{"id":481463,"date":"2026-02-15T11:09:14","date_gmt":"2026-02-15T11:09:14","guid":{"rendered":"https:\/\/www.newsbeep.com\/au\/481463\/"},"modified":"2026-02-15T11:09:14","modified_gmt":"2026-02-15T11:09:14","slug":"uk-pension-shake-up-could-make-millions-on-modest-incomes-worse-off","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/au\/481463\/","title":{"rendered":"UK pension shake-up could make millions on modest incomes worse off"},"content":{"rendered":"

Rachel Reeves has confirmed that tax-free salary sacrifice pension contributions will be capped at \u00a32,000 by the end of the decade.\"UK<\/p>\n

UK pension shake-up could make millions on modest incomes worse off<\/p>\n

A pension tax overhaul from the Labour Party government could see people on modest incomes lose out, it has been warned. Labour Party Chancellor Rachel Reeves has confirmed that tax-free salary sacrifice pension contributions will be capped at \u00a32,000 by the end of the decade.<\/p>\n

Labour plans to curb salary sacrifice pension arrangements, with former Liberal Democrats<\/a> Pensions Minister Sir Steve Webb warning the impact could extend far beyond the 3.3 million savers initially identified as affected.<\/p>\n

Mr Webb says a new Office for Budget Responsibility (OBR) document “indicated that many workers sacrificing less than \u00a32,000 could also lose out”.<\/p>\n

READ MORE Major mobile phone used by millions being cut off – users urged to upgrade<\/a><\/p>\n

The OBR document acknowledged that predicting how businesses will react remains “highly uncertain, given the various channels through which employers and employees can respond”.<\/p>\n

Mr Webb stated: “Far from ordinary workers being ‘protected’ from the changes, we could see millions of people on modest incomes losing out as well, further undermining their incentive to save in a pension.”<\/p>\n

He added: “We urgently need the Government to be clear about the true scale of the losses from this policy.”<\/p>\n

Steve Hitchiner, the chair of the Society of Pension Professionals Tax Group, shared: “The decision to restrict salary sacrifice for pensions will result in higher costs to employees and employers, along with less saving in pensions when more saving is needed.<\/p>\n

“The additional revenue raised by the Exchequer will both diminish and is uncertain.<\/p>\n

“Nevertheless, employers and employees should continue to use salary sacrifice where possible and pension saving remains the most effective means of saving for later life.”<\/p>\n

HMRC has said an estimated 7.7 million employees use salary sacrifice to make pension contributions \u2013 and of these, 3.3 million sacrifice more than \u00a32,000 of salary or bonuses.<\/p>\n

The Chancellor’s changes to the salary sacrifice pension regime will come into effect from April 2029.<\/p>\n","protected":false},"excerpt":{"rendered":"Rachel Reeves has confirmed that tax-free salary sacrifice pension contributions will be capped at \u00a32,000 by the end…\n","protected":false},"author":2,"featured_media":481464,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[64,63,99,186,184,185,10894],"class_list":{"0":"post-481463","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-personal-finance","8":"tag-au","9":"tag-australia","10":"tag-business","11":"tag-finance","12":"tag-personal-finance","13":"tag-personalfinance","14":"tag-your-money"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/481463","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=481463"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/481463\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/481464"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=481463"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=481463"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=481463"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}