close to £5,000, with implications for their profits and growth plans.
Even a more modest change of NI relief, to a 6 percent rate rather than the full 13.8 percent would mean an additional bill of £192 a year for the employer of that same employee.
Hannah English, head of DC corporate consulting at the consultancy, said: “As we approach the budget with less than two weeks to go, the question of how the chancellor will balance the books has never been more prominent. Rumours of cuts to national insurance relief are headline news and the implication for employers is vast.
“Our concern is the impact this may have, where the current national insurance saving is used to top up pension contributions. Without this saving the top up is under threat. Abolishing such a saving would impact future pension pots at a time when pension savings, pensioner poverty and future proofing is at a record low.”
