MPs recently considered the National Insurance Contributions (Employer Pensions Contributions) Bill and gave it its Second Reading on Wednesday 17 December 2025. As the Shadow Chief Secretary to the Treasury, Richard closed the Second Reading debate for Her Majesty's Opposition. His closing statement can be read at https://hansard.parliament.uk/Commons/2025-12-17/debates/01106ACA-49E6-45BD-BEE1-2C3CEA795E2A/NationalInsuranceContributions(EmployerPensionsContributions)Bill#contribution-2A165541-A7B1-43C5-AB58-DEC82EE347ED
Richard Fuller MP commented:
This Labour government continues to lurch from one crisis to the next, compounding every error with yet more mistakes. This is another Bill that targets people who are trying to do the right thing. It is a bad measure. It is an anti-savings measure and it is an attack on prudence. The Conservative Party is opposed to this Bill.
The Bill makes it less attractive for employers to contribute to private sector pensions. We all know that there is less certainty in the private sector, because that is where defined contribution schemes predominate, whereas in the public sector, greater certainty is given by a defined benefit scheme. In the public sector, there is also benefit because the contribution from the employer to employee pensions is much higher than in the private sector. In the public sector, employer contributions are equivalent to 27% of earnings, on average, according to research by the Taxpayers’ Alliance, but in the private sector the average contribution is only 8%. Why are the Government proposing to make it harder for private sector employers to contribute to the pensions of their employees? The Bill actively exacerbates the differences.
This Bill is yet another example of the lack of private sector experience on the Government Front Bench. It's all very well to support public sector workers and simultaneously appease the unions but it's the private sector that pays the bills, and the Government would do well to realise this and quickly, before they destroy even more businesses through their regulation and taxes.
The 2025 Budget announced that from 6 April 2029, employer and employee NICs would be due on pension contributions above £2,000 a year made through salary sacrifice. This Bill enacts the change announced in the Budget.
Both employee and employer pay National Insurance Contributions (NICs) on pension contributions when an employee pays into their pension. However, if an employer pays directly into an employee’s pension, neither employers nor employees pay NICs on the contribution. Some employers offer ‘salary sacrifice pension schemes’ to make tax-efficient use of this difference. In a salary sacrifice scheme, an employee agrees to reduce their salary and in return the employer contributes the reduced amount directly to the employee’s pension. Because an employee’s salary is lower when they are part of a salary sacrifice scheme, both employee and employer pay lower NICs. Around 7.7 million people are estimated to use salary sacrifice to pay into a pension - that's around 20% of the workforce and the Treasury estimates that £32 billion of pension contributions had used salary sacrifice arrangements in 2024.
