Pension Increase Exchange meaning

In this issue Employment taxes Budgets and Finance Bills VAT International Taxes management and litigation Companies and corporation tax Anti-avoidance Devolution Pensions LexTalk®Tax: a Lexis®Nexis community Daily and weekly news alerts New and updated content Dates for your diary Trackers Latest Q&A Useful information Employment taxes Royal Assent for National Insurance Contributions (Secondary Class 1 Contributions) Act 2025 The National Insurance Contributions (Secondary Class 1 Contributions) Bill—bringing in an uplift to 15% for the main rate of employers’ secondary Class 1 National Insurance contributions from 13.8%, and cutting the secondary threshold to £5,000 per annum—was first set out at Autumn Budget 2024 and obtained Royal Assent on 3 April 2025. The provisions apply from 6 April 2025. See: National Insurance Contributions (Secondary Class 1 Contributions) Act 2025. HMRC publishes Employment Related Securities Bulletin 59 (March 2025) Private Intermittent Securities and Capital Exchange System (PISCES)—policy...

Original news Source: Hansard Debate: National Insurance Contributions (Employer Pensions Contributions) Bill, Volume 777: debated on Wednesday 17 December 2025 News summary MPs have approved the Second Reading of the National Insurance Contributions (Employer Pensions Contributions) Bill following a concise yet pointed Commons exchange on 17 December 2025. The government measure (bill 344 in the 2024–25 session), brought forward on 4 December 2025, would create a power to levy NICs on pension salary sacrifice amounts above £2,000 per year, with implementation scheduled for April 2029. Ministers contended the proposal is a proportionate, targeted step to contain the fast-escalating fiscal cost of NIC relief for salary sacrifice—projected to almost triple by the decade’s end—and to bolster fairness, as many employees have no access to salary sacrifice at all. Opposition parties countered that the plan would deter saving, increase expense and administrative complexity for employers, and could, over time, depress pension contributions. The Bill cleared its Second Reading by 312 votes to 165 (Division 395) and will now advance under an...

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Defined benefit (DB) pension scheme deficit A defined benefit (DB) pension scheme is in deficit when the value of its assets falls short of its liabilities. There are several ways to assess the shortfall, for example: on the scheme funding basis — required by the Occupational Pension Schemes (Scheme Funding) Regulations 2005, SI 2005/3377, and used to determine future contributions. If a shortfall is identified on this basis, the trustees and sponsoring employer must agree a recovery plan to clear it. For further information, see Practice Note: The scheme-specific funding regime — Recovery plan on a solvency basis — liabilities measured as the premium an insurer would need to secure the scheme benefits in full (the ‘buy-out basis’) on the Pension Protection Fund (PPF) basis — assets and liabilities valued using standard assumptions and the benefit structure set by the PPF on an accounting basis — assets and liabilities measured as required by an accounting standard For further information,...

THIS PRACTICE NOTE APPLIES ONLY TO DEFINED BENEFIT OCCUPATIONAL PENSION SCHEMES Recent years have seen more defined benefit occupational pension schemes fall into deficit, and sponsoring employers and trustees have shown heightened interest in ways to manage, and preferably reduce, the financial risks and investment swings linked to these arrangements—a process typically termed ‘de-risking’. A range of de-risking approaches exists, and further options continue to be developed. These methods are directed at managing exposure to financial risk and investment volatility tied to such schemes. Among them are incentive exercises, including enhanced transfer value exercises and pension increase exchange exercises, which are treated as part of the de-risking toolkit—an arsenal available to employers and trustees of defined benefit schemes (for more information on incentive exercises, see Practice Note: Pension scheme incentive exercises). Increasingly, however, de-risking strategies are turning to insurance solutions, with pension buy-outs and pension buy-ins being the most prevalent choices. Before proceeding with a buy-in or buy-out, the Pensions Regulator advises trustees to obtain specialist advice and, where...