Millions of workers set to be £3,000 worse-off under National Insurance shake-up
Millions of workers could be £3,000 worse-off under the Labour Party's National Insurance overhaul, claims new analysis. Workers are projected to be £3,000 worse-off under a drastic policy change which is expected to be rolled out during Labour Party Chancellor Rachel Reeves' landmark address.
Based on PolicyEngine's findings, if Labour chooses to increase employer contributions by one percentage point from 13.8 per cent to 14.8 per cent, businesses could lose out. If the employer does not change their salary, the National Insurance contribution they will pay will jump to £3,093 for the year.
PolicyEngine's research found that the same salary would neeed to be lowered to £29,818 in order to keep the total cost of employment fixed at £32,884. Felicia Hjertman, the founder of investment platform Tillit, warned: "Britain is on the brink of a retirement crisis, and increasing employers' National Insurance contributions on private pensions is a step in the wrong direction.
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“Faced with rising costs, employers with more generous contribution policies going beyond the Government-mandated, basic contribution rates may be forced to review these policies, undermining people's ability to achieve a comfortable retirement.
"Currently, more than 80 per cent of households aren't on track for a comfortable retirement. The Government should focus on stronger incentives for both employees and employers to prioritise private pension savings, making it easier and more accessible for everyone to secure their financial future."
A UK Government spokesperson said: "We do not comment on speculation around tax changes outside of fiscal events." It comes as Sir Keir Starmer warned that working people around the world had lost faith that politics could deliver for them, but said that did not mean politicians should give up on them, warning that “populism preys on the fears that people have.”
He also accused Rishi Sunak and the previous Conservative government of calling an early election to avoid facing the fiscal situation that his Labour have inherited.