National Insurance Contributions (Employer Pensions Contributions) Bill: Second Reading

Parliament voted on 17 December 2025 to give a Second Reading to the National Insurance Contributions (Employer Pensions Contributions) Bill, meaning the Bill passed its first full parliamentary debate and moved forward for further scrutiny. The result was 312 votes in favour and 165 against. A Second Reading is the stage at which MPs debate the general principles of a Bill before it proceeds to detailed line-by-line examination in committee.

The Bill creates a power to apply National Insurance contributions (NICs) to salary sacrifice pension contributions above £2,000 per year, with the change due to come into force from April 2029. Salary sacrifice is an arrangement where an employee agrees to reduce their gross salary, with the difference paid directly into their pension, meaning neither the employee nor the employer pays NICs on that portion of pay. The Bill would cap the NIC relief available through this mechanism. The government projects the measure will raise approximately £7 billion over the forecast period, while ministers argued that without action the cost of salary sacrifice relief would have reached £8 billion per year by the end of the decade. The £2,000 annual threshold is intended to protect lower earners, with ministers arguing that 60 percent of contributions through the scheme come from the top fifth of employees.

The vote divided almost entirely along party lines. Labour and Labour and Co-operative MPs voted unanimously in favour, joined by the four Green Party MPs and three independents. Every Conservative, Liberal Democrat, Reform UK, Scottish National Party, Plaid Cymru, and Ulster Unionist MP who voted did so against. There were no notable cross-party rebellions in either direction. The Bill sits within the broader context of the government's autumn 2025 Budget and is described by ministers as a companion piece to the Finance Bill debated the previous day.