Aviva leader govt Dame Amanda Blanc has prompt the chancellor to reconsider plans for a big clampdown on wage sacrifice schemes, caution that the transfer would penalise each employers and staff whilst destructive long-term pension saving throughout the United Kingdom.
Talking forward of Rachel Reeves’ 26 November price range, Blanc stated Aviva was once “very involved” concerning the Treasury’s goal to cap the quantity staff can sacrifice tax-free to simply £2,000 a yr — a metamorphosis anticipated to lift round £2 billion yearly.
Wage sacrifice lets in workers to surrender a part of their gross pay in go back for pension contributions or different advantages. Since the contribution is taken prior to tax and nationwide insurance coverage (NI), each folks and employers save on NI bills. At the moment, staff can give a contribution as much as £60,000 a yr into pensions tax-free below the device.
However pensions professionals warn that Reeves’ proposed cap would sharply build up NI expenses for employers and workers, most likely main many firms to scale back the generosity in their pension contributions.
“What you’re successfully doing is penalising the ones employers that in fact give a contribution extra to workers’ pensions,” Blanc stated. “And also you’re additionally signalling to those that save for his or her pension that most likely they shouldn’t do it. This is dangerous information long-term for the United Kingdom, in particular when 15 million individuals are already no longer saving sufficient for retirement.”
The transfer would additionally constitute a 2nd NI blow for companies in simply over a yr. Reeves larger employer NI in her first price range remaining October — a call that drew robust grievance from industry leaders.
Blanc warned that putting off the NI get advantages solely would impose a significant price on companies: “The true price to employers of putting off that NI have the benefit of wage sacrifice isn’t going to be insignificant.”
Her feedback got here as Aviva delivered a robust third-quarter replace. The FTSE 100 insurer stated it now expects to understand £225 million in annual price financial savings from its £3.7 billion acquisition of Direct Line — virtually double the £125 million in the past forecast — through 2028.
Aviva additionally expects to generate working benefit of £2.2 billion this yr, aside from any contribution from Direct Line. That implies the corporate is ready to hit its 2026 benefit goal two years early. It additionally unveiled new three-year objectives, together with handing over a go back on fairness of greater than 20% through 2028.
Analysts at Financial institution of The usa reiterated their “purchase” ranking on Aviva, pronouncing they be expecting the insurer to overcome its newly up to date monetary goals.
In spite of the robust steerage, Aviva stocks fell 42.5p — down 6.1% — to near at 650p. The inventory has risen round 40% for the reason that get started of the yr, with analysts suggesting that most of the upgrades introduced on Thursday had already been priced in through traders.
Paul Jones
Harvard alumni and previous New York Occasions journalist. Editor of Trade Issues for over 15 years, the UKs greatest industry mag. I’m additionally head of Capital Trade Media’s car department running for shoppers akin to Crimson Bull Racing, Honda, Aston Martin and Infiniti.
