The Institute of Chartered Accountants of Scotland (ICAS) has warned that the Chancellor’s cap on national insurance (NI) relief could discourage pension saving.
The comment comes after reports that some employers are withdrawing salary sacrifice schemes in response to the change.
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The accountancy body said that measures that discourage pension saving amount to “short-sighted tax policy”.
ICAS tax director Katie Close said: “Reports of employers withdrawing salary sacrifice schemes are unsurprising. The changes to salary sacrifice announced in the 2025 Budget will have long‑lasting impacts for both individuals and businesses.
“At a time when private pension saving is already insufficient and the population is ageing, measures that disincentivise pension saving represent short‑sighted tax policy – particularly in the absence of wider reform to encourage long‑term retirement saving.”
The professional body urged “coherent, stable and long-term” pension rules to give employers, savers and the wider industry the confidence to plan ahead.
Close added: “Research by the IFS and the Pensions Commission shows that more than a fifth of private sector workers don’t save into a workplace pension at all. Of those who do, around 30–40% are not on track to achieve an adequate retirement income.
“These changes risk exacerbating this problem if employers respond by withdrawing salary sacrifice schemes or reducing the generosity of pension provision for all workers.”
She added that the core purpose of pensions policy should be to secure sufficient income in retirement for individuals.
“Without that clarity and certainty, reforms risk undermining the very outcomes they are meant to support, while potentially widening existing inequalities such as the gender pensions gap,” Close concluded.
