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

Parliament voted on 21 January 2026 to pass the National Insurance Contributions (Employer Pensions Contributions) Bill at its Third Reading, the final stage of Commons approval before a bill proceeds to the House of Lords. The result was 316 votes in favour and 194 against. The bill passed comfortably, carried by Labour and Labour and Co-operative MPs voting unanimously in support, along with four Green Party MPs.

The bill amends the Social Security Contributions and Benefits Act 1992 to create a power allowing employer and employee national insurance contributions to be applied to salary sacrifice pension contributions above £2,000 per year, starting from April 2029. Salary sacrifice is an arrangement where employees give up part of their salary in exchange for pension contributions made by their employer, currently free of national insurance. The change would cap the amount on which this tax advantage applies. The government argued that the cost to the Treasury of salary sacrifice pension schemes was on course to nearly treble by 2030, from £2.8 billion in 2017 to £8 billion, making reform necessary to protect public finances.

The vote divided along clear party lines. All voting Conservative, Liberal Democrat, Scottish National Party, Democratic Unionist Party, Plaid Cymru, and Reform UK MPs voted against the bill. Labour and Labour and Co-operative MPs voted unanimously in favour, with no rebels on either side. The four Green MPs supported the government. The bill subsequently went to the Lords, where amendments were passed, and the Commons later voted on 23 March 2026 to disagree with five Lords amendments, in each case by margins of around 280 to 160.