Rumoured increases to employer pension contributions in next month’s Budget are sparking panic among UK businesses, with nearly one in five firms warning they could face insolvency if contribution rates rise.
A survey of 500 businesses by consultancy Barnett Waddingham found that 19% of employers believe a mandatory hike in workplace pension contributions could push them over the edge financially. More than 30% say they would respond by freezing recruitment or cutting headcount, further tightening an already strained labour market.
The warning comes as companies continue to absorb cost increases introduced in Chancellor Rachel Reeves’ previous Budget, including: The National Living Wage rising to £12.21 from April 2025 and Employer National Insurance Contributions increasing from 13.8% to 15%.
Martin Willis, partner at Barnett Waddingham, cautioned that even a modest rise in pension costs could have severe consequences.
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