The 2025 Autumn Budget and your pension
19.12.2025
On 26 November 2025, the government unveiled the Autumn Budget. Within it, the Chancellor announced that from April 2029, only the first £2,000 of pension contributions made through salary sacrifice arrangements would be exempt from National Insurance contributions.
If you’re currently paying into the ABF Pension Scheme, this change will not affect you.
Different pension schemes in the UK have different contribution arrangements. A salary sacrifice arrangement is one where an employee gives up part of their salary for the employer to pay it directly into their pension instead.
The ABF Pension Scheme is not currently a salary sacrifice arrangement. Therefore, if you’re currently paying in, you won’t be impacted by the announcement.
What does the government hope to achieve by capping salary sacrifice arrangements?
The amount you pay in National Insurance contributions is based on your salary before tax or pension contribution deductions. Salary sacrifice arrangements allow someone to reduce their overall salary, meaning that both the employer and employee save on National Insurance contributions. By restricting this amount to £2,000, the government is hoping to receive a higher income from National Insurance contributions.
But don’t I get any tax relief on my pension contributions?
Your pension contributions are deducted directly from your pay before tax, so you won’t pay income tax directly from your pay on your pension contributions. The government has not announced any additional measures to cap tax relief on pension contributions collected directly through pay as part of the Autumn Budget.
Although it doesn’t affect most people, there is already a restriction in place on the amount of tax relief you can benefit from over a year known as the Annual Allowance. More information about this can be found at the links below:
What else did the budget say about pensions?
Despite the many rumours that circulated prior to the Budget, pension announcements were generally not significant.
The government confirmed that they would maintain the triple lock for the next tax year, and consequently, state pensions would rise by 4.8% next April. Because income tax thresholds have been frozen, that rise means pensioners receiving only the State Pension may cross the tax-free Personal Allowance and begin paying income tax from 2027.
The budget document also reaffirmed the government’s intention to make most pension death benefit lump sums subject to inheritance tax from 6 April 2027. Read our full news story for more details on these upcoming changes.
Further information
We will continue to keep you informed via our news page about any pension developments that could affect you as a member of the Scheme.
Explore the rest of our website for more information about the Scheme and your pension options.
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