UK Government Considers Increase in National Insurance

The Labour government, led by Chancellor Rachel Reeves, is considering an increase in employer National Insurance Contributions (NIC) as part of its upcoming Autumn Budget, potentially raising the rate from 13.8% to 14.8%. This move is aimed at addressing a £22 billion fiscal shortfall but has raised concerns about its impact on businesses and employee pensions. Experts from RSM UK warn that applying NICs to pension contributions could deter employers from offering generous pensions, leaving workers with inadequate retirement savings. A survey indicated that nearly half of employers might reduce pension contributions if NICs increase, while 63% would hesitate to boost payments in the future. Critics argue that this approach, while seemingly affecting employers rather than employees, could ultimately harm workers' financial futures. The Chancellor is expected to clarify these potential changes during her fiscal statement on October 30.