Some of the UK's largest pension and insurance providers have called on the Chancellor to avoid restricting salary sacrifice for workplace pension contributions in the forthcoming Autumn Budget, arguing that such a move risks discouraging long-term saving and undermining confidence in the retirement system.
A joint letter coordinated by the Association of British Insurers (ABI) was sent to Rachel Reeves, Chancellor of the Exchequer, on Nov. 21. Signatories included Aviva chief executive Dame Amanda Blanc, Phoenix Group’s Andy Briggs, Zurich UK’s Drazen Jaksic, Scottish Widows chief executive Chirantan Barua, Smart UK’s Jamie Fiveash and Nick Turner of NFU Mutual.
The signatories expressed concern at reports that the Treasury is considering a cap or limit on salary sacrifice - one of the most widely used mechanisms for increasing pension contributions in a tax-efficient manner. They warned that the change could lead to reduced savings levels at a time when the government itself has acknowledged that future retirees risk being financially worse off than those retiring today. ABI research referenced in the letter indicated that two in five savers would cut their pension contributions if changes were made.
The letter also stressed that pension policy requires long-term stability to maintain trust and allow individuals to plan with confidence. The CEOs argued that short-term fiscal measures could weaken the government’s own ambitions to improve outcomes through the newly proposed Pensions Commission.
"Customers need long-term policy stability to trust that they can plan for their future with certainty," the letter said.
The call for a long-term approach was echoed by the Institute and Faculty of Actuaries (IFoA).
Ahead of the Budget, IFoA president Paul Sweeting said that successful pension policy changes have historically been built on sustainability rather than short-term savings. He noted that uncertainty is one of the biggest risks to public confidence, and highlighted auto-enrolment as an example of a policy that works because it delivers gradual improvements over decades.
Sweeting added that the Commission and the ongoing review of the State Pension age create an important opportunity to reinforce sustainability and fairness between generations, reducing the need for corrective interventions later.
While acknowledging the fiscal pressures facing the government, industry leaders are urging the Treasury to prioritise the long-term financial security of future retirees and avoid measures that could weaken contributions at a critical time for pension reform.
