National Insurance Contributions (Employer Pensions Contributions) Bill

Graham Leadbitter Excerpts

2nd reading
Wednesday 17th December 2025 Commons Chamber

[Graham Leadbitter (Moray West, Nairn and Strathspey) (SNP)]

While businesses are still reeling from last year’s national insurance increase, with this Bill the Labour Government are set to increase tax again by making salary sacrifice pension contribution schemes worse for workers.

What has the Labour party said previously? In its 2024 manifesto, on page 79, it stated:

“Our system of state, private, and workplace pensions provide the basis for security in retirement…We will also adopt reforms to workplace pensions to deliver better outcomes for UK savers and pensioners.”

It gets even more ridiculous when we see that the same manifesto also stated on page 21:

“Labour will not increase taxes on working people, which is why we will not increase National Insurance”.

That is exactly what the Bill does.

Recent survey data from the Confederation of British Industry showed that three in four employers will have to decrease pension contributions as a result of the measures in the Bill. As the CBI has said, it is

“‘a tax on doing the right thing’”.

It goes on to state:

“Ultimately, this unwise move will only damage growth, investment and pension saving rates.”

It is not just the CBI that has voiced alarm at the Bill. The Association of British Insurers stated:

“Capping salary sacrifice for pension saving is a short-sighted tax grab which will lower pension saving and undermine people’s retirement security.”

The Minister said in his introduction that

“everyone who has thought about this”

will come to the same conclusion. He might not wish to refer to the CBI and ABI coming to different conclusions, but they have clearly thought about it.

It is not even clear that the measure will raise the money that the Chancellor expects. A former pensions Minister from the coalition era has said that he expects it to raise “a fraction” of the intended amount, as firms will restructure payments to evade it. In addition to the likelihood of payments being restructured, even the OBR has made it clear to the Chancellor that it expects employers simply to pass the cost on to employees through lower wages and less generous schemes. It will be working people who ultimately pay for this short-term thinking, with a lower standard of living and less spending power in their retirement.

As we have seen with the maladministration of pension changes for 1950s-born women, politicians cannot and must not change the goalposts on retirement planning without giving significant advance notice. Any approach otherwise, such as in the Bill, is deeply unfair to savers. This move will land businesses with yet more administrative costs, disproportionately hitting small to medium-sized employers who are still absorbing the increased NIC costs from last year’s Budget. Is this muddled policy really from a Government who stood on a pledge of growing the economy? This is yet again another Budget with another rise in national insurance by Labour.

There are numerous unanswered questions, but the following are top of the list. What assessment has the Minister made of likely behavioural changes to pension savings as a result of this policy? What is the estimated increased cost to businesses as a result of this policy? Does the Minister anticipate lower pensions for workers as a result of this policy, and if so, how much would the decrease be? Can the Labour Government seriously make a commitment in this Chamber not to increase national insurance in next year’s Budget, given the rises in both their Budgets since coming into power? This Bill is deeply flawed and the SNP will not support it today.

[Madam Deputy Speaker (Caroline Nokes)]

As there are no further Back-Bench contributions, I call the shadow Minister.