The Financial Secretary to the Treasury (Lord Livermore) (Lab)

My Lords, the cost of pension salary sacrifice was set to treble to £8 billion a year by the end of this decade. That increase has been driven mostly by high earners, with additional rate taxpayers tripling their salary sacrifice contributions since 2017. This includes individuals sacrificing their bonuses without paying any income tax and national insurance contributions on them. The status quo is neither fair nor fiscally sustainable. We simply cannot afford to allow the cost of pension salary sacrifice to balloon, benefiting predominantly higher earners. The Bill therefore introduces a cap of £2,000 under which no employer or employee national insurance contributions will be charged on any pension contributions. It protects ordinary workers by using salary sacrifice and limits the impact on employers while ensuring that the system remains fiscally sustainable. The majority of those currently using salary sacrifice will be unaffected. Saving into a pension, including via salary sacrifice, will also remain hugely tax-advantageous under these changes. The Government currently provide over £70 billion of income tax and national insurance contributions relief on pension contributions each year. That spend will be entirely unaffected by these changes. These are fair and balanced reforms. They protect lower and middle earners. They give employers many years to prepare. They preserve the incentives that underpin workplace pension saving and they ensure that the tax system is kept on a sustainable footing. I beg to move.