Fiona Tait, pensions specialist at Royal London commenting on today’s Budget announcement said:
“The decision to raise National Insurance Contributions (NICs) for the self-employed did not come as a surprise following last year’s levelling of the State Pension playing field. It does not make sense for one group of workers to pay a lower contribution and receive an equal benefit. Some commentators had in fact expected an increase to 12%, in line with the rate paid by employees, so it is good that the Chancellor has recognised that the self-employed still do not benefit from sick pay and redundancy benefits or, currently, parental leave.
“What will be interesting is whether this increase may be a step towards using NICs to encourage saving for retirement. Sir Steve Webb has already suggested that an increased rate of NIC could be coupled with a default arrangement to direct the additional contributions towards a pension plan. Those who wish to could opt out, in which case, the contributions would go to the DWP.”
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About Royal London:
Royal London is the largest mutual life, pensions and investment company in the UK, with funds under management of £117 billion, 8.8 million policies in force and 3,745 employees. Figures quoted are as at 30 June 2018.