Tories' Tax Raid On Pensions
More than six million workers across the UK will suffer a surprise cut in take home pay of around £40 a month after a stealth raid on their salaries comes into effect this month.
Changes to National Insurance (NI) payments will net the UK Treasury £5,500 million a year because the government is replacing the second state pension with so-called single tier pensions.
Previously, employees and employers could “contract out” of a second state pension and payer lower NI contributions. Now it is being abolished, both employees and employers will automatically pay the higher NI rate and receive only the single-tier pension.
Workers face an extra 1.4% of NI on earnings and employers will be hit by a rise of about 3.4%. It is estimated that 1.5 million people in the private sector and five million in the public sector will be affected.
It is feared that the estimated £2,700 million cost to public sector employers such as local authorities and the NHS will force them to make cuts elsewhere.
The impact on the private sector could put the final nail in the coffin of company pension schemes, leading to them being scrapped altogether.
It seems that the Chancellor hoped no-one would notice this raid on salaries; in effect a tax grab with £5,500 million for UK Treasury coffers at the expense of millions of workers and no doubt impacting on public services.
If George Osborne is so proud of these changes, if he is not trumpeting them he should at least warn people they are about to be hit in their pay packets. After the recent debacle around cutting benefits to disabled people, it’s no surprise he wants to keep quiet and hope no-one notices this new stealth tax.