NI cap cuts salary sacrifice, hurts pensions, ICAS warns

The Institute of Chartered Accountants of Scotland (ICAS) warned that the Chancellor’s cap on national insurance relief, introduced in the 2025 Budget, could discourage pension saving by prompting employers to withdraw salary-sacrifice schemes. ICAS says this risks reducing private pension contributions at a time when many workers are already under-saving, potentially widening retirement shortfalls and the gender pensions gap. For markets, weaker pension contributions could reduce long-term investment flows into UK assets and weigh on pension-provider business models and sectors reliant on corporate benefits, posing a downside risk to UK equity benchmarks such as the UK 100.