The Government’s recent decision to scrap the State Second Pension pension system will affect some six million UK workers and hundreds of employees from April 6.
Britons who reach state pension age after this date will be offered a flat rate of up to £155.65 per week, following the abolition of the current basic state pension and state second pension.
Employers will also be affected, as the changes will bring in an abolition of ‘contracted out’ pensions rates, which previously allowed workers and employers alike to pay lower National Insurance contributions.
Millions of UK workers will see an unexpected pay cut from next month, while employers will be faced with a larger wage bill in line with a rise in National Insurance costs.
National Insurance costs will rise by 1.4% for British workers, equating to an average £37 cut in take-home pay.
Businesses will have to shoulder an increase of 3.4% on their wage bill, and some firms, such as state-owned Royal Bank of Scotland (RBS), have announced that their increased costs will be passed onto workers.
Through its defined benefit scheme, RBS will force around 27,000 employees to cover the £18 million in extra payroll costs. Staff will also have to pay 1% more into their pensions from October onwards and will suffer a further 1% rise in 2017.